More than two million people get divorced every year in the United States. Annually, it is a $50 billion industry. Divorce rates for first marriages are currently at 52 percent, and second marriage divorce rates hover at 60 percent (75 to 90 percent if there’s a special needs child). It pays to be aware of this reality when your clients tell you they’re about to get married. Offering financial advice before clients take the plunge may seem uncomfortable, uneasy, unromantic and unfamiliar territory, but wealth planning advisors have the opportunity to bring a client and new spouse to a level of transparency and clarity that will only serve to cement their position as a trusted advisor and increase their odds of a successful marriage.
If you’re the type of advisor who has the skill set to manage difficult conversations and can deal with potential conflict, you may want to offer to sit with the couple (and the other spouse’s advisor) to help get the ideas out in the open. It requires superior communication and conflict resolution skills. Consider divorce mediation training or courses. If you lack these skills or don’t wish to develop them, consider bringing in an advisor who specializes in divorce. It's not a threat to your business. It’s a "value-add" just like bringing in an estate planner or recommending an insurance specialist.
For second marriages, these seven tips apply but may be even more important to protect the legacy for future generations of family that aren’t shared with new spouse. An added layer of protection may be prudent including pre-nuptial. Meet with an attorney who does pre-nuptials regularly
Here are seven steps advisors should advise their clients to consider taking before they take the plunge into marriage.
Michelle Smith is the founder and CEO of Source Financial Advisors, LLC, which specializes in divorce financial analysis services.
Justin Reckers is the CEO of Pacific Divorce Management, director of Financial Planning at Pacific Wealth Management and a Board Member of the Institute for Divorce Financial Analysts.