Dear reader, welcome to an exciting session on how CFA relates to CPA and CFP.
You’ll learn how the CFA differs from the CPA and CFP in job outlook, earnings, and requirements for certification.
Our main preoccupations in this article on CFA vs CFP vs CPA are:
Let’s dig deep into these three credentials and how you can take advantage of them!
Overview of CFA, CPA, and CFP
The three financial advisor abbreviations represent different career paths.
We will discuss the areas of specializations and organizing bodies of the three credentials in this segment.
The CFA Institute, USA, issues the chartered financial analyst certification.
It’s a globally-recognized credential in the business environment, signifying excellence in financial analysis and investment management.
The CFA is commonly assumed to be equivalent to a master’s degree due to its broad scope.
The CFA program makes you understand every aspect of finance.
You’ll also garner generalist knowledge in economics, financial accounting, portfolio management, and statistical analysis.
Although the CFA charter isn’t a statutory requirement for a financial analyst role, it’s an indescribable door opener for one of the most demanding finance jobs.
Most industry stakeholders revere the CFA charter more than an MBA.
Kindly read this article to understand the CFA charter better.
On the other hand, the American Institute of Certified Public Accountants (AICPA) organizes and issues the CPA license.
The CPA program broadens your understanding of tax returns, independent auditing, and public accounting.
A CPA handles the accounting needs of a hedge fund or a public firm.
Public accountants don’t need a CPA credential for tax returns because state laws govern the qualifications needed for this role.
However, earning a CPA license bolsters your chances to work with fast-growing accounting firms.
Conversely, the Certified Financial Planner Board of Standards oversees the CFP program.
The CFP program is investment-minded.
Financial advisors who earn this certification are versatile in creating and implementing financial plans for investors.
CFP coursework makes you understand how to meet the investment needs of individual clients.
The CFP certification is ideal for clients passionate about financial planning and helping clients reach their financial goals.
Though “financial advisor” is a generic name for professionals in the finance industry, the term is mainly personalized for financial planners.
It is unconnected from their financial planning or advisory roles to clients.
CFA CPA CFP Earning Potentials
Let’s focus on CPA vs CFA vs CFP Salary.
The average annual salary for a CPA is $69,901.
CPAs also earn bonuses, profits, and commissions.
The lowest 25th percentiles make an average of $50,000, while the top 10% earners make $117,000.
Tax consulting is the most valuable skill for CPAs, as professionals using this skill make an average of $74,526 per annum.
Experience and education also contribute to CPA earning potential.
On the other hand, CFPs make an average salary of $67,668 per annum.
The lowest 10% of earners make $48,000 per annum, while the top 10% of earners make $110,000.
CFPs mostly make money through compensations.
If you want to do CFA and CFP combination, you can now make an informed guess of the CFA CFP salary.
Earning the CPA and CFP combination salary will transform your financial status.
CFAs are the highest earners out of the three designations.
Chartered financial analysts make an average of $97,000 per annum.
But most experienced analysts and managers earn approximately $300,000 per year.
Portfolio managers, chief financial officers, and chief investment officers are the highest-paid CFAs.
Requirements for CPA, CFA, and CFP
You should check the eligibility requirements for these designations before registering for them.
Requirements for CPA Program
Most states require a bachelor’s degree with a minimum of 120 study hours to take the CPA exam.
Candidates must also garner relevant work experience, pass the CPA exam, and meet more education requirements to earn the CPA designation.
For instance, an applicant must have 24-30 credit hours in financial accounting through their undergraduate or graduate program to qualify for this program.
You must also have 1-2 years of experience in accounting or auditing.
Some strident states demand a minimum of 150 study hours to earn the CPA.
Many candidates earn a master’s degree to meet such high-standard requirements.
CFA Institute’s education and experience requirements are more rigorous than CPA, ChFC, FRM, and CFP.
An applicant must have a bachelor’s degree and pass a three-level sequential exam before earning the CFA charter.
You must also have four years of experience in investment analysis or creating investment products.
You may garner professional experience before, during, or after the exams.
Beyond meeting the educational and professional experience requirements, you must show serious commitment to this program to ace the exams in one attempt.
Requirements for CFP
According to the CFP Board, a CFP hopeful must have a bachelor’s degree in any discipline and 3 years of professional experience in financial planning.
You must also pass the CFP exam.
If you want to earn CFP and CPA, search for CFP requirements for CPA, and take steps to fulfill them.
Exam Details and Structures
After meeting the eligibility requirements, the most crucial step is passing the designation exams.
The exams are differently structured, with different areas of focus.
The CFA curriculum focuses on the following areas: portfolio management, equity & alternative investments, corporate finance, economics, financial analysis & reporting, fixed income & derivatives, ethics & professional standards, and quantitative methods.
The curriculum aims to train participants in investment banking, financial analysis, and management.
The CPA course curriculum includes federal entity taxation, corporate governance, individual federal taxation, ethics & general principles, economic concepts & analysis, and financial statement accounts.
The CFP curriculum is planning-based.
The topics include general principles of financial planning, estate planning, income & retirement planning, investment planning, risk management & insurance planning, professional conduct & regulations, and education planning.
The course introduces investment advisors to the fundamentals of planning and how individuals can make profitable decisions in different financial situations.
The course also makes you understand personal finance management skills.
If you’re interested in the CPA and CFP combination, compare the curriculums of the two designations to know if there are overlapping topics.
While the CPA financial advisor course and CFA program have multi-layered exams, the CFP has one exam.
The CFP exam contains 170 multiple-choice questions, divided into two sections.
Each section lasts for 3 hours, and you can take a 40-minute break after completing the first section.
The question types in this exam include stand-alone questions, case studies, and short scenarios.
You can also take unscheduled breaks during the exam.
However, the CPA uniform exam is in four tiers.
- Auditing and attestation
- Business environment and concepts
- Financial accounting and reporting
Each section of the AICPA-administered test lasts for four hours.
A candidate must take all the tests within one and a half years with a minimum of 75 scores.
Similarly, the CFA exam is divided into three levels and arranged progressively complex.
CFA Levels I and II exam contain multiple-choice questions, while Level III is a mixture of essays and multiple-choice questions.
Most candidates complete and earn their CPA license within 18 months.
Conversely, most CFP candidates complete the course in three years.
Hence, if you desire the CPA financial planner combinations, you can earn them within five years.
But if you’re still thinking “CPA or financial advisor,” you may go for the former because it takes lesser time to complete.
Some professionals prefer CPA to CFP because CPA allows them to work in high-ranking, large firms.
The CFA course takes the most prolonged duration to complete.
While the CFA Institute suggests a 4-year completion period for the program, many candidates spend 5-7 years.
It takes perseverance and commitment to earn the CFA designation.
Some people pursue the ChFC instead of the CFA because it takes an average of 2 years to become a ChFC.
CFA vs CFP vs CPA Difficulty Levels
The CFP accounting difficulty level is moderate.
The exam has more than a 60% historical pass rate.
First-timers had a 62% pass rate in 2019.
Also, the historic pass rate for the CPA is 50%.
Candidates who sat the exam in 2020 had a 55% to 65% pass level.
However, the pass rate of the CFA isn’t impressive.
The pass rate for the exam in the past decade is 33%-50%.
Candidates pay $450 as a one-time registration fee before registering for CFA Level I exam.
Each CFA exam level costs between $700 and $1,000.
When you register for the exam early, you save $300 for each level.
Hence, the total cost for the CFA course is between $2,550 and $3,450.
However, the total cost for the CPA course is $1,500.
The amount includes registration, application, and license fees.
The chartered accountant course, the CPA equivalent, is costlier than this.
Conversely, the CFP course costs between $825 and $1,025.
Early birds pay $825, standard registration is $925, and late registration is $1,025.
The examination fees reflect the potential earning powers of these certifications.
Job Outlook for CPA, CFP, and CFA
One of the reasons you’re still concerned about the CPA vs CFA vs CFP debate is that you want to have a clearer perspective on the three before making a choice.
Earning any of the three designations opens you up to incredible opportunities.
CPA Job Outlook
There are high demands for accountants, and the trajectory isn’t changing soon.
Progressive-minded accounting undergraduates can get multiple job offers before their graduation.
The Bureau of Labor Statistics has projected a 6% annual job growth in the field till 2028.
If you’re still weighing CPA or CFP based on job growth, the two designations have the same growth rate.
Thus, you may consider a CPA CFP combo!
However, if you want to attain senior levels of public accounting, you need a minimum of three years of experience in a leading accounting firm.
There are lucrative roles in hedge fund accounting for ambitious job seekers to explore.
The seemingly harsh 2002 Sarbanes-Oxley Act has also provided numerous opportunities for job seekers in public firms.
The main door openers for these opportunities are outstanding educational background and relevant work experience.
You can start from a small firm and climb the corporate ladder with time and experience.
CFA Career Path
CFA charterholders offer financial services in the public and private sectors.
According to the CFA Institute, 16% of charterholders work for brokerages, 29% work in colleges, government establishments, and other nonprofits, while 49% serve as in-house analysts to institutional investors.
Charterholders are also wealth management and asset management.
Though there are no numerous roles for CFA charterholders like the CPA, the few available are more lucrative.
If you want access to more jobs and high-paying ones, consider the CFA and CPA combo.
The standard titles for charterholders include portfolio managers, research analysts, financial analysts, and chief investment officers.
CFP Job Outlook
The greatest beneficiaries of CFP certification are financial professionals willing to work with individuals.
While many opportunities are attached to the CFP, it doesn’t guarantee high-paying jobs.
The designation is particularly appropriate for professionals willing to test the waters in entrepreneurship.
A financial consultant’s sales performance determines their earning potential.
Thus, you must be particularly enterprising, daring, and skilled to make headway in financial planning.
We discussed the relationship between CFA, CFP, and CPA in this piece.
We agreed that the designations are unique and focus on different career paths.
To choose a career path out of the three, you should do some self-questionings like:
- What kind of work do I want to do?
- Where do I want to work?
- Do I want to work as an entrepreneur or an employee in a firm?
When you answer these questions correctly, you’ll know the best certification program for your professional growth.
No matter your decision, it’s worth the time, commitment, resources, and sacrifices.
You’ll get the returns on your investment.
Of course, you don’t always have to choose; you can decide to earn all the three certifications discussed in this piece.