For women in their mid-years, divorce can provide a first taste of pure unbridled financial freedom, once the process is complete. Choosing to collaborate with the right advisor can help determine if that taste will be bitter—or sweet.
Once you know for certain “forever after” has a hard stop after all, it is time to start putting your own team together: friends, family, an attorney, a counselor or therapist and, yes, perhaps a financial advisor, too.
Even when some aspects of a divorce are technically “uncontested,” the process can take years. For example, while many parents agree on 50/50 custody, other issues such as alimony, child support and asset division are often emotionally and seemingly interminably contested.
Of course, one’s divorce lawyer can and should manage every legal aspect of the separation, including the process of asset division and drafting legal documents.
A divorce finance specialist usually earns their place on the team when there are major conflicts regarding asset values or other complexities such as family business(es), trusts, notable premarital assets, private investments, debts and/or numerous investments.
For many spouses, the need for an advisor may or may not come into play during the divorce process. However, post-divorce, partnering with a financial advisor can prove invaluable.
Newly minted financial independence can quickly turn onerous without a trusted expert from the get-go. Making poor financial choices out the gate is a divorcee’s nightmare because it can have lasting catastrophic consequences down the road.
Nurturing a new singular life should be thrilling—not terrifying. Working with a well-matched advisor at the outset can provide invaluable clarity and calm, helping set a road map for a lifetime of solid financial footing.
Financial peace of mind comes with talking through and making plans for personal budgeting, asset sales, investing, income, expenses, taxes, trusts, insurance and gifts. A great advisor will even help with the framework for solo estate planning, collaborating with the attorney as needed.
Vanguard recently published a study outlining the emotional and time-saving benefits of working with a financial advisor. The paper builds on their earlier research quantifying the dollar value of working with an advisor. To be clear, Vanguard’s work was not aimed at assessing the impact of financial advice on the newly divorced.
Rather, the papers outline the extent to which the general population stands to benefit from working with an advisor. For example, Vanguard reported, “Advised investors are roughly half as likely (14%) as self-directed ones (27%) to experience high levels of financial stress.” And “76% of advised clients say advice saves them time.”
This research shows the extent to which advisors are not just about the next stock pick. Rather, the right advisor empowers clients to understand their choices and transform ingrained relationships with money and wealth.
For the recently divorced—often coping with so many important choices and options at once—the value of working with the right advisor is only compounded.
A Certified Divorce Financial Analyst (CDFA) will have the training to help manage the financial aspects of divorce. However, during what is often a raw and emotional chapter, finding a professional who has the right qualifications is only the first step.
More than anything, someone going through this complex—and likely expensive—process needs to find a professional who is not only divorce-finance savvy but who is also sympathetic and an excellent listener.
After an initial call or meeting, ask yourself these questions:
• “Did the advisor listen more than they talked?”
• “Did they synthesize the information into bespoke plans and goals, or did they seem to provide peremptory off-the-shelf solutions?”
• “Do I feel like a burden would be lifted and I would have a satisfying path forward with this professional on my team?”
Starting with a referral from a divorce attorney or friends who have been through it, consider meeting with at least two or even three financial advisors before deciding on one. Then, it’s time to check references, reaching out to a current client or two.
As so many who’ve been through it can testify, working closely with the right advisor sets the foundation for many chapters of financial freedom for many years to come.
This article was first published at forbes.com
