Divorce Financial Advisor: When to Hire One

Divorce is one of the most difficult challenges a person can face. On top of the mental and emotional trauma there’s a maze of financial logistics to untangle. From dividing assets and liabilities to negotiating a settlement, evaluating retirement accounts, and considering the tax implications of divorce decisions, it’s a lot to process. If you’re feeling overwhelmed, it may be time to hire a divorce financial advisor. Here are some key points to consider.

If you already know that you could benefit from working with a financial advisor, consider using SmartAsset’s free tool to find a match who serves your area.

What Is a Divorce Financial Advisor?

Financial advisors work with clients to help them manage their money and achieve their financial goals. Divorce financial advisors have a similar mission, but specialize in the legal and regulatory complexities surrounding the division and redistribution of assets that are part of a separation.

A divorce financial advisor may hold a professional designation as a certified divorce financial analyst (CDFA). That designation means that they’re knowledgeable about specific aspects of divorce, including:

Alimony and child support
Division of personal and marital property
Treatment of retirement accounts
Tax implications of divorce
Insurance planning

A CDFA is different from a divorce lawyer, so you’ll still need an attorney to represent you and manage the legal aspects of your divorce. A CDFA or divorce financial advisor typically works alongside your attorney to help you get the best settlement possible.

What Does a Divorce Financial Advisor Do?

The primary goal of a divorce financial advisor is to help their clients obtain an equitable settlement, in accordance with the divorce laws in their state. How do they do this? Usually by doing the following:

Creating a detailed inventory of assets
Generating accurate valuations for those assets
Ensuring transparency throughout the divorce process
Offering advice on the division of assets like splitting a 401(k)
Providing recommendations for alimony or child support
Discussing the how to avoid unnecessary taxes on a divorce settlement
Coordinating with other members of your divorce team, such as your attorney or a mediator

A divorce financial advisor does not offer legal advice, that’s what your attorney does. They won’t file taxes for you either, but can explain to you what you’ll need to discuss with your certified public accountant or another tax professional.

They also help with creating a realistic budget or setting financial goals once the divorce is finalized. That can be helpful if divorce significantly changes your circumstances and requires you to rethink your financial strategy.

Who Needs a Financial Advisor for Divorce?

You can hire a divorce financial advisor to help evaluate assets, split property and create a plan for your financial future after a divorce.

If you have few assets and no child support to consider, you likely won’t need a financial advisor to help with your settlement agreement. However, hiring a financial advisor to see you through a divorce could be appropriate if you don’t fully understand the nature or value of the assets that you and your spouse have accumulated.

For example, you might consider hiring an advisor if:

One or both of you owns an interest in a business (or you own a business together)
One or both of you inherited wealth from a parent or other relative after the marriage took place
You’ve accumulated extensive real estate holdings or other investments together
You need help determining how to protect your retirement savings during the divorce
Alimony or child support payments are on the table

An advisor can also ensure fairness throughout the process. If you suspect that your spouse is hiding assets, for example, your divorce financial advisor might be able to track them down or might recommend a forensic accountant who can.

Their work doesn’t end once the divorce is finalized. From there, they’ll help you find your footing with things like managing the family budget, evaluating your income and expenses, and offering advice on saving and retirement planning as a newly single person.

How to Hire a Financial Advisor Who Can Help With Divorce

If you’re interested in working with a divorce financial advisor, it’s important to first consider what you need help with. You might have a laundry list of questions, for instance, and you want to work with an advisor who’s able to address them. Or you may just want another set of eyes in addition to your attorney to examine your financials so you can get an equitable settlement.

You can begin your search for a financial advisor online and you may also ask friends or family members for recommendations. Once you have a short list of advisors you’re considering, you can schedule an initial consultation. Whether you’ll pay for this meeting or not will depend on the advisor.

When meeting with divorce financial advisors, there are some important questions to ask:

How much experience do you have with divorce financial planning?
Is there a particular type of divorce case that you specialize in?
Who is your typical client?
How much do you charge and how are your fees structured?
What’s your preferred method of communication and how often will we communicate?
What services do you offer once a divorce is finalized?

You can also ask about professional certifications or credentials if you’re interested in working with a certified divorce financial analyst. CDFAs go through extensive training and education, which may be reassuring if you want to work with an advisor who’s well-versed in the ins and outs of divorce.

Financial Planning After Divorce

Once the legal proceedings are finalized, it’s important to take stock of your new financial situation and make adjustments to reflect your individual goal-setting and responsibilities. This includes creating or updating a comprehensive financial plan, setting a new household budget, and re-evaluating your investment strategy. You may need to revisit your retirement timeline, especially if shared savings or pension plans were divided.

Updating legal documents like wills, powers of attorney, and healthcare proxies should also be on your post-divorce checklist. If you have children, consider revising college savings strategies, such as a 529 plan, and custodial account arrangements.

A financial advisor can help assess your post-divorce net worth, evaluate future cash flow, and develop a long-term plan based on your new income, expenses, and priorities. For those receiving alimony or child support, an advisor can guide how to integrate those payments into your financial picture and advise on any related tax reporting.

This stage is also a good opportunity to explore new financial goals and reset your strategy, whether that means focusing on debt reduction, increasing your emergency fund, or making your first independent investment decisions.

Bottom Line

A divorce financial advisor can help you identify the long-term financial impact of different settlement options.

If you’ve got a diversified portfolio of assets or considerable wealth to manage, hiring a divorce financial advisor may be a necessity. The end goal should be to walk away from a divorce as financially intact as possible. And after working with one, you might decide that it’s worth your while to hire a regular financial advisor in order to help you shape your financial plan. They can help you establish your financial goals, create a plan to meet those goals, or even manage your investments for you.

Tips for Financial Planning During Divorce

As we’ve discussed above, having a financial advisor during and after a divorce can help you improve your overall financial situation. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Creating a financial planning checklist for divorce can make it easier to navigate the process. Your attorney or a divorce financial advisor may provide you with a list of things to do (or avoid) as you move ahead with your filing. For example, you may be advised to open a new bank account in your name only or cancel joint credit card accounts so that your spouse can’t create new debts in your name.
Once your divorce is final, remember to update your beneficiary designations. If you have a 401(k) or IRA, for example, you may want someone other than your former spouse to inherit those assets if you pass away. And if you have a life insurance policy in place, you’ll need to decide who should receive the death benefit if you no longer want your ex-spouse to be the beneficiary.