So, you are ready to consult a certified financial expert who can help you manage and grow your money to achieve your financial goals.
But you have noticed that people in the field have different designations behind their names. Maybe your local advisor has a certified financial planner (CFP) certification, while one of your favorite finance YouTubers has a chartered financial analyst (CFA) designation.
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If you’re an investor or institution shopping for a financial advisor, the dizzying array of credentials may seem daunting and can overlap. What do those credentials mean for you, as a client, and what do they tell you about the advisor’s expertise?
If you are confused by these professional designations and certifications, you are probably wondering which one is better or if it makes a difference either way. This guide will provide some clarity that will help you make the right choice:
— What is the CFA designation?
— What is the CFP certification?
— What are the similarities and differences between the CFA and CFP?
— Differences between the CFA and CFP.
— How to choose between CFP vs. CFA if you want to be an advisor.
What Is the CFA Designation?
The CFA designation is for financial analysts and investment professionals who typically work in corporate or institutional settings. These are equity research analysts, portfolio managers, investment bankers and other corporate finance professionals.
To receive this designation, you must pass three levels of examinations. These exams will test knowledge of investment assets, asset valuation, asset allocation, portfolio management, financial statement analysis and wealth planning, among other topics.
Recently, the CFA Institute created three specialized pathways for the level 3 exam. Now, 65% to 70% of the level 3 exam will cover the common core (the topics that all level 3 students will study), while the remaining 30% to 35% will relate to the chosen pathway.
The Private Wealth pathway focuses on the skills that will help students serve high-net-worth individuals (HNWIs). It covers areas such as family management, philanthropy and how to serve star athletes.
The Private Markets pathway develops a deeper understanding of private markets — private debt, private equity, infrastructure, real assets and other forms of private investments.
Finally, the Portfolio Management pathway is all about how to create a traditional portfolio of listed equities and fixed-income securities. It also covers both passive and active management strategies.
It’s possible to finish the three levels in 2.5 years. However, it takes an average of three to four years to complete the exams.
That’s because the CFA exams are considered very difficult, with an average pass rate of less than 50%. The institute has recommended 300-plus study hours for each level.
To qualify to write the CFA level 1 exam, you will need to meet one of the following enrollment requirements:
— A bachelor’s degree.
— 4,000 hours of professional work experience.
— Combined 4,000 hours of professional work experience and university education.
— Enrollment in an undergraduate program with a maximum of 23 months to graduation.
What Is the CFP Certification?
The CFP certification is for financial experts who help individuals and families with personal financial planning, retirement planning, estate planning, tax planning and insurance planning. CFP certificants usually work as financial planners, financial advisors, wealth advisors and personal finance consultants.
To complete the CFP certification process, you will need to pass a multiple-choice exam with 170 questions across two three-hour sections. The questions usually focus on the application of knowledge rather than mere memorization.
This exam will test your understanding of financial planning, retirement planning, investment planning, tax planning, estate planning, education planning, insurance and risk management, and proper professional conduct.
The CFP exam has a pass rate of about 65%, and you can complete it at once. However, before writing the exam, you must have:
— Acquired a bachelor’s degree (or higher).
— Completed the CFP Board coursework in financial planning.
Also, to obtain the certification, an advisor needs 4,000 to 6,000 hours of relevant professional experience in financial planning. This can come before or after they pass the exam. They must also agree to abide by the CFP Board’s Code of Ethics and Standards of Conduct.
What Are the Similarities and Differences Between the CFA and CFP?
The most obvious similarity is that they are for financial professionals. In fact, many people have both credentials. But other similarities include:
— Requirements. Both require work experience and academic qualifications in addition to passing an exam or a series of exams.
— Recognition. Both are widely recognized in the finance industry.
— Ethics and professional conduct. Both the CFA Institute and the CFP Board require adherence to professional standards.
— Course content. Both require an understanding of economics, financial markets, investment assets, investment management, risk management and financial planning.
Also, there is now a Private Wealth track in the CFA exams that covers similar ground to the CFP certification exam, except that the focus is on HNWIs.
[Read: How to Find a Financial Advisor If You’re Not Rich]
Differences Between the CFA and CFP
Career Areas
CFA: Typical career paths are investment banker, portfolio manager, equity research analyst, private wealth manager, private banker, financial analyst, wealth manager, financial analyst, financial planner and personal finance consultant.
CFP: Key areas of focus are investment analysis, portfolio management, corporate finance, asset valuation, personal finance planning, retirement planning, estate planning, tax planning, insurance, and risk management.
Exam Structure
CFA: Three exam levels that take a minimum of 2.5 years. Pass rate below 50% (level 3 rate is slightly higher).
CFP: Six-hour computer-based test administered in two three-hour sessions with an optional 40-minute break. Pass rate is about 65%.
Recognition
CFA: Global recognition.
CFP: Mainly in the U.S. and North America, but recognized in many countries.
Cost of Earning Designation
CFA: Relatively more expensive in terms of direct costs of taking exams.
CFP: Relatively less expensive for the exam component, but education requirement must also be factored in.
Typical Clientele
CFA: Corporate firms and institutional investors.
CFP: Individuals and families, and small business owners.
How to Choose Between CFP vs. CFA if You Want to Be an Advisor
The main consideration for advisors is the career path they want to pursue and the typical clientele they want to work with. If an advisor is passionate about helping individuals and families with financial planning and more, the CFP certification is the way to go. However, if their interest in financial planning is limited to HNWIs, they can still take the CFA and follow the Private Wealth pathway at level 3.
On the other hand, if they prefer to do investment analysis, portfolio management, asset valuation, and corporate finance for corporate clients and institutional investors, they should pursue the CFA designation.
It’s important to state that you should not choose based on exam difficulty or cost. If you want to be a portfolio manager, you shouldn’t just pursue the CFP certification because it’s less expensive or has a higher average pass rate.
What if you want both? Well, no one will stop you. If your ambition requires both CFA designation and CFP certification, you can pursue both. Someone who has taken the Private Wealth pathway during the CFA exams, for example, may desire to learn more about financial planning in general, leading them to obtain CFP certification.
Ultimately, what matters is understanding where your interests lie and the skills you need to pursue them.
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CFP vs. CFA: What’s the Difference? originally appeared on usnews.com
Update 02/10/26: This story was published at an earlier date and has been updated with new information.
