When dealing with a divorce, family lawyers will frequently refer their client to a financial planner or IFA in order that the settlement can be implemented.
For their part, financial advisers will often find themselves dealing with clients who require family law advice. The relationship between the two professions can, and should, be beneficial for both, and Resolution (http://www.resolution.org.uk/) provides an ideal forum for closer cooperation.
So, how can the two professions work better together? IFA Mary Waring, founder of Wealth for Women, has some tips.
Some areas where the financial adviser can work alongside the lawyer:
1) Help gather financial information
A financial adviser can help the client gather all the relevant financial and non-financial data required. For the less savvy client, that could involve going through reams of paperwork. The client may even be totally unaware of the cost of their current lifestyle.
2) Assess the financial information
The financial adviser can assist you with specific issues in relation to the pension or investment holdings for both parties. It would also include providing a list of question to the spouse.
Other areas include; should the endowment be assigned, surrendered or sold, and what mortgage capacity does each party have?
3) Manage expectations
Managing your client's expectations is vital in divorce. If there is not enough money to lead the lifestyle they'd like after divorce the client needs to be made aware of that as soon as possible. It may be easier if the message is given by both the lawyer and the financial adviser.
4) How long will the money last?
It isn't always obvious to the client how long their settlement money will last, or how much they can spend each month. A financial planner can work through that exercise with a client to show them what they can afford and if they likely to run out of money. If necessary the financial planner will provide financial planning strategies to address this.
5) How should the assets be divided?
It's not unusual for the wife to want to keep the house and the husband to want to keep the pension. Although that may be the most emotionally appealing option – it's not necessarily the best option for the long term.
A financial planner will look at the various options and demonstrate for example, the financial effect of downsizing now and taking some pension share, as opposed to taking the house and no pension.
Which option is most suitable for the client depends on their specific goals, priorities and objectives. The adviser can work alongside the family lawyer to review the various settlement options and advise which option is more appropriate for the client.
And what can a family lawyer bring to the party?
Financial advisers are key referrers for family lawyers. They are trusted advisers to whom clients turn when they are considering their options, and their professional recommendation carries great weight.
Financial advisers will frequently be asked questions that are outside their "comfort zone". For example:
• the client who has retired and can no longer afford to pay maintenance to his ex-wife at the rate set by the Court
• the mother who may have to remove her son from his private school because the father moved abroad and stopped paying the fees
• the lady who is desperately unhappy in her marriage but is scared her husband will make the family assets "disappear" if she leaves him.
The financial adviser cannot advise about these issues – but she knows someone who can!
How do you find a lawyer or financial adviser you can work with?
We all know family lawyers and financial advisers have their share of the pompous, the malodorous and the less-than-entirely-competent. It's therefore important to find the right fit. Resolution membership is a good start. You can be reassured that a Resolution family lawyer will adhere to the Code of Conduct and a Resolution accredited financial adviser will have the necessary skills to help a client going through a divorce or separation.
For many clients, a financial settlement following divorce or separation is their only chance of securing financial security for themselves and their children. It is therefore really important that they fully understand all the legal and financial options presented to them and are able to make informed decisions.