Deciding between the CFA and CPA designations can be a confusing, yet pivotal, choice for those venturing into the finance industry. Both pathways have distinct rewards, but which aligns best with your aspirations?
In this CFA vs CPA article, we’ll simplify the essentials of each, focusing on salary prospects, examination challenges, and overall difficulty. By the end, you’ll have a clear roadmap to navigate your career choice.
CPA vs CFA
Making a career decision in the world of finance can sometimes feel like a maze. Among the top certifications lie the CFA (Chartered Financial Analyst) and the CPA (Certified Public Accountant).
If you’re on the fence about which certification to pursue, this guide might be just the information you need to make a decision.
CPA vs CFA Salary
When making a career choice, salary potential is often one of the most important factors to bear in mind.
While both certifications pave the way for lucrative opportunities, their earning potential will vary based on your specific industries, role, and region.
When it comes to CPA earnings, factors like your individual position, experience, and location play a significant role.
Here’s a quick breakdown:
- Starting positions: Beginners, particularly in larger accounting firms, can expect competitive salaries in roles such as auditing or tax consulting
- Experienced roles: As you progress, roles like Chief Financial Officer or Financial Controller become accessible, often bringing six-figure incomes with them
- Variables: Your location matters. It’s common for CPAs in major cities or financial centers to command higher salaries, and niches like forensic accounting can even offer additional premiums on top of this
For those considering the CFA route, it’s essential to understand how salary prospects are impacted over time by a variety of market factors.
- Initial stages: New CFAs might find roles in equity research or asset management, with competitive salaries, though these may be slightly below the earnings of seasoned CPA
- Advanced positions: As a CFA gains experience, high-paying roles like Investment Bankers or Portfolio Managers become attainable. Additionally, bonuses can substantially boost total compensation, especially in the finance sector
- Influencing elements: A CFA’s potential earnings are strongly impacted by the overall health of the financial market, the amount of assets they manage, and the performance-based bonuses earned
Typically, CPAs start with roles in company finances and accounting, while CFAs are more immersed in investment management.
Initially, CFAs might earn slightly less than seasoned CPAs, though this trend often reverses later on when CFAs reach more advanced positions — particularly in investment banking or private equity firms.
Alongside pay, we recommend ensuring that you always consider the type of work, advancement opportunities, and job satisfaction before making a decision.
Recommended Study Materials
Interested in commencing your CFA studies? We recommend having a look at Kaplan’s in-depth study materials.
For more information, have a look at our What Is a CFA article.
CPA vs CFA Exam
The examination processes for both the CPA and CFA are renowned for their rigor and are pivotal steps in acquiring these designations.
Understanding the nature and demands of each exam can help aspiring finance professionals make informed decisions about which path to pursue.
Navigating the path to becoming a CPA involves understanding the structure and requirements of its certification exam. Here’s a quick snapshot of what potential CPA candidates can anticipate:
- Structure: The CPA exam consists of four separate sections, which all need to be passed: Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG)
- Duration: Each section is four hours long, for a total of 16 hours
- Pass rate: The cumulative pass rate historically hovers at around 50%, though different sections have varied success rates (with BEC generally being the highest)
- Content: The questions cover topics from financial statements to federal taxation and business law. They have been intentionally designed with a broad scope to ensure that CPAs are well-rounded professionals
All candidates will need a good understanding of the CFA’s exam structure to be able to obtain this designation. We’ve outlined some of the most important things to be aware of regarding the CFA examination process below:
- Levels: The CFA program is divided into three levels, each with its own exam. The content becomes progressively complex from Level I to Level III
- Duration: Exams for Level I and II last about six hours each, whereas the Level III exam has a different format that also spans roughly six hours
- Pass rate: The pass rate varies for each level, with Level I often having the lowest success rate. Overall, roughly 10-20% of initial CFA candidates successfully pass all three levels
- Content: CFA exams primarily focus on investment management, with topics ranging from portfolio theory to derivatives, ethical standards, and corporate finance
CPA and CFA exams each present their unique challenges. The CPA exam covers a broad spectrum of accounting topics, divided into four sections, while the CFA focuses on three progressively intricate levels centered on investment management.
Your decision should reflect your career goals: if you’re inclined toward accounting and auditing, the CPA is the better choice. On the other hand, the CFA is the ideal choice if you’re interested in financial analysis.
As both designations require huge amounts of preparation, it’s vital to grasp the practical aspects of the exams to ensure preparedness and success.
Interested in having a look at the CFA designation’s exam structure? We recommend having a look at our CFA mock exam level 1 article.
CPA vs CFA Difficulty
Navigating the challenging terrains of the CPA and CFA certifications can be formidable tasks. Both credentials have their unique intricacies, and it’s pivotal to gauge the difficulty of each pathway when selecting which is best suited to your needs.
Below, we’ve provided a breakdown of the difficulty of each exam according to several metrics:
Diving into the CPA certification? Here’s a quick overview of what to expect from the CPA exam difficulty and its requirements:
- Exam structure: With four sections spanning different areas of accounting, each section of the CPA exam tests a vast breadth of topics. This requires candidates to be versatile and have a comprehensive understanding of various domains
- Study time: On average, candidates invest 300-400 hours preparing for the CPA exams. With the diverse range of topics, consistent, focused study sessions are a must
- Pass rates: The cumulative pass rate for the CPA exams is around 50%. It’s an indicator of the examination’s comprehensive nature and the depth of understanding required
- Licensing requirements: Beyond exams, obtaining a CPA license requires specific educational qualifications and practical work experience, which can vary by state
Considering the CFA route? Here’s a quick rundown of some key details to be aware of regarding its difficulty:
- Levels of examination: The CFA qualification is composed of three exams, which increase in complexity from Level I to Level III. While Level I tests foundational knowledge, Levels II and III require greater in-depth analysis and application, making them more challenging
- Study time: Candidates typically spend over 300 hours preparing for each CFA level. Given the depth and intricacy of topics, dedication is crucial
- Pass rates: The overall pass rate is relatively low, especially for Level I. Only about 10-20% of candidates end up passing all three levels, which speaks volumes about the program’s rigorous nature
- Charter requirements: Beyond exams, the CFA charter requires candidates to complete four years of relevant professional work experience and/or education
It is important to understand that both the CPA and the CFA present unique challenges. Although the CPA entails a broader scope in accounting and auditing, the CFA digs deeper into investment analysis.
Generally speaking, the CFA is often perceived as more demanding due to its comprehensive three-level structure (in comparison to the CPA’s segmented exams).
Ready to get started? StateRequirement recommends having a look at Kaplan’s study materials and resources.
Which is the Best Option for You?
Ultimately, the best option for you will hinge on your career interests. The CPA is designed for individuals keen on understanding corporate finance, encompassing areas like auditing and financial reporting. CPA exam preparation typically spans around 18 months, with the primary expenses being course and exam fees.
On the other hand, the CFA caters to those interested in becoming a financial advisor, focusing on the evaluation of assets such as stocks and bonds. CFA candidates should expect to dedicate about 300 study hours for each of its three levels, alongside registration and exam costs.
All and all, your choice should align with where you envision your career: delving into a company’s financial workings as a CPA, or diving deep into the world of investment analysis as a CFA. Both paths promise notable career advancement in the realm of finance.
CFA vs CPA FAQ
Is CFA harder than the CPA?
Both certifications are rigorous, but the CFA has three hierarchical levels that delve deeply into investment topics, while the CPA has a more modular format covering diverse accounting topics. For a more in-depth overview, we recommend having a look at our CFA vs CPA article.
How much does the CFA designation cost?
The main costs involved in the CFA certification include registration and exam fees, which can range significantly depending on when you register and your chosen exam prep methods. Candidates are encouraged to check the CFA Institute’s official website for the most up-to-date information on these costs.
How long does a CFA take?
Generally, candidates spend around 300 hours preparing for each of the three levels, often taking advantage of online resources like study materials and mock tests. To make sure you’re prepared for your CFA examination, be sure to check out our Mock Exam CFA Level 1 article.
What degree do you need for a CFA?
A bachelor’s degree is typically required to be able to register, though candidates in the final year of their bachelor’s program are also eligible. Alternatively, a combination of professional work experience totaling four years is also acceptable. If you are interested in attaining this designation from the CFA institute, be sure to practice with our CFA Mock Exam Level 2.
Which is better, CFA or MBA?
Both designations offer distinct advantages: while the CFA hones in on the investment management industry and portfolio management, an MBA provides a broader understanding of business operations and leadership. Your career goals will determine which is more beneficial for your trajectory. Interested in finding out more? Check out our What is a CFA article.