In Conversation With Eloise Hammond: Discussing Financial Issues on Divorce that Particularly Affect Women

By Francesca Davey

Senior Associate

Eloise is a Chartered Financial Planner at SeventySeven Wealth Management, and one of the few female advisors in the UK. She has worked in financial services for over 10 years and advises on a wide range of financial matters. I caught up with her to discuss her insights into the financial issues on divorce that she sees particularly affecting women. 

You often work with divorcees, are there any typical financial pitfalls during the divorce proceedings that you see people fall into?

When going through a divorce, thinking about finances might be the last thing a client wants to do, however it is important for a client to be aware of their financial position and to have a clear plan for the next chapter in their life.

Understanding the tax implications of any settlements, the impact on pension rights and general future budgeting are the key planning areas which often get neglected. It is important to take advice to ensure you can make a clean financial break, as well as a new fresh beginning.

You are an advocate of women learning to maximise their financial strength, do you have any key financial tips specifically for women?

Have a plan – Women are good at planning, it’s one of our key strengths. Planning early can help mitigate against the financial impact of common yet costly life events, such as marriage, having children and divorce.

It can also help you ensure that you achieve your retirement goals – whether that’s full of travel, starting your own business or supporting your adult children. By using cashflow planning tools, you can forecast how much you ideally should be saving.

Pensions – It is now mandatory for employers to offer a workplace pension and automatic enrolment has been a huge driver in getting more women saving for the long‐term. However, many younger women still opt out of this, perhaps not perceiving it as a necessary investment so early in their career. Not saving more while young means women miss out on the benefits of compound returns, which can help savings increase substantially over their working lives.

Fill in gaps – If you’ve taken time out of work, to care for you children for example, check to make sure you’ve made sufficient National Insurance contributions to qualify for the full State Pension and if not, top them up. You can get a State Pension forecast from the government website.

Where someone has had an income stream like spousal maintenance awarded as a capitalized sum in a divorce, how should they make the most of this and once they have the money, what should they do next?

When someone is awarded a capitalised sum, it is imperative to take advice. Many people are reliant on this money, so ensuring it is able to generate a sustainable income is vital.

If you simply hold the money in cash and draw an income from it, you risk eroding the capital over time. By investing your money, you are more likely to keep pace with inflation and be able to maintain your capital value, whilst drawing an income. A financial adviser will be able to advise you on appropriate investments to ensure you are kept in line with your attitude to risk, whilst also making the most out of your tax allowances.

I often hear that women avoid investment because they are more risk averse. Is this fact or fiction, and would you encourage women to explore investment?

A study has found that women are actually more successful investors because they tend to think long term, spend more time researching their investment choices, trade less frequently and avoid riskier investments.* Although they might take on less risk when it comes to investing, it doesn’t mean they are risk averse. They are simply more likely to take on appropriate levels of risk with their investments than men.

I would always encourage women to explore investing, however it is important to take advice. Investing does naturally carry risks, so having a well-diversified investment to match your objectives and time frame, is imperative.

*Warwick Business School, Are women better investors than men?, June 2018

Myself included, I’m sure there are plenty of people who are overdue for a financial health check. What life events should trigger a client to come and get a financial review?

Financial planning is relevant to everyone and at almost every point in their life but people often shy away from it because they don’t understand it or don’t think it’s relevant to them.

Whether you have just bought a new house, got married, had a baby, changed jobs, got divorced, inherited money from a loved one – it is important to review your financial planning. These ‘financial restarts’ should be triggers to review your affairs, to ensure you are in control of your planning and that you are making the right financial decisions.

Ask yourself:

  • What do you want and why? – what does your future look like? Why are you saving?
  • How will you achieve this? – have you got a plan? What is the impact if you don’t achieve this?

As a minimum you should review your planning at least once a year. Life can be unpredictable and circumstances will always change, whether that’s personally or legislatively. You need to take responsibility for your money to ensure you have a better, more secure future.

For more information and to find out how we can help you, please contact us on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.