Couples who divorce often have sufficient assets to consult a financial advisor. Some of the modest means may want to understand options with retirement funds or a stock tip; those with greater means will need more substantial advice on investments and tax consequences.
Forbes had an interesting article on the question of whether the lesser earning spouse should continue to use the family financial advisor after divorce.
It is likely that the financial advisor has had more contact with the higher-earning spouse, so the question becomes for the lesser earning spouse whether that advisor will continue to have as full interest in the funds allocated to that spouse in the divorce. Certainly, having much less money to invest may mean less time, and it may at a minimum give the sense that the lesser earning spouse is not as important.
Another important consideration: the financial situation of the lesser earning spouse has changed dramatically, and those changes will significantly impact how to plan for the near term and the long term. If the financial advisor does not work at fully understanding those changes and treats both spouses alike, the lesser earning spouse may end up with bad advice.
We should note that a financial advisor has a fiduciary relationship with each client, and that duty requires due diligence for each client and his or her unique circumstances. We would hope that would be the case in a post-divorce situation, but the disparate financial conditions could strain that relationship in unintended and subtle ways that would discourage the lesser earning spouse from trusting that advisor.
The Forbes article points out the best reason to switch advisors for the lesser earning spouse is to make a clean break in a new financial reality. Post-divorce, the lesser earning spouse has new budgets, lesser income, and different financial demands. It would be a good idea to get someone at the outset who understands this new world and will work to make it the best it can be. The new relationship will carry none of the baggage associated with the marriage and the old advisor.
If you have questions about changing financial advisors post-divorce, contact us – we can help.