Welcome to the ultimate CPA vs CFA guide.
In this post, we’ll go through the variations and similarities between the CPA and CFA in order to help you decide which one of the best-fit careers is for you.
In this article, we will explore:
Let’s get started with it!
CFA vs CPA: An Overview
It’s understandable that various finance professionals and associated designations cause some confusion.
Accountants and financial analysts are crucial pillars of financial management, although the differences between their roles can be subtle.
A certified public accountant (CPA) is a title that refers to someone who has written the American Institute of Certified Public Accountants (AICPA) Uniform Certified Public Accountant Examination and has met their state’s standards for membership in the institution’s ranks.
There are also educational prerequisites.
A chartered financial analyst (CFA) is a professional who has fulfilled the CFA Institute’s academic requirements.
This requires earning a bachelor’s degree, passing three six-hour CFA exams, and accumulating the required experience (now 4 years) in the investing field.
People holding these titles are required to follow tight codes of behavior and adhere to high ethical standards.
When it comes to CFA, applicants, like CPAs, must achieve specific educational and experience criteria as well as pass a two-part CFA Exam that assesses essential financial management and financial accounting abilities.
Which is better: CFA or CPA?
Professional credentials are frequently pursued by financial professionals in order to further their professions.
The CPA and CFA designations are undoubtedly the most coveted in their respective industries.
The “black belt” in financial accounting is the CPA, also referred to as a certified public accountant.
Originally intended for public accountants, the CPA credential is now sought by non-public accounting professionals, tax accounting professionals, and financial experts who want to demonstrate their proficiency in arithmetic calculations.
A CPA license bearer also has the legal authority to approve financial reporting, which distinguishes the position.
CFA is the fundamental basis in finance and investment.
This is the greatest credential you can earn if you want to work as a private equity analyst, a portfolio manager, or an expert in hedge fund or wealth management firms.
CFA vs CPA: Application and Qualification
Every one of the fifty-five states or jurisdictions in the United States issues a CPA certification.
There is no separate administrative agency, and every state’s CPA examination and licensure criteria are slightly different.
Work experience qualifications for CPAs, for instance, differ by state.
Among all finance-related credentials, the CPA prerequisites are the hardest to fulfill.
To appear for the test, candidates should have a 4-year bachelor’s degree and, in most circumstances, 150 credit hours is allowed.
Non-US applicants find it difficult to take the CPA exam due to the high entry barrier and lengthy application procedure.
Qualifications for a CFA
CFA is a designation accorded by the CFA Institute, a non-profit organization founded in New York City.
The institution has its headquarters in the United States, although it has three regional offices and 200 local chapters globally.
Candidates apply via the institute, and the process is rather straightforward.
The applicant can sit for the test if he or she has a bachelor’s degree or four years of nearly any type of job experience.
Even before graduation, the candidate can take the test.
CFA vs CPA Difficulty
CFA designation is assigned by the CFA Institute, a non-profit corporation located in New York City.
The institution has its headquarters in the United States, although it has three regional locations and about two hundred local branches worldwide.
Applicants register via the institute, and the process is rather straightforward.
The applicant should sit for the test if he or she has a bachelor’s degree or 4 years of nearly any type of job experience.
Even before completion, the applicant can sit for the test.
CFA vs CPA Exam Format and Content
Financial Accounting and Financial Reporting, Audit, and Attestation, Regulations, and Business Environment and Concepts are the four components of the examination.
Multiple-choice questions, case studies, and personal correspondence make up the test, which is completely computerized.
The grading of CPA Exams is largely automated.
You can do the four segments one by one or all four at once.
Continuous testing is now accessible as of July 2020, which is different from when you previously had to queue for a CPA examination testing session.
You may now repeat the exam if necessary as soon as the scores of your prior attempt are received.
The exam is available at any Prometric examination facility in the United States.
When it comes to exams, there is a difference between CPA and CFA.
CPA vs CFA difficulty is one of them.
The CFA exam has a more rigid framework.
The test is split up into three stages, each of which must be completed before moving to the second one.
Instead of financial accounting, auditing, and taxation, the test focuses on financial analysis and portfolio management.
The CFA test has converted to an electronic format because of Covid-19 constraints.
As a result, the CFA Institute may now provide it more frequently.
Level 1 is now available in February, August, May, July, and November.
Levels II and III, meanwhile, are now available in May, August, and November.
Even though the exam is now computer-based, you should still take it at an authorized testing site.
In large towns and urban regions, there are several international examination facilities for the CFA exams.
The CPA test is divided into four sections.
Thanks to a new approach of continuous assessment, you can take any part and at any time.
There are three levels to the CFA test.
The three examinations must be taken in order, and each test is only administered three to five times each year.
CFA vs CPA Exam Difficulty
Is CFA harder than CPA?
Whenever it comes to the passing test, many applicants understandably wonder whether the CPA or CFA is the more difficult option.
While the answers to these questions may be subjective based on your specific talents and shortcomings, analyzing recent pass rates might be helpful.
The overall pass rate for each component of the CPA Test in 2020 was 49.98 percent (FAR) to 65.56 percent (BEC).
Pass scores for the CFA test, on the other hand, range from 49 per cent for Level I to 56 per cent for Level III, according to the most current results available.
This gives the impression that the CPA difficulty and CFA difficulty are roughly similar.
The pass grade for the CFA test in 2020, on the other hand, are rather above.
CFA pass grades averaged 41 per cent for Level I, 44 per cent for Level II, and 53 per cent for Level III since 2010 to 2019.
This implies that the CFA test has been more challenging in the past.
Furthermore, while opinions vary, some individuals who have done both believe that existing CPA applicants will have a tougher problem qualifying for the CFA test than the other way around.
CFA vs CPA: Time Required to Become Qualified
The majority of applicants want to complete the CPA test in a year.
Some people can learn all of the content in six months, take all four sections of the test in one sitting, and pass.
Before earning a license, most state boards demand a year of accounting experience, which must be overseen and validated by a CPA in the United States in most cases.
With a proper CPA review course, you will pass your exam and attain your career goals.
The updated continuous assessment schedule may allow all 3 exam levels to be completed sooner.
However, most applicants currently require four years to finish their tests.
As a result, becoming a CFA takes substantially longer than becoming a CPA.
The CFA designation includes 4 years of relevant experience.
This explains that a CFA program takes longer than a CPA program.
Because the CPA test portions may be taken simultaneously, the exam can be completed in a matter of months.
Following the exam, you must have one to two years of experience.
The three levels of the CFA program, as well as four years of the relevant experience requirement.
It takes most applicants four years to complete.
Exams and job experience might both begin simultaneously.
CPA vs CFA Salary
In the U.S, CFA charterholders can receive anything between $60,000 to over $200,000.
The average annual salary for a CFA charterholder is $92,947.
The wide variety reflects all you can accomplish with the charter.
Awards and years of practice also play a role.
The following are the typical wages for several prevalent CFA charterholder jobs:
• Research analysts: They earn an average of $77,000 per year as CFA charterholders.
• Financial advisor: Financial advisers who have earned the CFA charter receive an average of $83,000 per year.
• Investment analyst: Those who have earned the CFA charter make an average salary of $78,000 per year.
• Portfolio manager: with the CFA charter, they earn an average salary of $102,000 per year.
• C-level executive: CFOs with CFA licenses earn an average yearly base pay of $173,000 per year.
CPAs make an average of $86,979 each year.
CPAs are eligible for greater roles than typical accountants since they have fulfilled certification requirements after finishing their education requirements.
The median yearly income for a CPA with a master’s degree is $91,000.
The following are the typical wages for several prevalent CPA jobs:
• Accountant and auditor: CPAs make a median yearly income of $69,000 as accountants and auditors.
• Financial controller: A financial controller supervises and directs the accounting activities of corporate finance.
CPAs in this field earn an average yearly compensation of $98,000.
• Corporate controller: The average annual compensation for a CPA in the executive post of the corporate controller is $114,000 per year.
• Chief Financial Officer: CPAs who work as CFOs earn an average yearly compensation of $151,000.
Which is more beneficial: a CFA versus CPA?
On the outside, it appears that CFAs are better paid.
However, depending on where you reside and what type of CFA accounting or CPA accounting you perform, there is still a lot of difference.
To put it another way, a CFA is not certain to earn $25,000 more per year than a CPA.
CPA vs CFA salary differs at a wide range.
What about the CFA and CPA designations?
Christine has chosen to be a sole finance CPA, whilst Robert is a CPA CFA.
The CFA CPA combination allows the practitioner to be viewed as a CPA CFA accounting expert in the subject of finance, as well as a finance expert in an accounting firm.
In Robert’s case, this potent mix propelled him to become the Chief Finance Officer of a private equity firm and then the president of a respected family firm.
It took Robert a long time and a lot of sacrifices to finish the two qualifications.
Still, if you begin early enough before your family obligations pile up, you can accomplish it.
Within five years after graduating, Robert was able to achieve the CPA and CFA credentials where his CPA CFA salary is high compared to Christine.
These are the various benefit of getting a CPA and CFA.
Which is one to choose: CFA or CPA
The first and most important criterion when determining whether to pursue CPA or CFA is relevant to your job.
Aside from that, CPA has more stringent academic as well as experience requirements, but the procedure is substantially shorter once you are qualified.
Although CFA has a reduced entry hurdle, it takes a lengthier time to finish.
Of course, your job ambitions and personal hobbies play a role.
Finance will take up significantly less of your time if you get your CPA.
CFA and CPA Salary differ depending also on the location.
CFAs will also undertake reduced accounting tasks.
That isn’t to suggest that you can’t work as a CFA management accounting or a finance CPA.
You can easily pursue both if you do have the opportunity and drive.
The road to becoming a CPA or a CFA is not without its difficulties.
It’s crucial to make a decision depending on your professional goals.
You have the option to do both.
What Is the Difference between CFA vs CPA Charter-holder?
Both CFA charter-holders and CPAs deal with financial data, interact with clients, and analyze the feasibility of various enterprises and organizations.
Still, the results vary based on which degree they have.
CFA charter-holders concentrate on analyzing market circumstances, valuating firms, and choosing the optimal investment management for corporations or individual customers.
They generate money for their customers through investment banking, and some charter-holders purchase and trade securities, currencies, and other assets on their accounts.
Investment analyzers, financial counselors, and portfolio managers are common jobs for CFA charter-holders, and some may go on to be chief financial planners (CFPs).
CPAs, on the other hand, create financial records.
They may compute unpaid taxes or evaluate corporate processes to find cost-cutting opportunities and alternative investments.
They must also make certain that all financial standards are adhered to.
Some CPAs employ their accounting knowledge to spot fraud patterns or other criminal activity.
Career path for CPAs
After becoming a CPA, you can go into a variety of areas with your profession.
The first choice you will have to consider is which sector you’d like to operate in.
You have the following options:
Accounting services such as financial planning, recordkeeping, and audit planning are provided by public accounting firms to a wide variety of clients.
Working in the accounting field for a few years before switching to personal accounting or another more sophisticated accounting is rather frequent.
Government accountants conduct audits, evaluate the performance and productivity of different government entities, supervise public monies, and assist the Police in white-collar crime investigations.
Private accounting: Private accountants operate for the internal finance department of a single firm.
They keep track of the company’s finances, compile financial statements, and evaluate its financial results.
Accounting for non-profits: Non-profit companies require experts capable of doing particular responsibilities.
These include assessing donor-restricted funds that may only be used for certain objectives, as well as accounting for various sorts of assets.
Accounting professors not only educate learners about accounting and conduct research in the field, but they also frequently serve as financial consultants to businesses, firms, and in court cases.
Career options for CFAs
The CFA charter is a worldwide recognized financial credential that signifies knowledge, dedication, tenacity, talent, and dedication—obtaining your CFA charter positions you well for advancement in your financial career.
But, as a Chartered Financial Analyst, what type of finance job can you get?
We’ve outlined the most prevalent job roles of CFA charter-holders below, based on their results, to offer you a clear image of the sort of profession you may follow if you decide to get the CFA charter.
Portfolio managers are the most common job title among CFA charter-holders, accounting for 22% of all job titles.
A fund or a collection of funds is managed by a portfolio manager.
They invest their days in keeping up with the trade and economic news by collaborating with researchers, analysts, and customers.
As the markets change, they execute decisions to purchase and sell assets during the day.
A good portfolio manager can see past the obvious and make educated judgments for their customers based on specialist knowledge and experience.
Although the word is imprecise, research analysts perform a critical and particular function in the corporate sector.
It’s also a job description held by 15% of CFA charter-holders worldwide.
To give an analysis of anything that has already occurred and make future forecasts, research analysts employ a combination of statistical techniques and qualitative data.
If you provide a research analyst with a set of data, they can analyze it and make suggestions solely on the basis of the data.
Companies value the intelligence they collect since it is utilized to assist them in defining their future orientation and prioritizing objectives and operations.
About seven percent of all CFA charter-holders have risen to the top of the corporate ladder.
Chief executives are usually the most influential and powerful persons in a company; they make the major choices that determine the firm’s performance.
The Chief executive officer, chief operating officer, & chief financial officer are examples of top-level executive jobs (CFO).
These jobs are regarded as the pinnacle of corporate success.
A chief-level executive’s day-to-day activities differ based on the corporate framework and the exact administrative job the person performs in the firm.
Consultants have widely sought company specialists who assist firms make important financial decisions by providing useful financial advice.
Businesses engage consultants to give an unbiased professional opinion on business valuation, economic predictions and assessments, and possibilities to increase shareholder value.
Consultants account for about six percent of all CFA charter-holders.
Risk is an inevitable component of the corporate world.
To get to where they are and stay there, every great firm takes a certain degree of risk.
They depend on professional risk managers to assist them in identifying and evaluating any risks that the firm is currently facing or may encounter in the future.
Around five percent of CFA charter-holders engage in risk management as predictors, assisting their companies in anticipating and avoiding disruptions.
Corporate Financial Analyst, research analysts and company financial experts: there is some overlap between them.
Several businesses use both terms interchangeably.
The most significant distinction between them is that financial experts develop their analyses based on more than just the data inputs.
They do research and offer advice on macro and microeconomics, and they are trusted as important consultants on financial decisions.
A total of five percent of persons with the CFA charter operate in the commercial and financial analysis throughout the world.
Relationships are the foundations of every successful business.
Approximately 5percent of CFA charter-holders assist their companies in establishing and maintaining crucial commercial ties.
Relationship management’s overall goal is to eliminate or reduce volatility in a corporate connection by actively maintaining and assessing its present state, as well as the elements that impact it.
Financial advisers account for another five percent of all CFA charter-holders.
Typically, these specialists assist customers with financial decisions, tax rules, and coverage product selections.
They assist people in developing short- and long-term financial objectives and a financial strategy for reaching those objectives.
Some advisers make investments for their customers while also providing tax guidance.
CFA versus CPA: What’s the Difference?
Based on their thorough financial assessments, a certified management accountant concentrates on creating corporate growth plans.
A CPA, on the other hand, is a more basic accounting classification that isn’t as engaged in the execution of strategic actions.
The Institute of Management Accountants, accountable for testing and managing the CMA certification, offers it.
Someone who has acquired a distinct financial accounting and organizational strategy set of skills earns the certificate of completion.
Differing financial experts often make different predictions about the figures provided in quarterly and yearly reports of publicly listed corporations.
A CFA can construct an average estimate when several financial analysts provide projections for the same data point.
Clients and businesses alike pay attention to these consensus estimates.
A CPA, on the other hand, is frequently the one who prepares or audits the financial statements that may be utilized when evaluating a firm.
CFAs often make financial projections, whereas CPAs typically prepare and review the financial statements they utilize as the foundation for their predictions.
CFA vs CPA salary differs in a wide range.