Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP) are two common designations for individuals who are employed in finance. This article covers the major differences between a Chief Financial Analyst (CFA) and a Chief Financial Planner (CFP).
Financial Advisor
Individuals who offer their expertise in investment management, financial planning, and many other financial services are also known as financial advisors. The difference between CFA and a CFP is primarily determined by who they work with, and what they do.
Differences Between CFA and CFP
CFA– Chartered Financial Analyst
Chartered Financial analysts, as the name suggests pursues financial analytics. CFA Institute is also an organization that administers the certification of the CFA program. According to the CFA Institute, the most common occupations pursued by CFAs are:
- Portfolio manager
- Research analyst
Chartered Financial Analysts usually work for individuals who need assistance in investment and allocation of assets.
For an individual to become a CFA, he or she should receive the certification issued by the CFA institute. To be eligible for the CFA certification, the person is required to become a member of the CFA society. They are also required to pay the annual membership charges. An individual can also receive the certification for CFA bypassing three levels of examination that are conducted for the candidates. Each level of the examination focuses on different aspects of the knowledge and skill of the candidate.
- Basic knowledge of the candidates is also tested on the first level of the exam. So, the examination primarily focuses on different investment tools.
- The second level of the exam specifically focuses on two aspects – asset valuation and complex analysis.
- The third level of the exam emphasizes the management of the portfolio.
CFP– Certified Financial Planner
Again, the designation of the job gives out the area of expertise of a Certified Financial Planner(CFP) financial planning. The careers commonly pursued by Certified Financial Planners are:
- Wealth manager
- Financial advisor
- Financial planner
Certified Financial Planners usually work for individuals who need assistance for the management of wealth. So, CFP is a very common certification for financial advisors. The job of a CFP is more suited for providing individuals assistance with financial planning.
The certification for being a qualified Certified Financial Planner is overseen by the Certified Financial Planner Board of Standards. Moreover, applicants are required to meet certain criteria (education and experience) to be eligible to become a CFP. The requirements are
- Bachelor’s degree
- College education in financial planning
- A minimum of 6,000 hours of experience in financial planning
- For apprenticeship programs, the minimum experience required is 4,000 hours.
Finding the Right Financial Advisor
To find out the right financial advisor that suits your financial requirements, reflect on your goals, both short term and long term. Individuals who are also looking to manage their wealth are suggested to consult a Certified Financial Planner. On the other hand, there are individuals and organizations that handle other financial aspects. Moreover, these include the optimum allocation of financial assets and the management of the portfolio. Before choosing a financial advisor, go through the profile of the financial advisor to eliminate any further misunderstandings.
