Clients' divorces pose big risk for advisers

Third-party specialists may be best bet for spouses and their significant advisers
FEB 02, 2012
Financial advisers looking to help clients considering a divorce should protect their own liability and send them to a divorce financial planner, according to one of the nation's leading specialists in this area. A small group of financial advisers have become experts in helping divorcing couples plan their separate financial futures. They help people and their attorneys think about the parties' long-term financial futures, including usually undiscussed issues such as health care costs, college savings, retirement benefits and leaving an inheritance to children, said Lili Vasileff, owner of Divorce and Money Matters LLC and president of the Association for Divorce Financial Planners Inc. "If an adviser isn't knowledgeable about the state and federal rules about child support, pension valuations and so many issues, the adviser who is trying to be helpful has a big liability risk," Ms. Vasileff told attendees of the FPA Experience 2011 conference in San Diego on Saturday. Typically, the divorce process itself is contentious and emotional, and attorneys have their own challenges to get clients through the process. A divorce financial adviser works with the attorneys to make sure sensitive long-term financial issues are hashed out as part of any settlement. "Divorce takes a snapshot of current finances and doesn't look forward," Ms. Vasileff said. "We have developed optimal strategies to resolve and reach practical settlements." Advisers tapping specialized divorce financial planners are more likely to retain their divorcing clients — albeit as separate parties — because it's pretty much impossible for the adviser to perform these functions and remain neutral, she said. By sending a client to a divorce financial planner, the client gets the expertise he or she needs and "then we send the client or clients back to you," Ms. Vasileff said. Advisers also may be able to avoid clients' bursting into tears over these issues in their offices, something that is a regular occurance during sessions with the divorce financial planner, she said. The 200 members of the Association for Divorce Financial Planners provide divorce planning as fee-only services and have completed specialized training in divorce procedures and rules. Brittney Castro, a financial adviser with Perennial Financial Services LLC, specializes in working with women, many of whom are divorced or in the process of a divorce. She attended two of Ms. Vasileff's sessions at the Financial Planning Association's conference. "As someone who specializes in working with women, I see that divorce financial planning is something that's very needed," Ms. Castro said.

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