CFA vs CFP

Deciding between obtaining a Chartered Financial Analyst (CFA) and a Certified Financial Planner (CFP) designation is not always easy, and it ultimately depends on your current experience, time availability, and future career aspirations.

This is because, even though both are respected titles, they specialize in different areas and require different qualifications.

This CFA vs CFP article breaks down what each designation offers, explains all of the certification requirements that you will need to know, and delineates factors that you should consider when trying to decide between the two.

What is a CFA

The CFA designation is primarily centered around investment management, and can often be used in order to showcase an individual’s expertise in the areas of financial analysis, securities, equities, and investment portfolio management.

Here are a few general factors you should know about the CFA designation

• Scope: Primarily focuses on investment analysis and portfolio strategy
• Recognition: Globally recognized and regarded as a leading credential in investment management
• Duration: Typically takes between two and four years to complete all three exam levels

All and all, a CFA is a challenging, eminent certification that is often ideal for those with specific career aspirations in the world of financial services and wealth management.

What is a CFP

The CFP is a standard of excellence in comprehensive financial planning.

In order to obtain this certification, you will need to have demonstrated competence in a variety of diverse areas that relate to finance (e.g., retirement, estate planning, insurance, tax strategies, etc.).

Here are a few general factors you should know about the CFP designation:

• Scope: Comprehensive financial planning, encompassing insurance, retirement, and tax planning
• Recognition: Held in high esteem in the financial planning sector
• Duration: Generally takes between one and two years, depending on one’s background and study pace

A CFP is ideal for individuals aiming to provide a broad spectrum of financial services who want to specialize in fields like estate planning, financial planning, and individual wealth management.

Certification Requirements

Both the CFA and the CFP designations are extremely challenging and have specific requirements that you will need to satisfy in order to get certified.

We’ve taken an in-depth look at these below.

CFA

The pathway to obtaining a CFA designation includes passing three different exams, accumulating relevant work experience, and complying with the CFA Institute’s ethical standards.

 Here’s a closer look:

• Examination: Candidates must pass three rigorous levels of exams. Level 1 focuses on basic knowledge and comprehension, Level 2 emphasizes complex analysis, and Level 3 integrates all concepts with portfolio management
• Work Experience: A total of four years of professional experience is required, either before, during, or after participation in the exams. This experience doesn’t have to be solely in finance
• Ethics: Adherence to the CFA Institute’s Code of Ethics and Standards of Professional Conduct is mandatory. This includes commitment to integrity, objectivity, confidentiality, and professionalism in all financial dealings

Due to the difficulty of the exams — and the work experience requirement — it’s not uncommon for individuals to take years to obtain their CFA charter. Even so, it can undoubtedly be a worthwhile investment depending on your professional goals.

CFP

To become a CFP professional, you’ll need to meet the following educational, examination, experience, and ethical requirements:

• Education: You’ll need to complete a CFP Board-approved financial planning curriculum and hold a bachelor’s degree
• Examination: You must pass the comprehensive CFP Certification Exam, which assesses your ability to apply financial planning knowledge to real-life situations
• Experience: This step requires you to accumulate 6,000 hours of professional experience related to the financial planning process or 4,000 hours of apprenticeship experience that meets additional requirements
• Ethics: Commitment to upholding the CFP Board’s Standards of Professional Conduct, which involves adhering to principles of integrity, objectivity, competence, fairness, confidentiality, professionalism, and diligence is a must

While the path to becoming a CFP professional can be both expensive and time-consuming, it can equip you with the knowledge and credibility you’ll need in order to excel in the sphere of financial planning, and can thus be well worth it depending on your future goals.

Which Qualification is Better for You

Deciding between the CFA and CFP largely depends on your career aspirations; there are really no right or wrong answers.

Both certifications are gateways to high-earning positions, and both take a significant amount of time and experience in order to obtain.

Nonetheless, we’ve broken down a few factors that you can consider in order to help you determine which would be the best choice for you below.

Certification Cost

Even though both designations can be quite costly, you should keep in mind that becoming a CFP is generally significantly more expensive.

For example, acquiring the CFA designation entails an enrollment fee of $450; there are also exam fees that you will need to pay (ranging between $650 and $1,380 per level).

Furthermore, you will need to pay for online study materials, and — if need be — an online tutor to help you prepare.

On the other hand, the study materials you’ll need to prepare for the CFP designation will cost you between $5,350 and $8,050 in themselves (if you go with a premium provider). You will also need to allocate a few hundred dollars towards your exam (fluctuating fee).

This means that it might not be the ideal choice for you if you are currently operating on a tight budget.

Even though the price is an important factor, it’s worth noting that both of these qualifications are tailored toward already highly established financial professionals who are unlikely to be operating on extremely small budgets.

Career Opportunities and Salaries

You will also want to consider the career opportunities — and potential salaries — that each designation will allow you to pursue.

CFA

• Career Paths: CFA holders often pursue roles in investment banking, portfolio management, risk management, and research analysis. The designation is highly regarded in the financial services industry and provides broad opportunities in various sectors
• Salaries: The average salary for a CFA holder ranges from $70,000 to $150,000 per year, depending on experience, role, and location. More specialized or senior positions may command higher compensation

CFP

• Career Paths: Certified financial planners typically focus on financial planning, wealth management, and personal finance consulting. The certification can lead to positions as a financial advisor, estate planner, or retirement specialist
• Salaries: A CFP professional can expect an average salary ranging from $60,000 to $120,000 annually, with the potential for additional earnings through commissions or bonuses, depending on the role and firm

All in all, we recommend considering what roles and financial sectors resonate with you and how each designation will help you achieve your professional ambitions in order to make a final decision.