General

Divorce is a challenging and emotionally taxing process. Unfortunately, it is also common with one in three marriages ending this way in Australia. While it may be heartbreaking, stressful, or even cathartic, one of the biggest issues of navigating through is sorting your finances.

Statistics on the financial impact of divorce in Australia

Divorce can have a significant financial impact on both parties involved. Consider the following:

• While one in three marriages end in divorce, this increases to 60% for second marriages. There’s also been a notable increase among older couples, married for over 20 years, now representing almost 30% of divorces.

• The average cost of a divorce in Australia is $21,000 per person, however, according to Money Magazine, if it goes to court, the average cost is between $50,000 and $100,000 and can take up to three years to sort out.
• After a divorce, women in Australia experience a drop in household income of up to 30%. For men it tends to be less, but with separate housing, bills and the future to plan for, there are steep drops in standards of living for both.

These statistics highlight the importance of careful financial planning to help navigate through these stressful times.

The role of a financial adviser

A good financial adviser can understand and help you through the unique financial challenges that come with divorce. These include:

• Division of assets
• Budgeting and cashflow
• Child and spousal support
• Legal and professional fees
• Tax implications
• Superannuation and retirement planning
• Insurance coverage
• Managing debt
• Emotional impact

We already have a joint adviser – should I get a new one?

As a couple, you might have had a trusted adviser who helped you manage your finances to live your best lives. But that was when you were together. We believe that a good adviser, who has both your best interests at heart, should encourage and assist one party in finding another adviser.

If not, now that you’re single, you should consider…

1. Conflicts of Interest: An existing adviser may find it challenging to remain impartial and provide unbiased advice to both parties. By splitting advisers, each individual can receive personalised advice tailored to their specific needs and goals.
2. Emotional Support: Divorce is not just a financial separation but also an emotional one. Having separate advisers can provide each party with the emotional support they need. Advisers can act as a sounding board, helping clients make informed decisions without the added stress of navigating shared advice.
3. Clear Communication: Separate advisers can facilitate clearer communication and reduce misunderstandings. Each party can work with their adviser to develop a financial plan that aligns with their individual goals and circumstances, ensuring that both parties are on the same page.
4. Financial Independence: it is common in couples for there to be an imbalance in financial knowledge and control of finances. Engaging with a new adviser can minimise this, help close the gap in knowledge and put you on the path to new financial independence.

Choosing the Right Adviser

First and foremost, find someone you trust and feel comfortable with. Here are some tips to help you make the right choice:

1. Evaluate personal compatibility: It’s essential to choose an adviser you feel comfortable with and can trust.
2. Consider certifications and credentials: Ensure that the adviser holds relevant certifications, such as Certified Financial Planner (CFP), to show they have undergone rigorous training and adheres to professional standards.
3. Evaluate their approach and services: Understand the adviser’s approach to financial planning and the services they offer. Make sure their approach aligns with your needs and goals. Some will be very focused on portfolios and returns, others on your wellbeing and alleviating the stress of managing your money. Ideally, a balance between the two is ideal but find what works for you.
4. Request references and testimonials: Ask for references and read testimonials from current and previous clients. This can provide insight into the adviser’s effectiveness and client satisfaction. Even better, speak to your friends, family, colleagues or peers about a direct referral.
5. Understand their fee structure: Make sure you understand how the adviser charges for their services. Some advisers charge a flat fee, while others may charge a percentage of assets under management. Choose an adviser whose fee structure aligns with your budget and financial situation.

Start your new path to financial independence

While it may seem convenient to stick with the same financial adviser during a divorce, splitting advisers can offer significant benefits. From avoiding conflicts of interest to receiving specialised expertise and emotional support, having separate advisers can help both parties navigate the financial complexities of divorce more effectively. If you are going through a divorce, consider consulting with a new adviser to help you on your new path to financial independence.

Or, if you aren’t sure what to do next – speak to us at Keep Wealth Partners. We’ll help you onto the right path.

Keep Wealth Partners Pty Ltd (AFSL 494858). This information is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different, and you should seek advice from a financial planner who can consider if the strategies and products are right for you.