Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP) are sought-after credentials for those with finance, accounting, business or economics backgrounds. While CFA is an international certification awarded by the CFA Institute, the US Certified Financial Planner Board awards the CFP certification.
CFAs are involved in asset allocation, portfolio strategising, investment analysis and financial reporting. On the other hand, professionals with the Certified Financial Planner designation are experts in financial planning and wealth management, from tax and estate planning to retirement and insurance.
To become a Chartered Financial Analyst or Certified Financial Planner , passing the certification examination is a prerequisite. However, one of the most common questions aspirants have is this: CFA vs CFP: Which is harder? Going by the difficulty level, the passing rate for the CFA exam is 49%, and the CFP is 66%. While these figures give an idea of which exam is more challenging, deciding which course to pursue calls for further consideration.
To ease the confusion, we will compare and contrast CFA and CFP based on the following parameters:
- Jobs/ Career scope
CFA vs CFP: Eligibility
Let’s look at how CFA differs from CFP based on eligibility:
- Candidates must have at least a Bachelor’s degree (any discipline) to appear for the level 2 examination of the CFA. In addition, every candidate should have a valid passport to appear in the CFA exams.
- CFA exams are a three-phase affair. An applicant may appear for the level 1 exam a maximum of 11 months before appearing in the final examination of the corresponding degree course they are pursuing.
- The eligibility for CFP is that candidates must pass their 10+2 standard, that is, after completing Higher Secondary in any stream. Candidates should have an aptitude for commerce.
CFA vs CFP: Examination
The CFA vs CFP exam procedures are as follows:
- For CFA, a candidate needs to prepare these subjects/topics: Quantitative Methods, Economics, Financial Statement Analysis, Corporate Issuers, Equity, Fixed Income, Alternative Investment, Portfolio Management, Derivatives, Ethics and Professional Standards.
- The subjects of CFA revolve around corporate growth, audit, and consultancy.
- The CFA Level I exam has a total duration of 270 minutes, divided into two parts with 180 multiple-choice questions (MCQs). The first and the second sessions are of 135 minutes each. Level I is followed by Level II (4.5 hours), comprising 88 multiple-choice questions. Finally, level III is a 4.5 hour-exam consisting of MCQs and questions requiring a written response. The pattern and weightage of topics vary across the three levels.
- Enrolling in CFP for Inter students will be required to pass the following subjects/modules – Introduction of Financial Planning, Risk assessment & Insurance, Retirement Planning and Employment benefits, Investment Planning, Tax Planning & Estate Planning and Advance Financial Planning.
- The subjects of CFP focus on personal financial planning.
- Unlike the CFA exam, the CFP exam is not divided into three levels. However, the CFP exam is divided into two sessions. Each session is 3 hours long and comprises 170 multiple-choice questions. You can expect both standalone and case-study-based questions in the CFP exam.
CFA vs CFP: Jobs/ Career scope
The subjects included in the CFA and CFP courses are in sync with the job roles you are eligible for after earning the respective certifications. The difference between CFP and CFA based on jobs/ career scope is:
- The role of a CFA is to analyse and improve the financial growth trajectory of corporate organisations. All reputed banks and global audit and consultancy firms employ CFAs.
- CFA candidates are eligible for these job roles: Investment Banker, Data Scientist, Accountant, Investment Consultant, Investment Strategist, Private Wealth Manager, Research Analyst and Investment Officer.
- Organisations selling insurance and investment products hire CFPs to help clients reach their financial goals.
- The positions offered to CFP candidates include Financial Planning Director, Financial Service Advisor, Client Service Associate, Financial Planning Analyst, Income Tax Planning Advisor, Estate Planner, Education & Family Support Advisor, Individual Investment Planner, Retirement Planner and Family Risk Management and Insurance Planning.
CFA vs CFP: Salary
The average salary of a Certified Financial Analyst in India is around Rs 6.8 LPA.
The average salary of a Certified Financial Planner in India is around Rs 3.9 LPA.
CFA (Chartered Financial Analyst) and CFP (Certified Financial Planner) are two great career options for candidates aspiring to be a finance professional. However, aspirants are often at their wits’ end wondering – CFA vs CFP – Which is better?
This article gives an overview of the CFA and CFP exam methods, eligibility, career scope, and the salary professionals with these certifications earn. However, whether you want to become a CFP or CFA depends on your career goals. The choice also depends on the effort and time you wish to invest in your preparations. The cost of exam registration and fees is another vital factor that could influence your decision to choose one course over the other. CFP fees are more affordable, but returns are way lesser. It is the other way round if you enrol in a CFA course.
Is the CFA harder than the CFP?
Yes, CFA is comparatively more challenging than CFP since CFA requires you to clear three levels of examinations. On the other hand, CFP has only one exam.
Can I do CFP after CFA?
Yes, you can choose to do CFP after CFA.
Is CFP the same as CFA?
No, they are not the same. CFP deals with individual financial requirements, whereas CFA deals with corporate financial needs.
Who earns more CPA or CFA?
A CPA (Certified Public Accountant) gets a starting salary which is marginally on the higher side than a CFA. While the average annual base salary of a CPA in India is Rs. 6.9 LPA, that of a CFA is Rs. 6.8 LPA.