Author Larry McMurtry once wrote, "No illusion is more crucial than the illusion that great success and huge money buy you immunity from the common ills of mankind, such as cars that won't start."
Add to this list the pain of divorce, something financial advisor Kathleen Miller knows all too well from professional experience.
Most people, when they think of divorce, imagine a husband and wife cordoned off in different mediation rooms with lawyers shuttling in and out of the chambers. Rarely do you think of a financial planner being there.
But Miller, president of Miller Advisors in Kirkland, Wash., right across Lake Washington east of Seattle, has become something of a doctor without borders in the area. For more than 20 years, she's been helping women (and men) from riven marriages figure out a rational way to put their financial houses back in order. Her focus is often on disadvantaged spouses (both men and women) who for whatever reason gave up their careers or took themselves out of the job market to stay at home with the kids but then suddenly found themselves single, unloved, untrained, and scared witless. Especially scared about money, the mammon that most didn't have to think about before.
Often, the people she works with have handicapped themselves by staying out of the investment or money side of the family's life and focusing instead on the spending. They may have taken themselves out of the workforce because they had agreed that supporting the home was their job. They may have been abandoned or cheated on. Often, they're too emotional to make clear decisions.
Now that the marriage is ending, it's time to decide whether their spouses may have hidden assets from them or tried to force settlements before they know how much money is at stake.
"I'm very interested in how men, women-how we act [in money relationships], where we get our money system-from our parents, in our marriage. How we pass it onto our children. I'm just very intrigued with that," says Miller.
Miller's become such an expert in the area, she's regularly called upon for mediation and arbitration and asked to appear as an expert witness at divorce proceedings. She landed on the Worth magazine Top 100 Wealth Advisors for 2007 and expects to again this year.
It's a long way from her humble beginnings. Miller grew up on a large dairy farm in Iowa, the first female child in a family with four brothers and a much younger sister. Among other things, she canned corn, beans, pickles and tomatoes for the winter larder and learned about money playing Monopoly with a group of aggressive brothers, an early primer, she says, in learning not to back down when a man screams at her about money. Her first paying job at 14 was detasseling corn for a dollar an hour. She finally walked off duty in 100 degree heat, deciding she was being underpaid.
"My four brothers got an allowance," she said. "I didn't get an allowance because I was a girl. The perception was that I would overspend it anyway, because I was the girl."
Her first dream was to write short stories, which brought her to the famous Iowa Writer's Workshop where she encountered such heroes as McMurtry and Kurt Vonnegut. She taught English for seven years, including a spell in Brussels teaching at a private school. She hoped to continue teaching in Seattle, but when she got back to the U.S., a teacher's strike derailed her plans, and she found herself doing books for an entrepreneur and financier. That's when life got in the way of life.
Her boss was killed in a motorcycle accident in 1979 at 56, and Miller found herself overseeing a large and gangling group of holdings with businesses in different states. Most people would have sunk in the morass. Miller found herself to be a graceful swimmer.
"I didn't think I ever really had any aptitude for business," she says. "He had partnerships and buildings. A medical building. There were just all kinds of loose ends and that made me look at my career and say what do I really want to do, and financial planning was just getting started." She finished her MBA in 1980 and then got a CFP license. Her immersion in the financial planning process paralleled the beginnings of the profession itself, and as she met with varying estate planning attorneys and investment partners dealing with her old boss's holdings, a fledgling business sprung from the ashes and her financial planning business took off. "My business has always been built from referrals for the most part."
Around 1985, she met a client who would redefine her career yet again-the wife of a corporate executive and mother of four grown children who needed to be assimilated back into the single life after her marriage fell apart. The woman was going to have a hard time being retrained. Miller had once again found a calling.
"It really was very serendipitous because I really would never have thought of that as a particular area. It's just that there was a need and I was very creative in coming up with a solution that worked for both parties; I've always been after a win-win." Among other things she was able to show the husband was that his settlement offer in mediation (which is where most divorces are settled, rather than in court) was drastically different than the historical spending patterns Miller had found for the house. Also, at her age, the woman's prospects for being retrained were very slim.
Miller's book, Fair Share Divorce for Women, is a primer for those who are about to be thrown back into the big chill of single life. It's not a legal book, exactly. Rather, it forges an agenda of items that women might not be thinking about when the storm clouds of a divorce gather.
Of course, the old nuclear family model has changed, and many women today are the alpha earners too, not just men, but Miller addressed her book to women anyway, she says, because of different behaviors she perceived between the sexes toward money, something she's been thinking about ever since she learned her values in Iowa.
"Women sell their values when they get into marriage. They just bury them. That's one of the reasons why they get divorces also," she argues. "They bury their money personality.
"I can't tell you how many people I know who are in their 40s who get their divorce, and she was an engineer, as an example, and when the two kids came along she stopped working. You try and go back after being out of the engineering profession for 10 years. You may as well start your work over again."
It's more difficult and labor intensive than you would imagine to do this kind of advisory work, and requires a gimlet-eyed view of what the budget was right before the divorce and what it's going to be like in the years right after. Usually neither person in the couple has a grasp of where the money was really going.
She starts with money personality tests. Miller, who has herself been happily married for 37 years, says she has come to see how two married people often look at their money the same way two blind men look at the proverbial elephant-very differently. One spouse often sees it as something to make; the other as something to spend. Thus many times neither one appreciates the other's role in the financial relationship, which can make consensus even more difficult when the marriage comes unraveled. The money maker may know how much is spent, but not where or how.
"The reason it becomes important [to know] is that when you take the household and divide it into two, unless you're well-to-do, those two households are not going to be able to live at the same standard that they lived at before because expenses are going to be too great."
Those are big picture items. Then you have to get into trickier questions:
People often don't understand the difference between commingled and separate assets which were brought in before the marriage, and which may stay separate. The stay-at-home mom with kids in school may want to keep the house, which is often a big mistake, says Miller, because that means she'll defer alimony and be stuck with a giant mortgage she can't afford to maintain, or worse, a large capital gain she'll have to pay taxes on if she tries to sell it later. Or else the house becomes a money pit that's plunging in value in a market much like the current one.
Both sides have liquidity and tax issues, and sometimes one spouse's tax holiday is another's nightmare. Many factors come into play in the settlement, such as how long the couple were married, and how much alimony the non-working spouse might need to get retrained and re-enter the workforce. Both sides of the income stream need to be looked at to keep both spouses liquid and keep less of the money from going to the IRS. Her client may get 50% of the money or may not.
Divorce attorney Mabry DeBuys, head of the family law group in the Seattle office of K&L Gates LLP, has worked with Miller on cases for several years. "I think she brings both tangible and intangible things to a case," says DeBuys of Miller. "Where I'm representing somebody who is a stay-at-home parent or even for that matter somebody who worked but certainly didn't have anything to do with the finances of the family, the first thing Kathleen often brings is to be able to sit down with that person, take a very detailed look--at bank statements, at credit card statements--for the preceding 12 to 24 months, categorize expenses and help that person understand what money has come in and how they've spent it. That can help a person understand what it really takes to run a life."
Miller then looks at the spreadsheet of assets and liabilities and compares that with liquidity and cash flow and the present value of things such as future pension assets. She can use these to help the client and lawyer decide what assets a client may or may not want to request in a divorce. She can look at things such as the cost basis of assets such as stocks-since grabbing something with a big capital gains tax can wipe out the juice of cash value and make that ever-so-attractive fruit suddenly taste very sour. Miller can also come with innovations, says DeBuys, such as using a stock holding as security for a lender or deciding how to properly value something like a venture capital investment.
"I find her very helpful [when] different scenarios are floating through a room."
There's an intangible benefit as well, says DeBuys, because in doing all this, Miller makes the client more confident, less afraid of what the financial future would look like, and thus more confident in seeking a fair settlement. This is the therapeutic component.
De Buys recalls one client going through the dissolution of a 19-year marriage to her lawyer husband. They had all been at work on settlement issues for more than 12 hours, when the judge had come in with yet another proposal on something very small ("You know, who got Christmas Eve or Christmas Day," DeBuys says), and her client, finally worn thin after hearing yet another counteroffer, lost control and threw a ballpoint pen at the settlement judge.
"It was really not a good thing to do. Kathleen and I were just sitting there and we asked the judge to please leave. Kathleen was a huge help in getting our client clamed down. She didn't get angry with the client. She just helped me talk the client through what was going on and get back on the page."
Miller says attorneys like what she does mainly because she integrates so many aspects of the planning. "Because you'll have the tax aspects, you'll have the pension aspects, you'll have the cash-flow issues, you have the budget issues," she says. "And the financial planner brings all of those together and makes it integrated. Instead of just saying 'What's the pension worth?' and then what's this and what's that, it says, 'What is your lifestyle going to look like if you divide these assets and this income up this way?'
"If you really lay this out you can help both parties understand how they can survive with this kind of settlement," she says. In this way, she helps an ugly human interaction often become more palatable, at least in those 90% of cases, she says, that don't go to court. Because in the 5% to 10% that do, the ability to be creative about dividing assets is suddenly curtailed, and it's the judge who's doing the talking. "If you go to court and you go to trial, you speak when spoken to. If you didn't dislike your partner when you went into court, by the time you get out you will because the whole thing is very adversarial in a courtroom. And mean, nasty things are said."