Once you've decided to use a financial advisor, and in what capacity, it's time to start looking for a good fit. Many investors make the mistake of choosing a financial advisor based on performance track record alone. Equally important, though, are the investment style, the organization the person works for, the levels of service provided, and the fees. It's also vital to consider how comfortable you feel with the advisor and whether her philosophies mesh with yours. You will need to do some investigating to make sure the advisor and the company she works for are trustworthy, experienced, and solvent. Look for evidence of an efficiently run, profitable organization with an attention to client servicing. Look into how much insurance coverage the firm has for possible fraudulent acts of its employees. Ask about the investment successes, setbacks, and strategy changes that came about from market turnarounds. And check whether there have been any complaints filed with the sec by going to their web-site at www.sec.gov.

When it comes to credentials, acronyms abound. It's important to understand the distinctions among the various designations and certifications. That knowledge will help narrow your search to the type of advisor who will work best in your situation. Read on for information on some of the most common advisor designations and the skills each brings to the table.

Certified Financial Planner (CFP)

An advisor with “CFP” tacked on to his name has proven competency in virtually every area of financial planning. The education required is extensive — more than 100 crucial topics are included, from the ins and outs of stocks to estate planning. After completing their studies, those seeking the CFP designation have to pass a rigorous certification exam and then obtain qualifying work experience. The licensing agency (the Certified Financial Planner Board of Standards, Inc.) then monitors its licensees to make sure they adhere to strict ethical and professional standards. In addition, the CFP board posts information about their professionals, including any whose licenses have been revoked.

CFPs can make excellent financial planners. They can help you develop an overall financial strategy from the ground up, either long or short term. Then they'll advise you on the best ways to achieve your financial goals. If you're looking for someone to help you develop a portfolio to serve your short- and long-term needs, a CFP makes a good candidate.

Chartered Life Underwriter (CLU)

A chartered life underwriter starts out where the name implies — insurance. These professionals have undergone demanding study programs in the insurance field and other areas. Licensed by The American College, prospective CLUs have to pass eight courses, meet minimum experience standards, and adhere to a strict code of ethics to get their licenses. Once they are licensed, they must also keep up with continuing education requirements.

While the main focus here is insurance, CLUs know about a lot more than just life policies. They're typically well versed in overall financial and estate planning, and often work heavily in retirement planning. When it comes to current investment selection, though, these people probably aren't your best choice. Use a CLU if you have insurance planning questions, maybe even to help you formulate an overall comprehensive long-term financial plan. But for stock picking and the like, you may be flying solo.

Chartered Financial Consultant (ChFC)

Also certified by The American College, many chartered financial consultants are also CLUs — but with a lot of extras. The ChFC program covers virtually every area of financial planning from the client's perspective. Students are taught how to assemble a true picture of each client's financial know-how, position, and goals. The coursework goes on to make sure each candidate knows how to turn that basic information into a comprehensive plan, as well as how to set the plan in motion and keep it on track.

Once they've completed the program and passed the requisite exams, potential ChFCs must demonstrate evidence of three years industry experience before they can append the initials to their business cards. When they receive the designation, you can be sure they are well versed in everything from income taxes to stock analysis. What does that mean to you? You'll have the ear and advice of an expert who can take you from square one all the way to the finish line.

Personal Financial Specialist (PFS)

Personal financial specialists are certified public accountants (CPAs) with additional financial planning qualifications. On the plus side, they're starting out with an intimate knowledge of the tax code and may also have vast experience with tax planning; this can come in handy when you're looking for ways to add income without increasing your income tax bill. In order for a CPA to become a PFS as well, she must either complete additional education as demanded by the American Institute of Certified Public Accountants (AICPA) or already have a CFP or ChFC designation.

To maintain both the CPA and PFS designations, the professional must keep up with continuing education requirements and adhere to strict ethical guidelines. PFSs can be very helpful in determining your current net worth, your future needs for retirement, and appropriate investment strategies. Plus, you get the added benefit of expert tax planning to help minimize your current and future tax burden.