Despite the significant gains that women have made personally, professionally and financially in recent years, many of them still find themselves largely in the dark over their financial situation when they suddenly become single through divorce or the death of a spouse, according to advisors interviewed by ThinkAdvisor who focus largely on single women.
A growing number of women who divorce are in their 50s or older — a trend that’s come to be known as “gray divorce.” The U.S. divorce rate within that demographic has just about doubled since the 1990s, Pew Research Center reported in 2017. Citing data from the National Center for Health Statistics and U.S. Census Bureau, Pew said that, in 2015, for every 1,000 married people 50 and older, 10 divorced, up from just five in 1990.
All too often, women — even the ones who are executives — “have no control over the money” in a marriage and there’s also all too often “no transparency” about what assets there are, noted Michelle Smith, an RIA who’s the CEO and founder of Source Financial Advisors in New York City and started specializing in divorce 15 years ago, when she became a certified divorce financial analyst (CDFA).
Smith compared the situation that divorced women and widows find themselves in, as a result of those circumstances, to a medical crisis, when one is “thrown in the ICU and it’s all this new language and it’s all these fast decisions that have to be made.” And, just like cancer patients tend to see cancer specialists, she stressed the need for divorced women to see advisors who specialize in their specific needs.
It often feels like “life or death in divorce because you’ve got one shot at getting this pile of money” for what’s essentially going to serve as a retirement plan if the wife stopped earning an income and that “might have to last 50 years,” she said.
“There is a whole process to the transition of a woman who is suddenly single who has to now, in an emotional crisis, become a CFO,” she said. Smith created her own specialized process, which she calls “Wife2CFO,” to help guide women through divorce. “About two years ago, I literally woke up in the middle of the night and I saw the letter ‘F’ connecting the word ‘wife’ to CFO and so I immediately trademarked it,” she said.
All the advisors we interviewed focus on wealthy clients. For Source Financial Advisors, that means $5 million and up, with clients who mainly live in Beverly Hills, Connecticut, New York and Silicon Valley, and are often “the CEOs’ wives,” Smith pointed out. Her firm manages $420 million in assets and its clients also include men, although about 85% of its divorced clients are women, Smith said, noting a very small number of her clients are widows.
Smith decided to focus on divorced women as a result of the significant rise she saw in that demographic and the fact that the vast majority of clients coming in to see her were entirely in the dark about the assets in their marriage, she said, adding the women often have been similarly been left in the dark by divorce lawyers they saw before coming to see her. “I’m seeing more and more older people divorcing,” Smith said, attributing the trend over the past five years — at least among her clients — to people “being unwilling to stay unhappy,” especially as they live longer.
Also seeing a major increase in gray divorce is Carrie Gallaway, a certified financial planner (CFP), certified financial transitionist (CeFT) and managing partner of YorkBridge Wealth Partners, an RIA with offices in New York City and Bridgehampton, New York, that’s “approaching” about $850 million in assets under management, she said.