Women face much greater financial challenges during and after divorce if their spouse managed the household’s finances while they were married, according to research released Wednesday by BMO Wealth Management.
The research also showed that nearly all women who worked with a financial advisor experienced improved confidence after their divorce.
“Divorce is not only an emotionally traumatic experience, but it can also be a financially traumatic one, too,” Michele Havens, head of BMO U.S. Wealth Management, said in a statement. “Women who were inactive in their household's finances during their marriage often feel unprepared and blindsided by the financial stressors that a divorce brings.”
An advisor, Havens said, can help women regain control, rebuild confidence and chart a new path forward.
“With the right guidance, financial independence becomes not just possible, but empowering,” she said.
The research was based on a survey conducted March 10 to April 2 by Schmidt Market Research among 362 women ages 40 to 70 who were divorced within the previous five years. Each respondent had at least $1 million in investable assets, including 49% with $2 million or more.
Consequences of Deferring Money Management
The survey identified several negative outcomes for divorced women who had deferred money management responsibilities to their spouse.
Forty percent reported that their divorce settlement was lower than they had expected, compared with just 9% who had shared responsibilities and 10% who were themselves responsible.
Only 36% of respondents said they felt confident managing their finances during the divorce, compared with 64% during their marriage. Conversely, 68% of those who had shared money management responsibilities equally during the marriage reported that their financial confidence remained the same during the divorce versus during the marriage.
Half of respondents whose spouse was responsible for the finances during the marriage felt financially confident after their divorce. This compared with 90% for those who had shared equal money management roles with their spouse during the marriage.
Thirty-nine percent of divorcées in the survey said rebuilding financial confidence took more than a year after their divorce.
“Financial confidence doesn’t happen by accident; it's built through active participation,” Amy Hale, a regional president with BMO Wealth Management, said in the statement. “Staying engaged in decisions around saving, investing and planning isn’t just smart, it’s essential for long-term financial security.”
In other survey findings, 92% of respondents had retirement accounts separate from their spouses’ accounts during their marriage, but only 32% reported having separate investment accounts.
Nearly half of respondents said they had relied on referrals from family and friends to find a divorce attorney. Eighty-nine percent said their attorney was helpful in positioning them to meet future financial goals.
Some two-thirds of survey participants said they had hired an advisor based on referrals from friends and family.
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