Difference Between CFA and CFP

CFA and CFP both are very highly respected professions that require a good knowledge of economics and finance studies to pursue a career. The similarity in their name also often confuses people. However, they have different aspects in their profession.

CFA vs CFP

The main difference between CFA and CFP is that CFA stands for Chartered Financial Analyst and it deals with individual clients devoid of whether big or small, whereas CFP stands for Certified Financial Planner and deals with large capital firms majorly.

CFA vs CFP

The CFA designation is intended to demonstrate that a person has a solid understanding of financial analysis and stock administration, as well as a strong commitment to ethical behavior.
To become a CFA, an individual must complete a challenging degree program and pass many tests over two years.

The CFP is for financial advisors that help people manage their own portfolios and prepare ahead. The investment firm, estate, and retirement planning, tax planning, personal funds flows, and policy in all areas where Certified Financial Planners may help. The CFP exam consists of around 150 MCQ-type questions which are to be solved within a duration of 40 minutes.

Comparison Table Between CFA and CFP

Parameters Of ComparisonCFACFP
Organizing bodyThe CFA exams are organized by CFA InstituteThe CFP exam is organized by CFP Board
Exam levelsThe exam is conducted in three levels.The CFP exam is conducted in only one level
SyllabusThe syllabus of CFA contains subjects like Economics, Financial analysis.The syllabus of CFP includes subjects like Risk management, planning of taxing
DurationCFA requires a duration of 4 years to complete the degree.CFP requires a duration of 3 years to complete the degree.
ClientsCFA deals with large firms and investments.CFP deals with clients who work as individuals.
Membership/License validityCFA membership must be renewed every year.CFP ‘s need to renew their license every 2 years.
Study hoursThe CFA examination requires 300 hours of study.The CFP requires 250 hours of study.

What is CFA?

CFA stands for Chartered Financial Analyst. A CFA invests in larger groups, such as massive trading businesses on both the selling and buying sides, collective investment schemes, and fund managers. CFAs can also help companies that aren’t in the securities market with domestic economic information. A CFP concentrates on individual consumer financial scheduling, whereas a CFA concentrates on corporate capital administration.
The CFA credential is meant to show that one has a good base in awareness about financial evaluation and stock administration, as well as a deep commitment to social behavior.

An individual should finish a demanding degree course and pass several exams so over 2 years to become a CFA. The aspirant should also follow a strong code of ethics and also have 4 years of expertise in a financial decision-making environment. CFA is organized by the CFA Institute, and the exam is divided into 3 levels- Level I, level II, level III. The exam is conducted in the month of February, May, and August. The CFA curriculum is extremely comprehensive, and it’s best defined as a master’s degree in finance with specializations in accountancy, marketing, data analysis, and asset management.

What is a CFP?

CFP stands for Certified financial planner. A CFP assists people in making financial decisions. CFP’s assist their clients in achieving certain long-term savings objectives, such as retirement plans, purchasing a home, or establishing a savings account for their offspring.

A person must finish a university course and then clear multiple assessments becoming a CFP. Asset administration, tax preparation, healthcare, planning for retirement, investment management, and other fundamental basic financial subjects are covered on the test. Those are critical subjects for anyone attempting to assist clients in achieving their monetary objectives. The CFP test consists of 170 MCQ – covering over 100 personal finance subjects. Work ethic and laws, personal finance concepts, educational preparation, risk assessment, security, assets, tax preparation, retirement planning, and estate planning are all covered under one umbrella. A person excels in testing at different analytics, decision-making capacity, and leadership abilities all improving after being a CFA charter bearer.
In comparison to financial planners, CFPs are more comprehensive. CFPs typically begin by assessing the client’s present financial situation, including any currency, assets, securities, or real estate, to determine overall net worth. They also examine any debts, such as mortgages and student loans.

Main Differences Between CFA and CFP

  1. The full form of CFA is Chartered Financial Analyst while that of CFP is Certified Financial Planner.
  2. The organizing body for the CFA exams is the CFA Institute and for CFP, the CFP board organizes the exam.
  3. The time needed to acquire a CFA credential is about 4 years, while that of CFP is 3 years.
  4. The CFA membership requires to be renewed yearly, while the CFP license requires renewal in like two years.
  5. The CFA exam takes place in only a single level, but the CFP exam takes place in three levels.

Conclusion

While you’re looking for a financial advisor, you can rest assured that someone who has earned one of these credentials has put in the effort to learn how to invest the finances. In contrast, if one would like to add one of these credentials to the CV, the one that would be selected would be determined by the type of job that one would like want to undertake. Financial advisors have a variety of credentials that attempt to provide identical but distinct services to their clientele. A CFP, as previously said, may assist individuals in developing an investment situation, but other professionals, such as a CFA, can provide an economic statement for assets and portfolio management to serve people and organizations. Many advisers have various credentials, allowing them to specialize in their areas of expertise at a competitive level. Financial advisors commonly hold CFA and CFP qualifications. Partnering with an expert who possesses one of these two qualifications makes a significant impact on prospective customers. Such certification programs prepare candidates to manage their financial futures.

References

  1. https://www.researchgate.net/profile/Ashvin-Vibhakar/publication/240633386_A_Comparative_Analysis_of_the_CFA_and_CFP_Designations/links/5625352208aeedae57dae579/A-Comparative-Analysis-of-the-CFA-and-CFP-Designations.pdf
  2. https://web.p.ebscohost.com/abstract?direct=true&profile=ehost&scope=site&authtype=crawler&jrnl=10570810&AN=83272725&h=kySXfHMU0S65NHz%2byQT9nPEMEmg%2by%2bvTWq80NTprd6OCplVqBiaEi2jb%2fWfNIUwgrQ0DeKQ3H8h%2fnFwh9lRKOw%3d%3d&crl=c&resultNs=AdminWebAuth&resultLocal=ErrCrlNotAuth&crlhashurl=login.aspx%3fdirect%3dtrue%26profile%3dehost%26scope%3dsite%26authtype%3dcrawler%26jrnl%3d10570810%26AN%3d83272725
Help us improve. Rate this post! Total (0 votes,average: 0)