The Biggest Investment Mistakes We Find in Attorney Portfolios (They Can Cost You Thousands)
When I review portfolios for attorneys, I’m rarely surprised by the financial decisions they’ve made personally. Attorneys are intelligent, disciplined, and cautious by nature. What does surprise me — although perhaps it shouldn’t anymore — is how often the portfolios themselves reveal problems created not by the attorney, but by an advisor who simply isn’t doing the job well.
The reality is that many lawyers are working with financial professionals who are either conflicted, inattentive, or operating with outdated investment philosophies. And because attorneys are consumed by client demands, hearings, billable deadlines, and firm management, they understandably assume their advisor is handling things competently behind the scenes.
But portfolio reviews often tell a different story. And as Burton Malkiel emphasizes in A Random Walk Down Wall Street (the most recent read in The Lawyer Millionaire® Masterclass) the biggest drags on performance are rarely the dramatic ones. They are the quiet inefficiencies that accumulate year after year.
Here are the issues we see most often — issues that cost attorneys real money, but that could have been easily avoided with thoughtful, evidence-based planning.
#1 Excessive Fees Hidden in Plain Sight
One of the most troubling patterns we find is the sheer number of attorneys paying far more in investment fees than they realize. These aren’t minor overcharges. They’re meaningful, wealth-draining expenses that compound silently over time. And the most troubling thing is that they are most often hidden and difficult for average investors to assess.
I once reviewed a portfolio for a lawyer with $12 million invested. You would think with a portfolio that size, he should be getting white glove level attention and have a well-crafted portfolio. That was not the case. What we found were over 50 actively managed, high fee mutual funds secretly costing him over $100,000 a year in unnecessary expenses. That’s malpractice on the part of his advisor.
As A Random Walk Down Wall Street makes clear, fees are one of the strongest predictors of future performance. When advisors stack high-fee funds, managers, or unnecessary products into a portfolio, the client pays the price — not just in dollars lost today, but in lost compounding for decades.
#2 Actively Managed Funds That Underperform
Actively managed mutual funds are another culprit we see constantly. These funds are often recommended because advisors can justify higher fees by pointing to a star manager or a clever strategy. But the overwhelming evidence — showcased throughout A Random Walk Down Wall Street — shows that these funds almost always underperform simple index benchmarks over time.
And yet, many attorney portfolios are filled with them.
For attorneys who assume their advisor is applying a sophisticated, research-driven approach, it’s frustrating to discover that the portfolio is built on strategies the industry has long since disproven. The underperformance isn’t usually obvious year to year, but over a decade, the lost return can be staggering.
#3 Large Amounts of Idle, Uninvested Cash
This issue is rarely the attorney’s fault. It’s almost always an advisor oversight.
We routinely find tens of thousands of dollars — sometimes six figures — sitting in cash or money market funds with no clear purpose. One attorney recently had over $600,000 sitting idle simply because the advisor hadn’t followed up on a rebalance request or automated the investment process.
In a profession where time is scarce and mental bandwidth is limited, attorneys assume their advisor is paying attention. But uninvested cash creates real “cash drag,” one of the silent killers Random Walk warns about. The market rises more often than it falls, which means every month money sits idle is a missed opportunity for compounding.
#4 Tax-Inefficient Funds Sitting in Taxable Accounts
Attorneys are often in the highest tax brackets, which makes tax placement crucial. Yet we commonly find portfolios holding actively managed funds in taxable accounts — funds that distribute capital gains every year whether the client sells or not.
These unnecessary tax distributions drive up annual tax bills without delivering better performance. This is especially onerous when you’re in a high tax bracket and you are subject to the Net Investment Income Tax, or the distributions are classified as short-term instead of long term. It’s inefficient, preventable, and frankly, one of the clearest signs of an advisor who isn’t thinking holistically.
Again, A Random Walk Down Wall Street teaches that what matters is not what you earn, but what you keep after fees and taxes. Advisors who ignore tax efficiency are ignoring a fundamental piece of investment management.
#5 Insurance Products Masquerading as Investment Strategies
One of the most widespread and costly problems we see in attorney portfolios comes from insurance-first companies — firms like Northwestern Mutual, Guardian, and similar organizations that lead with insurance and treat investing as a secondary add-on. These companies train their representatives to position whole life, variable universal life, and indexed universal life policies as “tax-advantaged investment strategies.” The pitch sounds compelling, especially to busy professionals: guaranteed growth, tax benefits, protection, and a “safe” place to build long-term wealth.
But when we peel back the layers, the truth becomes clear. These products are fundamentally insurance policies with investment-like wrappers — and they are almost always expensive, opaque, and structurally incapable of delivering market-level returns. The fees, commissions, surrender charges, and internal costs create a drag so significant that the policies fall far short of the returns attorneys could have earned with a straightforward, low-cost portfolio.
This is exactly the type of problem A Random Walk Down Wall Street warns against: complexity masquerading as sophistication. Insurance and investing serve two very different purposes, and when the two are blended, the attorney usually ends up with the worst of both worlds — inadequate investment performance paired with high, long-term insurance costs. For many attorneys we meet, these products weren’t chosen intentionally; they were sold to them by advisors whose compensation depended on pushing high-commission policies.
The result is predictable: years of missed growth, reduced liquidity, and layers of unnecessary expense. And the most frustrating part for attorneys is that these outcomes were never the product of a bad financial decision on their part — only of bad advice.
The Bigger Story: Poor Advice Quietly Compounds Against You
Everything we see in attorney portfolios — the excess fees, the unnecessary risks, the tax-inefficient funds, the idle cash, the insurance-first “strategies” — reinforces one central truth: most of these issues aren’t caused by attorneys themselves. They’re caused by advisors who should know better but don’t… or advisors who do know better but choose to prioritize sales, commissions, and convenience over what’s actually in the client’s best interest.
Years of investment research tell us that long-term investment success isn’t about clever products or flashy strategies. It’s about clarity, transparency, low costs, the right structure, and disciplined execution. When those fundamentals are missing, wealth doesn’t evaporate dramatically — it erodes quietly. And for attorneys who spend their lives advocating for others, it frustrates me deeply to see their own financial success undermined by poor guidance.
This is the part of my work I’m most passionate about: uncovering what’s really happening inside someone’s portfolio, showing them how much they’ve unknowingly been leaving on the table, and helping them reclaim control. I’ve seen attorneys recover tens of thousands of dollars in hidden fees, eliminate unnecessary products, improve tax efficiency overnight, and finally feel confident that their money is working as hard as they do.
If you’re wondering whether these issues are hiding in your accounts, let’s find out together. A careful portfolio review can be eye-opening — and sometimes life-changing.
Book a call, bring your statements, and let’s take a clear-eyed look at your investments.
You deserve advice that’s aligned with your goals, grounded in evidence, and built to create real long-term wealth. Let’s make sure you’re getting exactly that.
About the Author
Darren Wurz, CFP®, MSFP, is the Founder & CEO of The Lawyer Millionaire® and a nationally recognized voice in financial planning for law firm owners. He is the author of The Lawyer Millionaire, published by the American Bar Association, and the host of The Lawyer Millionaire Podcast, where he teaches attorneys how to build wealth, grow their firms, and achieve financial freedom. Darren exclusively serves law firm owners through a flat-fee, advice-only model designed to eliminate conflicts of interest and deliver real, measurable value.