e-newsletter heading 3
 

 

Determining if You Need Professional Financial Advising in Cases of Separation or Divorce 

by Liz Winfeld, FA

 

When you find yourself in transition due to separation or divorce from your child's or children's co-parent, matters of personal and family finance are probably front and center a lot of the time. It's impossible to make broad generalizations about what is appropriate for women and men going through this challenge, but this article will try to lay out basic groundwork for you to try to determine if you need an advisor and how to feel comfortable looking for and, eventually, working with one.

 

Because of the need to remain broad, I am thinking of women and men who are separated, in the process of divorcing or are recently divorced who have kids between the ages of 0 and 18. It's also written with you in mind if:

  • You have an advisor - but don't know how to protect yourself if s/he is going to continue to work with your co-parent or wants to work with both of you.
  • You have never had an advisor and are not sure if you need one or "qualify" to work with one
  • You are not sure what questions to ask a prospective advisor or how s/he charges for services
  1. You have an advisor - but don't know how to protect yourself if s/he is going to continue to work with your co-parent or wants to work with both of you.:

There is nothing inherent in the rules or ethics of being a financial advisor that tells me that I cannot continue to work with co-parents during separation and/or divorce. We are bound by rules of confidentiality and we only discuss a person's financial matters with people for whom we have express, and typically written, permission to do so. It would not be a problem for the advisor therefore to understand that during a time of changing family circumstances, it must be made absolutely clear what can be discussed with or revealed to whom.

 

It is a fact that more than 75% of women who, upon becoming separated or getting a divorce will change financial advisors. This seems to be due to the fact that most financial advisors are still, these days, men (although that is changing) and there is a perception that the male advisor has a better relationship with the husband or male co-parent. Whether this is true or not, it seems to be the way that women feel, and so that makes it real for the woman in a relationship that's breaking up and, statistics show, she will want to act on it.

 

In the case of having an advisor therefore that you are going to change, you will have to begin the interview process again to find someone that you want to work with and who wants to work with you. Any advisor that you approach will want to know your up-to-the-minute circumstances as it is this information that allows us to do our best for you as a client.

 

Should you and your co-parent decide to stay with your same advisor who will continue to work with you both, that will likely be fine with the advisor. You will, however, have to re-establish boundaries and there will be matters of separating assets that will also be determined by the way your separation or divorce is being managed to take care of assets and liabilities.

 

Some people may feel that the only way to really protect their own interests, and those of their children in cases where that's part of the concern, will be to have a wholly separate advisor relationship as well. Again, there is no reason not to go this way if that's what makes you feel most safe and secure in dealing with these important, personal and sensitive matters.

 

And that leads us to #2:

 

2. You have never had an advisor and are not sure if you need one or "qualify" to work with one

 

The question of whether you "qualify" to work with a financial advisor is one that pulls a lot of people up short. There is a perception that you have to be "wealthy", but what does that mean? What, in fact, is "a lot of money"? The question turns out to be irrelevant. It is not the amount of money that qualifies or disqualifies a person from working with an advisor; rather it is the degree to which a person feels s/he needs and wants help understanding how asset and liability management works.

 

The job of a financial advisor is, in part, to help make investment decisions that allow people to attain their goals and objectives in life. But this is certainly not the only function nor is it, in my opinion, the most important one. The primary function of an advisor is to help people make informed, educated decisions about how they want to manage their assets. So if at this point of transition in life you are open to the idea of someone explaining things to you so that you feel more in control, then you are absolutely qualified to seek out an advisor to help you.

 

And that leads us, conveniently, to #3:

 

3. You are not sure what questions to ask a prospective advisor or how s/he charges for services

 

The over-riding rule is that you can ask an advisor whatever questions you want. My own clients and prospects ask me questions in the range of the personal, philosophical and financial, and never have I been asked a question I didn't want to answer. The relationship between you and your FA is a very personal one that has to be founded on mutual trust and a shared sense of what's right for you in terms of strategies and tactics. So ask away! And there is no such thing as a "stupid question"...especially when it comes to financial management. Financial advisors weren't born knowing what we know about the myriad tools we have at our disposal. We know what it's like to be curious and have to learn if a certain tool is appropriate and even how it works. So again: ask away!

 

Certainly it's fair to ask an Advisor how they go about their job, what tools they are most comfortable using, what kinds of people they tend to gravitate towards to work with and what kinds tend to gravitate towards them? It's fine also to ask for references and complete background and work history. And, of course, it's absolutely okay to ask how FAs get paid.

 

A financial advisor can be paid in one of three ways:

 

-          Hourly fee for services and then a portion of commissions or sales charges that come from negotiating financial tools for our clients

-          As a percentage of assets under management in which case all of the sales charges and commissions are covered under that "wrap" fee with the exception of buying things included-but-not-limited to life insurance or annuities

-          Transactional basis which means that every purchase or sale of a holding will have a sales charge or commission and the FA is paid out of that.

 

Hopefully you now have a basis upon which to explore your existing financial advising relationship or a bit more information about how to start one if that's appropriate for you. Good luck!

  

 

Liz Winfeld is a Financial Advisor and Accredited Asset Management Specialist with RBC Wealth Management in Portland. She invites you to visit her website at http://www.rbcwmfa.com/liz.winfeld  or contact her at [email protected] ; 207 756 6107

 

 

 

 
 

CONTACT INFORMATION/QUICK LINKS
phone:  207-761-2709                         Like us on Facebook                  
email:  [email protected]           Follow us on Twitter@kidsfirstmaine


 WHERE CAN I GET A COPY?   

  book 

  order directly from our publisher 

  order from Barnes & Noble 

  or pick one up at the Kids First Center

  or purchase from your local book store!