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.
There are some major similarities between women who have been divorced and those who have become widowed, she noted, adding that “their world has been turned upside down” in each case. As an advisor to women in these situations, Gallaway pointed out that she makes sure to be “mindful and aware of the time that they may need” and also be “respectful” about how she checks in with them and how often. Patience is important in these cases and “it usually takes a lot more meetings to accomplish” many of the things, including paperwork, that need to be done to shore up a client’s financial situation than what is typical with clients not going through the same sort of emotional crisis, she explained.
Each divorced client’s state of mind tends to be unique, she went on to say, noting for one thing that, in some cases, it’s the woman who initiated the divorce. Similarly, some widows are able to accept their situation much better than others, she said, adding that when comparing divorced single women to widowed single women, “there’s actually more similarities than there are differences.”
Over the past 5-6 years, Gallaway’s client base has largely shifted to single women and, currently, about 25% of those clients are women, while about 75% have been divorced, she noted. What inspired her to shift her focus to single women was the decision by her parents to divorce when they were in their 50s, she said, explaining that seeing the “impact that had on both of their finances especially really drew me into wanting to work with people” in these situations. Similar to Smith, she stressed how “overwhelmed” by finances and investments most of her female clients tend to be. Therefore, what was important to her was that she be able to “bring knowledge and information to women in a way that they can understand it and comprehend, and they don’t feel intimidated or talked down to,” she said.
Although Lauren Cosulich and Daniela Pedley, advisors and partners at Summit Trail Advisors, said they haven’t seen the same significant increase in divorces among older Americans as the other advisors we interviewed, they too are seeing that women still tend to largely be in the dark when it comes to financial matters and that most of them were not the ones making the financial decisions within their marriages. “In most cases, they weren’t really invited or encouraged to even have a seat at the table,” Cosulich told us.
About 40% of their clients are women who have come into their assets through either divorce or widowhood, and their business is “exclusively with ultra-high net worth individuals and families,” according to Cosulich. Of those clients, about 75%-80% of them are divorced versus widowed, they said. Their firm is a national RIA with about $5.5 billion in AUM that’s based in New York City, with additional offices in Boston, Chicago, San Francisco and Seattle.
One thing that Summit Trail finds to be productive for their clients is hosting educational lunches about 5-6 times a year, which present an “opportunity for these women to come together in a comfortable setting where there’s total confidentiality” but they’re able to have conversations with women just like them, which shows them “they’re not alone going through these challenging situations and they are also encouraged to ask questions that they might feel intimidated to ask” of male advisors, Cosulich said.
Dynasty Financial Partners, a New York City financial consultant whose clients include all the advisors we interviewed for this story, recognizes “the real and growing need to cater to female clients who control a greater percentage of assets than ever before, be it through divorce, death or earning the funds on their own,” Jenna Bloomgarden, its vice president of relationship management, told ThinkAdvisor. “We understand the need to empower women so they can take command of their own financial future.”
— Related on ThinkAdvisor: