Building strong, lasting client relationships is about more than just managing portfolios. As a best practice, it is important to address both spouses in conversations and correspondences from the beginning of the relationship. Even if one spouse is more actively involved in financial decisions, acknowledging both individuals creates trust, inclusion, and long-term loyalty. When major life events like death or divorce occur, a spouse who feels recognized and valued is far less likely to seek out a new advisor. Taking this small but important step early on can make a significant difference in client retention and relationship strength over time.
Stay in Your Lane
When couples decide to split, advisors can sometimes find themselves in an uncomfortable spot. They must lend their financial expertise but also approach interactions with sensitivity, clear communication, and impartiality. Your role in guiding clients through a divorce situation will be important, and it’s nothing to take lightly.
That said, here’s a basic guide to how you can effectively support clients during and after divorce while leading with professionalism and building trust.
5 Ways To Offer Support
1. Understand the Legal Process
If you’re new to these situations, it’s important to familiarize yourself with the process, especially in the context of financial planning. While the specifics can be dictated by the locality, there are common steps that relate to the following areas:
- Property Division: Couples might have joint assets like real estate, investment accounts, and retirement funds that they need to split.
- Alimony and Child Support: These obligations will need to be accounted for when budgeting.
- Tax Implications: Clients may need guidance on how to handle the division of assets and be prepared for filing status changes that might impact future tax liabilities.
Your expertise can only go so far. You might need to consult with a family law attorney or attend formal training on divorce financial planning to build your confidence. It’s a good idea to have these professionals in your network in case clients ask for a referral.
2. Remain Neutral and Professional
Divorce situations can be uncomfortable for all parties involved. If you’re working with both spouses, be intentional about remaining neutral. Avoid taking sides, even if you’ve connected on a deeper level with one client over the other. Emphasize that you’re there to assist them with maintaining their financial well-being during this chapter.
To maintain neutrality, do your best to create an environment where open communication and transparency are the standards. Stick to factual, data-driven conversations when discussing financial matters. Reassure both clients that your goal is to be fair and help them both win.
Positioning yourself as a neutral and caring expert is in the best interest of both parties and creates better outcomes.
3. Address Immediate Issues First
Divorces can be expensive and evoke panic about finances. Your first priority should be to help them maintain a semblance of financial order. With that in mind, you should be sure to address the following from the outset:
- Budget Review: Analyze both clients’ cash flow so they can be confident in managing current and future expenses.
- Protect Assets: Explain that clients are best served to freeze joint accounts, credit cards, or lines of credit while they’re still legally married.
- Health Insurance: Walk them through coverage changes and options for post-divorce plans.
Helping clients tackle these short-term challenges helps them bridge the gap between the present and the future.
4. Be Honest About Tax Implications
Taxes will certainly enter the equation in post-divorce finances. Certain arrangements might seem fair on the surface but could introduce complications. For this reason, educate your clients on matters such as capital gains taxes, filing status changes that could alter tax brackets and deductions, and alimony or child support taxes and their implications.
Drawing attention to these matters now can ensure they make informed decisions later down the road.
5. Lay the Foundation for Their New Financial Futures
Divorce may mark the legal end of a union, but it also represents a fresh start. Once they get their bearings, help your clients focus on building a healthy financial future independent of each other. That might mean helping them formulate a new budget, revising financial plans, updating insurance policies, and reassessing risk tolerance.
Stay Organized
More than anything, this is the occasion to instill a sense of financial autonomy in your clients while giving them space to figure out their next moves.
Navigating a divorce situation can be one of the most delicate challenges a financial advisor faces. With the right systems in place, you can protect client relationships and help clients feel fully supported during a major life transition.
With PreciseFP, you can easily manage updates and stay organized. Using the email address of each person on file, you can send separate correspondences to gather updated information like new addresses or notify about any newly forming relationships. It is also a great time to send a complimentary risk tolerance questionnaire to reassess each individual’s comfort level with risk after the transition. Keeping all client information updated across platforms and sharing changes internally with your team ensures you maintain a high level of service and compliance even through difficult changes.
Start your free trial of PreciseFP today and give your firm the tools to navigate client transitions with confidence.
