Collaborative Law and the Financial Professional

We’ve been looking at the professional roles that compose the Collaborative approach, in order to better understand Collaborative law and Alaska’s six-way team model. Today, we’ll focus on the neutral financial professional. 

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It’s no secret that finances and money are a significant source of stress in personal partnerships. And it’s no wonder that in the situation of divorce, that stress can turn into a show stopper. If a couple can’t adequately navigate their financial matters, it’s likely that their divorce process will drag on and not successfully put to bed financial tensions, but instead exacerbate them and set up ongoing challenges for each party, long after the divorce is “settled.” Hence, the role of the neutral financial professional is paramount to the success of the Collaborative process.

What is a Neutral Financial Professional (NFP)?

Typically, an NFP is a licensed Certified Financial Planner (CFP) or a Certified Public Accountant (CPA) who has also earned certification as a Divorce Financial Analyst. That’s a lot of certification! But, when you think about it that makes sense, because this person must have a handle on some of the more complex, personal financial matters that exist in our society. When a couple divorces, there are many aspects of their financial lives to consider:

  • The financial resources will now be supporting two households on income that previously supported one.
  • Budgets must be evaluated and altered to be sustainable for all parties.
  • Any property owned must be divided.
  • Taxes, financial planning, funding and any liabilities will be impacted and changed by the divorce.
  • Family members who can’t earn income must continue to be supported, financially.
  • Any businesses or pensions have to be assessed for value.
  • Any real estate assets must be valued and potential challenges addressed.

A word about neutrality:

In the Collaborative process, the NFP fills a similar role to that of the mental health professional (MHP), in that they take a big picture view of the situation—except through the lens of financial realities. They are typically aware of how finances can stir up powerful emotions and therefore, can work closely with the MHP to help the team navigate those emotions (hence, the inherent value in the Collaborative team approach). The NFP’s neutrality is of great value because their role removes the possibility of one party trying to out-smart or out-spend the other, or multiple parties trying to tell a different financial story, based on the same information. As a neutral party, they give greater credibility to the information and help to foster a dialogue that is mutually beneficial to the parties.

What does the NFP do in the Collaborative process?

Essentially, the NFP helps the couple evaluate their financial situation and develops informed, creative solutions for the complex financial problems inherent in their divorce scenario. They:

  • Gather, organize and present financial information.
  • Analyze incomes, expenses, assets and liabilities.
  • Educate the couple (and the team) about their financial scenario.
  • Develop a blueprint for legal disclosure.
  • Assist with income projections.
  • Assess tax consequences based on different scenarios.
  • Identify, clarify and prioritize the financial needs, goals and concerns of both parties.
  • Address financial considerations necessary for supporting healthy children.
  • Prepare sustainable budgets.
  • Develop all possible options for settlement, considering short and long-term impacts.
  • Consult with other neutral specialists when necessary.
  • Communicate with the team and clients in the context of financial matters (and the emotional currents that come along with them).
  • Validate emotions around financial issues.
  • Reviews settlement agreements for accuracy and sustainability in relation to financial decisions.
  • Bring the voice of financial realities (not perceptions) to the table.

At the end of the day, the neutral financial professional helps a couple to understand their financial realities, explore their options and choose the best for all parties involved. In this way, they empower the couple to settle smartly and avoid having someone else take control over those decisions. The desired outcome is that the settlement feels more like a settlement and all parties can feel more secure in their future.