Ilana Polyak
InvestmentNews, November 29, 1999
For several months, Kris Dwyer's client has been secretly collecting credit card statements, pay stubs and utility bills.
The client, a 48-year-old massage therapist, is gearing up for a divorce that may take 18 months to finalize. But following Dwyer's advice, she's realized it's never too early to begin collecting the things she'll need to divvy up marital assets.
"In a divorce there's always problems "getting data," explains Ms. Dwyer, a certified divorce planner, who says her principal tools are "a calculator and a box of Kleenex."
Jacqueline Gold of Southfield, Mich., understands the demand for this service better than most. When her father-in-law started referring clients from his divorce law practice three years ago. Ms. Gold didn't think they would end up dominating hers.
But the 30-year-old financial planner became so swamped with spouses calling it quits that she called it quits herself, gave up her plain vanilla practice and began focusing full time on divorce planning.
"I have three new clients coming in each week," says Ms. Gold.
DESIGNATION DERBY
Indeed, the explosion of divorce - one out of two new marriages now end that way - has spawned a new breed of financial adviser that specializes in divorce planning.
About 1.1 million marriages dissolve each year, and the bull market on Wall Street has raised the stakes considerably in many cases, creating strong demand for advice.
In fact, it's so strong, in a field overrun with designations, divorce planning now has one of its own. The six-year-old Institute of Certified Divorce Planners in Boulder, Colorado has trained and certified 482 planners.
These people - typically financial advisers or certified public accountants - have gone through a 2 1/2-day training course and passed a half-day examination.
Although many advisors avoid the field because of the complex tax issues, the need for additional training and the emotional drain, Ms. Dwyer is one of about 500 financial planners who now work specifically to help couples divide their assets.
Because of her expertise, Ms. Dwyer estimates that she can get settlements that are $50,000 to $70,000 more than clients would receive without planning.
"There's been an explosion of corporate assets and assets that are not that easily understood,' says DeVon Williams Daniels, a divorce planner in Greenville, Del.
Between stock options, deferred compensation and retirement accounts socked away at different companies, she says it can be difficult to locate all the assets.
Ms. Daniels, who deals primarily with large estatesm tells of one woman who arrived at her office with a settlement offer of $1 million, but left with one valued at $5 million by the time it became final.
I tell my clients, "You'll be a lot less sad if I get you a lot of money," she says.
Ms. Gold's firm, Hantz Financial Services, also the product of a divorce of sorts, was started only a year ago by a former American Express Financial Advisors planner. Since then, more than 100 defectors from the Minneapolis-based subsidiary of American Express Co. have joined up.
At Ms. Dwyer's firm, Financial Network Corp., divorces account for one-third of the business. She says her training helps clients determine if they can afford to live on the terms of their settlement.
Few attorneys or judges, for example, take into account the after-tax implications of dividing up assets. Nor do they approach the situation with a future projection. Instead, they typically took to distribute current assets.
In contrast, Carol Ann Wilson, director of the Institute of Certified Divorce Planners, says she trains planners to project into the future. The institute provides software that helps graduates map out several different scenarios, depending on the settlement.
"If the husband can see that his wife is going to go into poverty eight to 10 years from now, then maybe he'll give a little bit more property or a little bit more alimony," Ms. Wilson says.
Even the traditional settlement, where the wife gets the house, may not be in her best long-term interest, divorce planners point out.
Hantz Financial Services' Ms. Gold cites one tactic that may escape planners in general practice: Couples selling a home don't accrue capital gains tax on the first $500,000, but single sellers are only exempt from half that amount. So, she sometimes recommends selling before the divorce is final.
Also, the IRS does not treat all assets equally. Where real estate is subject to capital gains, retirement accounts can be slapped with penalties, and other investments may be taxed as ordinary income.
FIND A NICHE AND FILL IT
"There is clearly a need in the market that is not being met," Ms. Gold concludes.
Ms. Wilson says financial planners are ideally suited to develop this expertise.
"Practically all of them have clients going through divorce," she says. "But a lot of them don't know much about this area."
Ms. Wilson, 62, started the institute after nine years as a planner. The course deals primarily with marriages of more than 10 years, where the wife earned considerably less man her husband.
Planners who do make a specialty of divorces, not surprisingly tend to represent only one of the warring parties. Their clients come to them just as often through divorce lawyers or mediators as through word of mouth.
For the last year and a half, Ms. Dwyer, 39, has been focusing almost exclusively on divorcing clients, often taking the cases of wives who want to preserve the quality of life they enjoyed during the marriage.
Though the demographics are compelling, it may be an uphill battle to get financial advisers to advertise their divorce expertise.
Thomas Geraghty Jr., a certified divorce planner in Watchung, N.J., works in conjunction with lawyers and divorce mediators. He says planners shy away from the amount of knowledge they have to accumulate to work with divorcing parties effectively.
"If you've never dealt with a divorced client, it's not a good idea to practice on your first one," he says.