Certified Financial Planner (CFP) and Chartered Financial Analyst (CFA) are two of the most demanding certifications in financial advisory. So, it is better to understand each qualification’s professional route and determine which fits better based on your career aspirations.
What exactly is a CFA Certification?
The CFA Institute in the US manages the globally recognised Chartered Financial Analyst designation. Its goal is to instil a firm grasp of sophisticated investment analysis and practical portfolio management abilities. Among the top specialities for CFAs are relationship and wealth management, credit analysis, trading, accounting, auditing, and financial planning. This title is acknowledged as the “gold standard” for financial analysis on a global scale.
What does a CFP Certification cover?
CFP is a widely accepted standard for excellence in financial planning and is provided by the Financial Planning Standards Board (FPSB) outside of the US and the CFP Board in the US. CFPs work with clients to develop a financial plan considering investments, retirement, insurance, and taxes. These experts are held to a very high standard of ethics and have a fiduciary duty to make choices that safeguard their customers’ financial interests.
CFA Vs. CFP: Key Differences
While both certificates are popular, CFP is more common among financial advisors because it suits individual financial planning. Let’s closely examine their differentiating points:
| CFA | CFP | |
| Focus | Investment management | Long-term financial planning |
| Organising Body | CFA Institute | CFP Board |
| Course Duration | 4 years | 3 years |
| Syllabus | Ethical & Professional Standards Financial Analysis & Reporting Portfolio Management Quantitative Methods Alternative Investments Derivatives Corporate Finance Fixed Income Equity Valuation Economics | Professional Conduct & Regulation Education Planning General Principles of Finance Investment Planning Tax Planning Risk Management & Insurance Planning Retirement Savings & Income Planning Estate Planning Financial Plan Development Course |
| Career Opportunities | Portfolio Manager Investment Analyst Strategist Wealth Manager Corporate Financial Analyst Research Analyst Consultant | Estate Planner Retirement Planner Risk Manager Financial Planner Financial Advisor Wealth Manager |
| Nature of work | Work with large corporations on the research/ analysis side | Work with individual clients on their financial plans |
| Stock Market Dealings | Directly engaged in the trading of financial instruments such as derivatives, currencies, and commodities | Outsource day-to-day trading to investment/ portfolio managers and focus on building clients’ financial plans |
| Median Salary | INR 3.90 LPA | INR 6.16 LPA |
How to become a CFA?
Eligibility Criteria:
- Have a bachelor’s degree (or an equivalent) in any field
- Have at least four years of relevant professional work experience
- Clear three levels of the CFA exam
Each level of the CFA exam is made up of several components. The first exam level concentrates on investment tools while testing fundamental knowledge. The second level of tests involves more complex analysis and focuses on asset valuation, and the third series emphasises portfolio management.
How to become a CFP?
Eligibility Criteria:
- Have a bachelor’s degree and some college-level study in financial planning
- 6,000 hours of financial planning experience (or 4,000 hours through an apprenticeship program)
- Clear the CFP exam
The multiple-choice test gauges a candidate’s capacity to apply a comprehensive understanding of financial planning to real-world scenarios.
With many job prospects in their respective fields, CFP and CFA are well-recognised designations. The courses prepare students to manage a client’s financial future with proficiency. Pursuing an M.Sc. in Applied Finance or a Diploma in Wealth Management is ideal for those who wish to take these up as career options.
