Briefly rehashing some ominous data points, on average, women make less money than men and the U.S. divorce rate is high. In 2020, it’s estimated that the marriage rate was 5.1 per 1,000 total population while the divorce rate was 2.3, indicating that the often bandied about 50% divorce rate statistic is close to reality.
On those notes, it’s clear that divorced women are a demographic financial advisors should be working worth in larger numbers. Of course, there’s the obvious benefit for advisors in terms of growing a practice, but extending beyond capitalist perspectives, the potential exists for feel-good outcomes. As advisors know, clients’ life-altering, be they divorce, familial death, career change and more, are opportunities to cement client relationships be proving the advisor is about much more than investing outcomes and portfolio construction.
Something else advisors are likely to have learned through years in the business is that no two divorces are alike. Some are amicable with the involved parties even maintaining long-term friendships. Others, not so much. Unfortunately, there’s always the specter of one spouse not living up to post-divorce obligations, such as alimony or child support.
Translation: Advisors should realize they can offer substantial value to clients that are divorced women.
More Compelling Data
By some estimates, women currently make 83 cents on the dollar compared to men occupying the same jobs. In a hypothetical example, Acme Corp. pays a male vice president $100,000, but a women performing the same duties at the same level is earning just $83,000.
While more employers are recognizing this disparity shouldn’t exist and it’s bad optics to say the least, it will take time ameliorate. That is to say, advisors should be mindful of the income gap and the possibility it worsens depending on a woman’s individual circumstances as highlighted by Bryan L. Salamone, Esq. of Solutions Divorce Mediation Inc.
“This financial disparity gets worse if they take time off to have and raise children. Women may lose their financial independence and have trouble finding a job after they’re ready to reenter the workforce. If you’re a woman planning on divorce, it’s crucial you take steps to secure a better financial and credit situation,” writes Salamone.
Then there’s the specter of debt. Right or wrong, many states’ divorce laws essentially say that debt accrued by one partner in a marriage is the responsibility of both spouses. So if a husband wracks up $25,000 in credit card bills and files for divorces, his soon to be ex-wife could be responsible for a portion of that obligation. That’s all but guaranteed if the wife was a co-signer on the loans.
“Both spouses are responsible for any marital debt accrued, including mortgages, lines of credit, credit card debt, student loans and more. If you are a co-signer on those loans, you may still end up responsible if your ex fails to pay,” adds Salamone.
Other Issues to Consider with Divorced Female Clients
A key element in the advisor/divorced woman client interaction is that the former must realize that the relationship isn’t about them. Rather, the focus should be on the client, particularly when the woman is, say, just weeks or months removed from signing divorce papers.
However, there are ample opportunities for advisors to show divorced female clients that at least when it comes to their financial outlooks, better days lie ahead. Points of emphasis can and should include financial recovery in the wake of often exorbitant divorce costs and fiscal strategies for ensuring the woman client can procure health insurance without being financially burdened.
“Many women, especially stay-at-home moms, depend on their spouses for healthcare insurance. If you’re going to receive spousal support from your ex, make sure that it’s enough to pay for insurance and other financial issues while you get back on your feet. The average woman lacks insurance for two years after her divorce,” concludes Salamone.