Advisors for the Financial Side of Divorce

Financial advisor Jeff Landers knew he had to differentiate himself in order to be successful—the question was how?

“I’d go to networking events and invariably there would be a dozen other financial advisors present, and we were all saying the same thing. I knew I needed a niche,” says Landers. “At the time I had a number of clients going through a divorce. I saw how complicated that was, how distressed the people were. They weren’t sure what to do or what they would end up with. That’s when the light bulb went off.”

Today, Landers heads New York City-based Bedrock Divorce Advisors, a consulting firm he founded in 2010 to help affluent women navigate the tricky terrain of divorce. The goal: a healthy financial outcome for the client.

Landers, who blogs weekly about divorce for Forbes.com, hasn’t met the majority of his clients in person. Many find him over the Internet and most pay him online through PayPal or a credit card. He charges $400 an hour with a non-refundable $4,000 retainer that is paid in advance. Post-divorce, Landers says, 90% of his clients move their assets to Bedrock Wealth Management, his investment management firm.

“By the time they get to settlement, we’ve been working together for a couple of years and I know everything about her. Because of the nature of divorce and all the disclosures, I know every bank account, every insurance policy, every brokerage account, every piece of real estate,” says Landers, a certified divorce financial analyst (CDFA) whose book Divorce: Think Financially, Not Emotionally was a top seller on Amazon last year on the topic of divorce.

“It’s 100% transparent. I know all of the expenses and all of the income to the point that I know how much she’s spending every month on cosmetics and getting her hair done. It’s that granular,” adds Landers, who only introduces his wealth management firm’s services at the conclusion of the divorce process. “A lot of trust and confidence build up as I’m advocating for her. It’s almost a no-brainer to get the assets.”

Growing Niche

The divorce niche, while still small, appears to be gaining traction, especially among investment advisory firms and independent broker-dealers. What’s driving it? First, the growing popularity of collaborative divorce, or “no-court divorce” as it is sometimes called, has given rise to advisory teams that include not only legal counsel and a divorce coach but a “financial neutral” whose job is to develop viable financial options for both spouses. The Institute for Divorce Financial Analysts’ CDFA designation and professional associations like the Association of Divorce Financial Planners have also thrown a spotlight on the emerging niche.

This year, two advisory firms—San Diego-based Pacific Divorce Management and Freedom Divorce Advisors of New Jersey—will separately roll out nationwide platforms to support financial advisors who want to specialize in divorce advice.

The niche is not without controversy.

Some in the industry, for example, disapprove of advisors who provide divorce consulting for free as a tactic to win assets post-divorce. In fact, the Association of Divorce Financial Planners earlier this year made it a requirement that members charge for their services at market rates.

“Some look at the divorce niche as a way of gathering either assets or some type of product sale on a post-divorce basis. There’s really nothing wrong with that. The question is what you do during the divorce,” according to certified financial planner Andrew Samalin, president of the non-profit organization. Divorce consulting, he adds, should be a standalone business without a quid pro quo or an arrangement that could potentially influence or bias the financial planning.

“If they charge nothing, the client is getting exactly what they paid for. I would never go to a therapist, an accountant or an attorney that charged me nothing,” he said. “Professional services cost money. There’s no moral hierarchy. We simply want to have a profession here.”

Controversy aside, many advisors who run a divorce consulting business are winning assets not just from the divorced client—usually the female—but from family law attorneys as well.

Lloyd Lowe, Sr., who heads LD Lowe Wealth Advisory in Dallas, developed a divorce niche 10 years ago when family law attorneys began steering divorcing or divorced clients his way. He doesn’t charge a fee until assets are transferred.

“Years ago, I opted not to do hourly billing for the initial consultation. The heavy lifting comes after,” he says. “What I’m doing is putting my best foot forward. The rest will fall into place.”

Lowe’s services pre-divorce include putting together a financial plan, retitling assets and home insurance, assisting with a home purchase and tax filings, and making sure estate documents are up to date. He’s had some tough cases: a stay at home mom with a special needs child; a client who was in rehab as her divorce occurred; a divorcing spouse who is a foreign national.

Lowe has 178 clients and $200 million in assets under management. Nearly half of his practice is divorce-based.