Transitioning the Financially Inexperienced Divorce Client to Self-Sufficiency

The Emergence of the Transitional Support Advisor

Following a divorce, how does a financially naïve former spouse transition to become a financially independent former spouse? In this article, the author discusses what is a Transitional Support Expert and that professional’s role in a dissolution proceeding and following entry of the decree.

Most professionals involved in marital dissolution work, including attorneys and expert witnesses, are familiar with the phenomenon of developing a close, albeit temporary, bond with their divorce clients.  Throughout the divorce proceedings, particularly in the thick of discovery when the assets are being valued and argued over, clients look to their team of professionals for more than merely professional advice.  During the most heated parts of a divorce proceeding, the client may have near daily contact with their attorneys.  In many cases, the client will also have regular contact—perhaps even more so—with the rest of their professional team, including expert witnesses, forensic accountants, etc.  This expectation of support is a natural component of divorce work.

Yet, once final settlement is reached, either via agreement or court order, this regular interaction between the client and his or her professional team abruptly concludes.  While attorneys often have loose ends to tie up before they formally close their file, the lion’s share of post-settlement contact occurs between support staff and the client.  The relationship between client and expert witnesses or other professionals hired during the proceedings usually ends even earlier, once the professional provides the specific work product for which he or she was hired.

For many divorce clients, this abrupt end to the relationships often comes as a bit of a shock.  It is especially difficult for those clients who are not financially savvy or who historically took a “hands-off” approach to money management during the marriage.  The financially dependent client willingly trusted their now ex-spouse and the team of accountants, financial planners, and other professionals his or her spouse selected to manage their joint assets.  The financially naïve spouse simply let his or her partner hire the resources and make the decisions regarding money and assets.

However, now that the divorce is finalized, the newly single client has to make decisions on his or her own and cannot trust these same professionals to provide unbiased advice.  The vulnerable client suddenly finds himself or herself completely isolated with the realization that the finalization of the divorce is only the beginning of their journey.  These clients often receive a sizeable settlement that includes assets requiring competent guidance and management to maintain their value.  Divided retirement accounts must be re-invested, business interests must be managed, and real property must be maintained or sold.

Financially inexperienced clients are often ill equipped to effectively manage the settlement they received.  Yet they have no suitable and cost-effective resources to help them navigate the murky waters that lie ahead.  While the attorney may provide some instruction or referrals at the conclusion of their case, these unsophisticated clients often require more than that to successfully meet the challenges of their post-divorce life.  For such clients, the services of a professional who can assist with the transition from financial dependence to financial independence, while also not costing the client a fortune in hourly fees, can make the difference between success and failure in the months and years following their divorce.

The Role of a Transitional Support Expert

The concept of the Transitional Support Expert came about after more than a decade of providing business valuation and forensic accounting services in hundreds of dissolution matters.  With a unique background in forensic accounting, law, real estate, and finance, I am regularly retained to provide expert witness services to assist with uncovering and properly valuing marital assets that often include privately held business interests and real estate.  Throughout the course of litigation, I regularly find that the non-financial spouse is looking for someone to help him or her understand the basics of the marital estate.

While their attorney will provide guidance and reassurance regarding the legal process, there is a void when it comes to helping the client thoroughly understand the financial side of the equation.  These confused clients often turn to the person who they believe has a comprehensive understanding of finance and accounting—the expert witness.  While the matter is pending, this resource may field questions and provide general answers to the client, but usually refrains from comprehensive engagement beyond what they were originally retained to provide.

Yet, even when some questions are answered, the flaw in the traditional arrangement is once the proceedings are concluded and settlement is reached, the existing team of professionals withdraws from the client’s daily life.  This leads to a financially inexperienced client who is adrift.  The spouse is about to receive (or already has) his or her share of the marital assets, and must figure out what to do with these assets.  Whether it is real estate, an interest in an ongoing business, or various retirement accounts, the receiving spouse often does not have a clear idea what to do to maximize (or even maintain) these assets.  It is at this point where the receiving spouse and their hard-fought assets are most vulnerable.

It is also at this point where a Transitional Support Expert can step in to help.  A Transitional Support Expert fulfills a role akin to that of a temporary, personal Chief Financial Officer to the client.  This independent professional, who ideally possesses a broad background of expertise in multiple disciplines including legal, accounting and finance, has the knowledge, experience and, most importantly, solid, global referral connections to both understand and assist the non-financial spouse.

It is very important to emphasize that the Transitional Support Expert is not providing specific advice—legal or otherwise.  That is, of course, the province of the attorney.  Instead, this professional’s primary role is two-fold: to function as a relationship manager to help the client get back on his or her feet; and to make appropriate referral introductions based on the client’s specific needs.

Ideally, the role of Transitional Support Expert is filled by the same individual who provided professional services to the client during the divorce, as this capitalizes on an existing relationship.  However, because many expert witnesses have a very discreet skill set, they are not always in a position to do so.  Further, these same experts usually do not have the comprehensive referral network available to them to fully benefit the client.

Most often, to provide the client with the comprehensive resources required to help them successfully transition to financial independence, the Transitional Support Expert is a third party who is brought in after settlement is reached.  This professional functions as a relationship manager to field client questions and connect them with the right resources to build a long-term team to assist with investments, real estate transactions, and/or business management.

To achieve success in this role, it is critical that the Transitional Support Expert have a comprehensive and solid referral network not limited in scope by either geography or discipline.  When such a global referral network is in place, this role can effectively be executed virtually; meaning the client and the Transitional Support Expert do not have to be in the same city or state.  In fact, the two never even have to meet in person, as the relationship can be effectively developed and nurtured remotely.

The Benefits of the Transitional Support Expert

There are myriad benefits to adding a Transitional Support Expert to the team assisting a non-financial spouse after a divorce.  These benefits inure to both attorneys and client.

First and foremost, incorporating a Transitional Support Expert frees up the attorney from repetitive contact from a client in the post-litigation phase.  While, of course, long-term relationships are the cornerstone of any attorney-client connection, usually clients do not want to pay the attorney’s hourly rate for an indefinite period.  Yet, this often does not dissuade them from reaching out to the only person they believe can help them.

By offering a professional, third-party resource to the client, the attorney has satisfied his or her duties and obligations to the client, provided an invaluable resource to their client, and continued to build a solid, long-term relationship with him or her.  The attorney is assured their client is in competent hands going forward.

For the client, the benefits of a Transitional Support Expert are even greater.  The primary benefit is that the financially inexperienced client has immediate and ongoing assistance to manage their financial assets.  Rather than allowing inexperience to deplete the value of the marital estate he or she received, the client can immediately build a team of his or her own trusted advisors.  This team, recommended by the Transitional Support Expert based on the client’s specific needs, can immediately get to work helping the client maintain and maximize their valuable assets.

The secondary benefit is cost.  Since a Transitional Support Expert receives compensation via referral commissions, he or she never charges the client for the services provided.  The client can contact the Transitional Support Expert as often as needed, with no fear of receiving a large bill for professional fees.  After an expensive divorce, this sort of cost-effective assistance is not only appreciated, but often necessary.

A tertiary benefit is that the Transitional Support Expert remains available as a resource long after the appropriate referrals are made.  If the client ever has a question, the Transitional Support Expert is just a phone call away, again at no cost to the client.

In the unlikely event that an issue arises between the referred professional and the client, the client need only make a single call and the Transitional Support Expert will resolve the dispute quickly and effectively.  However, in my personal experience with my own referral resources, when a solid and thoroughly vetted referral network is in place, these sorts of issues rarely—if ever—develop.  Still, it brings peace of mind to the client to know that assistance is just a call away.

Summary

It is a far too common situation where a financially inexperienced ex-spouse finds themselves the owner of assets they have no idea how to manage.  These clients face an extremely high risk of poorly managing assets that were designed to provide them with financial security after a divorce.

As attorneys and professionals work with these clients every day, it is imperative to put a system in place to maximize the likelihood of financial success in the post-divorce phase.  It is simply not enough to send them the signed court order and a final invoice and hope for the best.

To ensure these vulnerable clients stand the best chance of effectively managing their financial resources, the use of a Transitional Support Expert can make the difference between achieving success or facing failure in the years following the divorce.

Dr. Robert Hetsler Jr., J.D.*, CPA**, CVA, FCPA, CFF, MAFF, CMAP has been preparing retirement division orders for over a decade. Dr. Hetsler is a financial specialist in the division of retirement and pension accounts in divorce cases and is often called upon during divorce proceedings by attorneys and mediators nationwide to provide expert assistance in the division of retirement accounts. He is a Harvard University trained Financial Expert, authored seven books on several divorce topics, as well as the founder of the nationally recognized online divorce school where he researched and interviewed the top divorce minds throughout the United States. Dr. Hetsler has also taught continuing educational classes on common mistakes attorneys make when trying to prepare QDRO’s themselves.
Dr. Hetsler can be reached at: (844) 234-7376, or by e-mail to: robert@qdronow.com.