I met Frankie (Francesca) at The AllBright, a women’s only members club in London (men welcome) where she runs an Investment Club evening once a month with another lady. Together they are very energetic and passionate about finance, constantly reminding the audience to take more responsibility of their future and especially pensions. The constant reminder that I am probably going to live another 40 years got me thinking about financial advice during a divorce and post-divorce. I reached out to Francesca for her insight.
Divorce & Finances
Divorce is costly, although in the UK you can in theory divorce for £593 online. The truth is most people will alos pay for therapy, mediation, lawyers, and some will find themselves employing a barrister. The costs can include moving home, buying furniture, mortgage, child support, alimony and what many don't consider, time.
Frankie recommends that if both parties are still amicable and able to communicate, get a professional financial audit before going to the lawyers.
Frankie explains that when a couple recieve a 360-degree view of their true financial situation it creates an awareness through transparency as to what is available for their next stage in life. It's eye-opening to both parties. The benefits include reducing costs and time spent with lawyers arguing over finances, lowers unrealistic demands such as maintaining an unaffordable lifestyle. Some people genuinely don't realise that a salary of £120,000 is in fact, £74,649.40 after tax and NI. Their company uses a software program that will input parameters relevant to each scenario to come up with a realistic figure for each couple. When couples don’t do this, it is usually the lawyers that will contact Frankie and her colleagues with their determined parameters and scenarios to validate the numbers their clients are fighting over. This doubles the costs for the clients who not only pay for the audit but also the lawyers time. It also affects the outcome as parameters and scenarios are missed that would have been more beneficial to the couple.
‘Lawyers start charging the minute the clock starts.’
Your finances post-divorce.
- When you are the person paying child support, alimony, mortgage/rent, the idea of meeting a financial advisor can seem ridiculous, but what I have learnt from Francesca is 'start planning now for a healthier financial future.'
- If you are the person receiving the child support or alimony, or even a lump sum settlement, are you aware of how much you will need to live a financially stable and even abundant life?
- Are you divorcing a high-net-worth family? The chances are the family already employ a financial manager who may be doing an excellent job. However, it is natural to want to break free, feel more in control of your destiny and remove any ties with your ex.
Frankie shares that in 2018 UBS research showed that 61% of women leave their financial decisions to their husbands/partners. This statistic includes women earning a high income. My jaw dropped. Stats online show that women aren’t that interested in their finances until a situation like death or divorce forces them to be. Yes, the financial sector is renowned for being male dominated, along with jargon and the presumption that it’s even understood. I know many men who don’t understand it either, nevertheless, women tend to shy away from this space.
Frankie shares that it's important that you find a company that will sit down with you and explain your options in a language you understand. Always ask questions and get clarification.
In my opinion, if you are lucky enough to meet Frankie with your post-divorce settlement, then you are privy to someone who is empathetic, listens, explains in simple terms and helps you define your ‘now what?’. What do you want from your life, and what will it take to make that happen? Do you need to go on holiday three times a year, pay a mortgage, private schools, or invest in a career? Each of us have different needs and wants that need to be considered.
Frankie asks, 'What keeps you up at night?'
Pensions, the word in itself makes Frankie smile, she will talk about the importance of one at every possible opportunity. In a divorce, there can be an entitlement to a share of their partner's pension, but it's not so simple. It's not the 50% some would make you believe, and even then there can be issues with accessing it. The fine print of each pension can come with penalties and fines if it's accessed early, and if you do get access, then what? There are a multitude of investment options that need to be considered and women must realise that they will probably live until the age of 90.
TLDR (for the readers that have requested a short version)
Before you start your divorce and spend your money on lawyers- get financial advice. If you are married, happily married, single, miserable and married - get financial advice.
In Frankie's ideal world, we would all have financial audits and planning advice and not wait for a death, divorce or a health issue to force us to look at our finances.
Nothing in this article is financial or legal advice. If you need help, please contact a professional relevant to where you live.
If you want to share your story or you are a professional who wants to share some insights please email me at email@example.com