EP Wealth’s Regional Director, Kelly Owens, CFP^®, CDFA^®, shares how working with a financial advisor during divorce can help you become aware of costly mistakes and plan more confidently for your financial future. 

Working with a Financial Advisor During Divorce

When it comes to the financial side of divorce, you often only have one chance to get it right. Once the agreement is signed, the decisions you’ve made are final. You can’t go back a year later and say, “I wish I’d done that differently.” That’s why working with a financial advisor and other professionals during divorce can be so important. You want to make sure you’ve thought through every implication and explored every option before you commit to something that will have such a major impact on the rest of your life. Your lifestyle, your retirement, your children’s education – all of these will be significantly affected by the financial decisions you make as part of divorce negotiations.

As a Certified Divorce Financial Analyst^®, my role is to help you separate emotions from the hard numbers and make informed decisions that are in your best interests both now and for the long term.

What to Consider When You Have a Financial Advisor

One of the biggest mistakes I see people make during divorce is assuming all assets are created equal. They’re not. For example, there’s taxable money and there’s pre-tax money, and those two categories behave very differently.

In divorce situations, someone might say, “I’ll take the equity in the house, and my ex can keep the retirement account.” On the surface, that might sound like an even trade, but those two assets behave very differently over time. The house may appreciate, but it also comes with property taxes, maintenance, and other costs. The retirement account, on the other hand, continues to grow tax-deferred, with the potential to accumulate significantly over the years.

If you don’t account for those differences, you might think you’re getting an even split when really you’re not. A financial advisor can help compare apples to apples when dividing assets.

Here are a few other common financial missteps I see during divorce:

• Treating short-term needs as the only priority.
  It’s natural to focus on what feels most pressing right now, such as immediate living expenses or who will get the house. But that short-term focus can sometimes come at the expense of long-term planning. For example, someone in their early 40s might dismiss the value of taking half of a retirement account they can’t access until they’re 59½. That may seem irrelevant in the moment, but those funds could play a major role in their financial future. My role as an advisor is to help clients think beyond today and visualize what life may look like ten, twenty, or thirty years down the road.
• Overlooking how divorce impacts children’s expenses after age 18.
  Divorce agreements typically cover child support only until a child turns 18. There’s no automatic requirement for a parent to contribute to college or post-18 support unless it’s specifically written into the settlement. Once the divorce is final, you can’t go back to court and add those expenses. Kids don’t suddenly become financially independent at 18; college and early adulthood can be expensive years, and planning for that ahead of time is crucial.

When you’re in the middle of a divorce, it’s easy to focus only on what feels immediately urgent. A financial advisor helps you take a step back, understand the broader picture, and make decisions with your future in mind.

Working with a Financial Advisor During Divorce

Divorce often involves handling assets, taxes, and future planning considerations that most people don’t deal with regularly. Having an advisor brings a different level of experience and objectivity with the goal of helping you see things more clearly and make choices with greater confidence.

An Experienced Advisor Can Help Spot Potential Issues that Might Otherwise Be Missed

One of the benefits of working with a financial advisor during divorce is having someone with the experience to recognize potential issues that won’t be top-of-mind for most people. When you don’t work with finances or divorce cases every day, there are lots of subtle details that can get overlooked.

You don’t know what you don’t know. As a financial advisor who has spent years working with divorcing clients, it’s my job to bring non-obvious issues to your attention, whether that has to do with the tax implications of asset division, life insurance gaps, underestimating your liquidity, or something else. Knowing what to look for can help reduce the chance of mistakes that might otherwise go unnoticed until it’s too late to fix them.

An Advisor Brings an Objective Perspective

Divorce is emotional, and emotions can cloud decision-making. I see this often, for example, when it comes to the family home. Many people feel deeply attached to their home and want to keep it, even when doing so may not be the most sustainable move financially.

My role is to take the emotion out of those decisions and look strictly at the numbers. I outline the true costs of keeping the house, including property taxes, insurance, and maintenance, and then compare that to what your financial picture could look like if you sold and downsized. When you can see those trade-offs in stark black and white, it becomes easier to make a clear-headed decision.

By focusing on the numbers, an advisor can help you make decisions that are grounded in financial reality rather than the stress or sentiment of the moment.

Balancing Short-Term and Long-Term Financial Planning

In divorce, everything changes all at once. Many people understandably go into survival mode, concentrating on immediate needs such as where they’re going to live or what their cash flow looks like over the next 6-12 months. That short-term focus is perfectly natural, but it’s equally important to think about your financial health years down the road.

Working through a full financial plan with an advisor helps show how today’s decisions play out over time and takes the guesswork out of what comes next. At EP Wealth, we use financial planning software to:

• Visualize long-term impact.
  We can plot out how today’s choices might affect your future financial picture. The software projects the long-term results of decisions such as dividing assets, adjusting spending, or planning for changes in income after divorce. Seeing how those numbers evolve over ten, twenty, or thirty years helps put the impact of each choice into perspective.
• Model real-world scenarios.
  We can test out different possibilities and see how they might work in practice. For example, what happens if you go back to work in three years and earn a certain salary? What if you don’t return to work? What if you sell the house and downsize to reduce expenses? Each scenario can be modeled side by side so you can see how your choices might shape your long-term outlook.
• Turn abstract ideas into concrete numbers.
  For many clients, long-term planning feels theoretical until they see it displayed visually. Once the data is presented in charts and graphs, it becomes easier to understand and brings clarity to the plan moving forward.

Selecting the Right Financial Advisor for You

When you’re shopping for a financial advisor – whether it’s to help with a divorce or for any other reason – it’s important to understand whether the person you’re considering is a fiduciary. A fiduciary is legally required to act in a client’s best interests. Since not every financial professional is held to that same standard, it’s an important question to ask early in the process.
While credentials matter, the working relationship itself is just as important. Here are some further factors to consider when selecting an advisor when you’re going through a divorce:

Personality fit and communication style:
You’ll be spending a lot of time with your advisor during what can be one of the most difficult periods of your life. It’s important to find someone you actually like and feel comfortable meeting with, who listens carefully, understands what you’re telling them, and explains things clearly. Even if someone is highly recommended, it’s not the right fit if you dread the meetings. My advice is to trust your gut. Sit down with the advisor, visit the office, and meet the people who work there. Get a feel for the environment and go with your instincts if you have a good feeling about someone.

Comfort level discussing personal finances:
It’s also important to find someone with whom you’re willing to be honest about your financial situation. For some people, that can be difficult. They may feel embarrassed about debt or past financial mistakes, and I understand that. I try to reassure clients by telling them, “I’ve seen similar situations before.” My role isn’t to judge, it’s to help you move forward. The more open you can be, the more effectively we can plan for what comes next.

Red Flags to Watch Out for When Choosing a Financial Advisor

• Non-fiduciary status:
  If the advisor isn’t a fiduciary, that’s an important consideration and potential red flag. It’s generally best to work with someone who is legally obligated to act in your best interests.
• Someone who talks over your head or talks down to you:
  Avoid anyone whose attitude is, “You don’t need to understand that. I’ll take care of it.” Or someone who oversimplifies and talks to you in a condescending way. A good advisor meets you where you are. Keep in mind that an advisor doesn’t automatically know your level of financial understanding, so some back-and-forth communication will help them gauge that. When I meet with new clients, I’ll often ask them some brief questions just to make sure I’m speaking on the right level. I don’t want to talk down to someone, but I also don’t want to talk over their head.
• Lack of availability:
  Be cautious if an advisor doesn’t return your calls or always seems too busy. You want to work with someone who respects your time, responds promptly, and makes you feel like a priority.

 What to Look for in a Financial Advisor 

How a Financial Advisor Complements Your Attorney During Divorce

I’ve never seen a couple, even those with significant wealth, go through a divorce without worrying about money. As a result, it’s understandable that some people hesitate to bring in a financial advisor during divorce. It can feel like just one more expense at a time when you’re trying to control costs. What’s important to remember, however, is that your attorney and your financial advisor each play very different, though complementary roles.

Your attorney’s job is to handle the legal side. Your financial advisor is focused only on the numbers. Attorneys appreciate this division of labor because it allows them to hand off financial tasks that an advisor can often handle more efficiently. In some cases, this collaboration may even help reduce unnecessary overlap.

Over the years, I’ve witnessed people operating on both ends of the spectrum: those who have made costly mistakes and others who have made thoughtful, well-informed choices. The difference often comes down to having informed guidance and support. Being able to share that experience and help clients learn from what I’ve seen is one of the most meaningful parts of the work I do.

If you're going through a divorce and want to understand how a financial advisor can support you, contact us for expert guidance tailored to your needs.

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