5 financial mistakes divorcing women make and how a financial expert can help your clients avoid them

When you’re supporting your female clients through divorce, it might become apparent that they need to make decisions about property, pensions, and investments as they navigate an emotionally challenging period in their lives.

This can make it difficult for them to think objectively about what they need from a settlement.

Indeed, a decision that might feel sensible in the short term may not support their financial security later down the line.

A financial expert could help your clients understand the long-term implications of various settlement options, giving them the confidence needed to make informed decisions.

Read on to discover five common financial mistakes divorcing women make and how working with a financial expert could help them avoid these pitfalls.

1. Making decisions based on emotion

As mentioned, divorce can often involve grief, anger, and uncertainty. As a result, your clients may find it challenging to separate emotional priorities from their financial ones.

For instance, a client may be determined to keep the family home because it feels familiar. Yet, the ongoing costs of maintaining the property might place significant pressure on her income after divorce.

What’s more, a client may be tempted to accept a settlement quickly because she wants the process to end, even if the terms don’t support her needs.

A financial expert could help your client step back and consider the practical outcomes of each option.

I can use cashflow modelling to show your clients how different settlement outcomes might affect their income, retirement plans, and long-term security.

This can provide valuable support to you as a solicitor during negotiations, as when your client understands the impacts of a settlement, she may be more able to engage with the process.

2. Overlooking pensions or focusing only on the family home

It’s understandable that your divorcing clients might gravitate towards focusing on the family home, as it may represent security at a time when everything else feels uncertain.

Yet, focusing too heavily on property could mean that other valuable assets, namely pensions, are overlooked.

A pension could be one of the largest assets in a marriage, but it can still feel less tangible than a home.

Your client might not fully understand what a pension is worth, how it could be divided, or the level of income it may provide later in life.

A financial expert could help your client understand the value and purpose of a pension within a settlement, such as by:

• Explaining the difference between pension sharing and offsetting
• Modelling how each option could affect her retirement income.

This might help your client look beyond the short-term appeal of the family home and consider whether the settlement offers enough long-term financial security.

Read more: House or pension? Financial guidance can help divorcing women make this tough decision

3. Ignoring tax implications and liquidity

It’s vital to note that two assets with the same value on paper might not offer the same practical benefits.

For example, £300,000 in cash is different from £300,000 in property, and each asset might have different tax rules or growth potential.

If your client doesn’t understand these differences, she may agree to a settlement that appears fair but is less useful in reality.

Moreover, your client may receive assets that are valuable but difficult to access, such as wealth tied up in property or pensions, which might not help her meet immediate costs or manage changes in income following divorce.

Tax can also affect the value of a settlement, with Capital Gains Tax, Income Tax, and the timing of transfers all needing consideration.

I can help your client understand what different assets are worth after tax and how easily she can use them.

This might support more realistic discussions during a settlement and reduce the risk of your client discovering that her assets don’t provide the help she needs.

4. Not seeking financial support for fear of being seen as disloyal

Some of your clients might be reluctant to seek financial support during divorce if the couple used the same expert for years.

She might even worry that seeking guidance will be seen as disloyal or feel embarrassed that she doesn’t understand the family’s financial position.

If your client doesn’t feel confident asking questions or challenging assumptions, she may struggle to understand whether a settlement would meet her needs.

A financial expert who works solely for your client can provide a safe space for her to talk through her concerns and explore her options.

For solicitors, a client who is financially informed could make better decisions based on her long-term wellbeing.

Read more: It’s not disloyal to seek financial advice during divorce. Here’s why

5. Failing to create a financial plan after the settlement

Reaching a settlement is understandably a significant milestone, but the work shouldn’t stop here.

Once everything is finalised, your client may need to manage new assets, take on new responsibilities, and adjust long-term goals.

Without a clear plan in place, the settlement might not provide the security she hoped for.

Indeed, she may hold too much in cash and have its real-term value eroded by inflation, or invest without a clear strategy.

Or your client might underspend out of fear of running out of money, or overspend because she hasn’t determined how long her wealth needs to last.

A financial expert could help your client set up a sustainable budget, create an emergency fund, or rebuild pension savings.

Doing this could allow her to understand exactly how these assets might support her life after divorce.