Unveiling the Unspoken Truth
The Financial Challenges Women Face During and After Divorce Table of Contents
Introduction 2
About the Women, Divorce & Money Participants 3
Money Before Divorce 6
Money During Divorce 17
Money After Divorce 19
Divorced Women and Investing 28
Process and Outcomes 34
Support Systems 41
Divorce Professionals Financial advisor, matrimonial attorney, accountant/CPA, 47 estate planning attorney, therapist and divorce coach Francis Financial conducted one of the first studies Conclusion 60 focused solely on women who have divorced or are About the Authors 63 in the process of divorcing. The results shed light About Francis Financial 65 on emotional, legal, and financial difficulties women face during and after divorce. Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
About the Women, Divorce & Introduction Money Participants
Women currently control 51%, or $14 trillion, During divorce, money issues ranked Selection Process Age of personal wealth in the U.S. and are expect- as the number one worry for women, even More than 150 women participated in the Participants ranged in age from early twen- ed to control $22 trillion by 2020.1 Despite in- topping concerns about their children, and Francis Financial Women, Divorce & Money ties through eighties. The average age of the creases in wealth, the path to financial security the majority of women felt that they did not (WDM) study. The respondents were invited to women in the survey was 49. for divorced women has many obstacles. get enough financial guidance during the participate by Francis Financial or a professional Financial challenges as a result of divorce divorce process. who works closely with Francis Financial. are common, as the income that supported The post-divorce decline in income hits Geographic Diversity one household is split and must support two. women especially hard. Women face unique The survey reached women in 25 states. Half All possessions-money, financial assets and financial headwinds because they have longer the participants (51%) reside in New York State, real estate-are divided. life expectancies, lower incomes and fewer with the majority living in New York City. years in the workforce than men. All of these factors can drastically reduce savings. Children Francis Financial conducted a study on women A majority of the women (84%) had chil- who have gone through, or are in the process of dren. Of the participants who had children, Employment Status 65% had at least one child aged 20 or young- going through, divorce. The goal was to bring to The majority of the women surveyed (67%) er. Another 26% had at least one child in their light the challenges that women face or will face worked full-time. A minority (18%) worked 20’s and the remainder of respondents had during this difficult transition, and to educate part-time, were retired (9%), or actively volun- children who were older than age 30. industry professionals on how to best work with teered with non-profit organizations (5%). clients going through this process.
Many of the women who participated in this survey shared that finances were a major concern in their divorce and continue to be an issue in their post-divorce life.
1 BMO Wealth Institute “Financial Concerns of Women,” 2015
2 3 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce About the Women, Divorce & Money Participants Continued
Stage in the Divorce Process Net Worth Of the women surveyed, 19% were going The majority of the WDM respondents through the divorce process at the time of (54%) had assets worth over $500,000 and the survey and 81% were already divorced. were considered affluent, while 46% had as- sets worth less than $500,000. Over a quarter Number of Years Married of the respondents (27%) were considered to This research found that 57% of partic- be high-net-worth individuals and had assets ipants had a long-term marriage, having in the range of $1 to $5 million. Another 6% been married for more than 10 years. were in the ultra-high net worth range and had over $5 million in assets.
4 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
Money Before Divorce
For many of the women who participated in was their husbands' spending habits. range of roles, including women who were not shared this role evenly with their former spouses. the WDM study, money disagreements were a A similar percentage of women admitted engaged and left entirely in the dark about all Men, on the other hand, tended to concentrate common factor in marital disputes. Participants that finding the money to pay everyday bills money matters. On the other hand, a few WDM on investing. A study by Prudential, Financial told stories of their husbands' unhealthy relation- was very difficult. survey participants were the sole breadwinners Experience & Behaviors. Among Women, shows ship with money as a contributing factor to their Twelve percent of the women surveyed said for the entire family and performed all short-term that women tend to be in control of the household breakups. Neglecting to pay bills on time and that saving for the future was their biggest financial and long-term financial decision making. finances, but don’t take as much of a role when it out-of-control spending were recurring sources of worry when they were married. In addition to saving Commonly, the WDM participants focused comes to long-term financial goals.4 financial conflict during the marriage. for retirement, putting money away for children and more on day-to-day financial matters such as The WDM survey also saw evidence of A recent study conducted by AARP supports their education made the list of top concerns. paying the bills and managing the family’s budget. this phenomenon. In 38% of the respondents’ these findings that money can be a significant marriages, the husband made all investment Who was responsible for paying contributing factor to divorce. About half of the decisions without any participation by his wife. everyday bills during your marriage? women (53%) from the AARP survey said money Due to this lack of experience, only 35% problems created by their ex-husbands led to of WDM respondents felt confident in, and the divorce, while 44 percent of men said the understood, their investment portfolio and same of their ex-wives.1 investment strategy, after their divorce. Substantial research concludes that financial Do you understand and feel confident in your issues are a primary cause of divorce.2 Couples investment portfolio and investment strategy? who argue about money early in their relationships — regardless of their income, debt or net worth — are at greater risk for divorce. Arguments about money are longer and usually more intense than other types of marital disagreements. 3 The WDM survey explored money behavior Nearly a quarter (24%) shared that their most in marriage by asking participants about financial During the marriage, 40% of the respondents significant financial worry during their marriage decision-making. The results showed a broad explained that they paid all of the bills without any participation from their husband. Another 37% 1 Xenia P. Montenegro, AARP, “The Divorce Experience: A Study of Divorce at Midlife and Beyond." 2004 2 Jan D. Andersen, Family and Consumer Science Department, California State University, “Financial Problems as Predictors of Divorce,” 2001
3 Sonya Britt and Jeffrey Dew, Family Relations Journal, “Examining the Relationship Between Financial Issues and Divorce," 2012 4 Prudential, “Financial Experience & Behaviors Among Women," 2014-2015
6 7 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
The WDM survey respondents were typically Significant events involving money are imprinted quite critical of their ex-spouses when it came in our memory and can influence the role money to discussing money. plays in our lives.
When asked what their biggest financial worry was during their What money issues do couples argue A study from The Family Relations Journal most about? The top six money arguments points out that arguments about money are marriage, the vast majority of responses from the WDM survey that couples have are about merging their actually arguments about deeper issues in the were negative. However, a few women did share that they had money, dealing with debt, budgeting, how to relationship — power, trust, etc. If such deep best invest, hiding money secrets from each issues in the relationship are problematic, then a very solid financial relationship in their marriage. other and planning for emergencies.1 couples may be more likely to split. Negative financial events, such as a job Arguments about money may also stem from
“My ex-husband’s propensity to spend “We didn’t have financial worries. We loss, can also expose the cracks in a struggling a difference in “money personality,” which explains tomorrow’s money yesterday.” worked hard together to create a strong marriage, causing it to deteriorate. Several WDM outward behavior, but is based on deeply-held base and plan for retirement.” participants shared that job issues created stress beliefs about the purpose of money. Our money “My husband would irresponsibly spend the in their marriage. personality comes from the family in which we money I had inherited and come into the “I had no financial worries really. We both “We didn't really have any issues until my grew up. Significant events involving money are marriage with.” made good salaries. We saved for retire- husband went on unemployment.” imprinted in our memory and can influence the ment, had enough to spend and had a “Debts and too much spending. Unwilling- role money plays in our lives. good home. We were financially responsi- “My ex kept losing his jobs creating reloca- ness of my husband to do anything about it.” “Sometimes spouses’ beliefs differ and so ble and financially stable.” tion expense, debt, etc.” they come into conflict. You might imagine “Never having enough to cover life expens- a spouse who feels that money is best used “My financial situation during my marriage “My ex would quit his job, or get fired, es due to my husband’s spending habits.” for status married to someone who feels that was actually good.” with no warning.” money is best used for security. This couple “My husband spent too much money and “I didn’t have any financial worries.” would then probably have more conflict."2 had secret debt.”
“My ex was constantly day trading with our entire savings. He traded on margin, got constant margin calls, and even took out extra mortgages to use for trading. He was very financially irresponsible.” 1 SmartMoney Magazine study, “Love & Money,” 2004
2 Sonya Britt and Jeffrey Dew, Family Relations Journal, “Examining the Relationship Between Financial Issues and Divorce,“ 2012
8 9 THE NINE HIGH NET-WORTH PERSONALITIES1
Family Stewards Moguls
• Dominant focus is to take care of their families • Control is a primary concern
• Conservative in personal and professional lives. • Investing is another way of extending personal power
• Not very knowledgeable about investing • Decisive; rarely look back
Independents VIPs • Seek the personal freedom money makes possible • Investing results in ability to purchase • Feel investing is a necessary means to an end status possessions • Not interested in the process of investing • Prestige is important DURING THE MARRIAGE, MANY or wealth management • Like to affiliate with institutions and financial advisors with leading reputations WDM RESPONDENTS HAD SERIOUS Phobics Accumulators • Are confused and frustrated by the responsibility FINANCIAL WORRIES. of wealth • Focused on making their portfolios bigger • Dislike managing finances and avoid technical • Investments are performance-oriented discussion of it • Tend to live below their means and spend frugally • Choose financial advisors based on level of Not Saving Low Income Healthcare Bills personal trust they feel Gamblers • Enjoy investing for the excitement of it The Anonymous Family Debt College Mortgage Insurance • Tend to be very knowledgeable and involved • Confidentiality is their main concern • Exhibit a high risk tolerance Money Future Spending Expenses Worried • Prize privacy in their financial affairs • Likely to concentrate assets with a financial Innovators Job Loss Paying Buying Retirement advisor who protects them • Focused on leading-edge products and services • Sophisticated investors who like complex products Finances Job Saving Children • Tend to be technically savvy and highly educated
1 Russ Alan Prince and Brett Can Bortel, The Millionaire’s Advisor™, 2003.
10 11 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ® Case Study Carrie – To Divorce or Not to Divorce?
After 19 years of marriage, the cracks in Car- From a financial perspective, Carrie knew Carrie didn’t know where to start. She began costs, while other assets require money rie and Mark’s marriage were becoming larger that she was better off than a lot of her divorced googling guides to divorce and immediately for ongoing maintenance. For example, and larger. When their twin daughters left for friends. The responsibility for family finances began to feel overwhelmed. However, after investment assets may continue to grow, but the NYC apartment requires maintenance, college, Carrie could no longer distract herself was split evenly between Carrie and Mark. talking with a few close divorced friends, Carrie real estate taxes and mortgage payments from the sadness she felt. The miserable voices Carrie oversaw the household expenses, and realized that getting savvy about their financ- that must be considered. es was a crucial first step. Carrie decided to in her head were demanding to be heard. Mark concentrated his efforts on investments. Carrie was also happily surprised to learn ® Mark was not verbally or physically abusive. To They started out their marriage in these roles, meet with a Certified Divorce Financial Analyst that the inheritance she recently received from be honest, Mark was a pretty nice guy, just not the and continued in them. They rarely went over (CDFA®). Not considering herself a numbers her mother would be considered separate right guy for Carrie, any longer. The couple had their finances together. person, Carrie felt a financial expert with experi- property as it was not commingled with any not had sex for over a year, and romantic love did In order to try and understand their financial ence working with divorcing clients was exactly assets that the couple owned. Carrie had had no idea about the difference between marital not exist in their relationship anymore. situation, Carrie reviewed the paperwork that the person who could answer all of her ques- and separate assets and felt more empowered Despite years of feeling like a corpse and they had provided their estate planning attorney tions about staying in the apartment, protecting to have this knowledge. just making do with her marriage, the idea of when they updated their wills three years prior. her inheritance and understanding her current leaving Mark was terrifying. Carrie had never Carrie estimated that they had $2.5 million in and future financial situation. lived on her own, and had married Mark right investable assets with an even split between Carrie’s divorce financial planner asked What is a Certified Divorce Financial after college. Being out of the workforce for retirement and non-retirement accounts. questions about her assets, income, personal Analyst® (CDFA®)? nearly two decades meant that Carrie would Despite accumulating a large nest egg, and professional goals, financial values and A CDFA® professional is someone who comes have to retrain as a dental hygienist. She would Carrie worried that she would not have enough what money meant to her. Carrie had never from a financial planning, accounting, or legal be restarting her career from the bottom. investments to buy out Mark’s interest in the thought about all these issues before and how background and goes through an intensive family apartment in New York City. Keeping they could influence her divorce. training program to become skilled at analyz- The decision to divorce can be overwhelming. the pre-war apartment on the Upper East Side Carrie also discovered the growth potential, tax consequence, and liquidity of ing and providing expertise on the financial There are many questions and concerns when would mean the least amount of change for the each of their assets. All assets are not created ® twins. Carrie admitted that she felt guilty that she issues of divorce. All CDFA ’s must stay cur- contemplating divorce, and it is important to equal. In addition to understanding taxation was putting her happiness before that of the girls rent with the changing field of divorce and are find the right professional team to help guide of certain assets, Carrie learned that it is and wanted the girls to be able to come back to required to engage in continuing education to you through this difficult transition. important to consider the ongoing costs of the only home they had ever known. owning certain investments. Some assets keep their designation in effect. continue to grow and gain value without
12 13 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce
Case Study UNDERSTANDING SEPARATE Continued VS. MARITAL PROPERTY
Separate vs. Marital Property. Before begin- Commingled Assets. The line between mar- ning a property settlement, you must define, ital and separate property becomes blurred value and assess how to divide the marital when clients mix marital and separate assets estate. Something important to take into ac- together. Separate property becomes co-min- When contemplating divorce, women struggle count during the division is which properties gled when added to jointly owned assets or to to see how to make their future financially secure. are owned separately and which properties are separate property of the other spouse. Think considered marital. The classification of sepa- of commingling assets as similar to mixing Working with a divorce financial planner who rate versus marital property varies according to two different shades of sand. It is very tough to whether state law follows equitable distribution separate them, once you have poured them understands your goals can provide a glimpse (e.g. New York) or community property (e.g. Cal- together in the sand box. ifornia). While this area of divorce can be quite into what your future will look like, financially. Debt. Another area that must be addressed in complicated, here are some general rules to divorce is debt. The liabilities and debts accu- help classify these assets. mulated during the marriage and brought to Carrie was very knowledgeable about their Even though Carrie did not think that she Marital Property. Marital property is exactly the marriage should all be assigned, paid, or spending during the marriage, but the divorce needed a matrimonial attorney at this point, what it sounds like: the asset is acquired during handled in some manner as part of the di- financial planner helped her understand what the divorce financial planner explained that it the marriage. The appreciation of separate vorce settlement. The laws of each state vary her budget post-divorce needed to be. was imperative to interview several attorneys property can also fall into this category, espe- on which marriage partner is responsible for Together, they discussed what the short and to understand the legal issues at play in cially if the spouse’s active management of the certain debts, depending on when the debt long-term financial impact of any proposed the divorce process. The divorce financial asset contributed to growth in its value. How- was incurred (before the marriage, during the financial settlement would be in a clear and planner guided Carrie towards lawyers who ever, marital property will take various forms marriage or after separation). The purpose of non-intimidating way. would be best suited for her situation. After depending on state law and you will want to the debt (necessities, an extravagant lifestyle, This knowledge gave Carrie the financial several consultations, Carrie hired a fantastic consult with your own matrimonial attorney. or expenses to pay for an affair) also factor into peace of mind she needed to make the lawyer and moved forward confidently in the who is responsible for repayment. decision to move forward with the divorce. divorce process. Separate Property. Separate property is Carrie felt clear-headed and could focus on typically brought to the marriage. In New York, the well-being of the twins and herself. separate property includes personal injury awards, as well as gifts and inheritances made to only one spouse. In divorce, this sep- arate property is typically not divided, but is kept by the spouse who owns it.
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Money During Divorce
Just as money was a source of conflict during their marriage, the WDM participants also worried about their finances during the di- vorce process. Amongst the top three concerns during their divorce, 86% of respondents listed money, 74% indicated children’s welfare and 70% chose their future living situation.
“My biggest money concern was understanding the family financial situation.”
- Sophia A., Married 8 years “My husband was spending beyond his means, despite multiple attempts to get him to either cut back on spending or increase his earnings. He was content to rely upon me to be the household breadwinner. I always expected we’d be financial equals when we got married, but somewhere along the way he just seemed to stop trying to earn money. This was the primary cause of the dissolution of our marriage.”
– Ellen T., Married 32 years
17 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ® Money During Divorce Money After Divorce Continued Women have many worries about saving for retirement.
Even though worries about money outranked “I had a bad relationship with my ex-hus- The definition of financial security can vary Post-divorce, economic security is fears about children adjusting to divorce, the re- band during the divorce because we had during a marriage and especially after a divorce. difficult to attain. Income once supporting sponses below reveal that much of this financial to deal with money issues.” For some respondents, being financially secure one household must now cover the cost of anxiety stemmed from the participants’ concerns meant having the feeling of independence and two. Numerous studies have revealed that a “Figuring out how to take care of my about how they would be able to financially sup- control over their own money. Other participants woman’s lifestyle is negatively impacted after daughter, emotionally and financially.” port their children post-divorce. measured financial security in a more tangible divorce, and over half (52%) of respondents “I was most concerned about giving my way, focusing on the size of their net worth and experienced this well-documented downward What were the major challenges you faced kids a sense of continuity and safety, which the amount of income coming into the household. shift in their standard of living. during your divorce? was a huge challenge as we were splitting.” Regardless of how the respondents Lifestyle Shift After Divorce “Keeping up strength. Fear of financial measured economic security, many shared a devastation.” discouraging picture of their financial lives. The majority (52%) of participants admitted that they “Understanding how I will pay all the bills did not feel financially secure. A full 15% didn’t by myself.” even understand their situation well enough to “Dealing with the loss of income and know if they should be worried. uncertain medical coverage.” Do you feel financially secure? “Facing the unknown. After 21 years of mar- riage, I was scared of what my new life would The reduction in income had a negative be like and my ability to support my kids.” domino effect on savings. The majority of WDM “Becoming aware of finances that were respondents did not feel that they were making hidden from me.” enough headway saving for their “golden years.” Over half of the women (66%) knew that they “After a while, he stopped my access to were not saving sufficiently. A handful of partic- his online banking, restricting my access ipants (11%) admitted that they were in the dark to money.” about their financial situation and had no idea if “Mostly personal issues and financial issues.” they were saving enough and on track.
18 19 Francis Financial – Plan | Grow | Protect ® Money After Divorce Continued
A recent Prudential study backs up the When listing their financial worries, the results of our research. Fewer than 33% of majority of WDM survey respondents were very women feel they are on track or ahead of concerned about saving for retirement (40%) or schedule in planning or saving for retire- outliving their money (39%). As wonderful as kids ment, down from 46% in 2008.1 may be, children also added a financial stress. Nearly a third of the participants were concerned
about having enough money to take care of their Divorced women have financial headwinds children and pay for their education. After divorce, the average woman’s in- According to the American Psychological come falls by more than a fifth and remains Association report “Stress in America,” women low for many years. are much more stressed than men, and their “Don’t get caught confusing money with security. • Individuals need more than a 30% increase biggest stressor is money.4 This was also true in income to maintain the same standard of of the WDM participants. There are lots of ways to build a life that’s more living they had prior to the divorce. 2 • Three out of four divorced mothers don’t secure, starting with the stories you tell yourself, receive full payment of child support. 3 • Research suggests that women usually the people you surround yourself with and the cost do not fully recover from the financial of living you embrace. Money is one way to feel consequences of divorce. more secure, but money alone won’t deliver this.”
- Seth Godin
1 Lori Fouche, Christine Marcks and Caroline Feeney, Prudential “Financial Experience and Behaviors Among Women,” 2014-2015
For some, security comes from telling yourself 2 Mark A. Fine and John H. Harvey, Economic aspects of divorce and relationship dissolution, “Handbook of Divorce and the story that you have control over your money. Relationship Dissolution,” 2006 3 Timonty Grall, United States Census Bureau, “Custodial Mothers and Fathers and Their Child Support: 2013,” 2016 4 American Psychological Association report “Stress in America: Paying With Our Health,” 2015
21 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
While the survey paints a troubling picture of the Money After Divorce women’s long-term financial preparedness, respondents Continued were relatively satisfied with their day-to-day finances.
Nine percent of the WDM contributors indi- “My biggest money concern now is saving Half of the interviewees (50%) were at least “somewhat satisfied” and 17% shared that they Importance of an Emergency Fund cated that they were not only worried about their for my retirement.” own financial well-being, but also anxious about were “very satisfied” with their day-to-day fi- - Elizabeth P., Married 31 years An emergency fund is an account used to their ability to support their parents financially. nancial situation. These women typically paid set aside funds which may be needed in the The majority of our respondents worked “My biggest priority is to stay in my home bills on time and had enough money to make event of a personal financial crisis, such as in some capacity. However, starting a new and keep our child in her current school.” ends meet. A third of the participants (33%) the loss of a job, a debilitating illness or a career was still a major concern for 16% of the were not satisfied at all with their current - Carly P., Married 18 years sizable unforeseen expense. participants and as many as 18% were very day-to-day financial circumstances. Some An emergency fund can significantly im- concerned about their current job security. respondents cited a downward lifestyle shift prove financial security by creating a safety Not losing their money was a critical and long-term financial repercussions from concern. Over a quarter (27%) were anxious their divorce as factors contributing to their net to cover surprise expenses. A good rule of about protecting their post-divorce assets, dissatisfaction. Others shared that they felt ill- thumb is to have at least three to six months knowing that this money would need to equipped for retirement and feared that they of living expenses set aside in a high-interest support them into retirement and beyond. were unable to absorb any economic shocks savings account with FDIC insurance. Taxes were also a cause for concern, as many from unforeseen life events. Few of these Everyone’s situation is different, and there women paid taxes on the alimony they received, women had an emergency fund. isn’t a magic number that is right for all people. which took a huge bite out of their budgets. Financial Satisfaction Factors that can impact how much money you Therefore, a reduction in taxes paid to Uncle put aside include your job security, expens- Sam was essential for a significant portion (26%) es, investment portfolio size, debt level and of the respondents. whether or not you have two incomes coming Paying for medical bills was further down the list, into your household. but was still a concern for 16% of the women. Fears around medical costs were especially significant for those who had young children at home. Several women were also anxious about their ability to afford quality health insurance after having been dropped from their ex-husband's plan.
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Women generally focus more on day-to-day financial matters such as paying the bills and maintaining the family’s budget. Men tend to concentrate on investing. 1
During their marriage, the WDM participants “Budgeting has brought me pretty much the only focused more on day-to-day financial matters peace I've had in the divorce process. Having a such as paying the bills and managing the clear sense of my spending needs has enabled family’s budget, with 40% of the respondents me to focus on the emotional side of getting reporting that they paid all of the bills without divorced without having financial panics.”
any participation from their husband. Another 37% shared the bill-paying role with their hus- - Marion S., currently going through divorce band before the couple divorced. Regardless of their role during the marriage, nearly all (90%) of the WDM members at the time of this study had a clear understanding of their own cost of living. Over 42% of the WDM contributors shared that following a budget was somewhat important to them. Tracking expenses using a budget was very important to 56% of the women, and only 2% did not believe that monitoring their spending was necessary.
Managing the expenses is a role many Why do women feel more satisfied with their everyday financial women know well. One may conclude situation, but unprepared for the long-term? that such experience, coupled with a clear understanding of their budget and According to the 2017 AICPA Personal Financial Planning Trends Survey, there are distinct dif- improved spending habits, gave the WDM ferences in how men and women approach their finances, post-divorce. The survey found each contributors more satisfaction related to gender was equally as likely to experience a deterioration of lifestyle after divorce (women: 26%, their everyday financial situation. men: 25%), but the similarities ended there. The study discovered that women are far more likely to adopt positive financial behaviors, 1 Prudential, “Financial Experience & Behaviors Among Women," 2014-2015 post-divorce, than their male counterparts. Women were almost four times more likely than men to improve their spending habits after the split (42% to 12%).
25 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
More than half (59%) of our respondents explained Fewer money conflicts, more control and increased that they were most satisfied with their financial sit- knowledge foster greater financial satisfaction. uation at a time when they were not married.
Surprisingly, the majority of WDM participants For some of the WDM participants, divorce When the WDM respondents were single, “We never had enough money, even with felt the least financially satisfied during the period signaled financial freedom and a respite from pre-marriage and post-divorce, they were both of us working full-time. Some bills of their marriage, and associated their single years the frequent money-related disputes with their forced to become more involved with their never got paid when he said they were. with higher satisfaction. former spouse. When the money arguments finances and address their financial short- I had no control.”
More than half (59%) of WDM contributors went away, they saw their lives as being more comings. Essentially, the women had to get - Megan R., Married 29 years shared that they were most satisfied with their stable, leading to higher satisfaction marks. smart about money. financial situation at a time when they were not Some WDM respondents also shared that According to Wharton Business Economics “I now have control over my finances and married. Post-divorce (37%) and before marriage they did not have a significant role in the finances and Public Policy professor, Olivia S. Mitchell, everything is paid on time.” (22%) were the times that the study respondents of their marriage and felt they had no power studies show that women are more likely to - Morgan L., Married 10 years were the most content. to control their ex-spouse’s money behavior. recognize their gaps in financial knowledge and Having power in financial decision-making also are more open to learning than men. “My husband neglected paying bills.” When did you feel most satisfied led to women answering that they were more The main takeaway from the WDM survey with your financial situation? - Jennifer S., Married 22 years content with their money situation. is that fewer money conflicts, more control and increased knowledge foster greater “We had enough money, but my ex-hus- levels of satisfaction. band controlled all of it. I felt powerless.” The following comments help to explain - Allie P., Married 8 years why women have a greater sense of financial well-being on their own.
26 27 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
Women must become better educated about Divorced Women and Investing the role that smart investing plays in securing their financial future.
Fidelity Investments Money Fit Women How is your portfolio invested? Survey after survey shows that women lack If anything, women need to pay greater Study reports that, "while most women are confidence when it comes to investing and plan- attention to retirement saving and investing confident that they can balance a checkbook ning for retirement. According to the Pershing because they live longer, tend to take time (79%) or manage the family budget without study, “Women: Investing With a Purpose,” low out of the workforce, earn lower salaries, and help (72%), they are less confident about se- confidence plays a significant role in how wom- must cover higher healthcare costs. Investing lecting the right investments (28%)." This con- en invest, which tends to be more conservative. 1 too conservatively can put women at risk fidence gap helps explain why women tend to Prudential also explored women’s relatively of ending up with fewer dollars than they be more conservative investors than men. low investing confidence and found that just 22% need to pay the bills during their retirement Three-quarters of the WDM survey of women rate themselves as very well-prepared years. In fact, depending on their financial respondents employed either a moderate or for long-term financial decision-making, situation, women may require more stocks in conservative investment strategy. Only 5% of compared to 37% of men.2 While being an ultra- their portfolio than men to help them boost the WDM members considered themselves conservative investor seems safe, it is not the performance and close the gap. aggressive investors. most prudent long-term investment strategy. According to Hearts & Wallets, a This more conservative approach to investing retirement market research firm, a woman’s means less risk-taking and less reward. lack of confidence sometimes translates into disinterest. The WDM survey saw indifference towards the markets among its participants as well. Eleven percent were oblivious about how their portfolio was invested, and 8% did not invest in the market, at all.
1 Pershing, “Women: Investing With a Purpose why Women Investors May Need a Different Approach to Reach Their Goals,” 2015
2 Susan Blount and Christine Marcks, Prudential “Financial Experience and Behaviors Among Women,” 2012-2013
28 29 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ® Case Study Jodi – Understanding the Expenses and the Assets
Jodi was getting divorced after seven years Jodi confessed to her lawyer that she had no With the affair out in the open, Rob eventually of marriage to Rob. Her husband had acciden- idea about her spending. During her marriage, Dissipation of Assets complied with the team’s information requests. tally left his Facebook messenger open on their Rob gave her a small cash “allowance” and Wasteful dissipation of marital assets by a spouse Rob turned over the business credit card computer and Jodi discovered that he had been the use of his business credit card. Jodi was may be offset by awarding the other spouse a statements as well as the personal credit cards cheating on her for the previous two years with a not even allowed to see the monthly credit greater share of the remaining assets. Dissipation and checking accounts that were used to fund young staff member. Jodi had met Eve at numer- card statements as all account statements and may also include extravagant spending on an affair both Jodi and Rob’s relatively modest lifestyle and his extravagant spending on Eve. ous company functions, and felt disgusted, an- correspondence was delivered to Rob’s office. or other destructive behaviors such as gambling Together, Jodi and the divorce financial expert gry, hurt, humiliated and scared when she found It turned out that her ex’s lover had use of or drugs. Very often women are at a disadvantage out. Jodi had thought that they were happily the same credit card account. Eve used the reviewed each transaction on the statements because the husband manages the money. married and had worked out a great system, as card for her living expenses including five-star provided. A master spreadsheet with over 15,500 she supported the family at home, while he had restaurants, designer clothing and expensive entries detailed the true business expenses, started his own business and worked long hours. vacations. Eve even had exclusive use of a Jodi’s personal expenses, Rob’s personal Jodi’s lawyer introduced her to a financial She immediately retained an attorney, but was company car leased by the business. Now it expenses and those spent on behalf of or by Eve expert who was known to work with divorcing stuck when it came to providing a comprehensive all made sense. Jodi understood why she had over the past two years. The expenses totaled individuals. The Certified Divorce Financial list of her household expenses. Her expenses were been kept in the dark. more than $215,000 for Eve, helping bolster the Analyst® (CDFA®), initially had very little to do not only needed to complete her Statement of Net Rob’s controlling personality made Jodi attorney’s case for dissipation of assets. as there was virtually no financial information Worth, but were also essential in understanding feel extremely disconnected from money and available to the divorce team. However, Jodi felt her short-term and long-term needs for supporting finances, in general. When Jodi expressed her much more confident because she had a team herself and their six-year-old son, Sam. concerns about her inexperience with all things in place. In fact, she affectionately called her money to her matrimonial attorney, the attorney attorney and financial professional, “Team Jodi!” realized that Jodi had a big disadvantage because of her lack of financial literacy.
30 31 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Case Study Continued
Tax returns revealed that the business Jodi’s attorney was well-prepared to make expenses had increased significantly in the pre- his case that Rob was not being honest about vious year. Further analysis of payroll revealed his income, expenses and assets. If Rob did not a 132% salary increase for Eve, despite neither come forward with all the financial information, a promotion nor additional hours worked. The they might have to consider hiring a forensic financial expert also noticed very large, out-of- accountant. Either way, Jodi and her team knew the-ordinary business equipment purchases what they were up against. Jodi took great that offered the added benefit to Rob of fur- comfort in knowing that she had the right team DIVORCE PROCESSES ther reducing the value of the firm’s net profit. in place to protect her and her son, Sam. The most common methods women use to come to an agreement with Traces of retirement assets were also revealed Jodi’s divorce was a harrowing experience. their spouses about divorce issues include: in the corporate tax return. A 401K and defined However, after getting an understanding of her benefit pension plan were set up by the busi- budget, the couple’s assets and her financial Litigation. Litigation is the most common Mediation. A neutral mediator helps the ness. Large interest payments on the section of needs, Jodi felt more empowered about her method. If the parties do not agree and settle on couple resolve issues and reach a mutually the tax return pointed to significant amounts of finances. Jodi gained the knowledge necessary their own, the court decides who gets what, how agreeable settlement, but does not advo- money in interest-bearing savings accounts. to choose a settlement that provided her as much support or alimony must be paid, as well as cate for either party. Each spouse retains Personal tax returns were mined for essential much financial security as possible. issues of child custody and visitation. their own lawyer, while the mediator facili- information about the couple’s assets. The tates negotiation. However, the agreement divorce financial expert found evidence of two Collaborative. Collaborative law can be made through mediation is non-binding. unreported brokerage accounts in the schedule used when a couple agrees to work out a D capital gains and losses section of the return. divorce settlement without going to court. Arbitration. Arbitration is conducted by All of the people involved commit them- an independent third party. The arbitrator selves to achieving a negotiated outcome can conduct the session in a similar way and it is agreed there will be no litigation. to a court hearing, with specific time limits However, if one or both parties wish to for each party’s proof to be presented and discontinue the collaborative process, both arguments made. Both parties are bound by attorneys are legally obligated to withdraw the decision made by the arbitrator. from representing their clients. Each spouse will be required to hire a new lawyer.
32 33 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
For nearly half of the WDM contributors the Process & Outcomes divorce process took over two years.
Divorce Process Used Processes Recommended Length of Divorce Process For 29% of respondents the divorce process Forty percent of the WDM contributors The participants had clear, strong ideas about One of the greatest misunderstandings took less than a year. For nearly half of the used litigation to divorce their spouse. The re- which divorce methods worked best. When about divorce is the belief that all will be over women in the WDM survey (48%), the process maining participants used alternative dispute asked which processes they would recommend soon and that the two parties can get on with took two years or more to be finalized. These resolution methods such as collaborative to a friend, the majority of respondents favored their lives quickly. cases typically had complicating factors such (27%), mediation (23%) and arbitration (10%). alternative dispute resolution methods such as The average time it takes to get through the as higher income, longer marriages and/or mediation (41%), collaborative (38%), and arbi- divorce process is 10.7 months according to minor children. tration (8%). Only 13% of WDM study participants a 2014 survey conducted by Martindale-Nolo The WDM contributors had good reason to would suggest litigation to a friend. Research. This figure includes the period from want their divorce to continue for as little time filing the petition to getting the settlement as possible, as typically, the longer a case or final court judgment. Cases that go on trial drags on, the more it costs. The majority of take up to 17.6 months to resolve. The couples WDM participants’ divorces (71%) were longer that settle their cases out of court can often than the national average of 10.7 months. move on after just nine months. 1 A large number of the WDM participants (42%) wished that their divorce took less time. The length of their divorce process varied widely, from less than a year to more than six years.
1 Kathleen Michon, NOLO Nationwide Divorce Survey, “How Much Will My Divorce Cost and How Long Will it Take?,” 2014
34 35 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
The most significant factor impacting the total cost Cost of Divorce of divorce comes down to whether or not spouses are willing to settle.
Cost of Hiring a Lawyer According to Martindale-Nolo Research, Location Over half (63%) of the WDM members had Unfortunately, divorce is not cheap. In a case that settles before going to trial takes Hourly fees for lawyers can vary widely to grapple with the decision of hiring a foren- fact, the thousands of dollars spent on a 15-30 hours of a lawyer's time. If a case goes depending on location. In New York City, rates sic accountant because they felt strongly that wedding and honeymoon may be a fraction all the way to trial, Nolo anticipates adding an can range from $350 to $900 an hour. The cost their husband was hiding assets during their of the cost of uncoupling. One of the most additional 10-50 hours to the tab. will be much less than this pretty much any- divorce process. expensive divorces on record to date is the where else in the United States. According to Amicable or Contentious How Many and What Type of Assets $1.7 billion split between Rupert Murdoch Martindale-Nolo Research 2015 Divorce Study, When spouses reach more consensus on The number and type of assets can be and his former wife Anna Murdoch in 1999. the average fee, nationwide, people paid to their own, less involvement is needed from another significant driver of fees. Physical While the rich and famous often have 6 or 7 their attorney was $250 per hour. their lawyers and team of experts. property such as a home, jewelry, art or figure divorces, divorce can be very pricy no In addition to hourly fees, most lawyers will other valuable collections will need to be matter the financial situation. require a sizable retainer before getting started. appraised. A pension, too, will need to be How much a divorce will cost is not a simple A retainer may be as little as $1,000 or as much evaluated by a pension expert to ensure a calculation and will depend on several factors. as $100,000. Any unused portion of the retainer fair property settlement. If either spouse is a must be returned at the end of the case, or if a Court or Settle significant owner of a non-public business, new lawyer, at a different law firm, is hired. The most significant factor impacting the a business valuation may be needed. De- total cost of a divorce comes down to wheth- Hidden Assets pending on the size and complexity of the er or not spouses are willing to settle their If there is a suspicion of hiding assets, the di- business, the cost can range from several to case, or end up going to court. Trials are very vorce case will automatically reach the highest many thousands of dollars. Complex assets expensive, necessitating additional amounts echelon of cost. With hidden assets, a forensic such as stock options, restricted stock, and in attorney and expert fees. Not surprisingly, accountant must be hired to trace where assets private equity can also increase the price tag the more issues that must be hammered out have been transferred. Such labor-intensive and of an asset split. in a trial, the more expensive the case. skilled work does not come cheap and there is no guarantee that the assets assumed to be hidden will be found.
36 37 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
Nearly a quarter wished that they had had a better Processes & Outcomes understanding of money. Continued
During their divorce, all of the WDM respon- Taking the House Not Knowing All of the Assets Not Understanding Tax Impact dents faced many decisions that affected their Understandably many women want to stay Being in the dark about money can be Clearly understanding the tax impact of financial security. However, nearly a quarter (22%) in their home, either to not disrupt the lives costly. Spouses who handled all of the financ- taking one asset over another is vital. While two wished that they had had a better understanding of their children or for sentimental reasons. es during their marriage have an advantage assets or investment accounts may have equal of money, allowing them to make more informed However, failure to consider what will happen over those who did not. dollar values, their post-tax value could be vastly choices about their divorce settlement. when child support and alimony run out down Being aware of everything about the different. This is especially true when comparing the road can spell trouble. Homeowners also assets owned as a couple is not simply the value of a 401K to a checking account. some of the most frequent typically underestimate annual ongoing main- an option-it is a necessity. It is important Too few people sell their primary residence mistakes include: tenance and repair costs, mortgage payments, to understand the value, location and tax without worrying about taxes that are due. The property tax, insurance, among other expenses. aspects of those assets and debts. Property sale of a primary residence may create taxes
Not Understanding Spending can include retirement, non-retirement due if the gain for each party is over $250,000. Most people know exactly what they earn and bank accounts, as well as real estate, Taxes, coupled with selling costs, can take a each month, but can’t pinpoint exactly where The 2017 AICPA Personal Financial Planning future pensions, and social security. Debts huge bite out of the post-sale house proceeds. their money goes. It is impossible to be fully Trends Survey asked financial planners overlooked, at times, include mortgages; Creating a monthly cash-flow plan using student loans; retirement plan debt such as a the after-tax value of alimony is also a must. A confident that a divorce settlement is financially what steps would have better prepared 401K loan; credit lines; credit cards; business $10,000 per month alimony check can easily be feasible without knowing how much money is their clients, financially, for divorce. The loans with a personal guarantee; payday slashed by as much as 40% or more after federal, being spent on a monthly basis. most frequently cited were: loans and personal loans. state and local (if applicable) taxes are paid. Failing to Consider the Long-Term • Understanding how to manage personal Focusing only on the most immediate tasks finances (75.6%) of splitting assets, alimony and child support, Understanding the long-term financial planning without taking into consideration what life • might look like in ten years or more is a mis- consequences of a divorce settlement (73.0%) take. Neither spouse would want to be left in • Understanding the tax implications of a a financial bind once the ink is dry on his or divorce settlement (56.9%) her divorce settlement, having said yes to an agreement that does not work later on.
38 39 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
Looking back, half of the WDM study participants now wish that they had a different financial agreement. Support Systems
Divorce is often the most traumatic period in Several WDM contributors shared that a person's life. The emotional impact of divorce highly-charged emotions negatively impacted can extend two, four, six or more years into the their ability to make sound decisions during future. How long the recovery takes depends on the divorce process. Many studies prove many factors, including what stage of the emo- that during stressful events like a break up, tional process the individual is in when the de- cognitive function declines. cision to divorce is made, as well as how much Given the impact of emotions on effective support they have during and after the divorce. decision-making and health, it is clear that Unfortunately, many WDM respondents getting support during and after the divorce lamented that their divorce was especially process is imperative. However, we found that a painful for them because they did not have all large number of respondents (38%) did not feel the support they needed through the process. they had enough support. Some (11%) felt that they did not have any type of support, at all.
“My biggest challenge was not being Divorce is never easy, but you do not have familiar with the details of the process. to do it on your own. The divorce industry has Due to the emotional state at the time stepped up to the plate with numerous legal, it is difficult to think of everything.”
financial and emotional support structures -Bonnie M., Married 41 years to help empower those moving from couple- dom to single life with emotional health and financial security. Over a third (35%) of the respondents in- Nearly a quarter (22%) wished that they dicated that they wished they had received had a better understanding of finances. more money in the settlement. Twelve percent A fifth (20%) of the WDM respondents blamed of the respondents wished there were a differ- their attorney and would have hired a different ent custody agreement. attorney if they had to do it all over again.
40 41 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce
“It was difficult keeping mentally and emotionally stable during this difficult time.”
Support Systems & Professionals
“Do not feel ashamed because you are going through a divorce. I told everybody and found that many different people have good advice to offer, which was extremely helpful.”
– Monica C., Married 9 years
42 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce
When asked what additional support was desired, respondents ranked the services of a divorce financial planner highest.
When initiating a divorce, most women When asked what additional support was have the immediate concern of hiring the desired, respondents ranked the services right legal team to help protect themselves of a divorce financial planner highest (28%) and their children. Along with matrimonial followed by a divorce support group (21%) attorneys, the WDM participants expressed and divorce coach (16%). a desire for support from divorce financial Several WDM contributors (19%) wished planners, divorce support groups, divorce that their family and friends were more coaches and other experts who could assist present in offering comfort and assistance during this difficult transition. during their divorce.
“I wish I had someone who would have helped me look at the entire financial picture.” – Deborah R., Married 35 years
“I wish that I had some guidance on finances and fair division of assets while drawing up the divorce papers.”
– Robin L., Married 9 years
44 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
Preparing for Divorce Divorce Professionals
Participants were asked about their expe- Financial Advisor Some of the information that you need to riences with divorce professionals—financial Only 35% percent of participants worked with gather and organize include: advisors, matrimonial attorneys, CPAs, di- a financial professional during their divorce. The
vorce coaches and estate planners—with the majority of the WDM respondents (64%) said • Recent investment account statements goal of sharing what qualities make divorce a financial advisor would have been helpful to (preferably within the last 30 days) showing professionals most helpful. them during this time. account values, holdings, cost basis and Seventy-five percent of the women Would a divorce financial planner have account titles. surveyed felt comfortable seeking out the been helpful during your divorce? guidance of a financial professional. The oth- • Recent debt statements showing er 25% said they either didn’t have enough interest rates and outstanding balances. money to feel comfortable approaching Copies of property deeds. • an advisor, or that they had trouble finding
• Copies of insurance policies including the someone that they trusted. declarations pages for life, health, disability
and long-term care insurance.
The majority of respondents (64%) said a • Copies of all property and casualty “Women who are better educated about financial advisor would have been helpful coverage including auto, homeowner, money fare better in divorce. You cannot make to them during their divorce. renter, umbrella and business insurance. smart decisions about the financial settlement • Tax returns for the last 3 years. You will if you do not understand the money issues.” want to go back as far as 5-7 years if you – Stacy Francis, CFP®, CDFA®, CES™ or your spouse own a business or are part of a closely held partnership, etc.
• Copies of any prenuptial or
post-nuptial agreement.
46 47 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Divorce Professionals Continued
Finding the right advisor is essential. The most important factors considered by the WDM participants, when assessing the suitability of a financial planner, included the professional’s ability to look out for her best interests (74%) and that the advisor is honest (70%). Over half (62%) of the survey participants agreed that experience was a key factor to consider. Forty-eight percent felt that listening skills were also an important factor when choosing advisors. Forty-seven percent of the women felt that getting the best market returns was of primary importance when choosing the right money manager.
“I think that looking out for best interests is more WHY USE A FINANCIAL ADVISOR? important than best returns. Good returns have The WDM participants shared many reasons why a financial advisor to be balanced against the whole experience.” could have been helpful during and after their divorce. – Sylvia D., Married 18 years “My lack of financial aptitude.” “Helping me budget and spend wisely.”
“Saving for retirement.” “Saving for college for my kids.”
“Fear that I will outlive my savings.” “Investing money from a house sale.”
"Allocating current funds wisely.” “Having a financial roadmap I can follow.”
48 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
In the WDM study, 1 in 2 respondents had a strong Divorce Professionals preference regarding the gender of their financial Continued advisor, most preferring to work with another woman.
Many studies have investigated whether Importance of Having a Female Advisor Women usually want to be educated, and How important is it that your financial women prefer to work with female finan- not just about products and fee structures, advisor spend a significant amount of time cial advisors. Most of these studies show but also about financial planning skills and and effort, upfront, understanding your that gender is not an important criterion for investing, in general.3 entire financial picture? choosing an advisor. However, according to Interpersonal Approach the Women of Wealth Study, "gender does Key for a lot of women is an advisor matter for a significant subset of divorcées who seeks to personally understand her and widows." needs, focuses on her overall longer-term In this study, 25% of divorced women financial picture and is able to offer quality and widows did prefer to work with a female comprehensive financial planning. financial advisor. Many women observed that Nearly all of the WDM participants (97%) "women have better listening skills and can agreed that it is important for financial relate better to their situation."1 According to the Fidelity Investments study, professionals to spend a significant amount The best relationship between a divorced Gender also mattered for a significant portion “Maximizing A Major Opportunity: Engaging of time and effort, upfront, understanding or divorcing woman and her financial advisor of WDM participants. Among respondents, nearly Female Clients,” women are more willing to re- other parts of their lives in addition to their is one based on a deep and comprehensive half (46%) believed it was critical or somewhat ceive financial advice than men and are more financial picture. knowledge of her life. All solutions should be important that their financial advisor be a woman. interested in holistic financial guidance and tailored to her unique situation. Of the WDM While, typically, women do not have a gender planning to meet a specific lifestyle or goal. study women, 92% were looking for a financial preference in working with a financial advisor, it is Women look for inclusiveness and a advisor to build a financial plan and strategic clear that women in transition (such as divorce or collaborative approach, and want to stay investment allocation based on their unique the death of a spouse) have a stronger preference engaged in the financial-planning process.2 situation, goals and risk tolerance. to work with a female advisor.
1 Heather Ettinger and Eileen O’Connor, Family Wealth Advisors Council, “Women of Wealth: Why Does the Financial Services Industry Still Not Hear Them?,” 2011
2 Kathleen Burns Kingsbury, Fidelity Investments, “Maximizing a Major Opportunity: Engaging Female Clients,” 2015 3 BlackRock, “Men vs. Women: The Financial Advisor-Client Relationship,” 2014
50 51 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
The WDM participants preferred to hire Experience was the factor WDM participants comprehensive wealth managers to help them considered most important when hiring plan their financial future. a matrimonial attorney.
Is it important that your financial advisor How important is it that your advisor be a Matrimonial Attorney The WDM contributors considered several create a strategic investment allocation comprehensive wealth manager? Nearly half (49%) of the women surveyed said key areas when determining which lawyer based on your unique situation, goals and they would recommend their matrimonial attor- to hire for their divorce. risk tolerance? ney. Another quarter (27%) were not sure they would recommend and the remainder (24%) of the WDM respondents answered that they would not give the name of their lawyer to a friend.
Despite the majority (87%) of WDM participants preferring to work with a comprehensive wealth
The WDM contributors preferred to work manager, only 13% hired this type of with a wealth manager over any other type financial professional. Of all the factors considered, experience of financial professional. How would you describe your financial advisor? A wealth manager offers more than just was the most important to 39% of the WDM investment advice, encompassing all parts For those lawyers missing referral opportunities, respondents. The WDM members shared of a person's financial life. Rather than trying it could be because their clients do not have a that any matrimonial attorney considered to integrate pieces of advice and various strong relationship with them. A significant number should have substantial experience in products from a series of professionals, the of respondents (40%) shared that their divorce handling divorce cases with situations client benefits from a holistic approach. A attorney did not know them well enough. The similar to their own. single financial firm coordinates all the services remainder, however, gave good reviews. Nearly a The top priority for nearly a quarter needed to manage her money and plan for her quarter (23%) felt that their lawyer knew them very (23%) of survey contributors was expert current and future needs. well and 37% knew them well enough to represent negotiating ability to help resolve the them effectively. divorce quickly with as little collateral damage as possible.
52 53 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
Nearly 1 out of 3 WDM respondents had In the WDM study, half of the participants admitted neither an accountant nor a CPA. that they did not have an updated estate plan.
Listening skills were important to 20% of Would you recommend your accountant/ Estate Planning Attorney Also of note, 57% of WDM respondents WDM participants. These participants insisted CPA to a friend? Often overlooked, estate planning is crit- did not have an estate planning attorney. that the divorce attorney also be accessible ical for divorcing women. Failing to properly The respondents who did have an estate and prompt in answering phone calls, emails, address these matters could lead to family planning professional gave mixed reviews and requests for meetings. disputes and financial troubles down the road. about them. Forty-one percent of the women Rounding out the bottom of the list, 18% Recommended legal tools for customizing did not feel that their attorney knew them of women hired an attorney based on the an estate plan include a will, power of attorney well enough to do a good job of drafting strength of their relationship with judges and personal health care proxy. their estate planning documents. A quarter in the jurisdiction. One in two respondents updated their will felt that their attorney knew them very well after their divorce. However, the other respondents and 37% felt that he or she knew them well Accountant or CPA Nearly all of the WDM respondents (87%) either failed to update their will or did not have enough to do a good job. Filing a tax return post-divorce is absolutely who had an accounting professional reviewed any estate planning documents. Despite a large number of WDM necessary. However, 29% of WDM women had them favorably. More than a quarter (27%) respondents sharing that their estate planner neither an accountant nor a CPA. Did you update your estate plan believed that their accountant knew them very did not know them well, 52% said they would Some survey respondents shared that although after your divorce? well and 59% felt that he or she knew them well recommend him or her. Nearly a third (30%) their ex-husband had had a good relationship enough to do a good job preparing their tax were not sure they would recommend their with their accountant, they did not have a good return and advising them on tax issues. lawyer. Only a small percentage (18%) of relationship with their former tax professional. the respondents answered that they would Having a poor relationship with their accountant How well did your CPA know you? definitely not give the name of their lawyer led some women to navigate taxes on their own. to a friend. On a positive note, those respondents that used an accountant were quite happy with their services, and 70% would recommend their accounting professional. Another 15% said they needed to give this more thought and might recommend him or her. Only a small minority (15%) would not recommend their accountant.
54 55 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
Other than a divorce financial planner, WDM Divorce coaching is a growing profession in respondents believed that a therapist would have the divorce field. been most helpful to them during their divorce.
Therapist and Other Professionals Divorce Coach I felt totally alone. When I looked around Of the kinds of professionals available to Divorce coaches support, motivate, and for support, "everyone" either cost too much, help WDM respondents through the divorce guide people going through divorce to help talked AT me, required I join their church process, 60% overwhelmingly said that a thera- them make the best possible decisions for group or suggested I date. These answers pist would have been helpful. their future. Divorce coaches have different made me feel more alienated. I never felt understood or accepted. “I wish I had more support to help maintain professional backgrounds and are selected based on the specific needs of their clients. my psychological strength to be present for Given that my lifestyle, when compared to Relatively few participants reported working my children.” others' going through divorce, was still in the with a divorce coach. However, several expressed - Jen W., Married 12 years high-net worth category, I felt judged. Like, a wish that they had had one. “get on with it.” Culturally, I felt others were “I needed someone to support me around “I wish I had had a divorce coach to help completely and utterly at a loss on how to the adjustment of suddenly being single.” explain the process to me and let me know help, what to say or how to respond to my - Kate N., Married 9 years I was running a marathon, not a sprint. I emotionality. There have been times during needed someone to hold my hand when I this transition when I experienced some of “I wish I had someone that could at least was frightened and help me think through the loneliest moments of my entire life.” tell me what to do and expect, like a different choices, keep me calm and opti- – Laura B., Married 12 years divorce coach.” mistic, give me empathy when I was freaking out, assure me that I was safe and protected, - Jersey G., Married 32 years remind me of my values, help me be a calm “I would have really benefited from a mom and astute client, keep me prepared therapist, financial advisor and divorce and help me create emotional safety while support group.” in the courtroom, the attorneys’ or therapists' offices and during interviews. - Olivia P., Married 4 years
“I wish that I had someone impartial to talk to.”
- April J., Married 2 years
56 57 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ® Case Study Colleen – Building a Team of Professionals
Colleen had contemplated divorce for over After reviewing Colleen’s goals and financial Colleen’s lawyer introduced her to the With a strong team of professionals who a year. She decided to ask a few close friends situation, her lawyer felt it was important for next member of her team, a divorce coach. had experience working with women going who had recently gone through divorce for her to meet with a CDFA®. Colleen and her She was told a divorce coach would be her through divorce, Colleen was able to come guidance. Their first and most important piece husband had accumulated a significant amount divorce guide and support. These professionals to a negotiated settlement and divorced her of advice was to have a support team who of assets, and she knew that she did not are trained to help work through the issues husband in less than two years. Her team would always have her best interests at heart. understand everything she needed to know to that were paralyzing her from moving forward, worked collaboratively, making the process First, Colleen needed to determine which make a smart decision about money, moving listening to her needs and concerns. less draining and more productive. Colleen professionals would be most suitable for her forward. Her lawyer felt it would be beneficial Colleen felt skeptical about meeting a never felt alone during the process. She and when to hire them. She recognized that for the financial expert to run scenarios to see divorce coach, but took the meeting, anyway. took on the legal, financial and emotional she needed expert advice, but also realized how each settlement proposal would affect After speaking with the divorce coach, she challenges of divorce with a strong team it could get very costly. Colleen’s first instinct Colleen’s life. immediately felt at ease. This person had a behind her, and finalized her divorce feeling was to reach out to a matrimonial attorney. With the legal issues and financial aspects comforting presence and had been through educated and empowered. After interviewing a few professionals, Colleen of Colleen’s case under control, she had her all- divorce, herself. soon realized she was looking for someone star team in place. Or so it seemed. Colleen’s divorce coach accompanied her who not only had good listening skills, but more Colleen started to go missing in action for to a few of the meetings with her attorney and importantly, had many years of experience weeks. She did not show up for appointments CDFA®. She loved that she had an advocate working with clients in a similar situation. After and failed to respond to important emails and and, at times, a personal stenographer with meeting with three attorneys, Colleen met telephone calls. When her lawyer confronted her in every step of the process. Colleen’s Denise, a matrimonial attorney near her town, her, she admitted that she needed more coach also helped her communicate more and immediately felt that she was being heard emotional support and guidance moving from effectively with her soon-to-be ex, and and would be well represented. being married to being single. the late-night ranting via text stopped and negotiations started to move forward.
58 59 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ®
Conclusion
Any flight attendant will tell you that in the Women Need a Team. Women Need a Confidence Boost. In addition to power imbalances within event of an emergency, you must place the air When faced with a stressful situation, women Women who are disengaged from making their relationships, women are still battling to mask on yourself before you put it on your child. tend to seek the help of others. During a divorce, strategic decisions about money may behave be equal in the workforce. According to the However, few women heed this advice, taking they reach out to family, friends and trusted this way due to a lack of confidence. Many Center for American Progress-The Women's care of themselves first, when it comes to their professionals for comfort and guidance. We found women were never given the opportunity or Leadership Gap, women make only 78¢ for divorce or separation. that a large number of WDM respondents did not encouragement to participate in, or educate every $1 earned by a man. Women hold During the divorce process, women tend to feel they had enough support, and some felt that themselves about, finances. It makes sense only 14.6% of executive-officer positions, focus more on taking care of the people that they did not have any support, at all. Participants that a woman will be less likely to want to and represent 8.1% of top earners and 4.6% they love, and less on themselves. This may repeatedly said that aside from the support of be involved in the minutiae of managing of Fortune 500 CEOs. These circumstances include children, parents and even friends their family and friends, they wanted to work with her money if she does not feel assured in conspire to reduce women's confidence. that have difficulty coming to terms with the a collaborative team of divorce professionals. her knowledge about financial matters. It is In spite of this, Fidelity Investments Money couple’s decision to divorce. To women, it’s not only about money, or less about disinterest, and more about her Fit Women Study shows that women who do It is very clear that WMD women needed the children, or the house, or the furniture; discomfort around the topic. choose to invest actually realize higher returns more support from the professionals in their it’s about how everything comes together in Despite recent social changes, some than men – that women’s tendency to stay lives - as well as from their friends and family - a larger picture. It’s about different aspects women are still raised to believe they won't the course, and make fewer trades, is a more before, during and after their divorce. of their lives working together so they can be good at dealing with finances and that, if profitable and wiser strategy. How can we better understand and support move toward the goals they want to achieve they're lucky, some man will take care of the There is still much work to be done. When divorcing women? for themselves and their loved ones. Women details of money and investing. The majority given the right tools and direction, women are looking for holistic guidance when of women in the WDM survey disclosed that are just as capable with finances as men, striving toward a specific lifestyle or goal. their husbands made all of the long-term and possibly even more so. What women The most effective team that will deliver this savings and investment decisions. lack is the confidence in themselves to make holistic advice includes not only a matrimonial smart financial decisions, and the learning attorney, but also a financial advisor and a opportunities to invest in their own financial therapist or coach to help them manage the literacy. As a society, our goal should be more changes and stress brought on by divorce. financial training and support for women.
60 61 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Conclusion Continued
Women Need a Judgement-Free Zone. Women Need to Talk About Money. We carry our emotionally-charged mem- Nearly a century ago, Emily Post counseled ories of money from childhood. Watching our people to keep their financial affairs private, and parents’ or close relatives’ behavior around most women have been mum about money ever money forms our unique money personality. since. Women are still socialized to not talk about Some personalities have irrational attitudes their finances with others. and beliefs about money that are counterpro- The number one reason given for avoiding ductive to achieving financial security. Others these discussions is that money should be kept are constructive and helpful in encouraging private. All this lack of discussion surrounding smart financial decisions. money leaves women in the dark about their These hard-wired belief systems come own finances. That entrenched silence hinders into play when making choices about how we women from developing personal financial skills spend, save and invest money. Working with a and threatens their financial security. Money professional who offers a judgement-free zone discussions are so taboo that some women find and strives to understand these sentiments themselves on the doorstep of divorce without through good listening skills is key for women a realistic sense of their family’s finances. going through divorce and in the period after Financial professionals, such as Suze divorce. Women are good enough (some might Orman, are starting the money conversation say, too good!) at judging themselves - they do and are bringing money into the living rooms not need someone else to do this for them. of America. We, too, must engage in money conversations with our families, friends and the trusted advisors in our lives. Not only will this help each one of us become more financially aware, but we will also be creating social change, a change that is long overdue.
62 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce Francis Financial – Plan | Grow | Protect ® About the Authors Stacy Francis CFP®, CDFA®, CES™ Avani Ramnani CFP®, CDFA®
programs each year to women who want to career, she developed expertise in the areas of get savvy about their money. tax planning, financial planning, and investment She is the Director of the Association of Divorce management. She has earned the Certified Financial Planners’ (ADFP) Greater New York Metro Financial Planner® and Certified Divorce Financial Chapter and a member of the International Divorce Analyst® designations. She completed her Financial Analyst (IDFA) organization. Stacy has financial planning educational certification from spoken over 250 times around the country on the College of Financial Planning in Denver. Early in her life, Stacy Francis witnessed how important financial planning topics for women. Avani Ramnani grew up in India and developed Avani is the Director of the first Manhattan devastating life could be for women who were Stacy has received numerous industry awards, a passion for economics and finance early in her Chapter of the National Association of Divorce not empowered through financial education. among them, Investment News Top 20 Women life. In her formative years, she was lucky to have a Professionals. She is also recognized nationwide Her grandmother stayed in an abusive marriage to Watch in the United States, Financial Planning strong role model in her mother, who managed the as an expert in her field and has been quoted because she did not have the skills to effectively Association’s Heart of Financial Planning Award family’s day-to-day as well as all of the strategic extensively in publications such as Bloomberg, deal with money. That experience changed and Financial Planning Magazine's Pro Bono financial decisions. Growing up in India, Avani saw Chicago Tribune, CNBC, Forbes, Kiplinger’s, Stacy's life and drove her into the finance field. Award. She was also listed as a National Money the impact of financial education segregation. Investment News, SmartMoney and Wall Street Stacy is the President and CEO of Francis Hero by CNN Money Magazine and received Women who didn’t handle their finances well had Journal. In 2015, she was the recipient of the Financial, which she founded 15 years ago. the Women’s Choice Award for one of the best a huge disadvantage compared to their more Smart CEO Executive Management Award Stacy attended the New York University Center financial advisors for women. money savvy male counterparts. This realization celebrating her leadership at Francis Financial. for Finance, Law and Taxation and has over 18 She is a nationally-recognized financial grew into a passion for helping women gain Avani extends her passion in the field of years of experience. She is a Certified Financial expert being one of twenty of the nation’s confidence when managing their money. personal finance by dedicating time to teach Planner® (CFP®), Certified Divorce Financial leading wealth managers on CNBC’s Digital Avani is the Director of Wealth Management children and young adults about money. She Analyst® (CDFA®) as well as a Certified Estate Financial Advisor Council, a member of the and Financial Planning at Francis Financial. She volunteers with organizations such as High Water and Trust Specialist (CES™). Stacy is the Forbes Finance Council, as well as an expert holds a Bachelor’s degree in finance and an MBA Women and Savvy Ladies to pursue this cause. founder of Savvy Ladies™ and serves on its contributor for The Wall Street Journal. She has with a specialization in finance from one of India’s Executive Board of Directors. Savvy Ladies appeared in over 100 media outlets including top 10 business schools. Avani has 14 years of is a nonprofit that has provided over 15,000 Barron’s, CNBC, CNN, Good Morning America, experience in the financial planning industry and women with personal finance education and Investment News, Kiplinger’s, Money Magazine, an additional six years of experience working resources. The charity offers over 70 free NBC, The New York Times, PBS, and USA Today. in strategy consulting. During her extensive
64 65 Unveiling the Unspoken Truth – The Financial Challenges Women Face During and After Divorce About Francis Financial Simple and Elegant Wealth Management
Unveiling the Unspoken Truth
Francis Financial was formed in 2002 with When working with clients in transition, we The Financial Challenges Women Face During and After Divorce the purpose of doing things differently in the model the outcome of their divorce settlement wealth management industry and to provide and offer a clear and independent image of clients with independent advice, transparency what their financial future may look like if they and individual attention. choose one settlement option over another. We are an independent, fee-only boutique Our team is trained and knowledgeable about wealth management, and divorce financial planning individual states' divorce laws and helps our firm dedicated to providing ongoing comprehensive clients answer questions regarding budgeting, advice for women going through transitions, such alimony, tax planning, home sales, asset as divorce, widowhood and sudden wealth. We distribution, insurance and other factors that are have a fiduciary responsibility to act in our clients' crucial in determining their ideal settlement and best interest. We do not have ties to commissions attaining long-term financial security. or compensation from outside sources, so clients Francis Financial is honored to be the know that they can trust our advice. recipient of numerous industry awards, such as Our team specializes in divorce financial the Women’s Choice Award, Wealth & Money planning and plays a vital role in making sure Management Award for divorce financial that our clients sustain financial peace of mind planning team of the year, Financial Planning during and after their divorce. As Certified Association’s Heart of Financial Planning Divorce Financial Analysts (CDFA®), we work Award and Financial Planning Magazine’s Pro hand in hand with our clients and their team Bono Award. Most recently, AdvisoryHQ listed of divorce professionals to understand how Francis Financial as one of the Top 9 Best the financial decisions they make during their Financial Advisors in New York, NY. divorce will impact their future.
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