Wealth management for women during (and after) divorce

Even though South Africa’s national divorce rate is considered low by world standards (the number of marriages has fallen steadily since 2011), data by Stats SA in 2020 shows that four out of ten marriages dissipate within the first ten years.

Wherever you are in the world and whatever your circumstance, experiencing a divorce is never easy. However, that said, it is entirely possible to secure a happier future for yourself and your children, granted you take hold of your finances and have a plan to keep moving forward.

In this article, I’ve highlighted various strategies to better manage one’s personal finances before a divorce, and settlements obtained afterwards. While I do lean heavily into wealth management for women, some men might also find this information useful too – not just for themselves but for a daughter, sister, or female friend currently experiencing marriage dissolution.

Where and how to invest your money

During my many years of specialising in wealth management for women, I have dealt directly with ladies who find themselves divorced with large sums of money and unsure what to do next. It’s one of those nice problems to have, as long as one implements a well-thought-out financial plan.

It’s not uncommon to want to embark on a spending binge to overcome the sadness (or celebration) that comes after a turbulent divorce with a spouse, but spur-of-the-moment expenses can throw your finances in a tailspin after a divorce. It’s also worth remembering that the money you receive as settlement or child maintenance is often once-off, making it even more imperative to budget wisely.

Instead of allowing your settlement money to sit idle in a savings account, mutual funds, and exchange traded funds provide excellent alternatives to growing and protecting your money whilst maintaining financial independence and stability. Externalising your money offshore further allows for greater diversification across sectors, businesses, asset classes, and currencies.

It’s also crucial for newly divorced women to rethink their retirement plans. As a married couple, chances are you would have made some plans for those golden years, but that situation changes drastically after a divorce. If an ex-husband is listed as a beneficiary in your will, this would be a good time to remove them.

The post-divorce period is also a good time to set up a well-thought-out estate plan and update all documents required to protect your assets after you pass (whether you have children or not). As backed by data from the World Health Organisation (WHO), women generally tend to live longer than men, so it’s important to prioritise a plan for your life and legacy, regardless of whom you share it with.

Ask a professional for help

From my experience advising on wealth management for women, one of the biggest challenges some face amidst a divorce is the fear of being perceived as lacking financial smarts. But as I often explain to all my clients (both men and women), financial literacy isn’t something we just take in with the air we breathe.

It takes time to understand the ins and outs of finance – but what’s most important is a willingness to learn. I always work hard at emphasising this, as well as the fact that there’s no such thing as a dumb question.

Fortunately, financial illiteracy is becoming less common as more women can now access objective information and advice in order to make better-informed financial decisions. Whether you (or someone you know) are in this position, there is a whole pool of qualified professionals who can genuinely help you protect your assets and get you out of a marriage feeling financially empowered.

As a passionate wealth manager, my goal is to find the balance between being supportive and professional. But as a human being, I can certainly empathise with lapses in financial confidence. Regardless of who you are or the situation you’re in, there’s no need to feel embarrassed or deep shame over your past actions (or lack thereof!) regarding money.

Act before divorce occurs

As someone who advocates wealth management for women, there are many times when I’ve had to assist women who have ended up with a raw financial deal.

Generally speaking, this tends to happen more frequently amongst women who’ve predominantly focused on running the household during their marriage instead of building a financial profile of their own (homemaker vs breadwinner). According to this report by Martin Vermaak Attorneys, a South African divorce law firm, in 2019, 24% of women were unemployed while going through divorce proceedings as opposed to 17% of men.

When divorce comes as a surprise to some women, it can leave them feeling completely futile, distraught and out of their depths, with an immediate urge to get out as quickly as possible. Sadly, this can result in them being somewhat short-changed, with very little to fall back on.

As mentioned earlier, working alongside a divorce lawyer, as well as a financial expert, can help significantly in terms of calculating solid negotiation figures. However, to avoid potential pitfalls completely, the best time to implement mechanisms to protect yourself financially is at the start of a relationship rather than the end. Yes, it is an uncomfortable exercise thinking about the potential demise of your marriage, but in reality, it’s naïve not to.

I cannot stress this enough: establishing a financial profile in your own name to fall back on during your marriage is absolutely essential. Once a relationship starts to sour, it can become nearly impossible for couples to agree on anything, least of all their financial matters.

Dealing with a divorce or know someone who is? I’m here to help strategise the best way forward with a high level of care, particularly regarding wealth management for women. Get in touch here, or send me a direct email: giles.maynard@carrick-wealth.com

I’m Giles Maynard. I provide individual investment and wealth management services for private clients and companies. I have been trusted by clients, large and small to manage, protect, and preserve their wealth. How can I help you with yours?