How Financial Planning Professionals Can Benefit Family Law Attorneys
Article below as printed in the Family Law Section Newsletter of the Dallas Bar Association, April-May 2010 (Click here to download the Newsletter in PDF format…)
Family law attorneys, especially those specializing in divorce, have experienced increasing complexity and heightened demands in their daily practices. Their clients have more ―moving parts‖ in their lives and the pace of communications has greatly accelerated (what once took weeks by letter now takes days or hours by email), yet more services and better results are routinely expected. If you are a divorce attorney, one way to leverage your time and be more effective is to strategically use other professionals to your maximum advantage.
Multiple Benefits Provided
When a divorce lawyer teams up with a financial planning professional (FPP), such as a CERTIFIED FINANCIAL PLANNER™ Practitioner or a dedicated wealth manager, the following types of benefits may be expected:
Assessment: The FPP‘s specialized financial knowledge helps define, diagnose, and inventory the client‘s current financial situation and upcoming challenges.
Solutions: The FPP helps the attorney and client look for the most effective solutions possible, whether the divorce is settled in or out of court.
Settlement: The FPP facilitates reasonable settlements by delivering bad news to the client from an expert, impartial, and dispassionate source.
Assistance: The FPP can provide the client post-divorce financial planning and ongoing assistance.
To begin with, lawyers should recognize that in an increasingly complex world, a competent FPP can rapidly and thoroughly analyze a client‘s current and future financial situation and likely challenges. FPPs know how to quickly assess financial assets and income streams, and can use their training, tools, and experience to evaluate how much will be needed to support an existing lifestyle (with or without children).
The FPP‘s knowledge can then be leveraged by the attorney to look for the best possible solutions. Suppose the attorney represents a non-wage earning wife. After helping her determine what‘s most important—for example, keeping the marital home versus having substantial working capital going forward the FPP can help arrive at a number of potential solutions likely to be reasonably attractive to both sides. And if the case goes to court, the FPP can explain to the judge why awarding the wife a disproportionately high percentage of the total available assets makes perfect sense given the high wage earning husband‘s ability to relatively quickly build back his asset base.
Importantly, the FPP in this example can also help the attorney keep the wife on track by providing her with impartial and dispassionate advice. Asking for too much, or attempting to get even or prove that the husband ―wronged‖ the wife in some way, is often a terrible strategy to follow. Reaching a reason-able out of court settlement, or providing a judge with a sensible solution for dividing the assets, typically results in a much better outcome than a furious assault on hubby‘s behavior and morals. Working closely with a financially and emotionally competent FPP, the attorney may more easily steer the client to a better financial outcome.
Lastly, an FPP can help the client plan for post-divorce life and then execute, maintain, and monitor that plan. Many non-wage earning spouses have little idea how to run their financial lives even if they come out of a divorce in relatively good shape. Having assisted the lawyer and the client throughout, the FPP is well situated to work with the client on an ongoing basis post-divorce. This ultimately reflects quite favorably on the attorney, since part of the taking care of the client during the divorce process is making sure there‘s someone there to take care of the client once the dust has settled.
A New Way of Working
While some very successful divorce attorneys are regularly teaming up with FPPs, many others have not done so, based on a variety of doubts, misconceptions, and even prejudices. Many attorneys, for example, think either that they can do it all on their own or that they should do it all on their own. Similarly, many attorneys point out that they‘ve always moved through divorces without the help of an FPP, so they see no reason to make changes and break tradition. But given the complex nature of today‘s demanding world, it‘s hard to argue that the client wouldn‘t be better off if the expertise of a competent FPP were brought into play.
Negative opinions about stockbrokers who churn accounts and rack up fees also abound. In reality, most FPP‘s are good, competent, caring individuals who treat their profession as a means of right livelihood. But what about the cost of bringing in an FPP—won‘t that ultimately take money out of the attorney‘s pocket? In fact, many FPPs charge relatively little for the initial workup, and instead hope to earn the trust and business of the client going forward.
What To Look For In An FPP
Financial planning and investment counseling competency and credentials, including a well-articulated investment philosophy.
People skills: good listening, warmth, ability to communicate.
Low or fixed reasonable fees for initial financial workups and consultation
Familiarity with the legal system and divorce proceedings
A desire to stick with and assist the client post-divorce
Ultimately, of course, the divorce attorney is looking for an FPP who will do a good job for the client, who will help reach workable solutions, and who will therefore reflect well on the attorney in the long-run. The lawyer who brings such an FPP onto his team creates a win-win-win solution, one that benefits the client, the attorney, and even the legal system itself.
– Wade H. Chessman, CFP®