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5 practical reasons divorcing clients would benefit from speaking to a financial planner

Couple in divorce mediation

Research published in FT Adviser recently revealed that just 3% of people seek financial advice when going through the divorce process. Clients over the age of 50 are four times as likely to seek advice from friends when divorcing as they are from a financial planner.

You may have read that we have recently received accreditation from Resolution, meaning we’re one of just a handful of planners in the UK with this specialist award in advising divorcing clients.

Offering your clients financial planning support when they are divorcing – or even considering divorce – can provide peace of mind and add value to your service. Here are just a few practical ways that clients benefit from speaking to us.

1. Pension sharing

While many clients focus on property when separating – for good reason, as it’s an emotive issue – pensions are often the biggest asset in a divorce.

Yet, according to research in FT Adviser, just 12% of people divorcing consider pensions when dividing assets with their partners and almost a quarter (24%) actively waive their rights to the value of them.

On a basic level, if a client is benefiting from a pension share, then we can help them set up a pension to receive the share they are entitled to.

We’re also well placed to deal with more complex matters, such as how to tackle Lifetime Allowance issues. As a Pension on Divorce Expert (PODE) we can also help your clients to make decisions about the pension component of the overall financial settlement on divorce.

2. To establish their financial position post-divorce

A common question that many people have when they separate from a partner is: can I afford to live independently after the divorce?

There may be multiple factors to consider from where a client will live (see below) to what income they will generate, either from salary, investments, or pensions.

We use sophisticated cashflow modelling software to look at how a client’s financial situation will look post-divorce. We can establish whether a client is likely to run out of money in the future, and whether they will have enough to live their desired lifestyle.

Seeing their financial future in black and white can often be a transformative moment and give clients the clarity they seek.

3. To buy/remortgage a property

Living arrangements are generally one of the most emotive and pressing issues facing separating clients. There are often strong feelings when it comes to “the family home”, and spouses on lower salaries may be concerned about their ability to live independently.

Often, there will be a property transaction involved in a divorce. This might be the sale of a property and the division of assets. Alternatively, it might be that one party wants to buy the other out of a jointly owned property, so there may be capital raising needs or a transfer of equity.

Property and pension issues may also be interlinked. For example, a client may need to take a lump sum from their pension share to fund the purchase of a home. We can help advise on such issues.

4. To make sure they have the right protection in place

If clients have taken out joint life insurance policies, these may no longer be relevant on divorce. If they are cancelled, clients may then have insufficient protection in place, which can be a particular issue if they have a family.

Even if clients retain their protection policies, they may need to change the trust arrangements or beneficiaries of the cover.

Clients may also need to review their business protection arrangements. For example, they may need to review their shareholder protection to ensure the share of their business passes to the right person on the event of their death.

We can work with clients to ensure they have the right protection in place.

5. To update wills and Powers of Attorney

Divorce is an important life event, so it means it’s time for clients to review their wills and Powers of Attorney.

We can help clients get all their paperwork in order, by updating the beneficiaries of a will to reflect their changed circumstances. We can also help them to complete “expression of wish” forms to ensure that any pension benefit nominations are updated.

Get in touch

Working with a financial planner can give your separating clients clarity and reassurance at a stressful time. And, as one of just a handful of Resolution accredited specialists, we’re ideally placed to help divorcing clients.

If you have clients that would benefit from advice, or you’re interested in how you can work more closely with us, please get in touch. Email hello@sovereign-ifa.co.uk or call 01454 416 653.

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