I just filed for divorce and I'm wondering when to hire a financial adviser to help with the process. SHould I consult with someone now, at the end when everything's being divided or throughout?
Pablo - you should seek the services of a financial advisor who is familiar with the divorce process as soon as possible. I suggest you find an advisor with the CDFA designation. You can search for a CDFA advisor through the Institute of Divorce Financial Analysts (https://www.institutedfa.com/).
An advisor that is well-versed in the divorce process can be a significant resource for both you and your divorce attorney. While a divorce attorney is the legal expert in the divorce process, an advisor with experience in the divorce process can be a valuable member of your team to serve as the financial expert.
Here is a great resource including reasons why might consider using a financial advisor as part of your team in the divorce process: https://www.institutedfa.com/Public.php
I wish you the best in your divorce
Thanks for the question. A properly conceived and executed divorce should be considered a process rather than an event, much like retirement. The process begins with the decision of how to divorce. Too many people believe an adversarial divorce is the only choice and solution. With the decision of how you will divorce, you are in a position to create the team you and your spouse need to create the divorce that will work best for you.
How you decide to divorce partially answers your question. If you and your spouse are willing to work together (typically mediation or collaborative divorce) to create a solution that is best for both of you (and children if applicable), you should consult and maintain a relationship with a financial divorce specialist throughout your divorce process. By the way, if children are involved, I would strongly suggest including a child specialist (which differs from a custody evaluator) as well – again, early in the process.
If you hire a financial specialist to help you (and potentially your spouse) through your divorce process, I recommend incorporating a financial specialist who has experience working with other divorce professionals (lawyers, mental health professionals, etc…) in your area. It is also my recommendation that your divorce financial specialist does not serve as your financial advisor after the process is complete. Although opinions vary, I feel there is the potential for a conflict of interest if there is an expectation beyond the divorce process. During this often emotional time in your life, it is best to gain unbiased information with which you can make informed decisions. There are enough conflicts of interest in a divorce without adding more.
You are wise to consider incorporating a financial specialist into your process. Lawyers are great resources when considering the law. I have met only a handful who are good with numbers and even those are often ill equipped to look forward when considering how today’s financial decisions will affect you (and your spouse/family) in the future. Good luck.
When going through a divorce you want to be concerned with identifying and fairly splitting assets such as home furnishings, investment accounts and pension funds. You also want to be concerned with the long-term financial impact of the divorce. I would interview both a CFP (Certified Financial Planner and a (CDFA) Certified Divorce Financial Analyst. They both help clients take care of not only their short-term needs but their long-term needs also.
You should keep your financial advisor in the loop throughout the process for several reasons.
When dividing financial assets, you can generate taxable gains if you sell appreciated stock or other investments. This should be planned properly to avoid getting both you and your ex-spouse slammed come tax season.
Your financial situation will often be very different after a divorce. Your income and /or investment assets may well have been cut in half (or worse). You will need a new plan.
Your credit rating may take a hit in the divorce, which will impact your ability to borrow. This may mean having to rely on your savings or needing to sell investments.
You'll want to make sure your financial advisor is not taking sides in the divorce. Given the important planning decisions that need to be made, you want someone you can trust.