In the Collaborative Process for divorce, there are usually three types of professionals employed to help divorcing couples:  attorneys, mental health professionals, and financial neutrals. 

The neutral financial professional is a Certified Financial Planner (CFP®) or Certified Public Accountant (CPA) who also is a Certified Divorce Financial Analyst (CDFA®).  This person offers a safe, unbiased environment for spouses to speak openly about their financial fears, concerns and ultimate goals.  This makes it easier to reach mutually satisfying agreements.

In many divorce settings, negotiations break down over financial issues or concerns, oftentimes leading to litigation. The financial neutral offers both parties a balanced, thorough financial evaluation of the marriage and offers realistic solutions to obstacles in negotiations.

Benefits of Using a Financial Neutral

1. Streamlining Financial Information Collection.  The financial neutral helps the divorcing couple collect the necessary financial information. Having one professional gather and organize this information avoids duplication of efforts and ensures that both parties receive all documents during the Collaborative Process.  In addition, the financial neutral is trained to identify missing / overlooked assets and liabilities.
2. Reduced Costs.  Since only one financial neutral is hired in the Collaborative Process, the costs tend to be less than those if each party had hired separate financial experts.
3. Education & Professional Financial Advice.  In most households, one spouse typically handles most of the family’s finances.  As a result, the other spouse may not have a lot of experience dealing with financial issues and may feel overwhelmed during the divorce process.  In these cases, the financial neutral can provide guidance, education and support.
4. Clarify & Evaluate Long-term Implications of Financial Decisions.  The financial neutral will consider both the short-term and long-term implications of the financial choices in divorce.  Through financial modeling and analysis, each party can see the short-term and long-term financial projections, so they are making informed decisions during the divorce process.
5. Help Identifying Reasonable Compromises.  A financial neutral can help the divorcing couple work together to reach a mutually beneficial financial outcome.  Since the financial neutral is working for both parties, the financial neutral’s focus can be on identifying opportunities for compromise.

The financial neutral does not make the ultimate decisions regarding financial alternatives; that is still left up to the divorcing couple.

Using a Financial Neutral in Non-Collaborative Divorces

Many divorcing couples and their other professionals (e.g., attorneys and mental health professionals) have seen the benefits of hiring a financial neutral, even in cases that are not part of the Collaborative Process.  As a result, it is becoming more and more common for financial neutrals to be involved in the divorce process even if the couple has not decided to use the Collaborative Process.

Posted by Chuck Clifton, CFP®, CDFA®