The views presented here do not necessarily represent those of Advisor Perspectives.
Advising clients through divorce requires both a deep dive into assets as well as a command of the softer skills — supporting them through the emotional ups and downs ahead and their financial plan post breakup.
“The big thing they needed was me letting them know there is light at the end of the tunnel,” Lindy Venustus, CEO and founder of Create Financial Planning, said of her experience helping clients through divorce. “I think focusing on what’s right for their family,” is a good approach to take for clients, particularly those with children, she added.
In the past year, Venustus has worked with two different clients as they completed their divorces. Each of the women came to her because of the divorce, Venustus adds, noting that she’s been through one herself in the past.
“The most important thing is that you know with certainty, that if something happens, you’re going to be okay financially,” she said.
“When you move, make sure you still have an emergency fund. Be careful not to add stress to this new life by accumulating debt. Work with what you have and what your income is. Make sure you really are okay, so you can afford to socialize with friends, have home security and food security and have the lifestyle that you want. You made this big transition so you could be happy, so make it so you can be happy and have less stress,” Venustus explained.
Advisors also need to steady themselves, as their clients experience their own emotional rollercoaster.
“Come at it with a sense of, it’s always darkest before the dawn. Be there as a support and cheerleader for them. [Remind clients] that however long it takes, [they’re] still going to get through it,” Venustus said.
Transparency Into Assets
Advisors who haven’t yet dealt with many client divorces will need to be aware of many moving parts, including whether clients live in a community property state and whether either or both of the spouses has a gift or inheritance agreement in place. Other key info, such as who earned more during the marriage, where couples’ income is held, and how children from multiple unions will be provided for, will also be crucial to review, she notes.
In addition to clients’ earnings, advisors will need to take stock of who is able to save more, life insurance needs and who is covering those insurance costs. Additionally, emotional betrayal or abuse are some of the sensitive matters that can impact how you proceed, Venustus says.
Clients need to have a plan to support themselves financially, while also being transparent about where their assets are, she adds.
