Divorce Looks Like Forced Early Retirement for Many Wealthy Women, Advisor Says

Given my mom’s experience and my own experience getting divorced, I was inspired to become a very early pioneer in the divorce advisory niche, having received my Certified Divorce Financial Analyst designation back in 2004.

At this point in time, about 80% of the clients we serve are high-net-worth divorced women. Many of them were individuals who did not have their own lucrative career prior to their divorce, and so the process of getting their finances in order after that event is just so critical for their long-term well-being.

They are in my office because they need to understand their money. It’s not a job they always want, frankly, but it’s a job they have to do. Many of the women we serve were never the CFO of the family before they got a divorce. They might have managed some day-to-day financial stuff, but many of them were not investment managers or in charge of planning for retirement, so there’s a steep learning curve.

I have male clients too, of course. Whoever you are or whatever life situation you are in, everyone wants to know that they are OK financially, and they don’t want to run out of money in retirement. In fact, for women who may have given up their income earnings ability in order to work inside the home, a divorce settlement can be like a really early forced retirement. It takes a plan.

If you cannot get out there in the workplace and replace what might have been a very substantial income, the divorce planning really does become similar to retirement planning, except you are starting at age 45 or 50. A lot of it is about creating a spending plan and addressing both longevity and sequence of returns risk.

Can you tells us about the decision to launch the fee-based Wife2CFO financial literacy platform?

The basic motivation is that our client niche is just so underserved.

Just think about it. We have a turnover rate of half of all marriages ending in divorce, and that figure increases for second marriages to 60% and again to 80% when a child with special needs is born.

We get a lot of our core clients by referrals from centers of influence, such as divorce specialist attorneys, who know that we have a deep understanding of the divorce process and all the laws and rules across all the local jurisdictions.

The creation of the fee-only financial literacy platform Wife2CFO is a powerful way for us to deliver our expertise at a greater scale, and it opens up our expertise for a broader range of clients, because you aren’t obligated to use us for money management. It’s easy for a divorce lawyer to turn to their client and say, “Hey, you need take this course, because you need to learn this stuff.”

It’s really hard for people to learn financial stuff during an emotional crisis, so the structure and approach of the course is a really important thing. We believe it delivers a lot of value.

Can you tell us about the composition of your firm and your focus on inclusion?

At this moment we have a team of seven people in total, and we are diverse by design. Our staff is majority female, and we all come from different backgrounds. One distinguishing feature is that my brother and I are the only two people over the age of 50.

Our CIO is in his 30s, and our head of family office services is a 32-year-old woman of color. I believe we are doing a good job attracting the next generation of talent, and that’s critical, because the next generation of clients wants to do business with people who understand their lives and experiences.

Our younger team members are actually spearheading an initiative that is building on the Wife2CFO framework, which we are calling Generation You. It’s the same fee-based financial literacy approach, but it’s tailored for young people who generate or come into significant wealth, for example if they are going to receive a trust distribution.

This is key to our next step forward as an RIA, because the massive wealth transfer from older Americans to millennials and members of Gen X has already started, I can assure you. Some of the things we get into include are how to understand prenuptial agreements, how to have difficult conversations about money with a partner, and how to demonstrate that you are fiscally responsible for things like inheritances and trust distributions.

Finally, what can you tell us specifically about your clients who are navigating their retirement?

So much of being happy in retirement is about setting and achieving lifestyle expectations. Regardless of your level of wealth, when it comes to retirement clients, nobody wants to see a dramatic reduction in their standard of living.

Of course, the lifestyle is going to evolve during retirement. That’s normal. We see many people who may plan to spend more in the first 10 years of retirement and then dial back, for example.

The real key to peace of mind is the plan. You have to run the original plan and then keep revisiting and adjusting as things like sequence risk have an impact. This expectation-setting is so critical. If we get expectations management right, it makes us confident that the client isn’t going to blow up their plan by selling at the bottom, for example.

You have to put in the time up front to show people what could happen and how you can respond and keep them on track.