Ask The Experts
Barbara Lommen, MBA, CFP®, CDFA®
Colorado Financial Management
3033 E 1st Ave, suite 408
Denver, CO 80206
Barbara is a financial advisor at Colorado Financial Management. She was born and raised in the Netherlands and spent the first part of her career as a project manager in international biomedical research institutions. Wishing to expand on her interest in finance and her desire to make a difference in people’s lives, Barbara decided on a career in financial planning. She is passionate about helping her clients manage their financial affairs and meeting their life goals. Her special focus is on educating and empowering women clients who either have had their spouse manage their financial lives or who are going through life-altering events such as divorce or the loss of their spouse.
Outside of work Barbara is very active outdoors -running, cycling, skiing, hiking or climbing. She also likes to be creative in the kitchen, to the delight of her husband and teenage sons.
Q: Tell us a little about yourself and what it is that you do.
I’m a financial planner and advisor with Colorado Financial Management, a Registered Investment Advisory firm (RIA) established in 1988 with offices in Boulder, Denver and Loveland. We offer asset management and financial planning services. We approach managing portfolios as an integrated part of a client’s total financial life during their income-earning years into and beyond retirement. For, ultimately, money is not just a goal in and of itself – it is a tool to enable you to live your life to the fullest.
I absolutely love what I do because I can add value to clients’ lives by taking money-related anxiety off their shoulders and providing them with a roadmap to financial security. Life is better with a plan!
Q: How does your profession relate to divorce?
In recent years I stood by several friends and clients who went through divorce. It made me realize how complicated it can get to untangle many years of marital life and how much is at stake for both parties when assets are divided. I saw a clear need for planning services not only after divorce but also during the process. I decided to become more knowledgeable by obtaining the Certified Financial Divorce Analyst (CDFA) designation. The way this works is that I help by becoming part of the divorce team either at the request of a client or the suggestion of an attorney. My main role is to help inventory all marital and non-marital assets of both parties and to model different asset splits showing how those will work out over the client’s life span. We go beyond detailing potential asset splits in a static spreadsheet. We illustrate the implication of different divisions in our highly specialized, interactive financial planning software. This turns out to be extremely helpful for clients to understand their options and get to the best possible resolution.
Q: What is something you would stress to people if they are thinking about divorce?
One thing I would stress very heavily for anybody, no matter how happy you are in your current relationship, is to know what your financial situation is. I recently read in the 2018 Fidelity Investments study on Couples and Money that 34% of couples cannot agree on how much money their other half earns. Even if you are not interested in finances, it is very important to know the basics and be willing to talk with your partner about finances so you are not blindsided if you suddenly have to go it alone.
Q: Are there any dangers in thinking of your assets in the short term during a divorce?
It is always risky to have a short-term outlook. The reason we center our client relationships around financial planning is because it allows us to focus on what purpose the assets serve within the framework of your entire financial life. This is even more important in a divorce where there are no do-overs after the final asset division. Beyond the here and now, we must consider how assets will grow and what underlying tax implications govern certain accounts. For example, on a taxable investment account you’ll be paying capital gains tax rates. Distributions from a 401k or IRA will be taxed at current income tax rates, which usually are significantly higher. So, having a short-term horizon can be costly down the road.
Q: Is it better for your clients to remove emotions as much as possible from financial planning?
Absolutely! In my view this is the biggest added value financial planners bring to the table. Divorce tends to be one of the most emotionally difficult events in a person’s life. Most people find it very challenging to take emotions out of financial decision making during the best of times, let alone when they already are experiencing extreme emotional stress.
Our financial planning software allows us to have discussions about different asset division options. We can illustrate the probability of success that you will not outlive your money using an interactive module in the software, which allows us to change parameters on the fly. This keeps the discussion more factual.
Q: What kinds of things should people have their ducks in a row on when heading in to speak with you when going through a divorce?
Make sure that you really know:
- all you have and all you owe
- what’s coming in and what is going out
- how assets are titled
- when assets were acquired
- what future obligations are
Our starting point usually is the combined sworn financial statements (SFS) of both parties. Make sure that the information on the SFS is correct and comprehensive.
Also make sure that you have a realistic and all-inclusive estimate of your future expenses. Those are going to be crucial in a lot of ways. You are going from one household to two households. And even though right now it might feel like you’re never going to have fun again, you have to budget for those things too because there is life after divorce.
Q: For someone who has never created a budget, what do you normally advise your clients?
Our software provides clients with their own portal into which they can privately pull data from their credit card and checking accounts. That makes it easy to see how much you spent and on what every month. The portal provides a quick and easy way to assign your past expenditures budget categories, so you can distinguish between mandatory and discretionary expenses and can filter out the one-off exceptions. For those who do not like technology, we still have the paper budget worksheets available as well.
Having a realistic picture of your spending is one of the key elements of the financial planning process and we usually spend a fair amount of time talking about current and future expenses.
Q: What would you say to someone thinking about using a financial planner during their divorce but who isn’t sure whether or not they want to?
If your joint assets include a mix of real estate, investment accounts, retirement accounts and or pensions -not to mention stock options or business interests- it is extremely important to have a planner on your team. Not all planners are created equal either, so I would recommend you choose a fiduciary with Certified Financial Planner (CFP) and/or Certified Financial Divorce Analyst (CDFA) designation.