Wealth Manager: Building a practice around divorce
By Helen Kearney
NEW YORK (Reuters) - With about half of all U.S. marriages ending in divorce, there is plenty of need for advisers who can help with the sensitive issue of splitting the family assets.
And with divorces no longer limited to contentious legal battles, financial advisers say they play a critical role in out-of-court settlements such as collaborative and mediated divorces.
"It's one of the most stressful transitions that a financial planner is needed for," says Laura Hyman, a New York City-based adviser with RBC Wealth Management, a division of Royal Bank of Canada. "You have to look at them as the couple they were and as the individuals they are going to be. The usual financial planning structure doesn't work."
In a collaborative divorce, a team of experts is involved, including attorneys for both sides, a divorce coach and a child specialist if there are children involved.
The role of the financial adviser is to act as a "financial neutral" and develop a plan for dividing the couple's assets. The adviser is prohibited from taking either party as a client once the divorce is finalized.
In a mediated divorce, usually only the attorneys and the mediator are involved. The adviser can act as a financial neutral, or he can be hired by either the husband or wife. Unlike in a collaborative divorce case, a financial neutral in a mediated divorce can take either party as a client after the divorce.
Unlike the usual modes of compensation for advisers -- commissions or asset-based fees -- a financial neutral charges an hourly fee. Continued...