Traditionally, financial planners work with individuals at the conclusion of the legal process. However, financial planners with additional training in the financial, tax and emotional issues of divorce (Divorce Financial Planners) can be extremely valuable during the divorce process.

Financial planning provides a structured approach to the analysis of an individual or family’s total financial picture. Divorce Financial Planners integrate the proven methodology of financial planning directly into the divorce process. As the recognized experts in personal finance, financial planners bring the following capabilities to the divorce process:

The financial planning process begins with gathering of data and coordination of financial information with other professionals such as stockbrokers and business accountants to produce a complete analysis of the current financial position. The resulting report includes budgeting and expense management, income tax, insurance, employee benefits, assets and liabilities, investments, retirement planning, educational planning and estate planning.

One of the main differences between accountants and financial planners is that accountants work in a much more limited sphere. CPAs are recognized for their expertise in auditing and income taxes. In divorce, CPAs excel in valuing businesses, professional licenses and degrees as well as forensic business accounting. In contrast to accountants, financial planners have broad expertise in personal finance and are a resource for the myriad of financial questions and strategies that arise in divorce.

To illustrate the varied work that Divorce Financial Planners perform in the divorce process, the following are examples of the diverse services offered:

Through comprehensive knowledge of personal finance, Divorce Financial Planners provides answers to many diverse questions thereby increasing the productivity of matrimonial attorneys and reducing the uncertainty that impedes divorcing clients from making decisions.

Since clients’ resources are limited, a key strategy in Divorce Financial Planning is helping clients prioritize goals. Financial planners take the time to get to know clients and to understand each client’s financial needs, goals, knowledge of personal finance and, equally important, psychological attitudes toward money. In order to improve my skills in this area, for example, I have read numerous books and articles on the psychology of money. A second objective of the financial planning process is increasing client’s knowledge of personal finance. Part of a financial planners job is to explain how different financial vehicles work, set up systems to provide budgeting feedback and help the client become aware of negative spending patterns.

The financial decisions that clients make in divorce are often the most important financial decisions they will make in their lifetime. During negotiations, financial planners help clients evaluate settlement proposals and suggest alternatives helping clients to make informed decisions. By understanding the financial issues at stake in maintaining their lifestyles, individuals become empowered to make important decisions to complete their divorce.

Financial planning is responsive to the multifaceted needs of people undergoing divorce, whereas accountants may be focused only on forensic and valuation issues.

The third quality of financial planning is its orientation toward the future. Planning for the future is an essential part of every divorce and fundamental to financial planning. Settlements that look fair initially may become inequitable or unworkable over time. A standard part of the financial planning process is the projection of future results. For instance, financial planners project retirement income into the future in order to calculate the annual contribution necessary for a desired post-retirement lifestyle. Divorce planners are cognizant of how a person’s financial situation can change over time and produce ten-year cash flow projections of settlement proposals in order to check long term workability.

Accountants have a different orientation. They are trained to look backwards, auditing payments and cash flows, and preparing tax returns or financial statements based on events that occurred in the past. A client going through divorce tends to be looking backwards at a plate of broken dreams, wondering what went wrong, whose fault it was, why the future that was planned now won’t happen. Turning a client around to face forward and then structuring his or her financial life for what lies ahead is the very essence of financial planning, but has little to do with accounting.

Since divorce involved primarily financial issues, it makes sense to have an expert in personal finance as part of the divorce team. CPAs have an orientation toward historical data rather than planning for the future leave a large gap in the continuum of expertise needed by both attorneys and clients.

Including Divorce Financial Planning in the divorce process in addition to a CPA will set a higher standard of matrimonial practice and more efficient utilization of attorneys’ time. Attorneys can save much of the time they spend on financial detail; clients obtain a more in depth understanding of their financial options and save on professional fees since hourly rates for professional planners are lower than CPAs. The benefits gained by utilizing a divorce financial planner more than outweigh the expenses and permit attorneys to work more efficiently.