Don't get dumped when client couples divorce
Divorce is obviously traumatic for the married couple going through it, but when a client couple says that they are on the path to breaking up, it can also create huge headaches for a financial advisor.
Two people whose interests have been mutual become antagonists, with the planner potentially caught in the middle.
When she first hears news of a marital split, Nicole Middendorf, founder and financial advisor with Prosperwell Financial in Plymouth, Minn., usually assumes that she will lose one or both spouses as clients, no matter what she does, though she also proudly points to instances in which both exes have remained with her post-divorce.
FOCUS ON CLARITY
In addition to sensitivity, clarity is her immediate concern when learning that a couple’s marriage is on the rocks.
For example, if there are assets that aren’t jointly held, Middendorf says that she won’t disclose confidential information about them to the other spouse.
For joint accounts and property, it is important to discuss guidelines going forward, and those conversations can be difficult, says Middendorf, who is also a certified divorce financial analyst.
“The key ideas would be full disclosure and transparency,” says Dan O’Connell, a divorce lawyer and partner at Collins Buckley Sauntry & Haugh in St. Paul, Minn.
Because a financial planner has a duty to both spouses, the planner needs to establish clear communications guidelines that everyone understands, he says.
An advisor may need to help the couple make substantive decisions about how to deal with financial issues during the period of limbo before the divorce such as how the two will deal with current debt, O’Connell says.
And it isn’t just the couple’s planner who must be sensitive to the situation.
Train employees to be sensitive and careful, Middendorf says.
Staff members and other advisors in the office should be aware when a couple is divorcing, and Middendorf makes sure that there are notes in her client management system.
“You don’t want someone in your office to be sending the wrong document to the wrong spouse at the wrong address,” she says. “And they should understand why a client might be more angry or emotional; it can get kind of crazy.”
It is especially important to document all interactions with each spouse, to have an accurate record in case an advisory firm is ever contacted by either side’s lawyer, Middendorf says.
Matrimonial lawyer Amber Barber of Barber & Waxman in Burlington, Vt., says she isn’t looking to put planners for divorcing couples on the stand.
She may use information from the planner, but if she needs a financial planner for litigation purposes, she will hire one unconnected to her clients as an expert witness.
But with all the financial problems that arise from divorce, Barber is happy to have planners around.
“I really appreciate financial advisors being involved in a divorce,” she says. “I think they can be instrumental in figuring out solutions for clients.”
Paul Hechinger is a New York-based freelance writer.