Collaborative Divorce Planning
By Carolyn S. EllisSuzanne Magee Fleming is a senior financial advisor with Merrill Lynch Wealth Management in Orlando, Florida. She works with many women who are experiencing divorce often through the Collaborative Divorce process.
L&HA: Tell us about the niche you have developed working with women experiencing divorce.
SMF: Many women haven’t had to handle the financial affairs in their home, and all of a sudden they find out they’re getting divorced. Usually financial advisors are brought in after the settlement is made. That can be too late. Women need to know that they are going to be OK; they don’t want to just be told. We have tools at Merrill Lynch to plug in what’s important, their needs and dreams, and see how they are going to fare. Usually there will be lifestyle changes when the income for one household is divided for two. Some women will need to go back to work. I make sure they understand what a stock, bond, or annuity is and what those terms mean to them. I help these women see there is a future and how they can get there. It can be a long process.
L&HA: Is part of your marketing being out in the community and connecting with other professionals?
SMF: You need to get to know divorce attorneys, mental health people, and CPAs to get referrals. I’m part of the Collaborative Divorce process, founded by attorney Stuart Webb in Minnesota in 1990. It’s not divorce mediation. It’s based on interest-based bargaining rather than position-based bargaining, which is more adversarial. The process involves a mental health professional who runs the divorce, a financial neutral, two divorce attorneys, and the two people getting divorced. Spouses have to understand the process and sign a participation agreement. The mental health professionals or financial neutrals often call me in when they see the woman has no idea what they are talking about financially. I call myself “the financial during and after” because I’m the one to take them on for the rest of their lives.
L&HA: But there’s still a paid financial neutral on the team?
SMF: The financial neutral and all other professionals in the collaborative are paid an hourly rate. When I’m in the role of “the financial during and after,” I’m in there on my own time. There’s a risk for me because I work with these women for months before I might get any business. Having a very established business here allows me to do that, and it’s so important to me to help these women. Investments have gotten much more complex over the years, and divorce attorneys are often unschooled about some investments. I can explain that an investment might sound great, but you can’t get out of it now. I don’t give tax advice but I can point out that if you buy dividend-paying stock these are what your tax rates could be. Or, having real estate might not be the right thing. The client may not be able to afford it. If she wants to keep it and needs to get it into her name, she may find the banks won’t give her a mortgage until they have seen a steady stream of alimony payments for some period.
L&HA: Is collaborative divorce an expensive process?
SMF: In collaborative divorce the parties sign a contract so they are committed to paying the professionals involved. If the collaborative process doesn’t work, the spouses have to start over with new divorce attorneys. However, there are other costs to consider, including stress and delays. What’s important about the collaborative is that when I look at the parties after divorce, they aren’t as damaged. The collaborative process is designed to keep the future in mind for both parties.
L&HA: What do you mean?
SMF: Based on negotiating in good faith, collaborative divorce centers on the individuals’ goals — they want the kids so many days, or want to stay in the house, or want be able to move in the future. It’s not like having the court say what you have to do. And by not going to court, if there are certain things the parties don’t want everyone to know, then collaborative divorce can be good.
L&HA: Is collaborative divorce ideal for long-time married couples?
SMF: It can be. I have a woman age 67 who’s getting divorced coming in today. She’s been married 40 years, so she’s in shock. She had no idea how much money they had, and there’s a lot of distrust. I love working with women on their financial health, and we also work with women whose husbands have passed away.
L&HA: You’ve found a great formula for success.
SMF: In Central Florida I’ve been on more collaborative cases than anyone. Collaborative divorce is still a small market, but you can work with regular divorce attorneys because they need us. As with any niche you have to have a passion for it. You need to be seen out there, own the market, and do good work. Reputation is so important.
With permission from clients, I send out little news updates that show divorce attorneys that what they did really made a difference in someone’s life. Your client got a job, she’s really happy, she’s got a boyfriend, or whatever it is. Divorce attorneys like that because usually when they get done with a case they’re done.
L&HA: Teamwork is a big part of your life.
SMF: Here at Merrill Lynch I’m on a team of six: three financial advisors, a wealth management banker, an associate that does all of our lending, and another associate that handles everything administratively. Last year my oldest son became a financial advisor on my team. I had told James he couldn’t start in the firm until age 30 because who would give serious money to someone just out of college? It’s exciting now to have him on board. Our clients love knowing what’s going to happen 10 or 12 years from now. And their children are happy to work with someone other than their parents’ advisor, to keep their finances private and to have someone closer in age who understands them more.