Financial Planning in Divorce: Q&A with a Financial Planner

Working through financial decisions during a divorce can be a challenging—not to mention, emotional—process. For many, working with a financial planner can prove to be enormously helpful. 

Tamsin Caine is a Chartered Financial Planner and Director of Financial Planning at Smart Divorce. Here, Tamsin answers several important questions about what it is like to work with a financial planner during a divorce. 

What does financial planning during a divorce look like?  

It really depends on when during the process you are recommended to a financial planner. My preference is to begin work with a client going through divorce or civil partnership dissolution at the beginning of the process, once they are separated. This way, we can help guide and support them throughout their divorce.  

If they work with us from the beginning, our starting point will be helping them to complete the Form E or voluntary disclosure documents. These documents are completed by both parties to give each other a full picture of their financial standing. We will go through the financial products they have, explaining what they are and how they work and their relevance post-divorce. If we discover that there are a number of different pensions, we will also suggest requesting a PODE (Pensions on Divorce Expert) report between our client and their ex.  

Once financial disclosure is complete, we use our software to help us to see how different asset divisions might work. This allows us to see what our client needs from the marital assets to maintain their lifestyle throughout the remainder of their life. We will also review offers from the other side in a similar way. 

Pensions is another area in which we provide support. We are often brought in by solicitors once a PODE report (actuarial report) is received to help the solicitor and their client understand the report and how to use the information to move forward with negotiations.  

Finally, we are sometimes brought into the divorce process at the very end to help to implement pension sharing orders or invest money from lump sum orders. Clients who meet us at this stage often comment that they wish they had met us earlier! We help them to plan their next chapter, working out how best to use the money available to them. 

When should an individual approach a financial planner? 

As soon after separation as possible! As I described above, we are able to provide the most comprehensive help if we work with someone from the beginning. However, I would suggest that the very first person they see is someone who can provide emotional support, such as a therapist, divorce coach, psychologist, etc. 

What is the process after getting in touch with a financial planner? 

With us, we would have an initial call to ensure that we are best placed to help the client. If the marital assets are a family home and a salary each, we are probably not going to be able to help. However, if there are other assets as well, such as pensions and/or investments, it can definitely be beneficial to work with a financial planner.  

If we agree to work together, we would then collect a lot of information from you, so that we have a picture of your finances. We will then have a meeting to go through the information to check that it is accurate. Many financial planners, like myself, often take meetings online. 

How can using a financial planner assist individuals with achieving financial settlement?  

A financial planner can help you to see where the shortfalls or surpluses are. They can help you to understand which assets you need to maintain your lifestyle. This can provide you with information to negotiate with your ex. They can also help you to see how an offer from the other side will work for you in the context of your lifestyle, rather than just hearing the numbers. Solicitors are experts in helping you to navigate the law. Financial planners are experts in helping you to plan your finances.  

Should everyone going through a divorce or separation consider getting in touch with a financial planner? 

There are definitely those for whom a financial planner will be unnecessary. If you have little in the way of assets or income, a financial planner will not be able to help you. However, where there is a property, pensions and/or savings/investments, it is worth having a chat with a divorce specialist to see how they might be able to help.  

Are financial planners appropriate for individuals using both court and out-of-court processes when going through a divorce? 

As a financial planner, I have helped clients using the court process and those using non court options. Whilst I prefer to work with those aiming for a non court settlement, sometimes it is just not possible to avoid court and we have continued to help support our client.  

What are the positives of using a financial planner?  

• You are using an expert in finances to advise on their specialism. 
• You will be able to see in the form of a graph what your future finances look like in the context of your own lifestyle, rather than just a list of numbers. 
• You will be supported to negotiate, understanding your needs from the marital assets. 
• You will have clarity and peace of mind about your financial future. 

What are the potential drawbacks of using a financial planner? 

Some would say that this is an additional cost, although I would argue that using experts for their area of expertise can actually reduce the overall cost.