Dealing with the financial aspects of a break-up can be one of the most stressful parts of any divorce. Indeed, a 2021 YouGov survey found that more than a third of women with a partner say they would not manage well financially if they split up.
When dealing with clients considering or proceeding with a divorce, you probably hear questions such as:
- Could I afford a house to live independently after my divorce?
- Could I live on a lower income?
- What will happen to my pension?
- Can I afford the legal fees?
- Will my share of the finances last me in retirement?
Speaking to a financial planner can benefit many people who are separating, and we’re now in an even stronger position to support your divorcing clients.
Our Chartered financial planner, Mark, has recently obtained full accreditation from Resolution, making him one of just a handful of planners in the UK with this specialist award in advising divorcing clients. Read on to find out more.
Demonstrating a high level of skill and experience in advising divorcing clients
Founded in 1982, Resolution is a community of family justice professionals who work with families and individuals to resolve issues in a constructive way.
Resolution’s specialist accreditation scheme recognises financial advisers and planners who demonstrate a high level of skills, proficiency, and experience in their work.
The organisation only runs one round of accreditations each year, and so there is only a small number of advisers who have gained this specialist accreditation across the UK.
To gain this specialist accreditation, Mark was required to demonstrate:
- Thorough knowledge of family financial matters
- Procedure and practice
- Skill and proficiency as a financial planner
- Experience of working with divorcing clients.
What this accreditation means is that you can be sure you’re dealing with a true expert when it comes to your separating and divorcing clients.
It gives you the reassurance that, if you refer clients to us for financial advice, they will deal with a trusted individual with exceptional experience and skill in this area.
The important role a Pension on Divorce Expert (PODE) plays
In 2019, the Pension Advisory Group (PAG) produced a guide to the treatment of pensions on divorce. In this report, the PAG recommends the use of a Pension on Divorce Expert, or PODE.
The role of a PODE is to help you and your clients to make fair and appropriate decisions about the pension component of the overall financial settlement on divorce.
Pensions can be difficult to value and tricky to divide. You may find that you need the assistance of a PODE whether the case is contested or not.
The PAG report encourages solicitors to work with a PODE when advising divorcing clients. We can support you – for example, by providing a Pension Sharing Report.
Other times when you may benefit from our support include:
- Where you need guidance on the level of income likely to be generated by a pension share
- Where pension assets are likely to exceed the Lifetime Allowance (£1,073,100 in the 2021/22 tax year)
- Where there is a significant disparity in your clients’ State Pension entitlement
- Where there is a public sector scheme involved
- Where clients have older occupational pension schemes, perhaps with high tax-free cash allowances
- Where one of your clients has a serious medical condition.
The benefits of financial planning to divorcing individuals
Working with a Resolution accredited financial planner can add value to your clients, particularly early in the process. At that stage, clients may have many questions about how their finances might look after the split.
We use sophisticated cashflow modelling tools to consider how a client’s financial situation might look in the future. We can model a range of “what if?” scenarios to establish whether clients will be able to life the lifestyle they want and, if not, what needs to be done. We can also identify issues such as any protection gaps, and tax efficiencies that could be maximised.
Speaking to us early also means that a new pension scheme can be identified before the decree absolute has been granted. This makes the transfer of any pension assets more straightforward.
Working with a financial planner can also help to identify whether any other actions need to be taken – for example, drawing down on the pension to assist with the purchase of a new property.
Get in touch
As one of just a handful of Resolution accredited experts, we’re perfectly placed to support you when you’re working with 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 firstname.lastname@example.org or call 01454 416 653.