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| What Is the Financial Advisor's Designation? |
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| Written by Hank Brock |
| Thursday, 19 February 2009 09:40 |
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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). Remember, background is only one of the necessary criteria for selecting a financial 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. The problem is that they are seldom able to take a future driven approach. That is the difference between a CPA and a financial planner. Even colleges recognize that the accounting program is different than the finance program. The financial planner takes a proactive, analytical, and long-term strategic approach. They are not reactive to the data, but influence the direction the data will take. The worst financial advice comes from journalists. They are notorious for describing an extreme market position, emphasizing the sensational in order to sell magazines. In my view, journalists are more concerned with making a story than reporting one. Seldom do I read the complete facts as given to the reporter, but rather a hazy half-truth intended to make a warped yet sensational point. Seldom do I find good judgment. 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. About the Author: Hank Brock is president of Brock and Associates, LLC, a firm specializing in retirement, estate, tax, and business planning. For more detailed information on selecting a financial planner, visit us online. Kindly provided by LJ-Marketing.dk You are welcome to use this article on your own website, if you include the link just before this text. |
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