With roughly 37% of first-time marriages in Canada ending in divorce, advisors should be prepared to assist clients after a marriage breakdown, says Akeela Davis, an advisor with TD Waterhouse Private Investment Advice in Vancouver and the author of Divorce Dollars: Get your fair share.
More complicated settlements, combined with growing interest in a collaborative legal approach, mean there is often a need for a team of experts in fields such as mental health, lifestyle counselling and financial planning. This translates into a demand for certified divorce financial analysts, who have training in tax laws and asset valuations, as well as estate and investment strategies that affect couples going through a divorce.
There are opportunities for forward-thinking advisors looking to help clients and build their businesses, Davis says. Advisors who have added divorce expertise to their repertoires are carving out a niche for themselves.
“I decided to look into certified training in divorce consultation after several of my clients came to me wanting information, which, at the time, I really couldn’t provide,” Davis says. “As a result, I am much better prepared for the challenge than I was.”
In addition, working with professionals from other disciplines has produced a much wider referral network to draw upon. “An unexpected bonus,” she adds.
Although lawyers have traditionally handled the legal and financial negotiations in divorces, Davis believes lawyers are slowly turning to other professionals to assist with an equitable division of assets. Not all lawyers understand the long-term impact of financial decisions facing couples going their separate ways, she says. Small-business owners pose special challenges, for instance, because spouses are often partners in the business and both expect it to provide them with income.
What certified advisors can do is show divorcing clients how they will be affected by certain decisions about their finances. Using computer-generated scenarios that take into account how assets will be split, the potential income and expenses of both parties and their future taxes can be calculated, Davis says. She generally charges $160 an hour for such consultations — of which she has completed more than 100 — with the average analysis taking 10 to 12 hours.
Gillian Trojan, an advisor with West Capital Wealth Management in Ottawa, which operates under the Armstong & Quaile Associates Inc. banner, became interested in this type of planning after a client asked her for help negotiating a divorce settlement. Trojan also has first-hand experience because she has gone through more than one divorce herself.
“I certainly wish I had known then what I know now,” Trojan says. “I saw this as an opportunity to help prevent other couples from making the same mistakes I did.”
Emotions can run high, however, and not everyone has the temperament to handle the emotional toll of being involved in divorce proceedings. Trojan, who earned her CDFA in 2003, has decided to let her membership lapse.
“I’ve only worked on a couple of cases, and I can’t see this forming a significant part of my business in the future,” she says. “The training is certainly useful but I’m not sure this area is right for everyone.”
Right now, there are two options for advisors interested in accreditation as specialists in divorce planning. Based in Colorado, but with courses offered across Canada, the Institute for Divorce Financial Analysts (www.institutedfa.com) charges about $2,000 for a three-day workshop and in-class examination. The Academy of Financial Divorce Specialists (www.afds.ca), a Canadian group that was formed a few years ago, charges $1,750 for its three-day workshop; accreditation is available only after the candidate submits a detailed case study a few weeks later. It is also possible to qualify through an online course, says Davis, who is an AFDS faculty member.
Although their curricula vary somewhat, both organizations provide sessions on dealing with the legal profession, on working as an expert witness in court cases and on how to market divorce-planning services. Both courses also offer training in a financial software program that helps couples understand the consequences of the choices they have to make in dividing their assets.
Divorce analysts are quick to emphasize that they do not advise clients what to do — that is a lawyer’s job. Rather, they present the two parties with various scenarios and show them the outcomes. If they do proffer advice, they leave themselves open to malpractice because even casual comments might be construed as legal counsel, Davis says.
@page_break@Present the options
“We simply present the options and illustrate the financial impact of each,” Davis says. “We outline outcomes for them to consider and use in their discussions and formal negotiations.”
This approach works best when couples and their lawyers are not in conflict, she adds: “It’s important to recognize, no matter who did what to whom or who did it first, that you must always remain the neutral party.”
Although some lawyers are opposed to bringing in outside expertise and are reluctant to relinquish control, Davis believes that the collaborative legal process is growing in popularity — and some lawyers agree.
“Collaborative law may be single-handedly responsible for revitalizing the practice of family law in Canada,” says Judith Huddart, a partner in the Toronto-based law firm of Dranoff and Huddart.
She estimates that there are now several hundred family lawyers practising collaborative law in Canada.
“Lack of communication is cited as a main contributor to failed relationships,” she says. “Add to this lawyer-fronted negotiations, and it may be no surprise that the ability of a couple to communicate after separation is at its lowest point. The spouses part company with their lawyers armed with a legal agreement but with no ability to work out parenting arrangements with each other.”
Not surprising, custody and money issues drive most divorce negotiations, Davis says. As a result, most clients who use divorce analysts are women, particularly women who lack financial experience or face disparities between their incomes and the incomes of their husbands.
The question of how much spousal support will be paid, and for how long, is generally the most contentious item. “The party who is paying the support may feel he or she will come up short in the end, but after looking at our models, he or she will see that this is not necessarily the case,” Davis says.
“This whole process is all about choices and presenting several options,” she adds. IE
Helping couples survive divorce
With accreditation, advisors can assist divorcing couples — and develop a new business niche
- By: Gordon Powers
- June 2, 2006 June 2, 2006
- 10:48