Getting advice on financial settlement

[pineapplesoda]

Are there financial advisors who specialise in advising on divorce settlements? I have written out a rough plan of what I'd like to ask for, haven't discussed with future ex yet because I want an expert to tell me that it's a reasonable request and that I am also being realistic about what I need for my own financial security. I don't have much financial expertise so want someone who can go through it with me and give me an idea of how much I need for security in retirement. How do people go about finding a good financial advisor, and do they need to have extra qualifications for dealing with divorce settlement advice?

A solicitor would be doing this for you and advising on realistic set of outcomes unique to your circumstances

Thanks @millymolls. I'm just sceptical about the financial expertise of a solicitor e.g. I don't think they'd be able to advise on something like how much capital would be a fair swap for not taking a % share of ex's pension, because how would a solicitor know what potential income I'd get from a lump sum investment? So I might be paying the wrong kind of expert if I needed that kind of info?

I'm just in the early stages of all of this, but from reading a bit online - CAB website etc, I am thinking the process might go something like this:

Make a list of assets.
Work out a rough division that seems reasonable.
Get advice from a financial advisor about how realistic the division is, what I need to live on, particularly regarding retirement income.
Negotiate with ex.
Get a solicitor to look at whatever settlement we come to.
Divorce.

Obviously that's assuming we can discuss this rationally and don't need a solicitor at an earlier stage, but I don't think a solicitor can offer formal expert advice about things like pensions, investments, property values etc. Wouldn't their advice be more about things like rights regarding child maintenance and access, and selling/dividing home and assets fairly? I can see I might need advice on those things too, but not sure if I'm at that stage yet. But I am only just starting to gather the info, so maybe you're right and I do need legal advice sooner rather than later, I don't know.

You could go to a financial advisor but they're not going to be able to tell you what is a fair swap of capital and pension is any better than a solicitor can. What a financial advisor could do is look at your pension and tell you:

1. What cash amount you could get for it if you liquidated it now; and
2. Provide a model of what it might be worth in the future in various scenarios depending on the performance of the stock market. But they don't have a crystal ball so they'll normally give you five scenarios: strong returns, good returns, okay returns, bad returns and terrible returns!

Another challenge is that in most divorces there is not enough money to go around to maintain a standard of living now or in the future. So you could go to a financial advisor and work out what you need but you probably won't get it all because your ex will have the same needs. The gap is filled by maximising your earning capacity until retirement.

A solicitor will be much better qualified than a financial advisor to prepare you for this. A solicitor will know what a typical pension offset looks like. A financial advisor in contrast would sit you down and say something like:

1. Well, you could take all the home equity and none of the pension, with a view to downsizing for a lump sum in retirement. Might work out, or house prices might crash or change relative to one another (e.g. the difference between a 1 bed flat and a 3 bed house becomes smaller even if the market rises overall). Or:

2. You could go 50/50 and hedge your bets and potentially have either a house and a pension at the end or negative equity and a poor amount of pension depending on market performance; Or:

3. Take all the pension which might have stellar performance or be taxed more or have lost value in real terms by the time you claim it.

And unless you have a crystal ball, you cannot answer which is the best option.

Thanks FutureExH, yes that's the kind of thing I need info on. That's helpful to know a solicitor can advise on this. I know there aren't any certain answers about how property and investments will perform, but at least a FA might be able to say "here's what you could do with x amount of cash and what it might earn you right now". And the downsizing would likely happen as soon as we agree on the split, so I wouldn't need to be guessing at the property market in 10 years' time.

I just wondered if there was such a thing as a FA who specialises in separation, but it seems not, so maybe a solicitor is what I need.

You won't get a financial advisor who will tell you how much you can make from a lump sum because they would be breaching their regulations by making a promise that they can't necessarily fulfil. Even money market funds can't do that anymore. What they will do is say what the risk of an investment is and tell you the price can go up or down. The other thing they are duty bound to do is offer products that are suitable for you. They cannot though tell you how much of a return you'll get.

What you could do is ask an independent actuary to give a current value to a pension fund and to the best of their ability they will try and do that. Bear in mind though you're essentially asking a professional to predict the future which funnily enough possible to an extent but you can't predict things like a financial crash.

However, you also have to bear in mind the human factors too. Just because a pension is worth say 70% of its face value today doesn't mean one party in a divorce will be happy to lose all the current assets to keep it. Such a decision could for example leave the one with the pension having to save before getting back on the property ladder again which could be expensive if price rises continue to outstrip wages. Or it could create short term cash flow problems, especially if there are still debts to be settled. So even if £ for £ it looks fair, it doesn't necessarily mean it's agreeable to both parties.

And that is precisely why a mediator or solicitor is a better bet than a financial advisor!

Hello I’m a family law solicitor and often work hand in hand with financial advisors. It’s best to sort out the parameters of settlement first, but you’re absolutely right to think about investment income. The family law association Resolution has a specialist accreditation scheme for financial advisors who specialise in financial matters on divorce, you can search on their website.
resolution.org.uk/find-a-law-professional/?location=&member_name=&service_offering%5B%5D=376&distance=5&sortby=&viewtype=&isadvanced=&filter_members=1

FWIW I would be happy to get a share of ex's pension and split the house, but for various reasons I think he will want to avoid that option. I'm just trying to inform myself and find a reasonable starting point for negotiating, but, in case I haven't been clear, I want both of us to come out of this with somewhere to live, and a certain amount of security in retirement.

I thought a FA might be able to give me ideas for if I agreed to take money/property in lieu of pension - what options I'd have for investing and the pros and cons of different types of investment, so that I'd be more informed about what situation I might end up with. But that doesn't sound like a good plan, so I'm going to have a chat to an accountant friend and hope he can give me some pointers.

I'm sure we'll go for mediation at some point, but I'm just collecting info and feeling my way with where to begin. I think we'll also both consult solicitors, but I'm hoping we'll avoid letting a court decide, or relying on solicitors for things we could reasonably agree between ourselves.

Sorry, that was in reply to FutureExH's post.

Familylaw that's really helpful - exactly the kind of thing I was hoping might exist. Thank you.

@pineapplesoda

FWIW I would be happy to get a share of ex's pension and split the house, but for various reasons I think he will want to avoid that option. I'm just trying to inform myself and find a reasonable starting point for negotiating, but, in case I haven't been clear, I want both of us to come out of this with somewhere to live, and a certain amount of security in retirement.

I thought a FA might be able to give me ideas for if I agreed to take money/property in lieu of pension - what options I'd have for investing and the pros and cons of different types of investment, so that I'd be more informed about what situation I might end up with. But that doesn't sound like a good plan, so I'm going to have a chat to an accountant friend and hope he can give me some pointers.

I'm sure we'll go for mediation at some point, but I'm just collecting info and feeling my way with where to begin. I think we'll also both consult solicitors, but I'm hoping we'll avoid letting a court decide, or relying on solicitors for things we could reasonably agree between ourselves.

Well, it's probably worth spending some time with a financial advisor but manage expectations. They'll spell out your options, not give you answers.

Well, it's probably worth spending some time with a financial advisor but manage expectations. They'll spell out your options, not give you answers

That’s exactly what I want - help with understanding the options, given my limited knowledge of financial matters.

Thanks - this has been helpful.

Post-divorce, once I had the share of pension, I used a financial planner to invest it. He is also a mediator, and the majority of his clients are divorced women. I can PM details to you if you'd like, then you could email him?

@pineapplesoda

Thanks FutureExH, yes that's the kind of thing I need info on. That's helpful to know a solicitor can advise on this. I know there aren't any certain answers about how property and investments will perform, but at least a FA might be able to say "here's what you could do with x amount of cash and what it might earn you right now". And the downsizing would likely happen as soon as we agree on the split, so I wouldn't need to be guessing at the property market in 10 years' time.

I just wondered if there was such a thing as a FA who specialises in separation, but it seems not, so maybe a solicitor is what I need.

Mine does (in answer to the question in your final paragraph).

@pineapplesoda

Thanks *@millymolls*. I'm just sceptical about the financial expertise of a solicitor e.g. I don't think they'd be able to advise on something like how much capital would be a fair swap for not taking a % share of ex's pension, because how would a solicitor know what potential income I'd get from a lump sum investment? So I might be paying the wrong kind of expert if I needed that kind of info?

I'm just in the early stages of all of this, but from reading a bit online - CAB website etc, I am thinking the process might go something like this:

Make a list of assets.
Work out a rough division that seems reasonable.
Get advice from a financial advisor about how realistic the division is, what I need to live on, particularly regarding retirement income.
Negotiate with ex.
Get a solicitor to look at whatever settlement we come to.
Divorce.

Obviously that's assuming we can discuss this rationally and don't need a solicitor at an earlier stage, but I don't think a solicitor can offer formal expert advice about things like pensions, investments, property values etc. Wouldn't their advice be more about things like rights regarding child maintenance and access, and selling/dividing home and assets fairly? I can see I might need advice on those things too, but not sure if I'm at that stage yet. But I am only just starting to gather the info, so maybe you're right and I do need legal advice sooner rather than later, I don't know.

You’re right- you don’t need a solicitor for Agreement bit…just do need to write up your agreement into a consent order Yes. It makes absolute sense to use a financial advisor - you will need to pay for it However, as part of the D81 disclosure you will need to document between it, tv does ask for pension valuations. These can take a long time to get potentially, so do that now asap. Especially if they are defined benefit schemes. This will give you some of answers you need about fair division, eve. If you agree lump sum exchange in lieu of a pension sharing order.

[quote Familylawso1icitor]Hello I’m a family law solicitor and often work hand in hand with financial advisors. It’s best to sort out the parameters of settlement first, but you’re absolutely right to think about investment income. The family law association Resolution has a specialist accreditation scheme for financial advisors who specialise in financial matters on divorce, you can search on their website.
resolution.org.uk/find-a-law-professional/?location=&member_name=&service_offering%5B%5D=376&distance=5&sortby=&viewtype=&isadvanced=&filter_members=1[/quote]
Ok, yes this is an option- but it will cost a lot to pay you as solicitor and a financial advisor when some of that info she could get for free