Certified Divorce Financial Analyst® (CDFA®)
Financial Clarity During One of Life's Most Difficult Transitions
Divorce is more than a legal and emotional process. It is also a major financial transition.
Decisions involving your home, retirement accounts, investments, pensions, taxes, debt, and future income can affect your financial life for many years after a divorce is finalized.
As a Certified Divorce Financial Analyst® (CDFA®), I help individuals and their attorneys better understand the financial implications of these decisions so they can evaluate settlement options with greater clarity.
I earned my CDFA® designation in 2011 and combine this specialized training with more than two decades of experience in the financial services industry.
What Does a CDFA® Do?
A divorce settlement can look reasonable on paper while producing very different financial outcomes over time.
Two assets with the same dollar value today may have very different tax consequences, income potential, liquidity, or long-term value.
A CDFA® brings financial analysis into the divorce process to help evaluate these differences before important decisions are finalized.
Depending on your circumstances, divorce financial analysis may include:
- Identifying and organizing marital assets and liabilities
- Analyzing proposed property settlements
- Evaluating retirement accounts and pension benefits
- Reviewing potential tax consequences of different settlement options
- Analyzing cash flow and post-divorce living expenses
- Evaluating the financial implications of keeping or selling the marital home
- Reviewing investment assets and concentrated stock positions
- Modeling different settlement scenarios
- Evaluating short-term needs alongside long-term retirement goals
- Helping you understand how today's decisions may affect your financial future
The objective is to help you make informed financial decisions based on more than simply the current dollar value of an asset.
Looking Beyond the Settlement
One of the most important questions during a divorce isn't simply:
“Am I receiving my fair share?”
It's also:
“What could my financial life look like after the divorce?”
A settlement may divide assets in a way that appears equitable today, but the long-term results can be very different depending on taxes, investment growth, income needs, liquidity, and future expenses.
Financial modeling can help compare different settlement scenarios and illustrate how those decisions may affect your financial position over time.
The goal isn't to predict the future. It's to help you understand the potential financial consequences of the choices available to you.
Important Financial Issues During Divorce
Retirement Accounts & Pensions
Retirement assets are often among a couple's largest financial assets.
IRAs, 401(k)s, pensions, deferred compensation plans, and other retirement benefits can have different tax characteristics and different rules governing how they may be divided.
Understanding the after-tax value and future income potential of these assets can be just as important as understanding their current account balances.
The Marital Home
Keeping the family home can be an emotional priority, but it is also a major financial decision.
Before agreeing to keep a home, it's important to consider the mortgage, taxes, insurance, maintenance expenses, available cash flow, potential capital gains considerations, and how much of your overall net worth would remain tied to the property.
The question isn't simply whether you can keep the house. It's whether keeping it makes sense within your overall post-divorce financial plan.
Taxes
Different assets can carry very different tax consequences.
A dollar in a traditional retirement account is not necessarily equivalent to a dollar held in cash or in an after-tax investment account. Investments may also contain unrealized capital gains, while other assets may create future taxable income.
Understanding these differences can provide a clearer picture when comparing settlement options.
Income & Cash Flow
Your financial life after divorce may look very different from your financial life while married.
We can evaluate anticipated income, living expenses, investment withdrawals, support payments or receipts, insurance costs, and other financial obligations to help determine whether a proposed settlement supports your anticipated lifestyle.
Investments & Long-Term Financial Security
Divorce shouldn't be evaluated solely on what happens during the next year or two.
For individuals approaching retirement, decisions made during divorce can directly affect retirement income, investment risk, taxes, Social Security considerations, and long-term financial security.
That makes it important to evaluate both your immediate financial needs and your longer-term financial future.
Working With Your Attorney
Does a CDFA® Replace a Divorce Attorney?
No.
A CDFA® provides financial analysis and education. A divorce attorney provides legal representation and legal advice.
The two roles can complement one another.
I can work with you and, when appropriate, coordinate with your attorney to help clarify the financial implications of different settlement proposals.
Your attorney remains responsible for advising you on the legal aspects of your divorce.
Objective, Numbers-Based Analysis
Divorce negotiations can understandably become emotional.
My role as a CDFA® is different.
I focus on the financial numbers, assumptions, trade-offs, and potential long-term consequences of the decisions being considered.
That can include comparing multiple settlement scenarios to help answer questions such as:
- What happens financially if I keep the house?
- What is the after-tax value of the assets I'm considering?
- How could different divisions of retirement assets affect my future?
- Will my anticipated income support my post-divorce expenses?
- How could this settlement affect my retirement?
- What financial risks should I understand before agreeing to a settlement?
The objective is not to determine who should “win” the divorce. It is to provide financial information and analysis that can help you and your legal counsel make better-informed decisions.
Planning for Life After Divorce
A divorce settlement isn't the end of your financial planning. In many ways, it's the beginning of a new financial life.
Once the divorce is complete, financial priorities may include:
- Establishing a new spending and cash-flow plan
- Repositioning investments
- Updating retirement projections
- Reviewing investment risk
- Evaluating tax strategies
- Updating beneficiaries
- Reviewing insurance needs
- Revisiting estate planning
- Developing a new retirement income strategy
For clients approaching retirement, I can also incorporate these decisions into my broader planning process focused on The Three Pillars of Retirement Confidence: Income, Taxes, and Risk.
The objective is to move beyond the divorce settlement and begin building a financial strategy for the next chapter of your life.
Specialized Financial Guidance When It Matters Most
Divorce can require some of the most consequential financial decisions you'll ever make—often at a time when you're also dealing with significant personal and emotional changes.
You don't have to make those financial decisions without understanding their potential consequences.
As a Certified Divorce Financial Analyst® (CDFA®) and Chartered Financial Consultant® (ChFC®), I bring specialized divorce financial analysis together with comprehensive financial planning to help you evaluate where you are today and prepare for where you're going next.
Wesley C. Bangs, ChFC®, CRPC®, CDFA®
Wealth Manager
Momentum Independent Network