What Is a Certified Divorce Financial Analyst (CDFA)?

Divorce is an unfortunate reality that many Americans face each year. According to the most recent data from the Centers for Disease Control (CDC), 673,989 couples ended their marriage in 2022. When people get a divorce, there are major consequences on several aspects of their lives, especially their finances.

Because of the financial implications of divorce, it’s important to be well-prepared before, during, and after marriage. Certified Divorce Financial Analysts (CDFAs) specialize in helping clients navigate divorce from a financial standpoint. In this article, we’ll outline what these professionals do, the expertise they must have to earn the designation, and how you can find one to assist you, if necessary.

CDFA Definition

A certified divorce financial analyst (CDFA) is a professional who specializes in helping both the client and attorney understand the financial implications of a divorce. They conduct a comprehensive analysis of a client’s finances and then help both with financial planning and strategic decisions. Specifically, a CDFA may assist with the following:

• Determining the implications of a divorce in the short- and long-term.
• Analyzing tax consequences as a result of the divorce.
• Developing a retirement plan that takes the client’s new reality into account.
• Helping to identify and set financial goals.
• Working with the client to budget for the lifestyle they want.

Kristyn Carmichael, Esq, CDFA, Professional Mediator at Couples Solutions Center, explains that professionals like her can help clients with quantitative tasks, such as “analyzing the value of certain assets like pensions, giving opinions of asset and debt division proposals, or reviewing clients finances for hidden funds.” Alternatively, CDFAs can assist with “personal” tasks, such as “helping a client build their confidence around finance generally, helping budget and understand financial goals following the divorce, and even guiding individuals who have been financially abused.”

Rules and Ethical Standards

Anyone with the CDFA designation must strictly adhere to ethical standards enforced by the Institute for Divorce Financial Analysts (IDFA). These govern how these professionals work with clients and carry themselves each day. Below are the rules CDFAs must follow:

1. Integrity. CDFAs must maintain the utmost level of integrity and honesty when interacting and working with colleagues, clients, attorneys, and the IDFA.
2. Competence. CDFAs must competently serve clients by maintaining a high level of education surrounding both finance and divorce planning.
3. Objectivity. Professionals must be objective and impartial when dealing with clients.
4. Fairness. CDFAs must make divorce planning recommendations independently from their financial advisory business. Doing so alleviates the potential for conflicts of interest.
5. Confidentiality. CDFAs must uphold a high standard of confidentiality between themselves and their clients.
6. Professionalism. In interactions with clients, attorneys, or colleagues, CDFAs must act in a highly professional manner at all times.
7. Scope. CDFAs must only advertise their services within the scope of divorce planning and strategy. Professionals may not provide legal counsel or mislead clients.
8. Compliance. Professionals agree to uphold a high standard of compliance and will be held accountable as necessary. They also will report any violations of other CDFAs to the IDFA if they become aware of such actions.
9. Unauthorized practice of law. CDFAs may not practice law unless licensed to do so by their state’s bar association.
10. Support. CDFAs agree to support the IDFA and the profession, when necessary, never tearing down or discrediting the organization.

It’s also important to note that, according to the policies above, CDFAs must keep their divorce planning business separate from any other financial services they offer. In many cases, a professional with this designation may also carry others, such as being a certified financial planner (CFP), chartered financial analyst (CFA), or chartered financial consultant (ChFC). While qualified to assist you with other financial areas, know that it’s likely they won’t assist in that capacity to avoid a conflict of interest until their divorce services with you are concluded.

Becoming a CDFA

It takes significant time, effort, and expertise to earn the CDFA designation. Before a candidate may complete the program, the IDFA maintains these eligibility requirements:

• Bachelor’s degree with at least three years of on-the-job experience or;
• Five years of relevant experience if there’s no bachelor’s degree.

In the list above, experience refers to financial planning and family law practice or at least three of the following professions: tax code, investment advisory, real estate, life and disability insurance, or financial therapy. Before becoming eligible, CDFA candidates must submit their relevant experience to the IDFA for review and approval.

Once a person is eligible, a person must pass the IDFA’s 150 multiple choice question exam. To prepare for and obtain the certification, candidates have four paths:

• Exam Only. In this arrangement, candidates must simply take and pass an exam offered by the IDFA.
• Self-Study. This allows candidates to purchase study material and the exam, which they must pass to receive the certificate.
• Self-Paced eLearning. In addition to textbook study material, candidates may participate in eLearning at their own pace to prepare for the exam.
• Virtual Classroom. This includes all of the study material from the previous option, except with the addition of a weekly video call for more instruction.

Each year, CDFAs must renew their designation by paying a $345 reinstatement fee. Professionals must also complete and report 30 hours of continuing education related to divorce every two years.

Who Needs a CDFA as a Financial Advisor?

CDFAs, while extremely helpful, may not be the right fit for every client. Individuals with less money or a high financial acumen may not need the additional assistance, for example. However, while this may be the case for some people, Rachael Burns, CDFA, CFP, and Financial Planner at True Worth Financial Planning, explains that “everyone would benefit from understanding what a CDFA is and how they can help, so that they can decide for themselves if it’s worth the investment.”

“Couples with complex finances benefit the most from working with a CDFA,” says Burns. Common examples of this include “owning rental properties or a small business, being eligible for pension benefits, or either side having significant assets pre-marriage that were later commingled with marital funds,” Burns describes. She adds that one might also consider hiring a CDFA if they feel “they’re at a disadvantage because they weren’t involved in managing the finances during the marriage.” In this case, a professional can paint a clear picture of one’s finances and devise a strategy going forward.

How to Find a CDFA

Once you’ve decided that you should meet with a CDFA, it’s key to find a high-quality one that aligns with both your personality and financial needs. To find one in your area, you can use the IDFA’s online directory. You can also use this tool to verify the credentials of a professional.

Be aware that, if you already have a financial advisor with a CDFA designation, they likely won’t be able to assist you due to the IDFA’s ethical standards. It’s a requirement for CDFAs to ensure their advisory and divorce planning businesses remain separate from one another. For this reason, it’s best to seek out an entirely different professional from one you may already have.

Upon your first meeting with a CDFA, be sure you take the time to get to know them before you commit. Burns recommends asking a professional “about their qualifications and confirm that they have experience working with clients in situations similar to yours,” as well as how they “collaborate with other divorce professionals on the case.” You should ensure that you get along with the expert, especially since they’ll be assisting you with a sensitive issue.

Frequently Asked Questions

Is a CDFA a fiduciary?

While the IDFA doesn’t explicitly name the fiduciary duty in its code of ethics, CDFAs must act both objectively and honestly when they assist clients. In other words, they must maintain the highest level of integrity, only recommending strategies that they believe are objectively in a person’s best interest. Additionally, professionals must avoid conflicts of interest by keeping their divorce and other advisory businesses separate from one another.

How long does it take to become a CDFA?

To be eligible for the CDFA designation, candidates must have at least three years of on-the-job experience with a bachelor’s degree or five with no degree. Beyond that, it’ll be up to each person to decide when they’re ready to take the 150-question exam. The IDFA also offers texts and eLearning material, which prospective CDFAs may study at their own pace in preparation for the assessment.

Does a CDFA give legal advice?

The purpose of a CDFA is to provide an in-depth, objective analysis of your finances when you divorce, as well as to help form a strategy that puts you on the right path. However, the designation doesn’t give them the ability to practice law in any capacity. Only licensed legal professionals may do so.