Death, divorce and dishonesty

Posted by on 09/05/24

Sarah and Tom had been married for over two decades. Throughout their marriage, they had entrusted their financial affairs to the same adviser, with whom Tom had a close relationship.

Sitting down for a joint review with the adviser, Sarah noticed a subtle shift in Tom’s demeanour – a nervousness that seemed out of place.

As the meeting progressed, the adviser began discussing their investment portfolio and retirement plans. Sarah, always diligent about their finances, started asking probing questions about certain assets she wasn’t familiar with. To her surprise, Tom hesitated before providing vague explanations.

Feeling a sense of unease, Sarah pressed further, prompting Tom to reveal the shocking truth – for their entire married life, he had been secretly accumulating assets in various accounts without her knowledge. From offshore investments to hidden brokerage accounts, Tom had been orchestrating a complex financial web behind Sarah’s back.

Stunned and hurt by the betrayal of trust, Sarah struggled to comprehend the extent of Tom’s deception. As the revelation sank in, she realised the implications for their financial future and the trust that had been shattered between them. Divorce was inevitable.

This illustration is based on a true story and the unfortunate reality is that Sarah is not alone. A significant shift is underway as women find themselves inheriting newfound wealth and independence due to life’s unpredictable twists: death, divorce and dishonesty.

Untangling finances when a marriage ends can be painful for all concerned. And to add insult to injury, just as can be seen with so many gender gaps – pay, pension, career, investing, mortgage – there is a greater risk for women.

To mark Divorce Day in January (the day a surge in enquiries about divorce is seen each year), Legal & General published research which found women’s incomes, on average, fall 40% after a marital split compared with a 21% decline for men’s.

As women like Sarah step into newfound financial inheritance and independence, they can quickly find themselves in uncharted territory, especially when existing adviser relationships have primarily been built with their husbands.

Sarah’s discovery of her husband’s secret assets serves as a poignant reminder of the importance of transparency and communication in financial relationships.

It underscores the need for both spouses to actively engage in financial planning and to maintain open lines of communication with their adviser. When this hasn’t happened, divorce can be the critical juncture for when women take control of their finances and establish financial independence.

Divorced women have the potential to inherit significant wealth to secure their financial futures. According to a report by UBS Global Wealth Management, titled Own Your Worth, divorced women who actively engage with advisers are better positioned to understand their financial situation and make informed decisions regarding asset management and investment strategies.

For advisers, the opportunity lies in recognising and addressing the specific needs and concerns of women who inherit wealth.

Attitudes are changing and, by examining preconceptions about female investors and actively building relationships, advisers can win a share in this important and rapidly expanding market.

With a third of the world’s wealth under their control, women have become a sizable economic force. They are increasing their wealth faster than before – adding $5trn to the wealth pool globally every year – and outpacing the growth of the wealth market overall, according to Boston Consulting Group. Overlooking their influence in the financial landscape is no longer an option.

Beatriz Sanchez, regional head of Latin America and member of the executive board at Julius Baer & Co, put it well when she said:

“Women will increasingly become more demanding and seek more information to make their own decisions, instead of delegating them to someone else. They will continue to be an economic force to the point where, hopefully, in five years, we will no longer be asking if women should be treated differently.”

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