From the September 2014 issue of Investment Advisor • Subscribe!

Responsibilities of a Financial Neutral

A financial neutral has important duties to the couple and the team

A financial neutral has important duties to the couple and the team. (Illustration: © Neil Webb/Ikon Images/Corbis) A financial neutral has important duties to the couple and the team. (Illustration: © Neil Webb/Ikon Images/Corbis)

(Excerpted from a 2008 white paper by Debora May, CPA, CFP, CDFA; Cynthia Zagorski, CPA, CFP, CDFA; and Jane Ochsman, CPA, CFP, CDFA)

The financial neutral on a collaborative divorce team works very closely with the divorcing couple and the team members to bring clarity and understanding to the family's finances with the goal of helping the couple achieve a mutually agreeable settlement that works for the family […].

The FN obtains a general overview of the assets, liabilities, income and expenses, and provides guidance to the clients as to what documents and information they will need to provide […].

The FN will schedule three-way meetings with the clients in order to review the financial data, add, update and clarify information, and identify issues and questions to consider […].

The FN will assign “homework” as needed and keep the team informed of the status.

The FN will then prepare financial reports for the team and clients to present the current financial information that comprises a schedule of assets and liabilities, inclusive of amounts, title and restrictions; family income and expenses, inclusive of any recent or anticipated material changes; and any other data pertinent to the financial decision-making process (insurance issues, children's assets, etc.).

[A financial review is held for the full team.] The FN identifies the need for other specialized professionals (business valuation experts, mortgage lenders, etc.) and states issues raised by the clients and other team members. The FN also assists with the development of options for the financial decisions […].

Typically the FN prepares projections of hypotheticals that reflect and compare outcomes of [options selected by the clients], including division of assets, cash flow, tax and retirement projections, pension analyses and other reports as needed. Scenarios may be revised many times to address issues and the clients’ concerns […].

When financial resolution is attained, the final scenarios and reports prepared by the FN become working documents for the attorneys in drafting the settlement agreement […]. The FN will assist in reviewing the draft agreement to ensure all financial and tax issues are addressed. The FN should remain available to the clients “in perpetuity” as part of the collaborative team, and should maintain records for a minimum of five years.

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