Like many interesting learning experiences, they can arise from the most unorthodox of circumstances.

The unorthodox setting

I was on a chairlift with a newly found ski companion in a relatively unknown corner of Hokkaido. It was snowing heavily. I was the spritely age of 27. My ski companion was in his late 50’s (specific age undisclosed).

Age difference all but forgotten, we bonded quickly. Both of us as gregarious optimists shared a mission to hunt out the best possible skiing. On the long chairlift ride to the top of the mountain, conversation drifted from one topic to another and eventually it settled on the ‘real world’, that is life outside waste deep snow and Japanese pop music.

I was a budding financial adviser, out for a final ski before launching my own firm and he was a new retiree, beginning what I suspected would be a regular schedule of exotic ski trips. In a previous life my ski companion was a partner at a leading international law firm. He didn’t have to say so, but it was evident he was good at his previous vocation.

He was now happily retired and when I mentioned my newly found career adventure he spoke very positively about the relationship he had with his financial adviser. He shared with me a story that really struck a chord.

The story

The law firm he had worked at was tremendously successful. He did not say this boastfully, it was simply a statement. He talked about a generation of partners that preceded him and the extravagant lifestyles that they had.

As in many larger partnership businesses, some of the older partners wound down their billable hours, whilst maintaining full claim to partnership drawings. This resulted in the firm’s profitability suffering over time.

He told me that a decision was made to initiate a partnership management plan that restricted partnership membership beyond age 55. He said the announcement sent shock waves through the older ranks of the partnership. Financially, some of the firms’ most successful partners had surprisingly very little to show for their many years of hard work. They could not afford to retire or even manage their medium term lifestyle obligations.

Not all partners over 55 were financially ‘distressed’ and many were still valued contributors to firm revenue, however the degree of financial stress and uncertainty amongst the older generation of the partnership was a catalyst for broadening the firm’s involvement on personal financial matters.

The firm’s logic was, if after ten years as a partner in such a successful firm you were not in a position to retire, then there was something awry.

The scale of partner discord made it apparent just how poorly many of the firm’s partners managed their personal financial responsibilities. Clearly something had to change. A financial planning firm was engaged and it became mandatory for any senior associate (essentially anyone on the road to partnership) and all partners to formerly engage with an adviser.

My ski companion, a member of the following generation of partners was a beneficiary of this management decision. As a newly minted senior associate in his 30’s, he was introduced to a financial planner as part of the firm’s new management initiative.

The outcome

By the time my ski-companion became a partner in his early 40’s he already had a trusted relationship with a financial adviser who had in place the necessary structures to streamline his now more significant wealth accumulation needs.

By planning for the lifestyle my ski companion desired in retirement in his 30’s, when the time came (at age 55) to wind up partnership involvement, he was able to do so with confidence.

Although adjusting to a new partnership model was a rocky transition, after the initial teething constraints were overcome, the policy shift was financially prosperous for both the individuals and the firm.

This article was written by Matthew Vickers CFP®, Principal Adviser at Snowgum Financial Services