he financial industry is vast, with numerous certifications whereby professionals can advance their careers. Currently, the most prestigious and widely pursued certifications in finance remain to be CFA (Chartered Financial Analyst) and CPA (Certified Public Accountant). Although both have a high level of recognition and career opportunities, there are many differences between them. In this blog post, we will explore the difference between CFA Charterholder vs CPA certifications.
What Is a CFA?
The CFA Institute offers the CFA certification and is among the most honourable certifications for finance professionals. To become a CFA charterholder, you need to prepare for three levels of exams, mainly on economics, financial reporting and analysis, equity investments, fixed income, derivatives, and portfolio management. The exams are quite rigorous. Usually, hundreds of hours of study must be invested by candidates to clear them.
The  CFA certification offers the added benefit of having the stamp of approval globally. In the investment management sectors, employers seek to hire CFA charterholders highly. Among other things, this CFA charter opens the door opportunities to for hedge funds, private equity, and even wealth management.
What is a CPA?
The CPA certification is awarded by each state’s Board of Accountancy and is a requirement for those who want to work as public accountants. To become a CPA, candidates must pass the CPA exam, which covers topics such as auditing and attestation, business environment and concepts, financial accounting and reporting, and regulation.
One of the greatest advantages of a CPA certification is that it allows professionals to do a variety of work as accountants and financial professionals. CPAs are respected by employers and can work in areas such as tax preparation, auditing, financial analysis, and corporate accounting.
If you want to know more about this course, read our blog What is CPA? Find Out Course Details, Fees, Syllabus, & Eligibility.
CFA vs CPA: How do they differ?
The areas in which you will focus primarily are different for CFA and CPA, both of them opening doors to high-paying and respectable roles, here is a deeper look:
CFA vs CPA: Primary Focus
CFA: The focus of CFA is on investments portfolio management, and financial analysis. CFAs are also the people who forecast market trends and investment opportunities.
CPA: A CPA is more specialized in the fields of accounting, auditing, compliance, and regulatory aspects. CPAs work more closely with financial records ensuring them to be in line with legal standards and often prepare and review financial statements.
CFA vs CPA: Career PathsÂ
CFA: The holder of a CFA will be an investment banker, portfolio manager, financial analyst, or risk manager. Generally, a CFA works for an asset management firm, banks, or investment funds as a provider of maximum return to the clients.
CPA: Many CPAs work as Accountants, Auditors, and Tax Advisors and also practice as Financial Controllers. Most CPAs work with accounting firms or large business corporations to ensure the companies’ financial accuracy, compliance, and transparency.
CFA vs CPA: SkillsÂ
CFA: Skills include financial modelling, Discounted Cash Flow analysis, complex investment products understanding, and trend prediction through various financial tools and methodologies.
CPA: The CPAs must be masters of accounting principles, tax law, auditing practices, and compliance. They mostly work with GAAP and understand all the intricate financial regulations.
Guide to Becoming a CFA
CFA is the abbreviation of Chartered Financial Analyst. It is one of the most highly valued certifications globally for investment professionals under the CFA Institute. Here is a step-by-step guide on how to become a CFA:
1. Educational Requirements
Bachelor’s Degree or Equivalent: You need to have a bachelor’s degree or equivalent level of work experience of 4,000 hours in any relevant field to join the CFA program.
2. Registration and Preparation of Exams
There are three levels for the CFA exam and progressively involve more advanced materials within their respective fields in the domain of economics, equity analysis, portfolio management, and ethics.
- Level I revolves around the foundation and application of basic knowledge and understanding- dealing mainly with the tools and investment.Â
- Level II deals with asset valuation; further analytical skills should be evident by this stage.Â
- Level III entails portfolio management and wealth planning; an integration ability which the concepts mastered from Level I and Level II need to be manifested. Roughly 300 hours for each level, but in some cases may differ among participants
3. Examination Fee and Registration Fee
Registration fee for the programme: A one-time fee that is approximately $350
Exam Fee: Early registration; ranges from $700-$900 depending on the level to which one is registering and $1,200 under regular registration.
4. Relevant Working Experience
The candidate should have at least 4,000 hours of relevant work experience in investment management, financial analysis, and portfolio management, among others, and should be completed over at least three years. The work experience can be done before, during, or after passing the exams.
5. Apply for CFA Membership
After passing all three exams and completing the work experience requirement, you apply for membership with the CFA Institute and a local CFA Society. After approval, you receive your CFA charter and can use the “CFA” designation professionally.
Guide to Becoming a CPA
CPA full form is Certified Public Accountant and is widely recognised for accounting professionals, especially in the U.S. Here’s a step-by-step guide to becoming a CPA:
1. Educational Requirements
Bachelor’s Degree with 150 Credit Hours: Generally, most states require the candidate to have at least a bachelor’s degree that has 150 credit hours; this may require additional credit courses beyond a typical undergraduate degree. Courses must include accounting, finance, business law, auditing, and more.
2. Pass the Uniform CPA Examination
The CPA exam has four sections that may be taken in any order:
AUD – Auditing and Attestation: Concentrate on auditing procedures and internal controls.
BEC – Business Environment and Concepts: Includes business concepts, corporate governance, and information technology.
FAR – Financial Accounting and Reporting: Focus on the preparation of financial statements, GAAP, and IFRS standards.
Regulation (REG) – It is concerned with federal taxation, business law, and ethics.
Exams are scored section by section. You must pass all four sections within 18 months. Candidates typically take 100–150 hours to study for each section.
3. Meet Work Experience Requirements
The experience in work differs from state to state, but most of them require 1-2 years of supervised experience in accounting under a licensed CPA. This experience can often be completed before or after passing the CPA exam depending on the state regulations.
4. Apply for Licensure in Your State
You should apply for licensure after passing the exam and gaining experience. Requirements may vary from state to state; therefore, check with your state board of accountancy.
5. Maintaining Your CPA License
The CPA license requires a renewal cycle through the completion of CPE credits annually or biennially. It varies according to state but is usually 40 hours of CPE annually.
CPA vs. CFA Salaries
Career opportunities for CFA charterholders are vast and varied, ranging from investment banking, portfolio management, research analysis, and financial advisory career paths. The median salary paid to a CFA charterholder in the United States is USD 180,000 per year as per the CFA Institute; however, the potential earnings can be much greater for charterholders as they climb up the career ladder.
Although CPAs offer much more, their career options are diverse, such as public accounting firms, corporations, government agencies, and non-profit organisations. Based on a report by the American Institute of CPAs, it is indicated that the median salary of a CPA in the United States is around $96,000 per annum, and a lot more as they advance in their careers.
Duration of CPA & CFA
The duration of the Certified Public Accountant course goes up to 1 to 1.5 year-long course with four examinations on Financial Accounting and Reporting (FAR), Auditing and Attestation (AUD), Regulation (REG), Business Environment and Concepts (BEC). Each paper is about 4 hours long and comes with a mix of multiple-choice questions and task-based simulations. The course duration of Chartered Financial Analyst on the other hand goes up to 2 to 3 years with 3 intensive levels.
CPA Exam vs CFA Exam
The CPA and CFA are highly prestigious certifications, but they come in different areas. CPA is about accounting, auditing, and taxation, whereas the CFA exam is designed for investment analysis, portfolio management, and financial markets.Â
Both of the exams require deep preparation and effort, but the context and scope differ significantly between the two exams. You will be selecting one as per your area of interest, whether it is an accounting field or a finance area.
Which is Best for You, a CPA or a CFA?
This choice between CPA and CFA depends upon career interests and strengths. If one’s interests lie in accounting, tax regulations, and compliance, then the best fit is the CPA. In accounting, auditing, corporate finance, and broad job security, CPAs carry more value.Â
If your interests are finance analysis, market strategies, and investments, then it will be more suitable to pursue CFA certification. It is a certification to acquire the skills of investing in management. The roles and areas of working in CFA are asset management, investment banking, and financial advisors.
Both the CFA and CPA certifications are highly respected and offer great career opportunities for professionals in finance.
Final Thoughts
Both the CPA and CFA certifications are highly regarded globally and hold high prestige, and they can greatly contribute to improving your career in finance. The ideal for those interested in accounting, audit and tax services, CPAs have skills ensuring a high degree of financial transparency and regulatory compliance. CFAs suit those who like to analyze financial markets and investment strategies. This may help you align your career pathway with passions and goals leading to a successful long-run in finance.
FAQS
What is the difference between a CFA charterholder and a CPA?
Both the CFA and CPA are highly prestigious certifications, decision on which certification to obtain ultimately depends on each individual’s career goals and interests. If they are interested in investment management and portfolio management, the CFA certification would be more beneficial. If, however, they are interested in accounting and tax preparation, the CPA certification would be more appropriate for them.
Does a CFA earn more than a CPA?
The starting salary for a CFA is way higher in India compared to that of a CPA.
Is CFA harder than CPA?
While both qualifications are equally challenging, the CPA exam requires less studying than the CFA exam. The preparation time for CPA exams is 80 to 100 hours while the preparation time for CFA is approximately 300 hours for each level.
Why is CFA better than CPA?
Both the courses are equally good in their own field. US CPA is in high demand in the accounting field for those who want to practice Chartered Accountancy in the US. CFA on the other hand is more for those who want to get into the field of investment and portfolio management.
