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Wellbeing & Financial Advice

While the financial benefits of advice are often discussed, the value it can add in terms of wellbeing is sometimes overlooked but is just as valuable. This can be particularly important when going through a divorce.

The improvements to wellbeing that financial advice can offer can be difficult to assess. After all, every client will have differing goals, priorities and challenges. Research from Royal London has measured how professional financial advice can support emotional wellbeing.

Financial advice helps people feel in control and confident

The research found that the vast majority of the 17 million people who seek financial advice in the UK benefit from a positive experience. Overall, it helps people to feel confident, in control of their finances and gain peace of mind. Clients rated three key areas that highlight the positive impact of a relationship with a financial adviser:

  • Quality of advice and expertise (82%)
  • Communication style (81%)
  • Trustworthiness (81%)

One of the important ways the report found advice is adding value  through understanding financial matters.

Those receiving advice feel up to three times more confident in their understanding of products and their finances than those who haven’t worked with an adviser. Some 23% of non-advised individuals said they would not know where to start when asked about life insurance, compared to just 7% of those taking financial advice.

The financial settlement and decisions you make at the time of divorce, have a long-lasting impact and it’s important to understand products and your options.

It’s a step that boosts emotional wellbeing. Some 63% of clients said they felt secure and stable, as opposed to 48% who did not receive advice. The report highlighted how it can have an impact on emotions too. Four in ten (41%) of those that do not take financial advice said they feel anxious about their household finances, compared to three in ten (32%) who receive advice.

On average, financial advice clients are £47,000 better off

While the emotional benefits of advice are important, the financial benefits are too. After all, financial freedom can help you to achieve goals and feel more confident about your future.

The report also covers previous research conducted by the International Longevity Centre UK.  It found that customers who took financial advice were on average £47,000 better off. Those who fostered a long-term relationship with their adviser were up to 50% better off than those who received one-off financial advice.

Tom Dunbar, Intermediary Distributions Director at Royal London, said: “We have long suspected that the benefits of advice go far beyond financial gains alone and our research confirms that individuals who have received advice are more likely to feel confident about the future, and less likely to feel anxious or worried.

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Pension Sharing : Guidance from the Courts

With many couples separating after having married either later in life or for a second time, the issue of how pensions should be shared and whether pensions should be shared so as to exclude pension accrued prior to that marriage has become a major issue requiring advice from Family Lawyers.

Fortunately in the case of W v H (Divorce financial remedies) [2020] EWFC B10), the Courts have given very welcome guidance as to the approach that should be taken when sharing pensions.

In that particular case the wife was aged 50 and the husband 48. They had lived together since 1999, married in 2005 before then separating in 2016.

The main assets of the marriage were the pensions.

The husband had a large Defined Benefit scheme (schemes which pay out a secure income which increases each year, such as Final Salary or Government Pension Scheme) with a Cash Equivalent  of over £2 million and a small Defined Contribution scheme ( a scheme in which the scheme member builds up a fund which can then be used to buy a retirement income) and the wife had a modest Defined Contribution and Defined Benefit scheme.

The main argument between the parties was

  • Should the pensions be shared to achieve equality of capital value or equality of retirement income?
  • Should the courts exclude that part of the pension that was earned by the husband prior to marriage/cohabitation?

In this case the Court decided to make a pension sharing order which would seek to equalise retirement income.

Furthermore the pension sharing applied to the entirety of the pension rights and did not exclude those accrued by the husband prior to the marriage.

The court stressed that although there is no “one size fits all” solution and that there are situations where equalising capital values may be appropriate for example where pension assets are relatively small, where parties are relatively young, or where pension assets are relatively straightforward, there will also be situations where pension sharing to equalise income would be considered appropriate. These would be cases where:

  • The pensions are medium or large and the parties needs on retirement are required to be met.
  • Where one or more of the pensions is a defined benefit scheme
  • The parties are no longer young and retirement is on the horizon.

The Judge made particular reference to the Report of the Pension Advisory Group (PAG Report) and quoted from the report itself: ‘Given that the object of the pension fund is usually to provide income in retirement, it will often be fair … to implement a pension share that provides equal incomes from that pension asset … Equality of income will often be a fair result … A division that pays little or no attention to income-yield may have the effect of reducing the standard of living of the less well-off party significantly.’

The Judge also rejected the husband’s argument that pension accrued by the husband prior to the marriage should be excluded as this would have resulted in the wife being unable to meet her needs.  The Judge again referred to the PAG report which reported that the vast majority of cases will be needs based and that in needs cases the Court can consider sharing any assets irrespective of when they were acquired in order to meet the parties’ respective  needs.

Pensions are complex assets but The Black Country Collaborative Group are fortunate to have Specialist Family Lawyers and Independent Financial Advisers who will be able to guide separating couples every step of the way to help achieve a fair resolution through the Collaborative Process.

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Involving a Financial Neutral can save money

It is always preferable to obtain expert guidance as early as possible.

This is true whatever the situation, but is very important within a Collaborative divorce. By having an expert on hand early they can assist in making sure that the discussions and negotiations are being held from a position of knowledge.

Take an example where an expert is not involved at the start of discussions, maybe due to the perceived added cost of including another professional.  Lawyers are not permitted to provide regulated financial advice and thus it is important that an appropriately qualified professional is introduced to provide support and ensure that negotiations are based on true values.

Say a divorcing couple have their home, cash savings, investments, pensions and an inherited property that is currently rented out.  There will be tax implications for some of these assets both on a transfer as part of the divorce and also selling them in order to provide liquidity, possibly for a further house purchase.

A Financial Neutral is a financial expert with a knowledge of the divorce process, especially Collaborative Law.  They will assist the parties in exploring their future options and suggest ways in which the assets could be split for each party to achieve their future objectives as closely as is possible.

Without this early input, discussions may take asset values at their face value and not account for any tax or inflexibility, thus the agreement may be flawed and whilst the intention may be to have an equal share of the assets the reality may be very different.

By having the neutral involved early they can assess the situation and if they feel they are not required they will step back and observe from a distance, they may be required again later in discussions and as they will already have an understanding of the parties needs will be able to assist as and when required.

The costs of having a neutral involved early in the process are likely to reduce the overall costs rather than increase them and also result in a fairer agreement.

Ian Hawkins is a director of Oculus Wealth Management (Wombourne)Ltd and Southdown Consultants Ltd.  He isboth a Financial Neutral and a PODE (Pension on Divorce Expert) and is thusideally suited to assist lawyers and divorcing couples.

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Why do I need a forensic accountant in my divorce when we have agreed not to go to court?

Many people find that the collaborative approach to divorce is a much healthier way of moving forward after a marriage breakdown than the adversarial, and often divisive, process of going to court.  However, there are still difficult decisions to make and a forensic accountant can provide some of the help you both need to reach find a workable solution.

Your collaborative lawyer may recommend that you involve a forensic accountant.  There is no prescribed ‘role’ for a forensic accountant in the collaborative process – our input is entirely tailored to your needs.

The first role is often as fact-finder, collating the appropriate financial information and explanations relating to business assets.  Both parties to the collaborative process sign up to full financial transparency, but the forensic accountant brings the skills and knowledge needed to scrutinise the data so it can be relied upon and used to generate creative solutions.

The second possible role of the forensic accountant is valuer.  We are often asked to value businesses or shareholdings, comment on the ‘liquidity’ in the business (i.e. what could be extracted to fund a settlement without harming the business) and the likely income that could be achieved from the business going forward.  This can be reported to you formally in a report, or informally in a round-table meeting.

The third role can be as educator.  If one party runs a company, the other often feels ‘in the dark’ about the business and its value.  By bringing that spouse up-to-speed on financial issues, it helps them to feel comfortable to reach decisions so the process can move forward. This can be achieved in a one-to-one meeting with the non-business-owning spouse to talk through the latest accounts and explain what they indicate in terms of liquidity and income.  This is a good chance for them to ask questions in a safe environment.

The fourth role of the forensic accountant can be as an impartial facilitator.  Once the value of the assets is established and the parties have some goals in mind, we can work together with your lawyers to identify appropriate options (e.g. share transfers, property divisions etc.), discuss and analyse the likely tax consequences.  A forensic accountant can act as the reality-check when brainstorming solutions.  This is also an opportunity for you both to raise questions and concerns.  Together with your lawyers we can help you find a resolution that best fits your family’s needs.

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The Importance of Listening

One of the most common features of working with divorcing couples, is that of discussing, finding out and encouraging the importance of good listening.

Often, we hear people say that they are good listeners and friends and relatives who might be supporting you through this difficult process, perhaps will offer you their ear whenever you might need to offload or discuss issues that have arisen.

Conversations with your ex concerning the house, finance and most importantly the children are inevitable at some point.

These conversations arise at a time when emotionally, we are not best placed to hear what needs to be said.

Divorce can often result from a breakdown in communication that has been building for some time, coupled with other relationship difficulties.

Below are some tips to consider when communicating with your ex:

LISTEN:

  • How do you know when someone is listening to you?
  • How do you listen?
  • What are the optimum conditions for you to listen fully?
  • If you are upset, frustrated, or angry, your listening skills will be impaired.
  • If you find yourself thinking about something else or how you might respond whilst others are still talking, you have stopped listening fully
  • Try to keep your focus on what is being said
  • Ensure that the time is convenient for you both to talk. If one of you needs to get away then your focus will not be on the present situation.

Once the other person has stopped talking.

CHECK:

  • To make sure you have fully understood, e.g. “Ok so what I heard you say was……………”
  • It is not unusual to miss important points during ‘emotional’ conversations, especially with your ex.
  • Keep checking until you fully understand what has been said.     

PAUSE:

  • Take a moment to reflect on what’s been said.
  • You might need more time, try not to feel pressured into making your reply immediately.
  • Rearrange another time, convenient to you both to continue the conversation if you need more time.

Once you have considered your response

REPLY:

Try to

  • Use ‘I’ Statements, e.g. “I think, I feel”
  • Consider your ex’s position, put yourself in their shoes.
  • Keep calm-it’s easy for things to escalate.
  • Consider your children’s needs.
  • Seek help if you are struggling. Consider a relationship therapist or mediator.
  • Check that your ex has understood, “can you please repeat back what you’ve heard?”

Some final points to consider:

What you’re going through is tough. You will at times feel very emotional and having a rational, calm conversation with your ex is probably the last thing you want to do.

Remember, no one can be made to do anything that they don’t want to, try to offer suggestions rather than make demands.

Control ‘your end’ of the conversation (AND the behaviour that goes with it) and be the best listener you can be, for the sake of your children.

 

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An Advisers View

I have advised many clients going through a divorce, on occasion following the divorce I have continued to advise both husband and wife separately.  Whilst the outcomes of the divorce from a financial view have been varied and specific to each clients circumstances it has been the process that has had the biggest impact from an emotional and personal wellbeing perspective.  I am not really there to provide support at this level but one cannot help but be drawn in and sympathetic to the feelings of longstanding clients.

The clients that have fared better from an emotional standpoint have been those that have divorced through a collaborative process.  Through this route all the discussions have been carried out face to face with both individuals having the support of their legal advisers within the 4-way meetings.  There have been difficult discussions but they have never been in doubt as to what their aims were and where there was conflict it was in the open with a full and frank discussion.  Whilst this has an emotional price, once the agreement was reached they could move on with a continued respect for each other.

Whilst some who have divorced through the ‘traditional’ adversarial approach have come though relatively unscathed others have not fared as well.  The uncertainty as to what their former spouse is thinking or what they are going to ask for next weighs heavy on them.  The financial outcomes may be similar in the end but the respect has gone and there is very little chance of any ongoing civility in communications.  This causes further problems where children are adversely effected.

Any couple who have gone through a divorce will say it is not easy but there are definitely some ways that are easier than others in terms of the emotional price paid.  Collaborative may not be suitable for all but it is certainly worth a look.

 

 

 

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“it’s the most wonderful time of the year” But is it???

So, it’s “that” time of year again and already in town there is a sense of pressure and panic as I watch busy shoppers struggle with bags laden with gifts for family and friends. There’s a bustle around the supermarkets as trollies collide, stacked high with sprouts, parsnips, turkey and pudding.

There is also anticipation and excitement from children who are queuing to see Father Christmas or gazing at the bright lights dancing high above the streets of the town. As the song tells us “it’s the most wonderful time of the year”

But is it???

For some people, Christmas is a time of dread for one reason or another. Finance (or lack of it), having family to stay, thinking of loved ones who may have died at this time of year and especially the extra pressure put upon us to complete all the tasks that need to be done before “the big day”. It is particularly difficult for those families affected by separation or divorce.

It is hard for parents even to consider being away from their children on Christmas Eve/Day and so battles often occur between parents over who will have the children during those special days. Ultimately the end result is often unhappy parents and unhappy children who are stuck in the middle.

As a therapist I help families who are struggling with contact and co-parenting issues, so I thought it might be useful to let me tell you what I know children of separated parents say about Christmas;

  • Children love you both and want to spend time with each of you
  • Children love having Christmas twice (what child wouldn’t?) and often don’t mind which order they go in
  • Being around grandparents and extended family is something that children of separated parents can miss out on, so Christmas is an ideal time for them to catch up
  • Parents who are uncivil to each other at handovers and especially at Christmas make it harder for children to be excited about leaving one parent and going to the other.
  • Children often have a good sense of fairness and are very adaptable to change-what gets in the way is parental conflict.

So, at this busy time of year a few “Try” and “Try not to” points to help you have the best possible Christmas

  • Try to remember if you are feeling angry and upset with your ex, that these are your feelings about your relationship- the children have a different relationship with your ex
  • Try to make it ok for the children to be with and get excited about being with your ex- they love them as much as they love you
  • Try to be fair-children will notice when it isn’t and it upsets them when they feel a parent is missing out
  • Try to negotiate alternate years for Christmas Eve/Day to make it fair to both of you and especially for the children
  • Try to be excited for your children when they are going to the other parent, even if you don’t feel it. They will be excited but if you seem sad it causes them distress.
  • Try not to compare the two Christmases-both are equally important experiences for your children
  • Try not to argue with your ex at the handover-if something is wrong save it for another time
  • Try not to contact your children too much when they are with your ex. Remember that hopefully they will be having a good time- they still love you but they will want to be involved in Christmas Number 2
  • Presents are exciting for children but time with each of you is much more important. Try not to get too upset is your ex has bought the latest gadget or more expensive gift-what children remember is the time you spend together.

It’s hard for everyone involved when couples separate, especially for the children and particularly the first Christmas apart. Parents have a choice about how to behave in front of their children. Remember that children learn from the adults in their life and will mirror their parents’ behaviour.

If things go wrong try not to worry too much, just try to do your best for next time.

As parents we can only be ‘good enough’-we are not perfect but we can aim for better co-parenting relationships in the future.

I wish you a Merry Christmas and hope that your children have lots of fun with both of their parents.

 

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Can Collaborative Divorce Save Time And Money As Well As Protecting Families?

There is no question that divorce and separation is a time of high stress and emotion for all parties involved, including children who are caught up in proceedings.

What is clear from research carried out by Resolution is that parties who separate or divorce using the Collaborative process properly, can often minimise much of this stress and emotional anxiety.

There has been much said and written about traditional family litigation being phased out in preference for alternative ways of resolving problems, with lawyers increasingly encouraged to work with parties to find amicable and constructive ways forward in divorce and separation matters.

Whilst the majority of clients that we now encounter respond to this kind of approach, we also acknowledge that divorce is still a difficult and painful process. Those of who practice Collaborative Family Law, can see the obvious benefits of using this process for the above reasons, but could this actually provide additional benefits in terms of time, money and future family relationships?

By entering into the Collaborative process, parties to a divorce or separation are assisted by Collaborative trained professionals who will assist them in resolving their own issues in an open and constructive environment. It is this environment that can save time and money, not only through the process, but thereafter.

By also committing not to enter into court proceedings, this also has the added advantage of removing the threat of such proceedings over the parties and encourages people to work together to find lasting outcomes for themselves and their families.

Obviously, by entering into open and constructive discussion and avoiding court proceedings, this can save considerable time and cost in terms of the processes that people employ.

However, over and above this, the way that parties interact with each other during the Collaborative process, in terms of reaching agreements around their separation, financial affairs and their children, creates a framework for future discussions and a format of resolving disputes that can work to protect the best interests of families.

When looking at the benefits of the Collaborative process, we believe that these can fairly be summarised as follows;

The protection of children

Children are often impacted by contested divorce proceedings and anyone who has gone through the court process knows how difficult this can be. By collaborating to find the best solutions for themselves and their children, parents often find a new way of communicating that is centred around the best interests of their children in the future and this can take away a huge amount of the potential distress that conflict often causes.

Saving time and money
When compared to litigation, the Collaborative process will invariably be considerably cheaper and quicker. Traditional litigation can often cause parties to become entrenched in their positions making the process slower and even more expensive over time.

The protection of extended family
Whenever there is litigation, inevitably, extended family and friends become engaged and are often forced to choose who they support. This can have long-lasting impact on both family and friends and ultimately damage longer term relationships not only with the parties but also the children at the centre of the dispute.

Privacy

In an increasing age of transparency, many clients want to keep their divorce and financial affairs out of the public domain. The Collaborative process is entirely confidential and can maintain everyone’s privacy.

In summary, we believe that the Collaborative process achieves not only a high success rate in terms of outcome, but more importantly meets parties needs and requirements in terms of preserving their dignity and respect, as well as being a timely and cost effective process . It can also have additional benefits in terms of the protection of family relationships long after any divorce or separation is concluded in a legal sense.

Contact details of qualified Collaborative professionals in the Black Country area who can provide you with more information can be found here

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Separating without Blame

The current law provides that the ground for seeking a divorce is irretrievable breakdown of the marriage based on one of five facts being adultery, unreasonable behaviour, two years desertion, two years separation with consent and five years separation.

Resolution, the national body of Family Lawyers and Practitioners, has long campaigned for reform by introducing no fault divorce in order to reduce conflict and support separating couples to resolve matters amicably.

Nigel Shepherd, the Chair of Resolution reports that Resolution’s campaign has led to a high level of media coverage and public declarations of support for no fault divorce.

A report in “The Economist” agreed that it was time to introduce no-fault divorces and went on to say:

“sorting out the division of assets and arranging for the…future care of children are always the hardest aspects of ending any marriage. Eliminating questions of who is to blame for the split would allow those involved to focus on dealing with these”.

This campaign for reform is supported by the public with a YouGov poll published in March 2017 reporting that 69% of the public want to remove blame.

We at the Black Country Collaborative Group believe that the introduction of no fault divorce will help separating couples to resolve issues relating to their children or division of assets in a constructive way without divisive arguments about who is to blame for the separation.

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Is my case too big for Collaborative?

I am often asked the question as to whether the circumstances of a particular case would be suitable for a collaborative solution or whether the case if too big or the circumstances not right.

In short, I do not believe that there are many cases, if any, that are not suitable for collaboration, provided that the parties and their lawyers enter into the discussions in the right way.

Recently, I have been involved in a divorce case which has been resolved using the collaborative procedure between two parties with total assets of somewhere between £10 million and £12 million.

This was further complicated by the fact that there was a trading business of which both parties were equal shareholders with some disagreement over the ongoing treatment of this business and its day to day running and operation.

Whilst this kind of case may not for the fainthearted, it is important to remember that with two experienced collaborative lawyers, a case like this is not impossible and can be dealt with.

What helped in this case is that both parties had seen friends go through more “traditional” divorces and witnessed first hand the consequences of litigation and bitter negotiation that only served to increase both the animosity and cost for everyone involved.

What both parties recognised was that they had two children who they both wanted to put first in their consideration’s and both of the parties were sensible and experienced entrepreneurs who could see the benefit of dealing with their divorce in a different way.

Having both instructed experienced collaborative lawyers, the first step was to speak to both parties as to their reasons and motivations, before the collaborative lawyers then spent some time together working out where they saw issues between the parties and preparing themselves for a face-to-face meeting.

Of particular importance was to get the agenda right to the very first meeting.

The reason I say this is that both of the collaborative lawyers recognised the power of getting early agreement.  What became apparent quite early was that there were a issues where one or both parties expected there to be disagreement, but it appeared that matters could be resolved quickly by agreement between them.  These items went on to the agenda early so that the parties could get used to agreeing things that they might have thought would be difficult.

More challenging matters then appeared towards the middle of the agenda, when the parties had already got into a culture of agreement between themselves.

Whilst I am not pretending for one moment that this was an easy process for either party, or their lawyers, the benefits of reaching agreements in this way are huge.

By both parties preparing well for that first meeting, as well as reaching some really sensible conclusions around the business, around 90% of the case was dealt with and resolved at that first meeting, which of course had a huge impact on the saving of legal and accountancy fees.

Whilst the case is not fully concluded and there are still some finer details to be ironed out, what it does show is that by taking a creative and constructive approach to these kinds of issues, individuals and families can reach fair and lasting solutions in an efficient and cost-effective way by using the collaborative process.

It is my opinion that cases are few and far between that do not fit into this model, provided the willingness is there to enter into this kind of process and the right level of support is provided by the collaborative lawyers and financial neutrals that need to get involved.

Contact details of qualified solicitors in the Black Country area who can provide you with more information on collaborative practice can be found here.