Separating After Lockdown: Financial Planning and Moving On

The last few months have been difficult for everyone not only in Scotland but indeed throughout the world with daily changes in respect of regulations, rules and major changes to daily life.  Of course, on a smaller scale, many of our clients have been facing the changes that come along with the decision to separate from their spouse.  Whilst much of lockdown has felt like firefighting for many people, the decisions which require to be taken in relation to parties separation should not be rash decisions and some thought requires to be given to the decisions to allow parties to move forward with their life looking to the short, medium and longer term in respect of finances, arrangements for children and general decisions in respect of where parties will live with whom etc.

Here at Jones Whyte we work closely with various other companies who are able to assist our clients in respect of taking those next steps and making the decision in respect of their separation.  Lesley Irvine-Rae at Cornerstone Asset Management discussed matters recently with our Danielle Stevenson with a view to assisting clients who are separating to look at the longer term implications of the decisions that they make in relation to their separation.  We discussed the impact that COVID-19 has had upon people’s financial decision making and Lesley had the following advice to give to any parties considering separation and making these important decisions in relation to their finances:-

“I don’t think anyone could hand on heart say that they have had no lessons to learn from this unprecedented time we find ourselves in.

When it comes to our clients’ investments, we have been really pleased with how well they have taken market and economic upheavals in their stride. I would like to think that is because we always advocate investing for the long term and keeping back a decent sized emergency cash fund.

We also typically recommend investments that are very diversified and micro-managed when it comes to controlling risk. Holding a UK centric portfolio was not a good idea over the last few months. Whilst diversification can sometimes mean that returns on the upside do not climb as high as those of riskier investments, but it is reassuring to know the portfolios tend to fare well when the going gets tough.

Financial planning should be all about avoiding nasty shocks as far as possible. You should therefore always allow for unexpected events, whether it be a pandemic, redundancy, divorce, or ill health, and protect against them if you can. That protection can take the form of a life assurance policy, an adequate cash reserve or simply a bit of flexibility in the planning.

For example, if the value if a pension fund doesn’t do as well as expected, it’s important to take stock of this and consider either trying to save a bit more, delaying a planned retirement date or phasing into retirement by reducing hours initially.

The flexibility offered by the pension freedoms legislation introduced in 2016 does mean that people don’t have to pin everything on retiring out right at 60 or 65, although with the extra choice comes more decisions to make.  In my view, the period from around 10 to 5 years ahead of your earliest possible retirement date is the key time to have a financial review and second opinion about what you can and can’t achieve.

We all lead such busy lives these days that we can be guilty of putting off until tomorrow what we should be doing today. If we all engaged with our financial planning more, we might not always be told we would be retiring as millionaires, but at least we would know roughly what to realistically expect, or what we need to do to achieve our goals, with or without another global crisis.”

Should you be considering separation or are in the early stages of separation then please do not hesitate to contact our office to discuss matters further with one of who would be more than happy to explore your options on both a financial and practical level. Not only can we assist you with legal advice, we can work with other professionals to assist you through the full process.  We can be contacted on 0141 375 1222 or alternatively family@joneswhyte.co.uk