When it comes to giving financial advice, experience is important but so are qualifications. It is the combination of the two – tested knowledge and applied skills – that makes for the best financial advisers.
This is never more apparent than when financial advisers or planners work together with members of the legal profession to provide advice services to clients going through a divorce.
Solicitors expect financial advisers not only to know their own stuff, particularly in the complex field of pensions, but also to have a very good working knowledge of the case law surrounding this subject.
I have recently spent two fascinating days attending a training course arranged by Resolution (previously the UK Collaborative Family Law Group) which went into great detail about the collaborative law process as well as technical issues surrounding the different options available in the area of pensions and divorce. This is a dynamic subject, with case law changing and developing constantly.
It must be said that the legal profession has not looked favourably on the financial services intermediary but more and more lawyers are recognising the complementary skills that advisers can supply.
Divorce is a difficult process but, leaving aside the emotional and family issues associated with divorce, the most important aspect is getting the financial settlement right.
Not only is it likely that one party to the divorce will be less financially aware than the other but it is usually the case that there will be some degree of conflict over who should get what.
I am constantly amazed by the number of men (sorry, guys, it is always the men) who think they can hide some of their assets from the court or who believe that their former spouse will accept substantially less than they are entitled to. This is where the well qualified and experienced adviser has a role to play helping either party to identify and document the existing financial arrangements and calculate an equitable distribution of those assets.
The Resolution course is an accreditation event and is followed up by an examination consisting of short questions that require a significant degree of research by the delegate. Once accredited, this puts the IFA in a strong position in their dealings with the legal profession. It is fairly likely that those lawyers who are members of Resolution will more often than not seek to use the services of an accredited IFA.
There are 5,000 solicitor members of Resolution and this number is a growing as this form of mediation becomes more popular, so IFAs who ignore this opportunity may well find themselves marginalised in this important business area.
There are two significant business opportunities to the IFA who specialises in this area. Solicitors have a great demand for what are known as single joint experts. The role of the expert is to prepare a report for the court, having analysed the pension arrangements of both parties and followed instructions from the solicitors to both the petitioner and respondent as to the required outcome. As well as having the usual pension qualifications, IFAs will have to demonstrate a real working knowledge of the intricacies of the legal process.
Above, I have set out 10 questions on the subject of pensions and divorce. If you can answer all the questions, well done. Anything less than nine out of 10, though, and you may well benefit from the course as well. The answers will appear in Money Marketing next week.
1) What four actions might constitute grounds for a divorce?
2) Which one of the above answers does not apply to the dissolution of a civil partnership?
3) Which form submitted to the court after the petition for divorce gets the whole thing going?
4) What information about pensions needs to go on to Form E?
5) If either party to the divorce wishes to pursue a pension sharing order, then the court can issue a request for completion of which form?
6) What four pension options are available in a divorce settlement?
7) True or false? An attachment order can be applied against the basic state pension.
8) How do you establish the value of state earnings-related pension/state second pension benefits?
9) What does a Duxberry calculation do?
10) What was the main point held in the Martin-Dye judgment?