Your financial advisors designation has the ability to tell you a lot about his educational background. The designation can denote backgrounds in various areas of finance, business, insurance, accounting, and law. Common designations in the financial planning field are ChFC (Chartered Financial Consultant), CFP (Certified Financial Planner), CLU (Chartered Life Underwriter), JD (attorney), or CPA (Certified Public Accountant).

Background is, however, only one aspect of a financial advisor.

For example, you might naturally assume that CPAs have greater background in income tax than other professionals. But that’s primarily due to their experience, not their CPA designation. Did you know that the CLU exam has more questions about 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.

Even areas of specialty don’t mean everything. CPAs, for example, major in accounting. College accounting courses take a historical perspective. They look at recorded historical data — which the CPA then records, puts on a form, and prepares as a financial statement or a tax return. Every business owner should have a good CPA who can assist with financial statements and money management.

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.

Over the years, I have found that the absolute worst financial advice comes from journalists. They spend more time and resources making sure that a position is outlandish and sensational, than they do covering sound economic and financial principals. The articles are there to sell papers or magazine, not to provide sound planning advice. You wouldn’t read a medical book to perform your own surgery, so don’t plan your future off of a magazine article.

Designations are an important criterion in assessing a financial advisor. Fully explore the planner’s background and experience. Often the common assumptions of background are not totally accurate as to expertise.