Emily Bernstein is an experienced private banker at Investec who specialises in supporting legal leaders and senior lawyers. Here, she tackles the unique financial challenges facing senior legal professionals
I’m becoming a partner at a rival law firm. My career is progressing, but my life is on hold because my income has changed. Can you help?
When you make partner, the transition can be both exhilarating and exhausting. And, at a time when your energy is focused on career progression, there may be big changes in your financial life which can make it harder to manage your money and apply for a mortgage. This is where a private bank which specialises in supporting legal professionals can help.
While partnership can come with a significant increase in earnings, it is the complex and unpredictable nature of your income which demands specialist support. At Investec, our private bankers build one-to-one relationships with clients, which includes partners who have recently been promoted from senior associate or moved firm, and we tailor our mortgage, FX and savings services accordingly. Our experience in your sector means you won’t have to explain the intricate nature of draws and distributions – and this should save you time and provide reassurance.
‘While partnership can come with a significant increase in earnings, it is the complex and unpredictable nature of your income which demands specialist support.’
Emily Bernstein, Investec
As a starting point, it is important to establish whether you will become self-employed. Then, how your new law firm differs from your previous one, in terms of how partners are remunerated. It may follow a lockstep model in which your income will increase with your tenure or operate a merit-based system. If you are receiving profit shares, these may be regular or irregular. And if you are moving to a US law firm, you may be remunerated in dollars (USD).
Armed with this information, a private banker can help curate the services you need to move forward.
Managing outgoings
The change in your income structure should not disrupt or delay your regular outgoings. However, if you do now have foreign currency exposure, you might need a bank account which allows you to view and manage your balances online in one place. The Investec solution is a currency access account, which may also allow you to earn interest on the cash you hold.
Buying a new home
If you are looking to upsize your home, you should not need to delay your move until you have been in your new role for an extended period of time, as a bespoke mortgage can reflect your current circumstances.
While high street lenders might base affordability calculations on your previous salary, Investec will consider your earning profile and take into account discretionary and/or deferred pay. This approach could help you achieve a higher loan amount and buy the property you want, more quickly.
In addition, it may be possible for a private banker to align your repayment plan with the lumpy nature of your income pattern at the outset, to support you as you navigate change.
My team recently helped a newly promoted equity partner to purchase a four-bedroom home in Chelsea, while retaining his existing property. The client had a low deposit and needed an 85% LTV, based on an income which included foreign currency and profit share elements. Given his distributions were staggered throughout the year, we were able to incorporate capital reductions into his repayment plan at appropriate times, to support his cash flow.
Using foreign currency income
It may be that you need to convert US dollar income into sterling to facilitate your property purchase. In this case, you do not necessarily need to wait to receive this income to determine the exchange rate or the value of any proceeds you will receive.
An FX Open Forward contract allows you to secure the current exchange rate for a trade that is made up to 24 months in advance, within a pre-agreed window period.
Recently, a legal partner wanted to secure the current exchange rate ahead of receiving his profit distribution in dollars in Q4 and purchasing a new home. While he won’t benefit if the value of the dollar increases against sterling, an FX Open Forward has given him clarity over expected funds ahead of making a deposit payment.
‘An FX Open Forward contract allows you to secure the current exchange rate for a trade that is made up to 24 months in advance, within a pre-agreed window period.’ Emily Bernstein, Investec
It is worth mentioning that FX Open Forward contracts can also be used for monthly draws to give you a predictable income, as this could help you feel more comfortable making spending decisions.
At Investec, a dedicated foreign exchange dealer would work with you and your private banker to help monitor the markets, understand your needs and execute trades, to save you time and provide added reassurance.
Need a short to medium-term saving solution?
Finally, you may want to leverage your new income beyond an easy access savings account to accrue interest on your funds.
One option might be a notice deposit account, which often provides a more favourable interest rate than an instant access account, while allowing you to access funds with a three- or six-month notice period if you need to.
If you would like to discuss more of the specific challenges you are facing and see how our private banking team can help, please do get in touch today. Your career success is admirable – and change does not need to be overwhelming.
Important information: Minimum eligibility criteria and terms and conditions apply. Your property may be repossessed if you do not keep up repayments on your mortgage. Investec residential mortgages are only available for residential properties in England or Wales and are primarily available to UK residents and subject to eligibility.
You can only book an FX Forward which is for an underlying personal or commercial spending purpose. You cannot book an FX Forward for investment or speculative purposes, for example in order to achieve a gain based on movements in exchange rates. Also, you cannot book an FX Forward on behalf of any other person. Additional terms and eligibility criteria apply for FX Forwards.
Please contact Emily to discuss your needs.
E: emily.bernstein@investec.co.uk