Some divorcing couples remain under the same roof – perhaps one spouse living in the basement – for up to a year until one can afford or find a place nearby, says one advisor.Andrey Popov/iStockPhoto / Getty Images
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While Canada’s divorce rate declined drastically in 2020, according to Statistics Canada, some advisors say they’re seeing an increase in the number of couple clients who want to separate.
Debbie Hartzman, certified financial planner and certified divorce financial analyst at Hartzman and Associates Inc. in Kingston, Ont., observed a slight uptick in separated couples and more agitation among them. After a few years of living in close confines during multiple lockdowns and COVID-19-related restrictions, they’re more than ready to cut the strings and venture out on their own.
While some couples still desire to negotiate via mediation, some have difficulty moving away from their entrenched views of what went wrong in the marriage, Ms. Hartzman says. And with spouses owning multiple assets from real estate, workplace pensions and investments to executive stock compensation, breaking things down equitably won’t be a fast process anyway.
“Everyone has their stance and wants to hold on to it,” she says. “They want you – as their advisor – to agree with them and don’t want to take advice. They’re just upset and mad at everybody and everything.”
Because of these clients’ attitudes, Ms. Hartzman declined to work on four cases in the past two months alone.
“I don’t get involved in who is at fault. I deal strictly with the finances,” she says.
For example, one spouse may want to keep the family home to keep things stable for children. “But that’s not always financially feasible and in the market we are in, it’s not easy for one to buy the other out,” she adds.
Living separately and making mistakes
Dami Gittens, wealth advisor and client relationship manager at Nicola Wealth Management Ltd. in Vancouver, notes that due to the housing shortage and overall affordability, some divorcing couples remain under the same roof – perhaps one spouse living in the basement – for up to a year until one can afford or find a place nearby.
“It’s not as easy to make a quick jump and separate living arrangements and find something in the same neighbourhood for co-parenting reasons,” she says.
Samantha Sykes, senior investment advisor with Sykes Wealth Management at Raymond James Ltd. in Toronto, had three pandemic divorces among her clients and also noticed the frustration among the couples to get things done quickly, but sadly to their detriment.
She cites one client who, ultimately, decided to become a do-it-yourself investor to save money and ended up signing most of her entitlements away, including a pension, just to be done with her spouse.
“A lot of them just want to move on faster so that they stop the bleeding,” she says. “People wanted to make things happen quickly and change their situation.”
Another mistake is delaying financial planning until the divorce is final. Ms. Sykes says clients need to be patient and proactive, take stock of what they own and be organized about things.
“You need to understand what you’re up against financially before you agree to anything,” she says.
Ms. Gittens has observed that more women aren’t hesitant to file for divorce if the marriage is no longer working for them. She sees this among a generation of women who are the primary breadwinners and financially independent in their own right.
“They know that they’ll be able to survive or thrive on their own and so, they’re doing what’s best for them instead,” she says.
She adds that clients do need to appreciate that the more types of assets they have, the longer it takes to assess the value of everything and separate things fairly and equitably.
Who gets the advisor?
When couples go through a divorce, Ms. Hartzman’s process is to work with one spouse but not both. She refers the other spouse to another advisor but leaves the decision of who goes where directly to the couple.
“You want to be working with the person who wants to work with you,” she says. “It’s hard to be impartial when people go through all the negotiations, so you want to make sure each person is getting fair representation all the time.”
Ms. Sykes, on the other hand, will work with both parties with some conditions laid out ahead of time. She conducts a recorded meeting explaining how she will meet with them separately. Both parties agree to being recorded ahead of time. Going forward, meetings are confidential between her and the individual party. She also recommends they each retain their own lawyers and accountants.
“I’m not here to referee,” she says. “Everything will be very much segregated. That’s my fiduciary duty to them.”
She acknowledges that some clients would prefer to be referred to another advisor within the firm or leave the firm altogether, and she will help them through that process.
“But more often than not, people are very comfortable with staying with somebody they know and trust and have worked with several years,” she says.
“Having said that, some people will bring a money-savvy friend or family member to act as a sounding board for at least the first meeting or so just to make sure that they feel comfortable when they meet and ask the questions.”
If something is out of Ms. Sykes’s purview, she will stop the meeting and advise them she can’t comment.
If one of the spouses is, for example, late with an alimony or child support payment, that’s something to take up with their individual lawyer.
“I suggest they talk to that person directly and it’s something they need to take outside,” she says. “I need to make sure everybody is treated appropriately.”
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