Working with a CDFA

WHY USE A CDFA™

Mitchell Hayes founder Wendy Hayes is a Certified Divorce Financial Analyst™ or a CDFA™ and her goal is to assist her clients and their lawyers in better understanding how the financial decisions they make today will impact their financial future.

When people think about getting a divorce, the first professional that comes to mind is an attorney. Typically a financial advisor – whether it is a CPA, CFP®, or a CDFA™ – is not considered until later in the divorce process – or even until after the divorce is final.

Financial problems can tear a marriage apart, and are often the primary factor that leads to divorce. Once a decision to separate or divorce has been reached, all sorts of questions bubble to the surface. These questions are often clouded by wounded emotions and accompanied by mutual accusations, which comes as no surprise. If a couple cannot solve their financial difficulties while the marriage was underway, it is unlikely that they will be able to agree on pressing financial issues when it has fallen apart.

Frequently Asked Questions

Many divorcing couples have the same common questions like:

Where will the children live?
Who will pay for their education and medical treatment?
How do we value our property?
Who gets what property?
What tax issues must we be concerned with?
How do we divide retirement funds and pensions?
How will the lower-earning spouse survive financially?
What additional financial support does that person need?
Who gets the house?
What happens if a paying ex-spouse dies?

These are the questions that divorce lawyers face with each divorce case. Many lawyers struggle with the intricate financial details that concern tax issues, CRA rulings, capital gains, dividing pensions, and so on. Lawyers attend law school to become experts in the law, not to become financial experts. More and more lawyers have seen the virtue of bringing a financial expert into the divorce process at the very start to provide their clients with solid information and expert analysis in their search for the best possible resolutions for their clients.

Fortunately Certified Divorce Financial Analysts™ can help.

WHAT IS THE CDFA'S™ ROLE?

Financial Planners Help Clients Achieve Goals
The role of the financial planner, CFP® or ChFC® is to help people achieve their financial goals regardless of whether they are divorcing or happily married. After identifying those goals, the next step is to take an inventory of the clients’ current assets and liabilities, then examine what must be done to achieve those goals. Some goals might be reached within a year; others could be realized 50 years down the line. To look that far into the future, certain assumptions must be made. These include income, expenses, inflation rates, interest rates and rates of return on investments. After these assumptions are settled on and adjusted for changes, the scenario must be reviewed on a regular basis. If during the review process the planner determines that the client is not on track, he or she will recommend a number of necessary or advisable fine-tunings. In other words, the financial planner looks at financial results in the future based on certain assumptions made today, and keeps the client moving toward stated objectives.

Accountants Examine Details for Present Day
Conversely, accountants typically confine themselves to examining the details of a present-day scenario. If called upon to participate in a divorce proceeding, they might calculate the taxes on dividing property combined with the effect of child support and spousal support over a very short period of time. They typically do not project further into the future. They also may be retained to perform an audit of account activity or to perform forensic accounting functions to help uncover “hidden assets".

CDFA’s Responsibilities and the Team Approach
To best meet the needs of a divorcing client, a blend of these two ideologies is needed. To meet this need, a new professional designation was created – the Certified Divorce Financial Analyst™. The role of the CDFA™ is to help both client and lawyer understand how the financial decisions made today will impact the client’s financial future, based on certain assumptions.

To understand this role, we first have to distinguish between a CDFA™ and other financial experts, who go by various titles, such as: Chartered Accountant (CA), Certified General Accountant (CGA), Certified Financial Planner® (CFP®), and Chartered Financial Consultant (ChFC®).

WHAT DOES THE CDFA™ ACTUALLY DO?

A CDFA™ is someone who comes from a financial planning, accounting or legal background and goes through an intensive training program to become skilled in analyzing and providing expertise related to the financial issues of divorce. The CDFA™ becomes part of the divorce team, providing litigation support for the lawyer and client, or becomes a member of a Collaborative Law team. In either event, the CDFA™ will be responsible for:

Identifying the short-term and long-term effects of dividing property.
Integrating tax issues.
Analyzing pension and retirement plan issues.
Determining if the client can afford the matrimonial home - or identify an affordable alternative.
Evaluating the client’s insurance needs.
Establishing assumptions for projecting inflation and rates of return.
Bringing an innovative and creative approach to settling cases.

The Certified Divorce Financial Analyst™ also:

Provides the client and lawyer with data that shows the financial effect of any given divorce settlement.
Is familiar with tax issues that apply to divorce.
Has background knowledge of the legal issues in divorce.
Is trained to interview clients so as to:
- Collects financial and expense data
- Helps client’s identify their future financial goals
- Develop a budget

A CDFA professional can:

Complete the detailed financial work for you, making case preparation and settlement easier
Provide in-depth analysis of the short- and long-term financial effects of a proposed settlement
Work as a consultant

A Certified Divorce Financial Analyst (CDFA) professional has:

Been certified by the Institute for Divorce Financial Analysts
Extensive financial expertise in the fields of financial services, accounting, or law
Received specialized training in the financial issues of divorce
Fulfilled continuing education requirements

Founded in 1993, the Institute for Divorce Financial Analysts (IDFA) is the most established and recognized designation in financial planning for divorce. In order to become a CDFA professional, a candidate must successfully complete a series of exams based on a self-study course offered by the Institute, be in good standing with his or her firm or broker/dealer and any governmental regulatory agencies, and complete a minimum of 15 hours of divorce-related continuing education courses every two years.

CDFA professionals help lawyers and their divorcing clients address the special financial issues of divorce with data that can help achieve equitable settlements. A CDFA pro is trained to:

Produce powerful exhibits in the form of spreadsheets and graphs
Give lawyers professional support to make sure they've covered all the financial “bases”
Provide lifestyle analysis for potential support cases
Analyze the financial implications of different divorce settlement proposals and options
Create a rock-solid personal financial analysis for the client
Make sure the client understands the short-term and long-term financial impact of different settlement proposals

Our Founder

Wendy Hayes is a highly creative, accomplished accounting and finance professional who has leveraged her own experiences with life transitions to launch Mitchell Hayes. Learn more about what drives Wendy.

Learn More

Proper Treatment of Retirement Plans in Your Divorce

June 2, 2016

The following blog written by Barbara Whelehan for www.bankrate.com is an excellent example of how important it is to have a Certified Divorce Financial Analyst assisting you with your divorce. Where qualified employee benefit plans are concerned it is critically important that you have a Qualified Domestic Relations Order (QDRO) pre-approved before the divorce is final.…

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Working with a CDFA

WHY USE A CDFA™

Frequently Asked Questions

Our Founder

Proper Treatment of Retirement Plans in Your Divorce

Learn more about how Mitchell Hayes can help you better plan your financial future.