How advisors handle conflicts and communication in divorce

When married clients announce a separation, financial advisors must treat each spouse as a separate client, manage conflicts of interest, limit unilateral communications and often refer clients to divorce attorneys or certified divorce financial analysts (CDFAs). Advisors describe the change as an immediate shift in client status that alters how they share information and give advice.

Adults under 65 face about a 45% chance of divorce, and advisors say the financial impact can be large. Kristen Shearin, director of the Institute for Divorce Financial Analysts, estimates clients have a 50% chance of losing half their net worth during a split. That potential loss converts a single household relationship into two distinct client relationships almost overnight.

Advisors say recognizing a pending split early matters. One common issue is imbalance: one spouse often has a stronger relationship with the advisor and may control account access or information. Shearin notes the imbalance is often with the spouse who is more invested in the investment decisions. During separation, that gap can widen if one spouse contacts the advisor without the other.

Firms handle the shift in different ways. Stephanie Kerns of Sacramento-based NorthRock Partners tells couples that once a split is announced she will communicate only with both parties together. “It is super important because legal requirements have to be followed. We are not attorneys and cannot make those decisions and need to make sure we are being transparent,” Kerns said, adding advisors should consider how reduced contact affects the less involved spouse.

Some advisors with divorce training try to keep both spouses engaged when the process is collaborative. Cris Caruso of Savoire Financial in Laurel, Maryland, outlines options: clients can both find new advisors or jointly decide who continues to work with the existing advisor. Caruso says an advisor can act neutrally if both sides agree, the legal teams coordinate and there is a clear division of assets. In more contentious cases, she sometimes withdraws from advising both parties, explaining she “cannot fairly or ethically be involved with and advise both people.”

Advisors also emphasize professional limits. Certifications such as the CDFA provide additional financial expertise related to divorce, but advisors should not provide legal advice and often coordinate with divorce attorneys. Kerns recommends that advisors without divorce experience bring in other advisors, CDFAs or attorneys to support clients.

Divorce commonly requires dividing retirement accounts, investments and property, and can change tax and estate plans. Advisors who identify a pending split typically set clear communication rules, document client consent for any information sharing and refer to appropriate specialists such as attorneys or CDFAs to handle legal and technical issues.