The Importance of Financial Advice in Family Law Matters
In this edition of the Australian Family & Fertility Law Podcast, Page Provan, Managing Director and Accredited Family Law Specialist, Bruce Provan talks with Adam Lomsargis, Wealth Coach at Sentinel Wealth Partners about the importance of financial advice post-separation.
Intro: You’re listening to the Australian Family and Fertility Law Podcast. Here’s your host, Bruce Provan.
Bruce Provan: Welcome to the Page Provan Family and Fertility Podcast. My name is Bruce Provan. I’m the Managing Director of Page Provan. My guest this afternoon is Adam Lomsargis, who is a financial planner from Sentinel Wealth Partners.
Adam, please tell us a bit about yourself.
Adam Lomsargis: Yeah, of course, Bruce. I’m a financial planner, a qualified financial planner or a wealth coach. And what I do is I help clients find the right strategy to build and protect their wealth. And, of course, a big part of that these days, it can be either fortunately or unfortunately, depending on your perspective dealing with financial separation.
BP: Thanks, Adam. Adam, tell me to someone considering separating, what financial issues should they consider?
AL: Absolutely. So one of the big points we want to look at, normally, Bruce, is helping the client to, first of all, take stock of their current financial position, and that will normally include reviewing the cash flow, their assets, liabilities and most importantly, their financial goals. Because normally, when you’re in a relationship, your financial goals can, of course, be very different compared to when you’re out on your own after you’ve separated. And also as part of that, of course, we want to make sure that the client will review their death benefit nominations.
BP: Thanks, Adam. We should someone going through a separation, consider getting advice from a financial planner.
AL: So a financial planner, what we can really do is help give the client a robust blueprint to help them get from where they are now. So say, let’s call that point A that have just been through a separation. They’re probably feeling a little bit emotionally disturbed at the moment, or maybe very stress. And what we want to do is help them move to, say, point B, which might be to get them back on track, to get them reaching their financial goals, whatever they might be. And as a general rule of thumb as well, Bruce, there are some studies out there which I will give links to. But as a general rule of thumb, working with a financial planner over time has been shown to benefit people financially around about $100,000 over a number of years. So that when that client advisory relationship is working well, there is a significant financial value in getting that advice, as well as, of course, the emotional support and a lot of people really enjoy and appreciate just having somebody to talk to and keeping them accountable.
BP: I know one of the issues that concerns people going through a separation is how financial plan is charged. And is it going to cost them a lot of money? Can you talk about that, please?
AL: Yeah, absolutely. So most financial advice can actually be very affordable. I like to put things in terms that most people understand, which is really the cost of a cup of coffee per day should be more than enough to really cover most financial situations and advice situations. And also asking, let’s say if you’re considering getting a financial planner or seeking financial advice, that would have to be one of the top questions that we suggest and recommend you ask. How do you get paid? And how do you charge financial advisers?
Bruce will normally charge in a couple of different ways, and they’ll charge you different points in the advice process. First of all, what we should just cover off is normally when you need financial advice, you’re either going to need to get a specific type of financial advice. For instance, how do I rebuild my super after a separation? Or maybe I need some investment advice, or how to sort out my insurance policies. Now, that’s an example of an upfront advice situation. So normally financial advisor will either charge you a fixed price and they’ll give you that quite upfront.
Or perhaps if they’re a Commission adviser, then they might be remunerated indirectly through a product provider. So it’s really important to find out about that. And then the other way that financial advisers get paid is normally through ongoing fees. Now, this is more or less when a client needs ongoing advice over time, which is really common, we might be able to give you a blueprint for sorting out your finances. However, life can have a lot of ups and downs and changes, especially through a separation. And it’s how we deal with those changes and how we make those course corrections that can make all the difference.
So that ongoing fee is also a separate cost, and that fee is normally tax-deductible, whereas the upfront cost isn’t, but it’s a really great question to ask. I think that’s key to be asking any potential adviser.
BP: Sure. And one of the things that concerns people about to or going through a separation is their cash flow. So why is there usually less money to live on following a separation?
AL: Sure. It’s a really good point. I mean, cash flow is essential and whenever you’re obviously, but whenever you’re separating more often than not, they’ll of course, be less money to go around because you’ll only be previously, you might have been a relationship for many years where there are two incomes or not. But when you separate, it’s just yourself. And for a lot of partners, that can be quite frightening, quite scary, because they might not have been in the workforce or working in previous years. And therefore, cash flow is a major factor.
It can make financial planning a little bit more challenging. But it’s important to note there’s always ways to improve your finances and really take control of what you do have rather than focusing on what you don’t.
BP: Okay. So how can a financial plan resist budgeting post-separation?
AL: Sure. So a financial planner, most financial planners will work with a number of different cash flow software, cash flow planning software, and what that enables you to do rather than back in the old days, when you had to sort of on a piece of paper, you had to manually write everything out line by line. These days, the software available that can really automatically analyse probably in categorise actually about of of all your transactions with very little effort and very little time. So it’s very powerful. What you can do is you can get this software working for you.
And financial planners are adept at then reviewing that information and working with the client to say, okay, well, what are the areas that we can? What are the opportunities for improvement? Where are the areas where maybe we could cut back a little bit? Where are the areas that perhaps you could be? You’ve got room to spend a little bit more, and making those course corrections and reviewing that budget can be really, really fruitful, especially after separation.
BP: Thanks, Adam. Now just changing the topic a bit. Why should someone about to enter a de-facto relationship or a marriage, consider getting a binding financial agreement?
AL: Sure, Bruce, I think it’s one of the best ways to especially for really more savvy couples. I think it’s really important to see some legal advice around whether or not a binding financial agreement is right for you, primarily because you’ve just been through a relationship, you’ve been through a breakup, and sometimes they can get really messy. And the last thing you want to do is have a repeat of what’s happened in the past. So having a binding financial agreement is a really smart or savvy way to put some measures in place and put some protections in place with the advice of your solicitor so that you can avoid repeating the pitfalls of the past.
BP: Sure. And that’s something that we assist clients with is the preparation and advice about binding financial agreements. Now, binding financial agreements can either be agreements in super for relationship or what they call prenuptial agreements. Or there can be agreements entered during the relationship to specify what’s to happen in the event of a separation. But they can also be agreements that are entered into after separation to say how all the properties to be divided up. What about issues like Wills, enduring powers of attorney and insurances?
AL: Yeah, absolutely. Bruce, you’ve covered a few different areas there, but of course, all equally important and relate to one another. I guess there’s the two primary aspects of going through a separation would be the asset protection side of things around insurance policies. You previously might have handled your insurances tied in together. And after going through a separation, what’s very often needed is a bit of a review of those insurance policies to make sure that your current sum insurance are in alignment with your current needs, which have normally changed a lot, especially if you’ve gone through a separation.
So that’s important to see some good, solid financial advice on that. Of course, the insurance policies is one thing, but also what we like to see is clients making sure that they’ve updated their superannuation beneficiary nominations. It might only sound like a really small part of a financial plan, but it’s a very important one, because what this will normally tie into, of course, is the will and estate planning. And this is where we encourage clients to liaise both with the financial advisor as well as their solicitor.
Because on one hand, Bruce, you know, we normally like to see people updating their wheels to make sure it reflects their current wishes. But also, it’s really important to make sure that their superannuation death benefit nominations are in alignment with their wishes in the will as well. There are some complexities around that, but normally a good solicitor and good financial advisor, I can help you avoid any potential issues and just make sure that in alignment with really what you currently need.s
BP: This has been very informative, and we often refer clients to financial planners for advice, especially those areas that we covered, because for someone contemplating or who’s just separated, it’s a good opportunity for them to get some advice if they haven’t already, and to sit down with a planner and go through all of that. Adam, thanks for your time this afternoon. That’s been great, and I look forward to speaking to you again.
AL: It’s been a pleasure indeed. Do I look forward to it?
Outro: Thanks for listening. If you have any questions, please don’t hesitate reaching out to Bruce at pageprovan.com.au.