Divorce can significantly change your financial position. You may receive a large cash settlement, investments, property or a share of your former partner’s pension, while at the same time having to plan for your future on a single income.
Use our wealth management finder tool to compare the best wealth managers for help with divorce and financial settlements.
How To Choose The Best Wealth Managers For Divorce & Financial Settlements
The best wealth managers for divorce and financial settlements should therefore do more than simply invest your money. They should help you understand your new financial position and build a long-term plan around it.
Look for experience with divorce settlements
Divorce can involve a complicated combination of property, pensions, investments, businesses and cash.
Look for a wealth manager or financial planner who has experience working with clients going through divorce and who is comfortable working alongside family lawyers, accountants and pension specialists.
MoneyHelper specifically notes that financial advisers can help divide assets tax-efficiently and advise on investing the proceeds of a divorce settlement.
Get advice before the settlement is finalised
If possible, speak to a financial adviser before agreeing the final financial settlement.
Two assets with the same headline value aren’t necessarily financially equivalent. £500,000 of cash, for example, is very different from £500,000 tied up in property or pensions.
Investments may also have tax consequences or charges when they are sold or transferred. MoneyHelper recommends considering independent financial or accounting advice when deciding how investments should be dealt with during divorce.
Your solicitor will deal with the legal aspects of the settlement, while a financial planner can help you understand what different settlement options could mean for your future finances.
Don’t overlook pensions
Pensions can be among the most valuable assets involved in a divorce and shouldn’t be ignored simply because they won’t be accessible for many years.
Pensions can potentially be dealt with through pension sharing, pension attachment or by offsetting their value against other assets. MoneyHelper warns that pensions can sometimes be worth more than the family home and recommends specialist advice where necessary.
For complicated defined-benefit pensions, additional actuarial or pension-on-divorce expertise may also be required.
Build a new financial plan
Once a settlement has been agreed, your financial circumstances may look completely different.
A good wealth manager should start by establishing your new income, expenditure, assets, liabilities and long-term objectives.
Cash-flow modelling can be particularly useful. It can help answer questions such as whether you can afford to keep the family home, how much you can spend each year, whether you need to continue working and whether you are on track for retirement.
Don’t rush to invest a cash settlement
If you receive a large lump sum, don’t assume that it all needs to be invested immediately.
You may need cash for property, legal costs, tax, school fees or everyday expenditure. Your wealth manager should establish how much you need to keep accessible before constructing an investment portfolio for the remainder.
They should also discuss whether investing the money immediately or gradually introducing it to the markets is more appropriate for you.
Understand how much investment risk you need to take
Your capacity for investment risk may be very different after divorce.
Someone who previously had two incomes, substantial pensions and jointly owned assets may now be relying primarily on their financial settlement.
A good wealth manager should therefore assess how much risk you can afford to take rather than simply asking how comfortable you feel about stock-market volatility.
Review your retirement plans
Divorce can dramatically alter retirement planning.
You may have received part of your former partner’s pension or surrendered some of your own. Either way, your retirement projections should be rebuilt based on your new circumstances. MoneyHelper recommends reviewing how much income you will need in retirement and what to do with any pension settlement you receive.
Look for someone you are comfortable with
Finally, personal relationships matter particularly when choosing a wealth manager following divorce.
You may be making major financial decisions independently for the first time, so you need an adviser who explains things clearly rather than ove