Working together: the relationship between your family lawyer and financial adviser

Going through a divorce or relationship breakdown can be an extremely emotional time for all parties involved. There are many aspects that individuals will need to consider as part of the separation process; the potential division of financial assets is just one part of this.

“Engaging in the conversation around money as early as possible could have huge benefits and help to reduce some of the stress and anxiety that both parties may be feeling.” Leigh Dunkley, Financial Wellbeing Lead, Schroders Personal Wealth

Having an understanding of your finances, at any point in your life, but particularly at key life events such as a separation could be crucial to making the best possible decisions for you and your family. This is something that you could do yourself but is also an area where the support of professionals including your family lawyer and financial adviser could really add value.

Below are just some of the things you may want to consider:

• Education: Before a divorce is even contemplated, ensure you have an understanding of your finances including the day to day finances such as household bills as well as longer term planning such as protection policies and pensions. If you and your spouse have a relationship with a financial adviser, look to set up a meeting to include both of you as this will help to create an equal playing field of knowledge and trust. You may also want to consider seeking financial advice in your own right.

• Communication: Once a divorce begins, make sure you’re having regular and honest conversations with your family lawyer and financial adviser. Together they could help you to understand what entitlements you’re eligible for, prioritise what’s important to you and also support your understanding on the outcomes of any decisions you’re thinking of making.

• Understanding: A financial adviser could support you in the “gathering phase” helping to collect and organise investment statements, pension information and other documents aiming to save you time. Having all of your financial information together and in one place can be beneficial particularly if analysis needs to be undertaken.

• Goal Meeting: Setting goals and thinking about the future can be tough when going through a separation however we believe this is an important part of the process. A financial adviser could help you to pinpoint and define any goals and aspirations that you have personally and for your family. This may include how you want to live and work moving forward, if you want to be able to support any dependents or other family members financially and even at what age you would be looking to retire. By setting goals, your financial adviser can then assess how this could affect your finances.

• Cash flow modelling: The completion of an income and expenditure analysis and the creation of a budget are two key exercises that a financial adviser would encourage you to do. This could help you track and categorise your finances in real time. Based on the results and your goals a financial adviser could then produce a cash-flow analysis that aims to help you, and your family lawyer, assess your ability to achieve your desired lifestyle. Part of this exercise could be to run multiple scenarios to test your financial position with the aim of creating a plan you are more comfortable with using your post-separation resources.

• Future Planning: Financial planning shouldn’t be a one-time process and a financial adviser could help you to keep your plan on track through regular reviews and check-ins. As part of helping to future proof your finances we would encourage you to review any wills, trusts, powers of attorney, healthcare policies and insurance policies that you have in place. Financial advisers often work closely with legal and accountancy firms which means they potentially refer you to a trusted partner that they work with if an update to your existing policies are needed or if a new policy is required.

49% of people are concerned about their finances with 88% of people stating that their financial concerns are impacting their mental and/or physical wellbeing (1).

Remember that you’re not alone and seeking the support of a financial adviser could help you kick start the process of creating your own financial plan. To book in for your free financial health check with an Schroders Personal Wealth adviser please visit: www.spw.com/referral/talk-money-week

There are no hidden fees and charges, and you’ll only pay if you choose to go ahead with the recommendations in your personalised financial plan.

Sources:

(1) Schroders Personal Wealth, ‘Financial wellbeing research’, December 2021.