PensionsJan 20 2016

Breaking up needn’t be so hard to do

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At the risk of stating the bleedin’ obvious, it is January, and some funny things tend to happen in January.

For one, thousands of us – for no other reason than that the clock has ticked past midnight from one year into the next – decide we are going to improve our fitness, diet, health or wealth in a series of resolutions that have a horrible tendency to last about as long as the New Year hangover.

We also, in some cases, fear the credit card bill – which tends to hit the mat in January with a bigger thud than most other months, thanks largely to Christmas excesses.

You can add to that the traditional rush to get the tax return sorted, which for many is a highlight of the Christmas period. For example, 2,044 people chose to submit their tax return on Christmas Day, according to figures from HM Revenue & Customs, up 13 per cent on the previous year. A further 5,402 submitted their return on Boxing Day, with a significant 11,467 sending their tax return to HMRC on New Year’s Day.

As always, there are still plenty of returns that need to be filed by 31 January, and it is worth advisers considering whether there is any way they can help their clients with this through updated portfolio valuations and so on. Yes, they may need to speak to an accountant, but if they choose to file themselves, then a little help from a financial expert never goes amiss.

However, for some the bills are even bigger, as January is the key month for divorce petitions as spouses who have been cooped up with their other half for an enforced period when they are supposed to be ‘happy’ decide that, actually, there is “probably more to life than this”.

The number of marriages ending in divorce has actually fallen to its lowest level in 40 years, according to data from the Office for National Statistics, but despite this there were still 130,473 couples who decided to get divorced in 2013 – the latest figures available.

The number of marriages ending in divorce has actually fallen to its lowest level in 40 years

There is a chance that the number of divorces being pushed through by couples in the first quarter of this year will increase too, as the government is set to raise the fee to file a divorce from £410 to £550 – a massive 34 per cent rise – from April.

With everything from the investment portfolio to the family home and pensions to consider as part of the split, an adviser is likely to be expected to lend a hand with the valuations, as much as an ear to the troubles the couple are experiencing.

For advisers, divorce can be something that is quite a difficult thing to deal with. You may have been advising a couple on their finances collectively for a long period of time, only to find that at the point they decide to split, you are expected to effectively ‘take sides’, which is probably something many are reluctant to do.

In many cases, particularly where the divorcees are older, the wife tends to be – but is certainly not always – more vulnerable financially. That vulnerability can manifest itself in a variety of ways. Certainly there is still a more traditional set-up in many families where the man has more control of the money and financial decisions, and recent research from Money.co.uk found nearly two thirds of married men (59 per cent) said they had control of the financial affairs of the couple. Most women think their husbands will do a better job than they will, but around a third of women did not want the responsibility that comes with financial affairs, and nearly one in five said they just did not understand personal finance.

However, once the divorce is finalised and the wife has a potentially large settlement, there is also a danger that dealing with the wrong people could result in her future security being damaged, or, worse still, that she is ripped off by conmen professing to help. Going through such an emotional time will inevitably leave people at a low ebb, just at the time when they are most likely to be badly advised whether legally or otherwise.

Of course, I am talking about women here; it could just as easily be a man where the wife controls the finances, or in a same sex couple there is still usually one spouse who takes more control of managing their money.

For advisers, this presents an opportunity to help divorcees who are in a difficult position, and who will be appreciative of the help. If you have an association with a local law firm, then this could be a good time to speak to them about whether they have any clients that might need your assistance. If you do not work with local firms in this way, then now could be a good time to start. Make an appointment to speak to the managing partner, and explain what it is you can offer both their clients and their business in return for referrals.

After all, if you are able to provide a good, professional service to a new client in dire straits, then for the rest of the time you are working with them it should only get better.

Alison Steed is a freelance journalist