Divorce Looks Like Forced Early Retirement for Many Wealthy Women, Advisor Says

What You Need to Know

While divorce can bring a financial windfall for some women, understanding what to do with the money can be a big challenge, says planning expert Michelle Smith.
For high-net-worth women who were not the primary earner pre-divorce, Smith says, the planning needs often resemble those of pre-retirees.
Smith’s reach is amplified by her firm’s fee-based Wife2CFO financial literacy platform, which will soon be complemented by a platform for young people.

The financial outlook of divorced high-net worth women can present one of the most complex planning challenges an advisor can face, especially in cases where the client was not the primary earner prior to their divorce. This is also one of the areas where older male advisors (i.e., the majority of the industry) tend to have serious blind spots.

This is one key insight shared with ThinkAdvisor by Michelle Smith, the CEO of Source Financial Advisors and a 30-year industry veteran with an unusual background in the world of financial planning.

As Smith explained during a recent interview, her mother was one of the first and only female brokers working for Merrill Lynch back in the 1970s. Smith says her mother, Corrine Smith, was “truly a pioneering woman in the field,” and that she counts herself lucky to have had the chance first to intern for her and then to work together in an independent practice.

As recounted in the Q&A interview presented below, Smith herself has spent her own career dedicated to the financial services industry, including the past 20 years advocating for “all things inclusion and empowerment.”

As CEO of Source Financial Advisors, Smith helps clients navigate complex, sensitive and critical financial topics and issues, especially those affecting divorced high-net worth women.

To this end, in addition to being a licensed financial advisor, Smith is also a divorce mediator who holds the Certified Divorce Financial Analyst designation. She is also an advocate for women’s financial literacy and has founded the program Wife2CFO, created for women who want to take control of their financial future after a divorce or other life-altering event.

Smith’s other passion is advocating for people with disabilities, including her own son, who has Down syndrome. She helped to found The IDEAL School, an independent K-12 independent school in New York City focused on inclusive education.

Echoing many of her peers, Smith says it is a tremendous time to be operating an independent RIA firm, and that the future appears very bright, despite some pressing challenges.

Among these, according to Smith, is the pressing need for the industry to improve its diversity and inclusion efforts, so that the next generation of emerging clients can be served by advisors who know and understand their lived experiences.

THINKADVISOR: Can you please tell us about your entrance into the advisory industry and your early experience building a book of business?

MICHELLE SMITH: Well, I have been in this space since the 1980s, and I can trace my roots as an advisor back to the fact that my mother became a broker in the late 1970s.

She entered the business after her second divorce, actually, because she wanted to take her teaching background and her entrepreneurial spirit and turn it into a profession where she could work for herself and not have anyone set limits on what she could earn or how she could run her practice.

I was a teenager at the time and it just had a tremendous impact on me, seeing my mother accomplish her vision. Like any teenager at that time, I knew nothing about the business, but I ended up interning with her in the summers and helping her at night. I just loved it, seeing the impact my mother was having on people, and especially on women.

Quickly, I started to understand that financial advice wasn’t all about stats and algebra. It was amazing how I watched her build her business by connecting with people and helping to solve their problems, and that was that. I knew I wanted to follow in her footsteps.

My mother is an absolutely amazing person. At the time she was founding her business, we lived two hours from New York City, and so she would commute four hours a day and study for her certifications on the train. She was fully committed to making it.

How did you end up working with your mother and what was that experience like?

So, once I grew up and got my own education and entered the professional world, I also went to Merrill Lynch. Initially, I worked in a separate office, but we did eventually join up, and it was a wonderful experience.

We later moved together to PaineWebber, where we spent 10 years, and then we went to Wachovia and its predecessor firms.

Today my mom is 81 and she lives down the street from me, so our relationship is still really close. She looks at this business I have created and my company and she’s so proud that I was able to follow in her footsteps.

What’s great as well is that I now work with my brother, who is our director of marketing. Several years ago he was getting burned out from his prior corporate job, and at the time we were in the process of launching the Wife2CFO brand, so he was able to help us really get that established. It’s just been awesome to work with them over the years.

Tell us more about your firm’s client niche.