Do you know the difference between someone who says they’re a “financial planner” vs. a “CERTIFIED FINANCIAL PLANNER™“ professional vs. “Divorce Financial Planner”? I am a CERTIFIED FINANCIAL PLANNER™ professional, (CFP®) who is also a Certified Divorce Financial Analyst (CDFA®). (Note: To adhere to compliance obligations, I must spell out CFP in all caps, etc.)
The only people who calls themselves “financial planners” are those who are not licensed. It is a generic term. Often, it means they are able to sell insurance, and that’s all.
Whereas a CERTIFIED FINANCIAL PLANNER™ professional requires a Bachelor’s Degree, plus specialized curriculum equal to at least 18 semester hours which take 18-24 months to complete. Candidates currently sit for a 7-hour comprehensive test. The year I completed the test, only 53 percent passed.
A CDFA® is someone who has been licensed by the IDFA (Institute for Divorce Financial Analysts), has additional training, and is expert in the financial aspects of the divorce code in their state and subject to oversight. Divorce financial planning is a process, not a product: It focuses on a specific life transition encompassing the time a divorce is first contemplated through the final outcome.
This year, I’m excited to be attending the ADFP (Association of Divorce Financial Planners) conference. It’s part of my commitment to ongoing education in divorce financial issues. Membership in the ADFP requires that I adhere to stringent criteria. The conference will include advanced discussions on Business Valuation, QDRO (Qualified Domestic Relations Order) traps, executive compensation, innocent spouse relief, and case law updates on divorce taxation.
ADFP also requires that divorce financial planning is a fee-only process to avoid conflicts of interest. Often “divorce planners” will offer their services to do financial planning during divorce with strings attached: For example, that you will engage them later to manage the investments (brokerage accounts, 401Ks) or proceeds you might receive post-divorce. Such an arrangement might provide the opportunity for a conflict of interest. This might result in the advisor to design the outcome so there are assets to manage, as opposed to the best result for a client. Focusing solely on the divorce process, rather than on the potential of asset management, avoids this conflict.
Here’s a blog article I wrote explaining how to identify an experienced divorce financial planner.
Divorce financial planning is not forensic accounting, which investigates the past. It’s a forward-looking process that focuses on lifestyle issues relevant to divorce: For example, we consider respective post-separation financial needs, and the paying abilities of the parties; division of assets or the financial workability of potential outcomes.
Part of my personal commitment to my clients is: 28 hours of tax training annually, 24 hours of insurance training every two years (including ethics). As a certified financial planner, I undergo 30 hours of Continuing Education (CE) each reporting period in various subjects plus 2 hours of CFP Board approved Ethics CE.
I am a member of my local bar association where I have access to additional CE in divorce law specific to California. I’m also qualified as a mediator in my state as well as trained by the Los Angeles Collaborative Family Law Association (LACFLA) for Collaborative Divorce as a financial neutral. I am securities licensed in many states.
In other words, those letters after my name mean something. Anyone can call themselves anything. But it’s worth your time and safety to understand the level of professionals who are on your team. Your divorce attorney undergoes continuing legal education to maintain his or her license. Likewise, as a CDFA® & CFP®, I do too.