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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.
There is no set rate, but advisers usually charge $100 to $150 an hour, says Fadi Baradhi, president of the Institute for Divorce Financial Analysts (IDFA), which trains advisers in divorce issues.
In a mediated divorce, the bigger payoff usually comes if one of the parties chooses to work with the adviser after the divorce.
That's how Charles Day, a Purchase, a New York-based adviser with Morgan Stanley Smith Barney, a joint venture between Morgan Stanley and Citigroup, has built his divorce practice. He oversees $175 million in client assets, and over half of his practice is divorce-related. Nearly all of his divorce clients are women.
Clients are referred to him by their attorneys or therapists, and he does not usually charge a fee for his advice during the divorce. Day can advise a client for anywhere from six months to a year for free. He says he almost always succeeds in becoming the client's primary adviser after the divorce and taking care of their portion of the assets from the settlement.
"If you try to push them and make them think you're only concerned about their money and not them, you will lose them as a client," Day said.
Other advisers prefer the transient nature of financial neutral work.
Garrick Zielinski, a Milwaukee-based adviser who founded advisory firm Divorce Financial Solutions, says that after years of working as a traditional financial adviser, he does not miss the stress of maintaining long-term relationships with clients.
"When the divorce is over you are done. You get them to the next stage of life and move on," he said.
A good starting point is getting accredited as a Certified Divorce Financial Analyst. The program, run by the Southfield, Michigan-based IDFA, has four modules covering a range of issues, including divorce law, child support, pensions and tax planning. It costs around $1,800.
The next step is to build a referral book. Zielinski recommends putting together a list of family law attorneys and creating a presentation explaining how a financial neutral can help a clients. Other referral sources include therapists and even local religious leaders.
The other key tool is investing in specialized software, says Hyman. She and her partner, Steven Paskal, tried to tweak their regular financial planning software, but it could not cope with all the variables involved in a divorce, such as spousal and child support rules that vary by state.
Producing a picture of what a particular split of assets might look like now and in the future is the most powerful tool they have, says Hyman.
"It's very illuminating for each side to see what the other will face financially," she said.
Reporting by Helen Kearney; editing by John Wallace