Why a Financial Plan Should Be Part of Your Divorce Process

Potato and Coins

By Patrick Janssen

If you have worked with a financial advisor during your marriage, chances are you have a financial plan in place that aligns your investment strategy with your life and retirement goals. Operating an investment strategy without a financial plan can often lead to unnecessary investment risk or a growth rate that impedes an acceptable probability of goal achievement. That is why a financial advisor that is a successful investment professional will usually look at your life first (goals) and then make a plan for your money (financial plan).

An Accurate Financial Plan and Divorce

While having a current and accurate financial plan in place plays a very important role in pursuing the achievement of your financial goals, it can also have a significant impact on the quality of your financial settlement with divorce. Understanding how the division of marital assets/liabilities, spousal maintenance, and child support, establishing two separate households can impact your future cash flow, retirement savings and net worth is essential when working through the divorce negotiation process.

Division of Assets That Best Fit Your Goals

Often the traditional divorce process will not evaluate the spouse’s financial future based on various financial settlement options. This typically requires a skill set and experience that a certified divorce financial analyst (CDFA) holds along with financial planning software that is specifically designed for divorce. Many CDFAs are also financial advisors that utilize financial planning with their investment clients which can support better guidance on the division of assets that best fit the spouse’s goals. Collaborating with a team of legal, financial, parenting, and mental health professionals can often lead to the most optimal pre and post separation outcome for each spouse.