When you get a divorce, your entire world changes. But at a time when it may feel like things are spiraling out of control, there are plenty of things you have the ability to control, two of which have to do with your financial future. And both of these two things will empower you more as you emerge stronger than before. Daniel E. Clement, Esq. writes (see the full article at www.ivemovedon.com) that the first thing to change is your financial outlook/attitude, and the second to look at is your financial advisor. This could be the right moment to toss the old out and usher in the new.
By: Daniel E. Clement, Esq.
How your attitude can overcome statistical weaknesses
Traditionally, women suffered more after a divorce because of time spent away from work raising children, which can make it more difficult to find a job when you dive back into the job market and reduce your earnings potential over the life of you career. But women also have unique strengths when it comes to money, and it’s all about how we look at our finances and financial security.
- A risk-averse mindset – Studies over decades have shown that women tend to be worriers, which means we prefer to avoid risk rather than try to beat the market. Not taking unnecessary risks keeps us from losing big bucks on a bad investment decision made on a whim.
- Commitment – Studies (by Sigfig) recently found that men turn over their equity holdings 50% more often than women and are 25% more likely to lose money than women. This is good for us because women tend to buy and hold, which is more beneficial in the long run if you look at the countless studies that show how passive index funds outperform actively managed funds in the long run.
- Saving habits – Although women who are about to retire tend to face a wider shortfall than men nearing retirement ($63,000 versus $34,000 for men, according to an Employee Benefit Research Institute study), we tend to be better savers, Vanguard found in 2016.
Now this is where your attitude is free to change. The statistics may be stacked against you, but if you’re even a little like most women, your secret weapons listed above will help you overcome any shortfall you may experience after a divorce.
And here’s another little secret. As women, we tend to want to indulge ourselves during stressful times, but the biggest thing we can do to indulge ourselves is taking that $10 we’ve been spending on a cup of designer coffee every day and investing it instead. Savings now means more money to spend whatever we want on in retirement.
Are you still relying on your ex’s financial advisor?
A key part of your financial strategy is your financial advisor, and for many women, the point of contact has been their husband. As such, it can seem like a daunting task to find one you trust. But you’re in control of the portfolio now so you need to find someone you can work with. It can be tempting to keep the same financial advisor simply because you’re uprooting the rest of your life, but there are several reasons why continuity probably isn’t the best idea.
- You’re the client… not the wife of the client. Many financial advisors focus most of their attention on the male half of the couple without cultivating a business relationship with the wife, but that means your business is up for grabs after the divorce. An advisor who waits until after you’re divorced to turn on the charm isn’t worth his fees.
- You may need a different kind of advisor. Many women need a holistic financial planner rather than just someone to tell them which investments to buy, especially during a time of such upheaval as divorce.
- You need a fee-based fiduciary rather than a salesperson. A recent survey by Fidelity Investments found that men are generally more confident than women when it comes to deciding what investments to buy, meaning that you’re more likely to need real, unbiased advice instead of someone to execute transactions. You need someone who’s on your side and ready to advise based on what’s best for you and not what will make him the greatest commission.
- You need it in writing. Oftentimes advisors think they can step right in without getting a contract in place with you just because they worked with your finances while you were married, but nothing could be further from the truth. Get the advisor’s fees down in writing before you move forward with a new advisor. He’s still a new advisor for you if he worked with your ex-husband on your finances and ignored you during your marriage.
Don’t wait until your marriage is over to start making changes that will help your personal financial situation. As soon as you sense that something is wrong, start adjusting your attitude and finding a new advisor to give you advice behind the scenes so you avoid being a victim. You’re moving up in the world, and so are your finances.