Don't let divorce drive you to financial despair

The perfect Christmas gift

The perfect Christmas gift

BY GWENDA BROPHY

It's that time of year again - festivities, goodwill - and the seasonal surge in the instigation of divorce proceedings. It may not be the perfect time for clear thinking and forward planning, but taking decent financial advice now may make the path, pre- and post-divorce, smoother.

Divorce is expensive. Dividing the spoils of the marriage will make resources scarcer, so opting for specialist financial advice may seem an indulgent option, which risks duplicating the role of divorce solicitors.

But that is not so, says Donna Bradshaw, of independent financial adviser Fiona Price and Partners. "For a start, many solicitors have a lack of knowledge about financial products and financial planning generally. Our role is complementary. We develop contact with the solicitor to build a relationship that will best benefit the client."

Mark Ormerod, of IFA Hill Martin, agrees: "In divorce settlements we often provide financial advice and support both to clients and their solicitors." Don Percival, of SG Hambros, says most clients are introduced by a solicitor.

But what is the financial adviser's role? "Anyone going through a divorce should at least think about using a specialist financial adviser because their lives are about to change so radically," says Mr Percival.

"The main earner is likely to have to confront a set of liabilities which they will live with for a long time, and the person who was not the main earner is probably going to have to take a much greater interest in their own financial affairs if they are going to live independently and self-sufficiently. When their personal lives are in such turmoil many clients find it hard to focus on financial detail at all. The adviser's job is to apply an overall structure to their financial affairs."

Mr Ormerod says that the changes brought about with divorce will necessitate a new financial strategy, especially if a cash settlement is involved. "A specialist financial adviser can provide a full analysis of a client's financial position with realistic recommendations about his or her situation, and what he or she is trying to achieve, together with strategic financial planning and investment management advice," he says. "They are also likely to possess a depth of technical knowledge - for example, in the area of pensions."

For those going through a divorce, the question of the home usually dominates the agenda. " 'Where am I going to live and how much is that home going to cost me?' is usually the biggest issue," says Mr Percival. "In addition, for the main earner the question of how much they will have to pay and which assets and investments are going to be divided are also key concerns. The person who is not the main breadwinner will often be worried about how much they are going to be living on and, more broadly, how they are going to manage their affairs."

The larger the matrimonial financial pot, the greater is the rationale for using a financial adviser. "We would advise a minimum of net assets of around pounds 250,000 plus," says Mr Ormerod.

However, Ms Bradshaw says discerning financial advice is as vital for those with limited assets as for those with larger ones: "Life cover and future pension cover are important issues that need to be addressed by most divorcees."

n Contacts: Fiona Price and Partners, 020 7430 0366; Hill Martin Financial Planning and Investment Management, 020 7227 3700; SG Hambros 020 7597 3036.

BEFORE YOU APPOINT ADVISERS ...

Have an initial meeting, which should be at no cost or obligation. Does their manner and approach inspire trust and confidence?

n What is their reputation with divorce lawyers who have dealt with them? If possible, obtain references from other clients who have previously been advised by them.

n Check out how many years' experience they have in the divorce field.

n Is it a wholly independent company charging fees for its service on a time/cost basis to avoid product selling?

n Does it suit you? For example, does the organisation generally specialise in particular groups, such as women, or in high value divorce settlements?

n Take as much information as possible to the preliminary meeting. This could save time and cut the cost of the advice.