What is the Difference Between a CFA and a CFP?

CFA vs. CFP: A Comparison

There are numerous distinctions between a chartered financial analyst (CFA) and a certified financial planner (CFP). However, the key contrast is that a CFP works with individual customers to achieve their own financial goals, whereas a CFA concentrates on large-scale corporate investments.

CFP (Certified Financial Planner)

A certified financial planner (CFP) assists people in making financial plans for the future. CFPs help their clients achieve particular long-term financial goals, including as saving for retirement, purchasing a home, or building a college fund for their children.

To become a CFP, a person must complete a course of study and then pass a two-part examination. The exam covers wealth management, tax planning, insurance, retirement planning, estate planning, and other basic personal finance topics. These topics are all important for someone seeking to help clients achieve financial goals.

Chartered Financial Analyst (CFA)

A CFA, on the other hand, conducts investing in larger settings, normally for large investment firms on both the buy side and the sell side, mutual funds or hedge funds. CFAs can also provide internal financial analysis for corporations that are not in the investment industry. While a CFP focuses on wealth management and planning for individual clients, a CFA focuses on wealth management for a corporation.

To become a CFA, a person must complete a rigorous course of study and pass three examinations over the course of two or more years. In addition, the candidate must adhere to a strict code of ethics and have four years of work experience in an investment decision-making setting.

Key Differences

The primary difference between the two designations has to do with the role or job that the individual is primarily concerned with. Providing financial advice and planning to individuals and families is most likely to be covered by the training and curriculum offered by certified financial planners and the services they provide. These include recommending investment portfolios, insurance products, and tax guidance.

CFA charterholders, on the other hand, are most likely to work for a financial institution such as a bank, hedge fund, pension, or mutual fund company. These professionals actively manage portfolios, engage in equity research or financial analysis, and trade assets like derivatives, commodities, or currencies.

Still, some CFA charterholders may engage in financial advising or run an advisory practice. Likewise, CFP® credentialed individuals may work for a bank or trading firm. In some cases, holding both designations is desirable to achieve a complete set of skills and knowledge for the job you do.

In choosing a designation to pursue, ask yourself what kind of work you want to do, where you want to work, and if you want to work as an employee with a guaranteed salary or an entrepreneur where the sky (and the basement) is the limit. No matter which you choose, each of these financial designations will provide ample professional opportunities for those who spend the time and energy to earn them.

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