Many professionals recognize the necessity for specialized financial guidance during divorce proceedings, yet potential clients often question the need for a Certified Divorce Financial Analyst (CDFA). With legal fees already high, some wonder if it’s worth the investment. The truth is, most other professionals—whether they are lawyers, accountants, business appraisers, or even the couple’s current financial advisor—lack the specific training required to handle the intricate financial details involved in “un-coupling” a marital estate.
Given that divorce can be the most significant financial event in a person’s life, obtaining specialized advice is crucial. A CDFA is uniquely trained through education and practical experience to navigate the financial complexities of divorce. This article explores the unique contributions of CDFAs to divorcing clients.
In-Depth Cash Flow Management
While financial advisors typically focus on portfolio management, tax planning, and retirement strategies, few delve into cash flow management, such as budget development. Advisors generally assume clients manage their cash flow unless a debt issue is reported.
CDFAs, however, guide clients through the critical process of understanding and documenting their current cash flow needs. This aspect often gets overlooked when divorcing clients don’t work with a CDFA.
Spousal support specific guidelines, often default to financial need and ability to pay as starting points for negotiations. Without a detailed budget, it’s challenging for an attorney to advocate effectively. Clients may overlook post-divorce expenses like health insurance, childcare, and work-related costs.
Creating a budget also helps clients who didn’t manage finances during the marriage grasp their new financial reality. They may need to adjust their expectations regarding expenses for children’s activities or home maintenance. Factoring in inflation and future financial needs is another area where a CDFA’s specialized training proves invaluable.
Asset Division Expertise
Deciding how to divide assets in a divorce isn’t always as simple as splitting them equally. Each client may have different financial needs and risk tolerances. For instance, one person might require immediate liquid cash, while the other is more focused on long-term retirement planning.
A CDFA assists clients in determining the optimal division of marital assets based on their specific financial situations. Their expertise in various investments, including deferred compensation, insurance products, annuities, stocks, bonds, mutual funds, and real estate, complements the attorney’s legal knowledge and enhances the overall decision-making process.
Specialized Knowledge in Legal and Tax Issues Related to Divorce
One of the most compelling reasons to work with a CDFA is their extensive experience in divorce-related financial matters. Certain tax laws apply exclusively to divorce and might be unfamiliar to a general financial advisor. Understanding the legal landscape is crucial.
An experienced CDFA can help set realistic expectations and provide detailed reports to support the client’s position, ensuring a more informed and effective approach to divorce financial planning. Feel free to reach out to me directly at 778-686-1515.
Ken Gordon, PFP, CDFA
Senior Wealth Advisor
