Divorce rates in the United States have been falling. Whereas in 2009, divorce rates were 9.7 out of every 1,000, by 2019, that number was only 7.6 out of 1,000.
But that still means that a high percentage of marriages end in divorce, which can have significant implications for your financial future.
If you are going through a divorce, you may have heard of a certified divorce financial analyst (CDFA) andmay be unsure whether you actually need one. After all, divorce is expensive, and you likely want to cut costs where you can.
Learn more about what a certified divorce financial analyst does: what services they provide, how much they charge, what you should know before hiring one, and whether
What Is a Certified Divorce Financial Analyst?
A CDFA is a trained financial professional who can help you navigate the financial aspects of divorce. They often work with your divorce lawyer and usually come from a background such as:
- Financial planning
- Divorce law
A CDFA must go through training and certification to provide their expertise in the financial implications of divorce. Their areas of expertise include anything that may affect your long-term financial picture, such as:
- Alimony or child support
- Dividing personal vs. marital property
- Determining the future value of retirement and pension funds
- Calculating any divorce payments
- Divorce tax law
A certified divorce financial analyst can also help you determine the cost of living as it relates to inflation. That ensures 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 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:
- Real property
- Retirement accounts
- Life insurance
Certified divorce financial analysts can also help divorcing spouses formulate realistic post-divorce monthly budgets. They often work with clients to determine how to afford the lifestyle a person wants to lead post-divorce or how divorce will affect taxes going forward.
A certified divorce financial analyst helps the divorcing couple come up with the fairest and most equitable division of assets that takes into account the long-term picture rather than just how things look at that moment.
A 50-50 split isn't always the most equitable, particularly where things like retirement and child support are involved.
How Much Does a CDFA Charge?
A CFDA charges an hourly rate, similar to that of a lawyer’s. These rates can vary based on your location and the value of your assets. Hourly rates may range from $150 to $450, though some may charge more, especially if the divorce and assets are complicated.
You can find a reputable certified divorce financial analyst via the Institute for Divorce Financial Analysts, the first issuing organization for CDFAs.
A CDFA is not a substitute for a good divorce lawyer. In many cases, you will need to hire a lawyer or mediator before you hire anyone else.
Can I Do It Myself and Save Money?
You might not always need to hire a certified divorce financial analyst. 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 realistic monthly budget with you.
If you and your spouse own a business together, 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, then you may be able to save money and do it yourself.
In cases of an amicable divorce, you and your spouse may be able to finalize everything by using just a mediator and a CDFA, forgoing the need for a lawyer altogether. That can save you both money in the long run.
Hiring a Certified Divorce Financial Analyst: A Checklist
Before you hire a certified divorce financial analyst or any other financial professional to assist with your divorce, you should check their qualifications along with several other factors:
- Certification: Make sure they are a member of the Institute for Divorce Financial Analysts or another reputable organization.
- Trust: Going through a divorce is a tricky, emotional time. Only hire professionals you can trust and be open with.
- Recommendations: Chances are, you have a friend or relative who has also gone through a divorce. Ask whether they used a certified divorce financial analyst they would recommend.
- Interview: Don’t be afraid to ask questions of a potential CDFA, such as how long they’ve been practicing, processes for their work, their average client profile, and even why they decided to become a CDFA. Their answers tell you whether they’d be a good fit to work with you.