Jan Galloway partner in the family team at law firm Moore Barlow, explains why pressure on families caused by the cost-of-living crisis is changing the role of financial advisors.
As made clear in the Spring Budget, the cost-of-living crisis will remain a challenge for the country for the foreseeable future. High utilities bills, increasingly expensive mortgage payments, a shrinking economy and a plethora of other challenges are diminishing household income.
The crisis is not just causing financial pressure, it’s having a detrimental impact on a high number of relationships as well. At Moore Barlow, we recently surveyed over 2,000 UK adults and found that seven in ten have experienced relationship strain over the past 12 months, close to a third of whom cited the cost-of-living crisis as the major cause. This also applied to high-net-worth individuals, 28% of whom reported that the crisis had caused strain in their family lives.
Advisers are, therefore, likely to find themselves dealing with a number of clients who are considering separation or divorce and coming to terms with the financial implications of such a decision.
This inter-twining of personal and financial concerns means the role of advisers is becoming more holistic. Lawyers need to know where to point their clients for appropriate financial services, and financial advisers would benefit from having a broad understanding of the different legal avenues open to their clients as well.
The key points on mediation
Financial advisers do not need to start giving their clients legal, or relationship, advice. If a client raises the issue however, an adviser who has an understanding of how and when to refer them to options like mediation could be greatly helpful, and further strengthen the client/advisor relationship.
Mediation sees couples meet with a neutral third party, who can help them work through the terms of their separation. Before their first joint meeting, both parties will individually meet the mediator, to discuss their concerns and priorities. Using this information, the mediator will help the couple find mutually acceptable terms.
This process is more cost-effective than divorcing through the courts. Separating couples share the cost of employing a mediator, rather than engaging separate lawyers in potentially costly legal battles.
Another potential benefit of the process is that it encourages more amicable separation. Mediators do not push couples to particular solutions but help them to craft their own solutions. This should ensure both parties feel their concerns are heard and addressed.
Mediation is also confidential, unlike proceedings in a family court. Hence, it can take place in a safe environment, where people can communicate openly about deeply personal matters. In fact, mediation has proven to work so well for achieving discrete, amicable conflict resolution, that the Ministry of Justice is planning to make it obligatory for disputes about the time each parent spends with their children.
The impacts of no-fault divorce.
As of April 2022, British couples no longer need to prove wrongdoing on the part of either party, in order to file for divorce. This has the potential to revolutionise the way Brits separate, by creating an environment where a range of dispute resolution mechanisms, which take place outside of the courts, are more widely used.
One of the possibilities it enables, is for couples to get divorced using the same lawyer. Such a process has similar benefits to mediation – it encourages collaboration and enables couples to share the cost of expert guidance and in this scenario advice.
At Moore Barlow, we were one of the first few law firms to offer a single-lawyer divorce service. The results of this approach so far have been excellent. Couples have quickly and amicably agreed settlements that set them up to have a positive relationship post separation – particularly important if they have children.
Connecting clients to appropriate support
The cost-of-living crisis is not going away. For the time being, it will continue to muddle clients’ personal and private concerns.
Financial advisers can provide an additional layer of support for their clients by connecting them to dispute resolution services. Building networks with legal teams who can offer services such as mediation, would enable advisers to put their clients on the path to resolving the issues affecting their personal lives, and add more value to the relationship.
