No matter how amicable a divorce is, the process of ending a marriage is an emotionally exhausting experience.
Divorce requires former couples to rebuild many aspects of their lives from the ground up — from their personal relationships to their living situation to their investments. While my job at Argent Retirement Plan Advisors focuses on institutional retirement plans, my experience as an accredited divorce financial analyst involved helping couples address the complex financial issues that can arise during this difficult transition.
In my work in South Texas, many of my high-net-worth clients have done well in the oil business but didn’t have much money when they married. Among these clients, divorce can be a big wakeup call for women whose husbands were the breadwinners and who have never dealt with money before.
I’ve worked as a financial consultant for clients in a process known as collaborative divorce, a relatively new way of handling the divorce process that attempts to accomplish a couple’s legal separation in a non-confrontational, cooperative style, including assistance from a group of experts.
Collaborative divorce is handled by a team that includes a mental health professional specializing in couples’ counseling, a financial counselor, the couple and their individual attorneys — all seated in a room together. The mental health professional manages the process, which in some ways functions as a therapy session for the couple. Both the mental health professional and the financial consultant are neutral throughout the process.
I’ve found that collaborative divorce works best for couples in their 40s or younger, perhaps because they’ve seen the fallout from contentious divorces and are striving to do better. Not every situation is ideal for collaborative divorce. Some couples just aren’t willing to be open about their finances and goals, without which there can be no honest conversation — necessitating a traditional process that includes legal discovery.
Collaborative divorce works well when children are involved — it’s not as tense and angry — and although there is catharsis and a range of emotions, it often doesn’t take as long for the individuals involved to recover. Throughout the process, the goal is to be forthcoming and to work together for a result that works for everyone.
Collaborative divorce can nevertheless be quite emotional, and sticking points can arise in unexpected places. I remember one divorce I worked on where a set of San Antonio Spurs season tickets became the touchiest part of the process, with neither person wanting to give up what was obviously something both valued very highly. But at some point you have to put a mark in the sand, put a value on the asset and make a decision.
There are other common pitfalls that financial professionals like myself work to avoid. One is making assumptions about the level of knowledge that both spouses have about their finances — even basic things like how credit card bills are paid. In some cases, a certain level of education is required as clients realize that they need to start living more frugally and setting retirement goals that don’t include income from their former spouse. We see this work as an extension of our responsibility as advisors.
Although nobody enters a marriage expecting to get divorced, it can be helpful for high-net-worth individuals to establish certain financial boundaries before a wedding takes place, which can include a prenuptial agreement. Take, for example, an individual whose family has a lot of property, such as a ranch. It’s perfectly reasonable to talk with an attorney about “mine, yours and ours” — property I’m bringing into a marriage, property you’re bringing in, and property that’s ours.
I also advise couples to maintain a “black book” that includes information about all their investment accounts, plus each advisor’s name and phone number. This helps prevent an unequal balance of power concerning a family’s investments. In addition, if anything happens to the person in charge, the other person has a starting point of where to go for information.
When I encounter clients who are in the midst of a divorce, I intuitively understand that the thing they need the most is unbiased, knowledgeable guidance from a person whom they can trust. By giving my clients a clear understanding of their financial picture and what their options are, I hope that I’m doing my part to getting them through this difficult period and on to a brighter, more prosperous future.
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