- Candace E. Duecker, CFP®, CDFA®
The Role of a Certified Divorce Financial Analyst® Professional in the Divorce Team
It is not uncommon for couples to maintain relationships with a variety of financial professionals so you might be wondering what makes a CDFA® professional so unique to the divorce process. The primary role for a CDFA® professional in the divorce team is to analyze the divorce settlement and help divorcing couples and their legal counsel understand the financial impact of their settlement. That means CDFA® professionals are present in the divorce process, equipped with divorce specific knowledge, and engaged with the goal of achieving the fairest division of assets for the divorcing couple. However, CDFA® professionals are not merely tuned into what is on the table today. They understand that a settlement deemed fair when the divorce is initially finalized may not be the case when it is projected into the future. In addition, a CDFA® professional also factors in a number of important considerations, such as the impacts of inflation, risk and return of the assets being divided, risk tolerance or appetite for the assets being received, cost of living adjustments, changes in custody arrangements, tax impacts, and many others. Another differentiator for CDFA® professionals is neutrality. Since the focus is on the financial impacts associated with divorce settlement decisions, CDFA® professionals are unlikely to have pre-existing relationships with the divorcing parties, placing them in a unique, neutral position to offer objectivity. Other financial professionals who have been working with a couple can unfortunately find themselves facing a conflict of interest when approached with news of their client's divorce.
According to the Institute for Divorce Financial Analysts, a CDFA® professional becomes part of the divorce team, providing litigation support for the lawyer and client, or becomes a member of a Collaborative Law team. In either event, the CDFA® professional will be responsible for:
Identifying the short-term and long-term effects of dividing property
Integrating tax issues
Analyzing pension and retirement plan issues, spousal and child support
Determining if the client can afford the matrimonial home – and if not, what might be an affordable alternative
Evaluating the client’s insurance needs
Establishing assumptions for projecting inflation and rates of return
Bringing an innovative and creative approach to settling cases
Is trained to interview clients so as to:
Collect financial and expense data
Help clients identify their future financial goals
Develop a budget
Set retirement objectives
Determine how much risk they are willing to take with their investments
Identify what kind of lifestyle they want
Determine the costs of their children’s education
The expertise a CDFA® professional brings to the table can and should be a very complementary addition to the divorce process and the team of advisors most recognizable to divorcing couples, such as attorneys, financial planners, and accountants. It is not unusual for a CDFA® professional to have a blend of skills across other areas of expertise and they often hold additional designations, such as the CERTIFIED FINANCIAL PLANNER™ certificate or a Certified Public Accountant license. These financial skills allow those CDFA® professionals to speak a language that attorneys sometimes cannot, which can provide great support to the attorney’s case. In addition, a CDFA® professional can testify in court as an expert witness, something attorneys are not permitted to do on their client's behalf. And as mentioned above, CDFA® professionals can offer a level of objectivity that many advisors who have been previously engaged with the divorcing couple may struggle to do.
©2017 SoulFINANCIAL LLC
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