CFP® vs CFA: What's the Difference?
When it comes to choosing a financial advisor, there are two of the most common that are also frequently confused: CFP, which stands for Certified Financial Planner, and CFA, Chartered Financial Analyst. Both credentials are widely recognized and respected, and both entail rigorous courses of study and examinations. So, what's the difference? It boils down to the type of client each professional works with, as well as their scope:
- A CFP® is focused on a 1:1 relationship with an individual, helping them with all the various aspects of their financial life.
- A CFA typically handles investing in a corporate or investment firm setting and is directly involved in the trading of assets.
What is a CFP®?
A CFP® is a financial advisor who has earned the designation of certified financial planner. To be certified, a CFP must have a bachelor’s degree from an accredited university, meet a financial education requirement, complete thousands of hours of practical experience and pass an exam.
CFPs are required by the CFP® board to uphold high ethical standards and keep their knowledge up to date with continuing education every two years.
What does a CFP® do?
A CFP® can help you reach your short- and long-term goals by working with you to put together a personal financial strategy. A CFP® is trained to help you with a range of financial planning topics, like retirement planning, estate planning, insurance needs, home-buying and saving.
Once you have a financial strategy, a CFP® can help keep you on track by acting as a coach and advising on financial problems as they come up.
What is a CFA?
A chartered financial analyst is someone who has passed the chartered financial analyst exams and met the other requirements set by the CFA Institute.
To become a CFA, a candidate must have a bachelor’s degree (or be in the final year of the program) or four years of professional work experience (or a combination of education and experience), complete a 750-hour self-study program, pass three exams and have four years of work experience in the investment decision-making process.
CFAs also have to commit to upholding the CFA Institute’s ethics code and professional conduct standards.
What does a CFA do?
The CFA exam is primarily focused on investment management, so it’s not surprising that two of the most common jobs for CFAs are portfolio manager and research analyst. A portfolio manager provides investment advice to clients, while research analysts study publicly traded companies and make investment recommendations.