Marriage, and dissolving them, are critical financial as well as life events. Vanessa Eve, Investment Manager at Quilter Cheviot Investment Management, explains why women have to get serious about their wealth management strategy following divorce.
Divorce, one of the largest, and hardest life events anyone can go through, often presents women with unique financial decisions for the first time, offering both challenges and opportunities.
A study by Warwick University that analysed 2,800 investors found women’s portfolios outperformed both the FTSE 100 and their male counterparts over a three-year period
After your divorce is finalised, you may be left with a lump sum payment over which you will have total autonomy – to spend or invest.
While investing might seem a daunting prospect, with the right support, guidance and advice, it need not be. Some women coming out of a divorce may feel unsure about investing. Especially if their joint finances had been managed by a male partner, as is traditionally still the case in many households. However, research suggests women are actually better long-term investors than men.
A study by Warwick University that analysed 2,800 investors found women’s portfolios outperformed both the FTSE 100 and their male counterparts over a three-year period. While annual returns for men climbed 0.14% above the index, women’s returns climbed 1.94% – proving women need not feel unsure about investing.
Approaching investments for the first time
Research also suggests, however, that women engage less with investments than men, with many women unable to specify exactly how much is in their pension pot, for example.
During challenging, and potentially expensive, times in life such as going through a divorce, it is essential that women are in the driver’s seat when it comes to their finances.
If women go into a divorce unengaged with family investments, and their state of their own finances, they do so with less information. This could potentially leave them disadvantaged
The negative financial repercussions of divorce are clear. A 2020 American research paper by the National Council on Family Relations that examined the impact of divorce on net worth found both men and women experienced a reduction in wealth during their separation period – 82% of men and 76% of women found they took a hit to their assets during this time. If women go into a divorce unengaged with family investments, and their state of their own finances, they do so with less information. This could potentially leave them disadvantaged.
However, with the right guidance, you can take those first steps in managing your finances in the way you want and in line with your own wealth priorities.
Top Tip
Lee Goggin
Co-Founder
First Steps
- Choose a firm you trust. The firm you engage to take care of your investments after a divorce needs to be one you trust. Your investment manager should create an environment in which you feel completely free to ask questions, no matter how small.
- Calculate exactly what is yours. This step will most likely be guided by a legal representative, but we can help you decipher which assets are yours, which taxes, if any, need to be paid and help you disseminate the assets that are to be left to your children, if children are involved.
- Make an investment plan. We offer a range of investment services, guided by our expert investment managers, who will oversee and grow the money you entrust to us. With offices across the UK, it is easy to engage with one of our specialists.
Your investment manager should create an environment in which you feel completely free to ask questions, no matter how small
Never too early
There is no rule compelling women to wait for a life-altering event to start thinking about managing investments, but with reforms to divorce law set to come into play in the UK from April 2022, divorce rates are expected to increase as it becomes easier to dissolve a marriage.
No-fault divorces will mean the necessity of wrongdoing by either marital party will be void, and the period of separation of two years would be eliminated from the proceedings.
With reforms to divorce law set to come into play in the UK from April 2022, divorce rates are expected to increase as it becomes easier to dissolve a marriage
According to the latest data from the Office for National Statistics, the rate of divorce in England and Wales stands at 33.3%, based on all marriages spanning the past 50 years between 1964 and 2019, and it’s likely to rise as the legal framework changes.
Whether divorced, widowed, married or single, women must feel confident in their ability to take ownership of their finances.
Important information
The investment strategy and financial planning explanations of this piece are for informational purposes only, may represent only one view, and are not intended in any way as financial or investment advice. Any comment on specific securities should not be interpreted as investment research or advice, solicitation or recommendations to buy or sell a particular security.
We always advise consultation with a professional before making any investment and financial planning decisions.
Always remember that investing involves risk and the value of investments may fall as well as rise. Past performance should not be seen as a guarantee of future returns.
