Dorie Fain, The Daily Record Newswire
I saw a dear friend over the weekend who shared that she and her husband are separated. She explained that things have been building for years, and over the past several months she reached a point when she gathered the courage to try to make a different, hopefully better life for herself and her children.
Because of my professional area of expertise in divorce financial planning and having been through my own divorce, my friend felt comfortable asking me some of her most personal financial questions that she had yet to ask of anyone. In this conversation I learned that she was considering going to a broker at a national brokerage firm to advise her through the divorce process. This was immediately a red flag; having worked for many years at a large national investment firm I know the limitations that exist in being able to provide stand-alone financial planning.
I listened to my friend's concerns and paid close attention to the key areas of stress and worry that she was feeling. What type of housing could she afford? How soon would they have to sell and move from their family home? What if they couldn't afford her daughter's upcoming bat mitzvah in 2017 in the way they had planned? Could they afford summer camp? Private school for three children? So many questions and so much uncertainty.
Going back to the broker that my friend was considering hiring, I happened to have worked with this person and have known her since my very first day in the business. She and her husband work as a team and they are great people so what I am going to share has nothing to do with them personally. The key is that most brokerage firms don't allow or compensate brokers to do stand-alone financial planning, which is what is needed throughout the divorce process. Often, the only way a broker at a firm like this can be compensated is for investment management - actually investing your money. So, in the long run, if there is money to be managed, my friend could decide if this broker is the right match for her. For right now, what is needed is pure, customized financial planning provided by a CFP or CDFA - Certified Financial Planner or Certified Divorce Financial Analyst. This is someone who has the ability to be paid by the hour for their work to analyze the financial terms, the impact on each spouse in the future, the affordability of the proposed settlement, asset and income division, the understanding of the cost of taking care of the children and any other financial matters.
I am a member of an organization called NAPFA, the National Association for Personal Financial Advisors. This is an organization with rigorous standards for membership and one that I have found to be a true resource for its members. Like-minded professionals known as the purists of the financial services world, NAPFA members are advisers who meet the highest competency standards, are dedicated to financial planning and receive compensation on "fee-only" basis, meaning no commissions for the sale of any product but rather advice-driven compensation.
My friend lives in another city so I set out to do an adviser search on the NAPFA website. I expected that my search would yield plenty of viable choices to send to my friend to review. She lives in a much larger city where I imagined that the niche of divorce financial planning must be well established. NAPFA has a search tool to find an adviser by geographic location. I reviewed over 25 firms' websites within 20 miles of where my friend lives and found only one possible adviser with the credentials, experience and stated focus of guiding people through life transitions. I was shocked. Every other firm except the one I mentioned had the same type of marketing jargon that is so typical and overused, catering to the investment management process. It really surprises me how many firms are missing the opportunity to speak directly to people in times of need.
My friend is working with a sophisticated attorney whom I expect will have financial resources for her to consider as well. Though I am reminded that often these differences in adviser capabilities and compensation are not clear to even the most experienced professional.
To learn more about NAPFA, here is a link to their website. There are a lot of great consumer resources available: https://www.napfa.org/
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Dorie Fain is the founder and CEO of &Wealth, a boutique financial advisory firm dedicated to helping women who are re-creating their lives, with offices in New York City and Baltimore. To purchase a reprint of this column, contact The Daily Record.
Published: Mon, Jul 25, 2016
