How advisors can help clients plan around gray divorce

Financial Planners

When divorce strikes, it’s increasingly likely to hit clients who are older — and likely richer.  

But helping them handle this bend in the road can be tricky for advisors, given the complexity of assets and relationships involved at that point in clients’ lives. 

“This is truly the only segment of the population where the divorce rate is actually exploding, and expected to even triple by 2030,” Lili Vasileff, the president of the Association of Divorce Financial Planners, said of older Americans in an interview. Vasileff, a certified divorce financial analyst (CDFA), is a published author of books on divorce planning. She is also a CFP and the president of Wealth Protection Management, a registered investment advisor based in Greenwich, Connecticut. 

Divorce at any age is hard and expected to shrink clients’ net worth, but so-called gray divorce, defined as a divorce with adults aged 50 or older, is the “perfect storm” as it often hits clients right as they are “on the cusp of retirement,” Vasileff said. 

Read more: Dividing clients’ assets in a gray divorce: Retirement Scan

The share of American divorces that are gray divorces has rocketed to an estimated 36%, according to a 2022 study that calculated divorce rates for older Americans using 2019 data from the U.S. Census Bureau. While the divorce rate for younger Americans is in decline, said to be the result of younger generations marrying later in life when they’re more financially established and mature, the American gray divorce rate has roughly doubled in recent decades, according to the Pew Research Center

Several rich high-profile older couples have divorced in the past few years, from billionaire Amazon founder Jeff Bezos — who was 54 when he announced the news of his divorce from then-48-year-old novelist MacKenzie Scott in 2019 — to Bill Gates, who was 65 when he announced his divorce from then-56-year-old Melinda French Gates in 2021. More recently, earlier this year billionaire Porsche executive Wolfgang Porsche, at age 79, filed for divorce from his wife Claudia Porsche, who was 74. 

Given that most wealth management clients are older, sudden divorces within this demographic could especially impact financial advisors. A recent industry-wide survey by Arizent, Financial Planning’s parent company, found that 73% of clients across surveyed wealth management firms were ages 45 and up; 43% were ages 60 and up. 

Everything can change for a client when they divorce, from drastically altering one’s standard of living to ripping up estate plans and redoing retirement calculations. 

Read more: When your clients divorce, avoid this costly IRA mistake

“People who get separated after age 50 can reasonably expect their wealth to plummet by an astounding 77 percent,” said Mitchell Kraus, the owner of Capital Intelligence Associates, a wealth management firm, in an email quoting from a newsletter he sent out in May to clients. 

But such times of turmoil also present an immense opportunity for advisors to provide value to clients, if they do it right.  

Financial Planning spoke with advisors and experts from across the industry on how to help clients through a gray divorce. Below are several common challenges they see in this area and tips they shared for successfully helping your clients navigate them. 

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