Wealth Management
/ Planning
10
For Advisor Use Only
January/February
2014
At the 2013 National Conference, advisors Nichole
Raftopoulos and Carl Watkins shared some of the
successes and challenges they’ve experienced in building
their own divorce practices. It was a lively and
informative discussion, and I couldn’t pass up the
opportunity to summarize their insights for the rest
of the Commonwealth community.
If you’re thinking about offering specialized services to
divorcing clients, here are answers to some key questions,
based on Nichole and Carl’s observations.
What is the Certified Divorce Financial
Analyst (CDFA) designation?
The CDFA is an important designation for advisors
who want to start a divorce practice. You can’t build a
successful niche as a sideline, acting as a financial planner
who helps clients here and there with divorce. In addition
to working with individuals to pursue their overall financial
goals, a CDFA adds value by helping clients understand
how the financial decisions they make during a divorce
will impact their financial future. Part of a CDFA’s role is
to assist in dividing assets, keeping the division equitable
for both parties.
The CDFA designation can be a great complement to the
CFP
®
certification or ChFC
®
, allowing advisors to offer
a targeted, well-defined service for their divorcing clients.
Can advisors work with existing clients
who are divorcing?
The CDFA coursework advises against working through
a divorce with current clients. It’s better to retain the
clients’ assets under management but to avoid giving
advice on the divorce. Of course, even if you steer clear of
divorce matters, a number of concerns can arise when an
advisor continues to work with both parties. Maintaining
trust and ensuring that you’re looking out for each client’s
best interests are often among the biggest challenges.
Keeping lines of communication open as two people part
ways can bring its own set of tests. When you’ve worked
closely with and developed relationships with both parties,
what happens if one client needs to be fired?
One opportunity to grow your practice is to build
relationships with other CDFA advisors in your local
business area. Not only can you provide your existing
clients with a vetted, competent professional to handle
their divorce matters, but you open the door to grow
your practice from the referral networks you’ve established.
In some situations, you might also consider building
“Chinese walls” between yourself and another advisor in
your practice, with each of you confidentially representing
one party.
What are some tips for managing
new client relationships?
Helping a client maintain perspective through the divorce
process can save both time and money. For example, a
couple may become passionate about assets of relatively
insignificant dollar value, and the pursuit of those assets
may end up costing an outsize amount of money. It’s
important to use goal planning and negotiation to settle
matters, hopefully out of court—and most definitely
before they get out of control. Once forensic accountants
and other subject matter experts enter the process, fees
tend to soar. Advisors can do their clients a service by
helping them gain perspective early in the process.
Peer Learning: Developing a Niche with Divorcing Clients
ROSE WATSON, JD, MSEL
Here in the Advanced Planning
department, we’ve noticed that divorce
planning is creeping up the list of hot
topics with advisors, closely behind
social security benefits planning.
