An Interview with Sonia Hawley
In the ranks of life’s most stressful events, divorce is usually ranked right up there alongside the death of a loved one, major illness, losing one’s income and moving house after many years in the same place.
And for many recent divorcees, or for those finalising a separation, the end of a marriage frequently coincides with at least one of those other stress points. So it goes without saying that professional support at these times is imperative.
Sonia Hawley, a Principal Adviser and Partner at Minchin Moore, is our in-house specialist in guiding individuals through the big life decisions associated with divorce, including those related to future finances, home, livelihood, lifestyle, and children.
With a quarter century in financial services, a Bachelor of Economics degree, an Advanced Diploma of Financial Planning, and a lifetime as a financial educator and communicator, Sonia has the technical qualifications and experience to help those going through divorce make good decisions.
But perhaps more importantly, as someone who herself has gone through a challenging divorce, she understands the emotional side of this life change and how important it is to have the right support in the transition phase and beyond. Below is the transcription of our interview with Sonia:
Firstly, can you tell us how you came to financial planning and how your own experiences have informed what you do now in helping divorcees?
“My father, uncle and godfather were all financial planners, so I was lucky to be brought up with good money behaviours. I lived within my means, saving and investing from the age of 16, and beginning with a small share portfolio.
Years later, when I was married with three children under six, my marriage blew up. Compounding the emotional pressures at that time was my discovery that our finances were shot. My husband had traded almost our entire wealth on the market and left the country for his homeland. This was at the start of the GFC. So, I dusted off my shame and my old Cue suit, landing a job at the Australian Financial Review. I took calls from the bank debtors, sold our family home and slowly rebuilt my little family’s finances and future. The advice and support I received back then was invaluable.
So after that experience, it felt only natural for me to specialise in helping divorcees understand the fullness of their situation and to guide them in making wise decisions, both for their immediate situations and for their future.”
At a social occasion when people ask about your job, how do you summarise what you do and the value that you bring?
“I tell them that I help people have a better relationship with their money. Money has a value. It provides for you, empowers you and can bring you joy. But most people aren’t sure when they have ‘enough’. I can guide individuals into what this means for them and how to best set themselves up to achieve that with conviction.”
Divorce can be one of life’s most traumatic events. Typically, what are your clients looking for initially and how do you separate the emotional pain from the financial challenges?
“Clients typically will ask for my help once they understand what their best-case and worst-case settlement offers are. It is usually a percentage of assets or a breakdown of actual assets for him and for her.
Often, this requires understanding the fullness and fairness of the offer – for example, where the breadwinner partner has a complex remuneration structure (like employer vested shares) or wealth held in tax structures (family trusts or companies), private equity (and often illiquid) investments.
Clients want to know if the offer will leave them with ‘enough’ – to have a home, a certain lifestyle, pay for children’s education costs and provide an income for now and into retirement. Of course, those questions are usually loaded with intense emotion, a sense of hurt/anger and loss.
Focusing on what’s important can help break this down to the essential financials. That might involve setting up a spending policy and visualising the lifestyle that this affords. Decisions may need to be made around the family home – perhaps to retain it and maintain the associated costs – or to buy a new home. It also involves setting aside capital – usually in super and in investment – to provide ongoing income now and into the future. The children often need provision for funding schooling or college and often towards their first home purchase.
Once clients get a picture of the affordability of their new chapter in life, they start to feel more empowered to track towards that goal. We run scenarios for different possible financial outcomes so clients can visualise making trade-off decisions about their finances. At what can be an extremely wrenching time in anyone’s life, having someone professionally guide you and your decision-making can help you retain focus, maintain positive momentum and build your confidence.”
How do you factor in income needs, as opposed to just wealth management?
“Determining what your new lifestyle is going to cost can be bewildering. Often, there’ll be a move from the large family home and new expenses associated with that, as well as managing food, utilities, cars and kids’ expenses – it’s a very different dynamic being independent.
Children may remain living with you on a full or shared basis. Where some costs are borne or shared by your former spouse, it’s important to have a clear understanding of how this operates so the children’s lifestyle priorities are maintained, and so they adjust well to the change of Mum and Dad living apart.
I’ll work with clients to determine how realistic this lifestyle spending policy is given the quantum of settlement funds received, their income earned, their age and the balance of other financial goals to be achieved.
Funding for retirement also needs to be considered so there is a tax-efficient source of income in older age. We will look anew at what is in superannuation, family trusts or directly held investments like property, and may reweight these to the most suitable tax entity for funding income now and in retirement.”
A divorce frequently prompts people to re-evaluate their entire lives. How do you allow that to happen while keeping them focused on ‘one step at a time’?
“I’m fortunate to work with mostly wealthy clients who will often use this change in life to revisit their personal goals with the aim of spending more time doing those things that bring them joy. For some, it may be building new family memories through planned holidays. Others want to take that long dreamt-of art tour in Italy or sign up to the local golf club or move to a beachside location. In working with a professional adviser, you can test whether your base-case scenario can be reliably funded from investments and any income sources. So we build multiple scenarios – optimistic, base-case and worst-case – to give clients an appreciation of how much capital they need to live the lives they want. Where this is comfortably achievable, we can assist in setting funds aside for the special expenses that clients desire for the new chapter ahead.”
Lastly, Sonia, what should people going through or contemplating divorce look for when seeking out a specialist adviser to guide them?
“As your settlement nears agreement, make sure you seek advice with a specialist in this area. In particular, find someone who really understands and connects with you, where you are at and where you want to be. Your asset position will look quite different to what it was initially and on a joint basis. Remember, the capital you have agreed upon will need to serve you and perhaps your family as well. This is a time to reset your life goals, a process that inevitably will require financial trade-offs and the setting of new priorities.”
