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Certified Divorce Financial Analysts: What They Do and When to Hire Them

Certified Divorce Financial Analysts: What They Do and When to Hire Them

Certified Divorce Financial Analysts: What They Do and When to Hire Them?

If you are getting divorced in Maine, you’re likely finding yourself having to take care of dozens of tasks you’d never thought of. One task that proves difficult for many people going through a Maine divorce is protecting their finances to ensure a transition that is as smooth as possible.

Divorce can be a financial minefield, especially if you’re not prepared. Although your attorney may be able to competently handle other aspects of your case, they may not have the financial knowledge to help you protect and retain your assets in a divorce.

In some cases, having a Certified Divorce Financial Analyst (CDFA) on your side can be beneficial. In this article, you’ll learn what a CDFA is, what they do, and how they might be able to help you.

What is a CFDA?

A Certified Divorce Financial Analyst, formerly called a Certified Divorce Planner, is an accredited advisor who has met the requirements for the CDFA designation administered by the Institute for Divorce Financial Analysts.

These requirements include 3-5 years of professional experience in family law or financial planning, with demonstrable experience in at least three of the following:

  •     Financial coaching
  •     Real estate or mortgages
  •     Life and disability insurance
  •     Investment advising or managing
  •     Tax code researching and application

CFDAs must also pass a 4-hour exam to receive certification and must complete 30 hours of formal continuing education every other year to keep their certification in good standing.

What does a CFDA do?

A CFDA conducts research and analysis to provide financial insights to clients and their teams of divorce attorneys and other professionals. They typically take a collaborative approach with clients and their teams, helping them shape strategies to minimize the financial impact of the divorce.

In some cases, a CDFA may also provide expert testimony in cases where deep analysis of a client’s finances, businesses, and personal assets.

A CDFA can also provide budgeting guidance to assist you with adjusting to life after divorce. By projecting changes in income, assets, and expenses – such as childcare costs and spousal support – a CDFA can help minimize financial disruption and help you recover from a divorce more quickly.

What are the Benefits of Hiring a CDFA?

A certified divorce financial analyst is an essential part of your divorce support network. While they do not provide you with legal advice, they can help your legal counsel understand how your divorce agreement will impact your financial future.

A CDFA will also help identify short-term and long-term effects of dividing marital property and if possible, assist your legal team in proposing an alternative property division settlement that ensures a better financial future for you. They can also review your financial information and project how much money you need to maintain your current lifestyle after your divorce.

Additionally, a CDFA can help you determine if you can (or should) keep your marital home, identify future financial goals, develop a budget, and identify any divorce-related tax consequences. As mentioned previously, a CDFA can also testify as an expert financial witness on your behalf during the trial.

Is there a difference between a CDFA and a financial advisor or forensic accountant?

If you already have a financial advisor, you might assume that you don’t need to hire a CFDA. Unfortunately, most general financial advisors lack specific knowledge regarding the tax and financial complexities of divorce.

This means that, while your financial advisor might be able to help you choose investments or fine-tune your succession plan, they’re not the kind of specialist needed for a divorce case.

Want to Speak to a CDFA?

Is a CDFA the same as a forensic accountant?

No. A forensic accountant is a financial professional with extensive courtroom knowledge who will research, audit, and investigate to assist with a potential or actual dispute. Forensic accountants are often called upon in cases of suspected fraud, hidden assets, difficult business valuations, and other past transactions that could impact the financial outcome of the divorce.

A CDFA, on the other hand, provides advice and forward-thinking strategies to produce the best client outcomes possible in divorce cases.

Do I need a CDFA if I have an attorney?

Expecting your attorney to have a firm grasp on the financial implications of your divorce could be a costly mistake. Attorneys are experts in matters of law, while CDFAs are experts in finance.

In fact, some divorce finance experts recommend that when attorneys are going through their own divorces, they should hire CDFAs to assist them.

What should I look for in a CDFA?

If you’re planning to hire a CDFA, you may have already asked a few of your closest friends for referrals or spent time searching for CDFAs online. It’s important to understand, though, that not every CDFA is right for your specific situation.

While evaluating your CDFA candidates, it’s helpful to find individuals who are also Certified Financial Planners (CFP). This designation means that the person you hire will have a broad understanding of long-term finances, which can be helpful for maintaining stability after a divorce.

Please note that finding the right CDFA can take time. Although this can be frustrating during a time when you’re already under enormous stress, taking that time can help create better results for you after the divorce is final.

 

If you would like to learn more about August Wealth Management and our CDFA and CFP services, please feel free to contact us or schedule an appointment.

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