Â£500m divorce and separation market primed for financial advisers
â€˜It's very rare I see a case where financial input isn't needed at some stage'
There is a growing need for specialist financial advisers in what is a relatively untapped £500m divorce and separation market, according to those already working in the field.
Over 200,000 people divorce in the UK each year, with the majority needing financial assistance, yet there are only 42 accredited financial adviser specialists working in family law, says a new report published by Resolution and the Personal Finance Society.
Nigel Shepherd, Resolution’s national chair, said: ‘We know from talking to financial planners and advisers who are already Resolution members that the world of financial advice is changing.
‘What clients want is sound guidance and trusted support. This is especially true in times of change or upheaval, and they do not come much more unsettling than a divorce or separation.
‘Advising those going through a divorce or separation is a very specialist area. There are real opportunities for those financial advisers that are able to position themselves as experts in the field, and by being part of Resolution they have great access to a large, unsaturated market.
Every year 90,000 family financial orders are made by courts in England and Wales – three out of four divorce cases.
The most recent family court statistics revealed there were 12,185 financial remedy applications in January to March 2017 – a 10 per cent increase on the same quarter in 2016 and the largest quarterly figure since April to June 2013.
Financial remedy disposals were also up 11 per cent to 10,928 on the same quarter in 2016. During this period, 72 per cent of disposals were uncontested, 20 per cent were initially contested, and 8 per cent were contested throughout.
There are also 3.3 million cohabiting couples in the UK who will need financial advice if they split, given the lack of legal protection they are afforded in England and Wales.
One family lawyer, said: ‘99.9 per cent of our cases are about the financial needs for the separating couple – how much they require to buy a house, what their mortgage capacity is. It’s about what they need in terms of an income.
‘This involves looking at investments to see what income this can provide for them. And importantly, it’s also about what they’re going to need at retirement. It’s very rare I see a case where financial input isn’t needed at some stage.’
A family mediator added: ‘I would like to involve financial advisers more in all my cases, but at the moment there just aren’t enough of them working in this area. I have two or three that I am close to… but they are really, really busy!’
Most financial advisers will already have some experience in family matters in offering mortgage advice or consulting on bereavement issues, so the focus will be on adapting how they work with family lawyers.
Keith Richards, chief executive of the Personal Finance Society, said: ‘In high stress situations, such as divorce or the loss of a partner, emotions can make focusing on the practical aspects of personal finance decisions extremely difficult. Having access to trusted financial advice as part of an integral and supportive professional network at such a key stage in life can be invaluable.
‘Professional financial planning gives consumers peace of mind that their personal finances are aligned with their future aspirations and goals. Financial advisers are crucial in every aspect of a family case, and Resolution members are “crying out” for specialist advisers.’
Matthew Rogers is a legal reporter at Solicitors Journal