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The advisor's designation tells you about his educational background. Designations include Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), Certified Public Accountant (CPA), Chartered Life Underwriter (CLU), or attorney (JD), among others. These signify backgrounds in finance, business, accounting, insurance, and law.

Remember, though, that background is only one aspect of a planner.

Many very naturally assume that CPAs have a much stronger background in tax law and tax planning than other similar professionals. Their proficiency most often is related to their experience, not their CPA designation. You probably didn't know that the CLU exam has more questions regarding income taxation than does the CPA exam.

As another example, the ChFC exam is clearly a broader and more rigorous exam (and therefore accredited like other colleges and universities) than the CFP designation, though CFP is marketed better and is more popular.

Areas of specialty won't always mean everything either. CPAs take college courses in accounting, focused primarily on the historical view of financials. They are often primarily focused on the then and now. They pull historical information, and then plug it into a financial statement or tax return. Every business owner needs a good CPA to keep the money management and financial in order.

But that's not the same as a financial planner. Even colleges recognize finance and accounting as different majors. Financial planning is applied economics. It takes a futuristic approach. It is analytical and has a long-term strategic perspective. It's proactive, not reactive.

Typically the very worst financial advice comes from journalists. They are infamous for taking extreme positions, glorifying unreasonable returns, and sensationalizing stories in order to sell magazines. Remember, if it sounds too good to be true, it probably is.

A designation can be helpful in determining your financial planner's background, but don't get lost in the false assumption that a designation represents expertise.