Divorce - why you need a financial adviser in your corner?
There is something about the end of the festive season and the dawn of a new year that seems to send people into a bit of a tailspin. Whether it’s too much time spent over the Christmas period with the in-laws, or just the preconceived idea that the start of the new year has to mean a fresh start and a new you, who knows.
Having spent many years as a mortgage adviser prior to becoming a financial adviser, I recall like clockwork the first of January always brings an influx of enquiries about transferring properties into individual names when couples begin the process of separation and then divorce. Not an overly cheerful topic for the start of the new year but sadly its true.
In my experience when it comes to finances, most people think of the family home as their most important asset. I can completely understand why. Everyone needs somewhere to live; to feel safe, to feel secure, and your home is often that place. For others their home is their status symbol, or they have an emotional attachment. However when it comes to divorce, it’s not until much further down the line (if at all) that people think of their other assets. Yes most people think about cash in the bank, but few consider in any great detail the less glamorous ones which are often the most valuable such as their pensions.
Research by L&G1 shows that 42% of marriages in the UK end in divorce. As you may recall from my previous blogs on weddings, I tend to have quite a strong opinion on the cost of weddings in general so those numbers certainly fill me with dread. More concerning within L&G’s research was that only 3% of divorcees actually seek financial advice when getting divorced. This number was pretty astounding to me and you have to ask why it’s so low.
Having pondered this for a little while my best guess would be that divorce is just really, really hard. Having to deal with lawyers, your ex and the unchartered territory that is UK law system, it may just be too much to even think about what else you need to be doing. Alternatively it could be cost related. Divorce certainly isn’t cheap. If your lucky you might find a solicitor that works on a flat fee basis but most tend to charge by the hour so things can quickly add up.
Financial advisers are often thought of as only for the rich, and people assume that we charge in a similar way to a solicitor which is not actually true. Whilst our advice and products are not free, certainly at Yorkshire Financial Planning we do not charge by the hour.
Each clients circumstances are unique, so the services we offer are tailored to fit so cost should not be the factor that stops you getting financial advice when it comes to divorce.
So why might having a financial adviser in your camp help?
In our previous blogs we have talked about the role of a financial adviser and what we actually do. But aside from the traditional role we play when it comes to financial advice, with divorce, we compliment and enhance the work your solicitor does on your behalf. While a solicitor will guide you through the legal side of a divorce, they can not give you advice on taxation of investments or the nuts and bolts of investments and pensions. This is certainly something a financial adviser can do. A joined up approach insures that you have the right team around you to provide advice and support in all areas that arise.
Making sure you get your fair share
When speaking to a local family lawyer she explained her approach is to bring a financial adviser in early when talking with divorcing clients. She described the importance of staying in her lane when it comes to supporting her clients, and given that financial products are ever changing, it is vital to use a financial adviser because they have the knowledge and expertise to provide invaluable advice.
A financial adviser can help you to see the true value of all assets. Our role is to challenge your assumptions on how to best divide your assets, and understand the true value of products and services you jointly or individually own.
Often when couples have children one of the couple may have spent time at home looking after the kids and the other was the main “breadwinner”. Whilst this is quite a traditional view of the world, in my experience it is quite rare for couples to have similar values within their pensions. Commonly one person will have a bigger pension pot, and if it’s a defined benefit pension it can be quite difficult to value and understand. It is therefore vital to involve a financial adviser from an early stage, so that you can understand the impact that divorce and potentially pension splitting might have on your future.
Additional support when you need it most
Having seen a number of friends and clients go through divorce, it seems to feel like a massive thing to even talk to the solicitor about, let alone turn to another professional for additional advice. Many have seemed not to have the mental capacity as the whole experience is overwhelming and that’s probably putting it mildly.
Caroline and I have joked in many of our previous blogs that financial advice is about 20% finance and 80% counselling and support. Whilst those numbers are said tongue in cheek, as the old adage says a problem shared is a problem halved.
Re-building your new life
Having spent a number of years within a relationship with joint finances, it must be quite a scary prospect to have to begin again, to rebuild and to plan for a new future. It’s likely that your finances, income and goals will look very different after divorce, so taking the time to sit down with a financial adviser to focus on you and your plan for the future is essential.
Whilst a solicitor is there to divide your assets, they cant advise you on what to do next. Divorce is a major life event and whilst you can potentially do your own financial planning, an adviser will help shoulder some of that burden. To find out more about why financial advice is important why not check our previous blog here.
Working with a financial adviser who is focused on your needs and goals, means you’ve got a better chance of rebuilding your financial future, and coming back stronger.
For more help and advice or to receive a complimentary guide covering wealth management, retirement planning or Inheritance Tax planning, contact Yorkshire Financial Planning on 01482 275540 or complete our contact form here.
1https://www.legalandgeneral.com/landg-assets/adviser/retirement/literature-and-forms/articles-and-reports/divorce-templates.pdf
