What Is a Certified Divorce Analyst (and Do You Really Need One)?
Divorce isn’t a fun topic. But with approximately 42-45 percent of all marriages ending in divorce, it’s something that must be discussed, especially as it relates to your financial future.
You may be going through a divorce and have heard of a certified divorce financial analyst (CDFA), but are unsure if you actually need one. After all, divorce is expensive and you are probably looking to cut costs wherever you can.
We break down the pros and cons of hiring a certified divorce financial analyst—what services they provide, how much they charge, what you should know before hiring one, and if you can save money by doing some of these things on your own.
What Does a Certified Divorce Financial Analyst Do?
Putting it simply, a CDFA is a training financial professional who can help you navigate the financial aspects of divorce.
Certified divorce financial analysts focus on the long-term financial effects of divorce. Areas of expertise include alimony, dividing property, determining the future value of retirement and pension funds, and calculating how any divorce payments (think: alimony). Basically, they focus on anything will affect your long-term financial picture in the case of divorce.
A certified divorce financial analyst can also help you determine the cost of living as it relates to inflation, to ensure that your assets are divided fairly and you aren’t shortchanging yourself when negotiating a divorce settlement.
What Services Do They Provide?
A certified divorce financial analyst helps you split up assets in the case of divorce, focusing on both short and long-term financial values of your assets and how it can affect you later in life.
They use specialized software programs to help them analyze assets like property, expenses, retirement accounts, pensions, inflation, life insurance, and child support, just to name a few.
Certified divorce financial analysts can also help divorcing spouses formulate realistic post-divorce monthly budgets.
A certified divorce financial analyst helps the divorcing couple come up with the fairest and equitable division of assets, taking into account the long-term picture, rather than just how things look at that moment. Worth noting: a 50/50 split of assets isn’t always the most equitable.
A CFDA charges an hourly rate, similar to that of a lawyer’s. Some experts estimate an hourly rate of $150-$450/hour for a good certified divorce financial analyst. But some charge more, especially if your divorce and assets are especially tricky or complicated.
You can find a reputable certified divorce financial analyst via the Institute for Divorce Financial Analysts, the first issuing organization for CDFAs. You can also go through The Academy of Financial Divorce Practitioners.
Worth noting: a CDFA is not a substitute for a good divorce lawyer. You’ll likely need both in the event of a divorce.
Can I Do It Myself and Save Money?
You may not always need to hire a certified divorce financial analyst. For example, if you already work with a financial advisor, they may be able to give you a good idea of your long-term financial picture and how it may be affected by a divorce.
They also have likely already worked out a workable monthly budget with you.
If you own a business together, or have significant assets, or don’t know how to form a budget post-divorce, then a certified divorce financial analyst is probably a good choice. However, if you don’t have significant or complicated assets like a business or several real estate properties, and are an excellent budgeter, then you may be able to save money and do it yourself.
Additionally, you and your spouse may be able to finalize your divorce using just a mediator and a CDFA, forgoing a lawyer altogether, which will save you both money in the long run.
Hiring a Certified Divorce Financial Analyst: A Checklist
- Make sure they are a member of the Institute for Divorce Financial Analysts or other reputable organization.
- Hire someone you can trust. Going through a divorce is a tricky, emotional time. You want to make sure you have someone on your side that you can be open with.
- Use a referral from a friend. Chances are, you have a friend or relative that has also gone through a divorce. Ask if they used a certified divorce financial analyst they would recommend.
- Interview potential hires. Don’t be afraid to ask questions of a potential certified divorce financial analyst. Things like how long they’ve been practicing, processes for their work, their average client profile, and even why they decided to become a CDFA can tell you a lot about whether they’d be a good fit.