CFA and CFP are highly respected professions requiring a good knowledge of economics and finance studies to pursue a career. The similarity in their name also confuses people.
However, they have different aspects in their profession.
Key Takeaways
- CFA (Chartered Financial Analyst) focuses on investment analysis and portfolio management, while CFP (Certified Financial Planner) concentrates on financial planning and advising.
- CFA certification requires passing three exams and having four years of work experience, while CFP certification requires passing one exam and having three years of work experience.
- The CFA Institute administers CFA, while the Certified Financial Planner Board of Standards governs CFP.
CFA vs CFP
CFA is a designation for investment industry professionals, such as portfolio managers, research analysts, etc. CFP is a designation for professionals who work in financial planning. The program covers retirement planning, estate planning, tax planning, and insurance.
The CFA designation is intended to demonstrate that a person has a solid understanding of financial analysis and stock administration and a strong commitment to ethical behaviour.
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 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 40 minutes.
Comparison Table
| Parameters Of Comparison | CFA | CFP |
|---|---|---|
| Organizing body | CFP Board organizes the CFP exam | The exam is conducted in three groups. |
| Exam levels | The CFP exam is conducted at only one level | The syllabus of CFP includes subjects like Risk management, planning of taxing. |
| Syllabus | The syllabus of CFA contains subjects like Economics, Financial analysis. | CFA requires 4 years to complete the degree. |
| Duration | CFP requires 3 years to complete the degree. | CFP’s need to renew their license every 2 years. |
| Clients | CFA deals with large firms and investments. | CFP deals with clients who work as individuals. |
| Membership/License validity | CFA membership must be renewed every year. | CFP’s need to renew their license every two years. |
| Study hours | The 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 not in the securities market with domestic economic information. A CFP concentrates on individual consumer financial scheduling, whereas a CFA focuses 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 and a deep commitment to social behaviour.
An individual should finish a demanding degree course and pass several exams so over two years to become a CFA.
The aspirant should also follow a robust code of ethics and have four years of expertise in financial decision-making.
The CFA Institute organizes CFA, and the exam is divided into three levels- Level I, II, and III. The exam is conducted in February, May, and August.
The CFA curriculum is highly 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.
CFPs assist their clients in achieving specific 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 precise multiple assessments to become 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 MCQs – 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 begin by assessing the client’s economic 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
- The full form of CFA is Chartered Financial Analyst, while CFP is Certified Financial Planner.
- The organizing body for the CFA exams is the CFA Institute, and for CFP, the CFP board organizes the exam.
- The time needed to acquire a CFA credential is about 4 years, while that of a CFP is 3 years.
- The CFA membership requires to be renewed yearly, while the CFP license requires renewal in two years.
- The CFA exam takes place in only a single level, but the CFP exam takes place in three levels.
- 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
- 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
Last Updated : 13 July, 2023
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
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