Madame Ex: Advising ‘Gray Divorcees’

• "Communicate differently with women than you do with men." For example, men tend to regard an investment as something that can gain value over time. Women are more concerned with being able to maintain their family's well-being and comfort from day to day. In addition, we've learned that women prefer being face to face with an advisor so they can look you in the eye, while men tend to prefer sitting side by side.

We would add an extremely important point:

Educate women about their financial choices. If you take time to discuss the various options and explain why you recommend one choice in particular, less financially knowledgeable women will appreciate your professional skill, understanding of their needs and commitment to keeping them involved. (Spouses who think they know it all may learn something, too.)

For other valuable suggestions about how to reach women clients, see Olivia Mellan's article "Majority Report" in the August 2010 issue of Investment Advisor.

She's Talking About a Divorce: Now What?

Your role as an advisor takes on a new dimension when you're consulted by a client considering divorce. "Many women who come to me haven't thought through all the ramifications, so I help them analyze the process more fully," Certified Divorce Financial Analyst Barbara Shapiro says.

A CFP who heads HMS Financial Group in Dedham, Mass., Shapiro startled us by explaining the first thing she does: "I always check to make sure [the woman] does not feel physically threatened. If she does, then that becomes the primary concern, rather than conserving assets. But if I am comfortable there isn't a safety issue, then I get a feel for her current lifestyle and discuss with her how it may change, both physically and emotionally."

When we learned that AARP identifies spousal abuse as a leading driver of divorce (see sidebar, "Why More Wives Are Calling It Quits"), Shapiro's priority became much more understandable.

Your assessment of a post-divorce future may (and probably should) be more hard-nosed than your client has envisioned. For example, Shapiro was once consulted by a wealthy woman whose neglect by a workaholic husband made her lonely enough to contemplate divorce. Her life revolved around the country club and other activities related to her husband's position. Shapiro says, "I pointed out to her that she wouldn't just be divorcing him; she would be divorcing her lifestyle. So I encouraged her to give this serious thought before making a move from which there was no turning back."

[Learn more about what divorcing wives fear most.]

Years later Shapiro ran into the woman, who thanked her for her advice. She had decided to stick with her husband, and when he died, "I got it all!" (Clearly, there wasn't much love left in this marriage.)

Instilling confidence through new knowledge and patient guidance is also a crucial responsibility. "A majority of women contemplating divorce after many years of marriage are fragile," says Linda Leitz, a Colorado Springs, Colo.-based financial planner who specializes in advising clients during and after divorce. "They have more to lose because they don't have the time horizon; and whether they loved their husband or not, they're going to be alone, and that's very scary. My experience is that a majority of these women are overly trustful and uneducated about money."

In fact, divorced wives typically suffer more due to financial ignorance than their ex-spouses. A 2009 TIAA-CREF survey found that older women are not only low in financial literacy, but they actually resist learning about money. And, shockingly, 2012 Financial Finesse research indicates that the financial knowledge gap between men and women appears to be widening.

Leitz explains, "It's often the non-moneyed spouse who seeks me out during a divorce—the one who didn't handle the household bills and the investments, and made less of the money or no money. So it's like someone coming to me with a car but not knowing how to drive it. They need to know if they're getting a fair deal in their divorce. After the divorce, they need to know what to do with the money they have."

[Learn more about how divorce and the recession affect retirement.]

Leitz views her job as teaching these clients enough so that they can make educated decisions going forward. "If they want me to make their decisions for them, I refuse to do it," she says. We applaud this attitude, which will end up helping women become full partners in the planning process.

As a new divorcée's advisor, you may be called on to explain the ins and outs of investments, insurance and mortgages, or help your client learn to budget. She may need your assistance to find a less expensive house or apartment, or even to negotiate moving in with an adult child. Consider collecting and sharing success stories of women who saved money by moving into a smaller place or taking in housemates. You might also gather resources about different types of community support available to older divorcées.

Your client won't always feel grateful about (and may be downright resistant to) having to seek a job after years of raising children and supporting her husband's career. Says Leitz, "We have to find a way to be sympathetic to her feelings, while encouraging her to build a new life for herself."

An Opportunity, Not a Problem

One-fourth of all divorces already involve couples who are 50 or older, according to BGSU's Brown and Lin. Over the next two decades, their number is expected to grow by at least one-third. Hopefully, more research will clarify the issues involved in this disturbing trend.

The financial ramifications can be complicated, especially for women who need your help in understanding their money. But divorce is an emotional passage, too. The better you comprehend the challenges, from loneliness and fear of running out of money to worries about children, the more helpful you can be in advising your clients and connecting them with the right support services.

[Learn more about the characteristics and wants of wealthy divorcees.]

As the increase in older divorce collides with weakened portfolios, stubbornly high unemployment and massive numbers of baby boomers on the cusp of retirement, it threatens to become a perfect storm that could menace a substantial part of your client base. If you build stronger relationships now with both members of every client couple, you should be rewarded with self-confident, independent female clients who will stay with you for many years to come—and send more referrals your way.   

View all the articles in our series on the "Graying of Divorce."