As you may have read previously, I have been working with financial advisors since 2004 on their marketing and branding strategies in order to grow their firms. One topic I am very fond of discussing is target marketing because an advisor becomes more referable when they are known for working with a specific type of client. Working with women who are facing challenges going through a divorce is one such target market.
Divorce is a hard enough time for any woman. Besides being met with loneliness, there’s a whole set of burdens that go along with divorce, during the process and after. Not only are there legal dilemmas to tackle, but a woman worries about her family as well. Not to mention adapting to a single life status while handling finances?
Divorce is very challenging for women and often can lead to stress and hard times in the long run. It’s an issue that’s brushed under the rug in the busy world that we live in. Today, I’m bringing awareness to the issue by talking about the challenges women face going through a divorce and WHY they need the help of a financial advisor.
1. Why do Women Face Challenges More than Men?
Looking at gender differences, women are more likely to struggle with divorce than men. This includes the psychological well-being of an individual as well as financial consequences. Studies have shown that the economic costs of divorce fall more heavily on women.
After separation, women go through a steeper decline in household income and a greater chance of poverty. This is mainly caused by lower earnings (if the woman is a stay at home mom) and finding ways to make ends meet while providing for children. Although, there’s more challenges along the way that we’ll get to.
2. Finances and women’s cash flow
It may sound surprising, but the biggest concern that a woman has during divorce is money ahead of their own children. A study showed that money is the number one concern with a figure of 86%. Money was ranked ahead of children (74%) which shows how uncertain women perceive the future after separation.
Each woman has their own set of challenges when it comes to finances. A lawyer and an accountant is usually needed to figure out how retirement assets will be handled. A 401k or a pension usually requires the court to divide them, and it takes time. There’s a lot of moving pieces for a woman going through a divorce. You have to figure out a new budget, cancel any joint credit cards, and change any family insurance plans.
Finally, dropping to a single income lifestyle is tricky in general after the divorce is finalized. Some leave their careers to take care of their children. Others cut their hours down to part-time so they can meet somewhere in the middle between working and caring for family. But the financial repercussions of the divorce don’t go away easily. 33% of women surveyed said that they were not satisfied at all with their current financial situation. It’s hardly enough to pay bills on time which forces women to cut back on their lifestyle quality.
3. Gender Wage gaps – women often earn less
The gender wage gap refers to differences in earnings between women and men. The bottom line is women often earn less money at work than men on a consistent basis. Studies show that, on average, women earn 82 cents for every $1 earned by men. Two main factors of the wage gap are women-driven labor fields and experience.
Some industries have a majority of women working including teachers, administrative assistants, and childcare workers. Women in these fields have less pay and even less benefits than job industries dominated by men. This gives women less flexibility as they search around for a new higher paying career in order to accommodate for a single income.
Experience is also contributing towards the gender wage gap. Employees with more experience earn more money for long tenures. Women are guided outside of the workforce so they could take time off to raise young children. Companies do offer maternity leave, but it creates a difference in years of experience between men and women. They sacrifice opportunities to earn more for caregiving.
Although the wage gap is declining as women move into more traditional male industries, it will take some time to narrow this gap.
4. Women are the main caretakers of children
It’s difficult for a woman not to think about the destabilizing effect divorce has on children. You might feel guilt or shame for choosing separation for the sake of the kids. A mother wants to guide their children by showing them what a loving, successful marriage looks like. According to research, children are more likely to face behavioral and emotional problems if parents divorce while the child is between 7 and 14 years old. With divorce rates remaining higher than they have ever been, the challenge of raising children as a single parent is common.
Every person’s marriage situation is different, so of course women are likely to feel alone even though divorce is a common option. Some people with a lack of understanding question why a mother didn’t try harder to hold the marriage together. So while a woman may feel guilty for being a single parent, they try their hardest to dedicate time to their kids because they know how vulnerable they are.
Combining the extra needs of children with single parents along with mothers working full-time to provide, and you have a burnt out woman simply doing her best. However, if you’re a woman going through the challenges of divorce, it’s important to remember you did it for the better. Keeping kids locked in a miserable situation where parents are arguing isn’t a good solution either.
5. Housing – women want to keep the family home
Home is where your heart is. It’s where you raise your children and usually have deep emotional ties. It’s one of several reasons why divorce is challenging for women. At some point in the divorce, you may realize that you shouldn’t keep the home just for the sake of your emotions. It may be time to leave because it doesn’t make sense to keep up with the bills.
After leaving, a woman has to find a new place to stay. Buying a home means real estate agents, closing costs, and miscellaneous fees. Renting likely requires multiple down payments and moving costs upfront. There is also the time and dedication it takes doing research on a new location that fits your needs. Most of the time women take custody of the kids which makes finding a suitable home that much more difficult.
On the other hand, it’s not uncommon for the woman to stay in the house while the spouse leaves. This requires a detailed list of everything that needs to be paid for such as taxes, utilities, and maintenance, now with a single income. Paying the mortgage is handled through a divorce agreement rather than child support. So careful planning and coordination needs to be done as soon as possible.
6. Emotional Well-Being for women
Breaking up the family is a distressing time. Sometimes, a woman may separate from their spouse seeking freedom from an unhappy marriage. It seems like the only way out regardless of how the circumstances may be. But the emotional well-being of a woman is in jeopardy for some time after a divorce. She may not have any support outside of her family which leads to feelings of loneliness and depression.
A challenge like a divorce could be difficult to cope with even years after separation. Women have to work even harder to keep up with changing times regardless how they feel. It’s never easy trying to stay productive while you’re struggling internally from anxiety. Not to mention, it’s easy to feel anxious or lonely when you’re forced to change from your old lifestyle.
Being a mom might just feel like your purpose in the world. But why wouldn’t it be? You’re doing your absolute best to do your job as a mother. At the same time, getting overwhelmed is easy when you have more obligations than a married couple does. You have to work your normal hours at your job and you have to parent on your own. Then there’s extra time spent coordinating with your spouse over agreements. All while coping with the stages of divorce.
7. Rising Above the Challenges of Divorce
Even though each situation is different, it’s probably one of the most difficult decisions a woman will ever had to make. Divorce is never easy, and it’s certainly not an overnight process. You have to think about each critical step before, during, and after the divorce. It’s a massive challenge coping with the emotional distress of separation alone. On top of that, you have to keep your head up and work harder in a society where women earn less money.
There are some steep hills that women have to climb, but it also means a sense of freedom for many. Throughout the challenges of divorce, it’s better to embrace them rather than bottling negative feelings inside. This isn’t a “failed marriage”, it’s an opportunity to rise above a negative situation and become a better version of yourself.
8. Financial advisors, women, and divorce
If you are a financial advisor wanting to tap into a new target market such as women going through a divorce, there is much that you can do to attract female clients and help them during this very distressing time. Consumers make decisions based on a need. When the PAIN of being married overcomes the BENEFITS of staying married, that’s when a woman will seek help from a financial advisor. The first step is to understand what a woman is going through.
9. Challenges Women face going through a divorce
• Economic costs – bills, overhead, and dealing with money
• Taking care of children
• Costs of keeping the family home
• Dividing assets between spouses equally and fairly
• Knowing where the money is located
• Never having managed the household finances
• Communal debt – how to handle it
• High costs of emotional distress
Consider the CDFA® Designation
Consider acquiring the Certified Divorce Financial Analyst (CDFA®) designation to truly understand the considerations for both parties during a divorce. This designation will help you design a program to help women sort through the messy challenges of legally separating from their spouse.
Final thoughts on women and divorce
This is where you can make a huge difference in the lives of your women clients. Understand what they are going through. Understand their hot buttons and points of pain. Help them understand the consequences of their financial decisions, even though it may be painful for them to hear.