Why You Need a Financial Advisor During Divorce

Life rarely goes as planned. The future you visualized 20 or 30 years ago may be far from the reality you’re living … and often it’s for the better! Unfortunately, lifelong plans sometimes change. In fact, around half of all first and up to 65% of second marriages will end in divorce. Besides the emotional toll, ending a partnership comes with many financial implications as well. 

Financial Planning for Divorce

Most couples don’t have a plan set in place in case they get divorced, and when it happens they find themselves in need of support to figure out the next steps. Sometimes the process is smooth, sometimes it is messy. Regardless, in 99% of the cases, you’re going to need an advocate by your side. 

The Downside of Divvying Household Duties

In many marriages, household duties are often divided up. One will take out the trash while the other washes the dishes; one handles paying the bills while the other keeps the family calendar. The list goes on and on. It’s only natural that one spouse gravitates toward managing the household finances such as day-to-day bill pay, overseeing investments, and big picture financial decisions. But when divorce gets thrown in the picture, the lack of knowledge about the family’s finances may leave the other spouse in the dark with a limited level of comfort and experience. 

Financial advisors get numerous clients going through a divorce who have no idea about the details of their household spending, the financial health of their marriage, or the state of their bank account. In some cases, both parties are financially savvy, but that doesn’t mean a life-changing event won’t uncover anxiety and concern about money. Your brain can get bogged down, making it hard to make logical decisions rather than emotional ones. 

Divorce Financial Advisor: Get the Right Help, Not Just Help

Clients are often under the assumption that to have a successful divorce, an attorney is all they need. Although counsel is fundamental in the process, they can only provide legal – not financial – advice. After children, money is often the number one sticking point in a divorce. A study from The Association of Divorce Financial Planners showed that 95% of those going through a divorce do not consult a financial professional.

The best decision you can make is to work with a financial planner who has expertise in divorce financial planning. Don’t get fooled by the idea that you “don’t have a complex financial situation”. The decisions you make now will have a considerable impact on your financial future, securing your wealth and legacy. 

You may be wondering:

• Am I going to be financially okay?
• Will I have enough after this is all done?
• Can I still retire? 
• Can I afford a similar lifestyle for myself and my children?

If you want to have these big questions answered with confidence, a Certified Divorce Financial Analyst (CDFA®) will be your best asset. This professional will help level the playing field of finances and get you organized, educated, and up-to-speed on making objective and logical decisions during a divorce.  

Seven Things a Divorce Financial Advisor Can Help You With

Though it depends on where you are in the process and the circumstances of your divorce, there are numerous value adds to having a financial partner during the process. Here are my top seven areas of value:  

1. Education

Being educated on the topic is always the best place to start. The more you understand, the more empowered you’ll be with your decisions. An advisor meets you where you are and helps you get to a position where you feel comfortable and confident about your knowledge.

2. Gather Information and Get Organized 

This is always a big undertaking. It includes organizing all the information available: account statements, retirement accounts, insurance, and more.

3. Review Expenses 

Do you have a good handle on where all your money is going today? Your current living situation is likely changing. Keep these questions in mind as you review your expenses: 

• Have you accounted for changes in health insurance costs, childcare expenses, and savings rates?
• What was your previous standard of living?
• How do you accurately estimate what your expenses will be on an ongoing basis? 
• Are there any common categories that are missed, forgotten, or understated?Create Your Financial Inventory

4. Create Your Financial Inventory

It’s important to review what you have and if there are any creative options or solutions for settlement. For example, are all your assets divisible and are you taking into consideration the tax implications of each asset?

5. Be a Sounding Board

You’ll likely have a million questions, which might be exhausting your family and friends. Having a go-to person to explore ideas and concerns with is one area my clients have found the most valuable. This designated person to provide guidance and support can be invaluable.

6. Review Settlement Options and Opportunities

A divorce financial advisor advisor can help you make objective decisions today and understand how different outcomes will impact your financial future and security. Think beyond the divorce and plan for what the future might look like. This entails working on an analysis to build a roadmap for your new life. For example, how might your goals, plans, and resources change with your new circumstances?

7. Financial Hurdles

One common concern is remaining in the marital home. Unforeseen financial hurdles can be avoided through expert guidance and advice. Ask yourself:

• Do you have the resources? 
• Do you have a good handle on the upkeep and expenses? 
• Can you afford it? Is it a sound financial decision? 
• Are you “giving up” other assets to retain the house? 

The Value of a Divorce Financial Advisor

Getting divorced is an emotional rollercoaster. It’s tough for anyone who goes through with it, and it’s crazy to think how many people feel like they have to figure it out on their own. You shouldn’t have to. Instead, you should feel confident in your financial decisions and, ultimately, your rights amid a divorce. Above all, being uninvolved in your household finances doesn’t mean you don’t have a say in the financial matters of a divorce. 

If you are going through a divorce, you don’t have to do it alone. A divorce financial advisor can help you navigate this difficult time and bring you peace of mind and confidence about your finances moving forward. Ultimately, we can’t predict how our lives will turn out… but when unexpected things happen, you need to put yourself and your financial well-being first to plan for the future you want.