posted 13th March 2024
When You Need a Financial Adviser in a Divorce
Most divorce settlements do not need a financial adviser. Some do, and the difference is worth knowing before you spend money on one.
What a mediator does
We establish what exists, work through what each party needs and negotiate terms both can accept, then draw up the consent order.
That covers the great majority of settlements: the house, savings, ordinary workplace pensions, debts and maintenance.
When specialist input is worth it
A defined benefit pension
Final salary schemes are difficult to value fairly against a straightforward pension pot. The transfer value often understates what the benefit is actually worth. Where one is significant, a report from a Pension on Divorce Expert may be money well spent.
A large age gap between the parties
Where one party is close to retirement and the other has decades to go, splitting a pension equally by value does not produce equal outcomes. Modelling that properly takes a specialist.
Equal income rather than equal capital
Where the aim is that both parties end up with similar retirement income rather than an equal share of the pot, that is a calculation rather than a negotiation.
A business
Where one party owns a business, establishing what it is actually worth usually needs an accountant or valuer.
Complicated tax
Transfers of property between separating couples can carry tax consequences. Where there are several properties, or assets held abroad, advice before agreeing terms is sensible.
When it is probably not needed
- One or two ordinary workplace pensions of similar value
- A house, savings and the usual debts
- Both parties of similar age with similar earning capacity
In those cases a report adds cost and delay without changing the outcome.
Choosing one, if you need one
- Look for someone who deals with divorce cases regularly rather than generally
- Ask what it will cost before instructing them, and get it in writing
- Check how they are paid, and whether they earn commission on anything they recommend
- Ask how long the work will take, since it usually has to fit around the settlement timetable
We will tell you
Where we think a specialist report is needed, we say so. Where we think it is not, we say that too.
The cost of an unnecessary report comes out of the same pot as everything else, so it is not in either party's interest to commission one that changes nothing.
We will tell you what your settlement actually requires.
The first conversation is free and there is no obligation.
