Financial struggles delay 280,000 recent divorces: few seek advice

Key Findings:

• One in six divorces delayed: Financial reasons caused 17% of divorces in the past five years to be postponed.
• Income drop post-divorce: Annual incomes drop by an average of £9,000 in the first year after separation.
• Perceived financial unfairness: 40% of divorcees believe the process is financially unfair, yet only 7% seek financial advice.
• Wills left unchanged: Nearly 900,000 divorced individuals in the UK have not updated their wills to exclude former partners.

We found that couples who recently divorced have delayed due to income concerns (13%), rising living expenses (12%) and the actual cost of divorce itself (12%). 

Once separated, many individuals face significant financial challenges that can make their lives more stressful. For example: 

• Income reduction: 45% of divorcees see their incomes shrink by 30%, equating to £9,229 less per year.
• Increased expenses: Living costs (29%), separation costs (23%), and time off work (18%) contribute to financial strain.
• Debt: 15% of individuals go into debt to cover the £2,500 average cost of divorce.

Early expert advice is critical

Getting expert advice at the right time, ideally before separation can make the world of difference to clients and avoid some of the most common financial pitfalls including: 

• Waiving pension rights: Only 13% consider pensions when dividing assets, and 23% waive their rights, impacting their retirement.
• Future financial claims: Without Clean Break Orders, 69% are exposed to future claims from ex-partners.
• Unchanged wills: 11% have not updated their wills, risking inheritance disputes.

Build relationships with solicitors to secure the best client outcomes

Divorce is challenging and can have a significant emotional toll on clients. The experience is often overwhelming. To support clients through such a difficult time, it’s essential that advisers approach the subject of divorce sensitively and empathetically and work with other professionals such as solicitors to get the best outcomes.

Advisers can build relationships with solicitors to ensure that key steps are not missed in the divorce process with potentially long-term consequences. A great way to establish good working relationships is to talk. Roundtables, seminars, and networking events even virtually are a great way to spark conversations and exchange knowledge. 

An adviser can ultimately improve a client’s experience of divorce. Although divorce causes an inevitable strain emotionally and financially, with good financial planning and sensitive advice, an adviser can guide a couple to make the best of the fresh start and move forward more confidently.