Morgan Stanley
  • Women Financial Advisor Forum
  • Apr 4, 2019

Divorcing the Breadwinner?
Here’s Some Advice

Financial Advisor Monica Woodward at The Clarity Group in Houston specializes in helping women who are blindsided by divorce.

The financial plea for help that I typically hear from women who have been blindsided by a divorce notice is, “I don’t even know where to start, I don’t even know what to do. I’m just – I’m shaking right now. I don’t even know what to think.” They suffer from anger, shame and betrayal. I help her start healing those raw emotions.

My goal as a Certified Divorce Financial Analyst®,[1] CDFA®[2], is to take her through a process that builds a greater sense of confidence, a sense of control, and ultimately a sense of how she can reinvent her future. Some women feel victimized during a divorce, particularly if they’ve been home for a long time and sacrificed their career for the sake of their husband’s career.

Divorce triggers a variety of stressful life events surrounding a woman’s financial future. Throughout their marriages, many women focus on their family at the expense of a career, so they were not the primary breadwinner. The stressors include a possible decline in the standard of living which generally results from splitting one household into two.[3]

Legal proceedings may unfold over months or even years. We use a process that tries to help a client embrace a new economic reality. I find that the six month point in the divorce often marks an emotional turning point for our clients.

Our starting point is an empathetic discussion about her financial situation and her future. My role as a CDFA® is to help both my client and her lawyer understand how the financial decisions made today will impact the client’s financial future, based on certain assumptions and analyses. The CDFA® designation indicates that I have successfully completed a series of examinations in specialized training for the financial profession.

We provide financial advice in a warm, safe environment. Even our offices at The Clarity Group in Houston reflect a judgment-free, relaxed atmosphere. My fellow team member Gail Stalarow is also a CDFA®.

Gail and I tell our clients that there are no silly questions in this context. We encourage our clients to ask any and all questions they have. No matter the question, we're committed to giving answers and advice that are comprehensive and suitable to each client’s personal situation...

Conduct a Financial Inventory
The first step toward regaining control is to conduct a financial inventory of her family’s assets. For example, she may be entitled to a share of her husband’s loyalty miles for airlines and hotels.  Another example comes from a client who found a box full of $20,000 cash hidden inside her husband’s study.  The key is to be thorough.

We supply an asset inventory list to aid in the discovery of: financial assets, life insurance, annuities, and bonuses. Obtaining past tax returns can help map out her family’s financial assets. We encourage women to search the family computer for financial accounts, documents, and spreadsheets.

Financial Effects of a Divorce Settlement
We provide our client and her attorney with data analysis that shows the effects of a divorce settlement. With it, we: explain the short-term and long-term effects of dividing property, analyze pensions and retirement plans, together with her tax advisor, help identify the tax consequences of different settlement proposals, and together determine if the client can afford the marital home, (if not, we help determine what she can afford).

Let's Get Real
This is a time to take stock of our client’s expectations for her financial future. We help manage her expectations by presenting different scenarios and talking through her budget and expenses. Past discretionary expenses such as the annual beach or ski vacation and impulse purchases have to be re-examined.

Most of the time women want to stay in the home where her children feel secure. We help develop a budget and financial goals. Staying in the home might not always be a good economic decision if she will have to live at a reduced alimony or child support rate.

A Time for Reinvention
We want to help her build a sense of hope and confidence while confronting the financial reality of how things may be different. A conversation centered on the following questions can be empowering:

  • If you could start over, if you could wipe the slate clean, what would you do differently?
  • What opportunities did you not pursue because you were the stay-at-home-mom?
  • Now that your kids are older or out of the house, what would you like to do that would give your life meaning?
  • What are the opportunities you would love to take advantage of today?

Talking through career goals helps our clients conquer fear. We want to give them a nudge and the courage to go for it, guided by a financial strategy. For example, if she wants to go back to school, that’s a very definite financial issue. We help her consider whether that makes sense or not. Maybe she gets a part-time job. I may advise her to tough it out to make sure she’s going to like it. Then, she can start setting aside money to pay for it.

What If The Woman is the Principal Breadwinner?
We see a growing trend of women who are primary breadwinners who want to protect their hard-earned assets. If they’re the one filing for divorce, we have more lead time to help answer the important questions and plan for her financial future.

Typically, she’s been thinking about the divorce for some time and it has finally reached a breaking point. When she comes in to see us, she’s already done her share of the homework. She has a much clearer picture of what needs to be done and how she needs help.

We hold a slightly different conversation. We still go through the checklist of assets to make sure that she’s thinking about everything. She has usually engaged an attorney and has discussed the assets with her legal counsel.

Divorce In the Retirement Years
It appears that a growing number of couples are divorcing on the cusp of retirement or shortly after retirement. Assets accumulated over a lifetime of marriage hang in the balance, along with her quality of life in retirement.

Protecting Inheritances and Gifts from Divorce
A growing number of couples in their 40’s and 50’s are getting inheritances. As much as they love each other today, I advise clients to keep the inheritance in a separate property account. The beneficiary of an estate can control the asset in the event of a divorce in the future.

I also advise the parents of newlyweds to place large gifts in a separate property account. In one case, my clients wanted to give their daughter $50,000 for her wedding. Two years later she discovered that her husband was having an affair and a divorce ensued. She was relieved to know that her unfaithful husband could not touch her parents’ generous gift because it had been placed in a separate property account.

We Are Women Helping Women
From our experience, Gail and I believe that a woman going through a divorce feels more comfortable sharing personal information with another woman.

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[1] Institute For Divorce Financial Analysts

[2] The use of the CDFA® designation does not permit the rendering of legal advice by Morgan Stanley or its Financial Advisors which may only be done by a licensed attorney.

Paul R. AMATO Pennsylvania State University, University Park, 2012