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Spike in divorce rate increases risk of financial vulnerability

"Instead of acting in an advice and adversarial capacity for one party, the financial planning professional might in an increasing number of cases be asked to act as a single joint expert, recommending a possible division of assets, for example to provide equality of income at a specific retirement age."

The guide said before undertaking this type of work, it is important that the financial adviser planner should have a thorough understanding of the relevant rules and regulations.

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The taskforce outlines the areas for an adviser to consider before and during divorce such as tax liability and life insurance. 

Source: Advising and supporting clients going through Divorce

Cecilia Furner, interim distribution director for retail annuities, Legal & General Retail, said the guide will be of “real practical value” to all personal finance professionals.

“Legal & General’s own research has shown that women are likely to face worse outcomes financially as a result of a divorce, and often waive rights to key financial assets such as pensions, which can have a significant impact on their long-term financial wellbeing,” Furner said.

“It’s our hope that via raising awareness of the impact of divorce on vulnerability, including through the publication of this guide, the division of finances for any divorcing couple will increasingly become as fair and equitable as possible.”

Earlier this week, FTAdviser reported that pensions are split between couples in less than one in eight (13 per cent) divorces, according to research from St. James’s Place.

According to a Freedom of Information request by SJP, between 2016 and September 2021, only 80,290 of the 602,491 divorces that were settled in court included a pension disposal by way of a sharing or attachment order.

A pension sharing order is a legally binding agreement to divide your pension assets at the time of divorce.

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