CFP vs CFA

What is right for you?

CFP vs CFA: which path to choose?

Certified Financial Planner (CFP) and Chartered Financial Analyst (CFA) are the two most talked about designations in the field of finance. Both of them serve different interests and candidates will eventually perform work of a different nature. Both may sound similar, but in reality, they serve different purposes (although there may be some overlap).  Let us discuss CFP vs CFA separately and talk about the differences.

The field of corporate finance is a broad one and comprises lots of career tracks. There is no dearth of opportunities if you choose the right path and clear the obstacles to achieve your goals. Choosing a path that is aligned with your goals and interests is important, and this guide seeks to help you do that.

CFP vs CFA

CFP – Financial Planning for Individuals

The focus of CFP is to create professionals who can advise individuals on managing their personal portfolio and planning for the future. Certified Financial Planners advise people on many areas, such as investment management, estate and retirement planning, tax planning, personal cash flows and insurance.

Some Certified Financial Planners may also form partnerships with people such as lawyers and tax experts.

Visit the CFP website here -> http://www.fpsc.ca/

 

CFP – Requirements and Examination

CFP requirements are laid out by the CFP Board of Standards. To get the CFP mark, one must hold a bachelor’s degree, have three years of financial planning experience and complete a prescribed course of study. In some cases, one might be exempt for taking the course. CFP involves only one exam and can be completed in one year if cleared on the first attempt.

The courses include the following:

  • Financial planning: process and environment
  • Fundamentals of insurance planning
  • Income taxation
  • Planning for retirement needs
  • Investments
  • Fundamentals of estate planning

 

CFP – Careers

CFP usually work directly with individual clients. Success depends on how good and loyal the client list is. Due to this, there is no regular salary for a CFP. It depends on the relationships formed by the planner.

 

CFA – Financial Analysts

CFA exam focuses on developing professionals who can do financial analysis and manage large sums of money. CFA designation, which opens up opportunities for jobs that are otherwise difficult to get into, has a very broad scope.

It can be described as equivalent to a master’s degree in finance with accompanying minors in accounting, economics, statistical analysis and portfolio management.

Visit the CFA website here -> https://www.cfainstitute.org/

 

CFA – Requirements and Examination

The CFA charter, given by the CFA Institute (USA), has a strong reputation mainly due to the series of examination that candidates need to pass. It consists of three levels and candidates must pass six-hour exams at every level. The Level 1 exam is administered twice every year – June and December – whereas for the other two levels, the exam is given only once in December every year.

The CFA Level 1 examination focuses on broad financial principles, while Level 2 focuses on financial analysis and accounting. The Level 3 exam covers portfolio management and decision-making.

To get a charter, candidates need to fulfill all three conditions: hold a bachelor’s degree, clear all three levels of exams and have three years of experience in the finance domain.

 

CFA – Career paths

CFAs primarily work as portfolio managers, equity research analysts, consultants, risk analysts, financial analysts, advisors, traders, etc.

As per CFA Institute, 49% of charter holders work as in-house analysts for institutional investors, 16% for broker-dealers, and the remaining 29% for universities, governments, and other areas. CFA-related jobs pay well; the median salary of a CFA Charterholder is $180,000. (Source: CFA Society, 2015).

 

CFP vs CFA – Overlapping careers

A CFP designation can be a small help in getting roles such as a financial analyst, trading, equity research associate and financial consultant, however, it generally only has a lot of pull for financial planning and financial advisor roles.

The CFA, on the other hand, can be used for both corporate roles (such as financial analyst, trading, equity research associate, investment banking, and private equity) as well as financial planning/advisor roles.

Both CFA and CPA offer a wide scope of opportunities. Some opportunities overlap, but in general, they are meant for different paths. Choosing according to one’s interests and aspirations is crucial.

 

CFP vs CFA for financial modeling careers

If you had to pick one it would be the CFA, but neither designation really teaches financial modeling.  The most common way to learn modeling skills is on the job in careers like investment banking, equity research or FP&A.

If you’re not already in one of those jobs, you can learn online through our financial modeling courses and certifications.

Below is a screenshot from our financial modeling courses at CFI.

 

financial modeling

 

Additional resources

This has been a guide to CFP vs CFA. To learn about other designations and career paths, check out these additional resources:

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