If you are going through a divorce, there are a million emotional, unsettling challenges that you will be required to deal with.

If the divorce is acrimonious, you can probably multiply that number by 1,000, and even if the divorce is relatively benign, making sense of your new circumstances will be incredibly difficult. One question you will likely ask yourself is, can I navigate this process by myself? For legal questions, about custody, alimony or how your state determines the distribution of marital property, you would likely retain the services of an attorney. And while a divorce attorney is an expert in the law, and may have intimate knowledge of your financial situation, he or she will not be able to provide expert counsel on the financial implications of the divorce. In fact, due to the many financial complexities of divorce, more and more divorce attorneys are hiring their own specialized advisors right from the start. If you have questions about how a divorce will impact your cash flow now and during retirement, and how it will impact the estate you leave to your heirs, you would be well served by working with a financial advisor who is a Certified Divorce Financial Analyst (CDFA).

A CDFA financial advisor specializes in understanding the complex interactions that splitting your assets can have on your financial situation now, and in the future. To start, a CDFA advisor can help you understand the true value of the marital property in question, before you make any legally binding agreements. Consider, for example, marital property which contains a $500,000 house and a $500,000 investment portfolio. The lawyers on both sides may agree that the party who will serve as the primary caregiver for the children should keep the house, and the other party should receive the portfolio. On the surface, this may appear to be equitable; however, this evaluation does not take into account the fact that the portfolio is likely to create additional revenue each year, while the house will require the homeowner to make mortgage payments, pay property taxes and homeowners insurance, and will require upkeep as well. A CDFA advisor will also be able to analyze previously filed tax returns, 1099s and W2s to identify potentially hidden assets, and ensure that all of the qualifying marital property is being assessed. In addition, a CDFA financial advisor will be able to conduct marital property assessments and cash flow projections, without requiring you to take on the additional billable hours of having your attorney research and then hire a financial analyst to provide testimony on your behalf.

At Waldron, the philosophy has always been to build our team of advisors with experts in a wide range of financial disciplines, so that we can assist our clients with any of the challenges and complex circumstances they may face. The wealth counselors, investment analysts and wealth planners at Waldron work as a collaborative unit, so that when any client requires the counsel of an expert to help them navigate the complexities of their unique situation, the appropriate team member can be called in to address their concerns, and integrate a solution into their long term goals.

Disclaimer

When we enter into an engagement with a new client, the first part of our process is to identify and understand their goals for their wealth.

In order for us to develop an estate plan, identify tax planning opportunities, or advise on the structure of their investment allocation, we first must know what it is that they hope to accomplish. Goals may center on maintaining a certain lifestyle after retirement, executing a seamless succession plan for the family business, or establishing an estate plan to support a philanthropic organization of particular importance to the family. Whatever the goals may be, they will be best supported by careful coordination of all of the components of the client’s financial life. Only when we have a complete picture of a client’s financial situation, can we develop a comprehensive strategy to help them achieve it.

Integral to supporting a client’s wealth management goals, is learning what their lifestyle expenses are, what they expect them to be in the future, and determining the cash flow required for both scenarios. This can be a challenging process, as many high net worth clients do not know what their annual expenses are, nor are they aware of all of the elements which comprise this figure. They most likely know what their mortgage and car payments are, but may overlook other components, including potentially substantial line items, such as intra-family loan payments, philanthropic donations, gifting contributions, travel, insurance premiums, and a host of other expenses. Provided with a current tax return, an experienced advisor can piece together the income side of the equation, but without accurate reporting on the spending side, building cash flow projections to retirement and beyond is virtually impossible. As they say, garbage in, garbage out. Fortunately, there are many online tools (Quicken, Mint) available to help individuals and families get a handle on their expenses.

At Waldron, we work to gain a complete understanding of a client’s current and anticipated annual expenses, so that we can conduct the analysis necessary to provide what they are ultimately looking for – a plan that will allow them to look to the future with confidence. A key component to developing an appropriate planning strategy for a client, is conducting a lifestyle security analysis. By identifying a client’s true annual spending figure, and applying long-term annual portfolio return and inflation models, we can get a clearer picture of the outcome they can expect at current spending levels, as well as projected outcomes based on spending adjustments. By integrating this information with our comprehensive strategy for the other components of their financial picture, we can simplify the decisions they will face, and provide an invaluable sense of security about what the future may hold. Lifetime security analysis is one of many cash flow management tools employed by our wealth planning team to provide clarity and confidence for our clients, and it’s a tool that leverages one of the few financial variables they are able to control, namely spending.

Disclaimer