The differences between a Chartered Financial Analyst (CFA) and a Certified Financial Planner (CFP) are many, but comes down to the fact that a CFP works with individual clients to achieve their personal financial goals while a CFA focuses on investing in large-scale corporate situations.
Certified Financial Planner
A CFP helps individuals plan their financial futures. CFPs are not focused only on investments; they help their clients achieve specific long-term financial goals, such as saving for retirement, buying a house or starting a college fund for their children.
To become a CFP, a person must complete a course of study and then pass a two-day examination. The exam covers wealth management, tax planning, insurance, retirement planning, estate planning and other basic personal finance topics. These topics are all important for someone seeking to help clients achieve financial goals.
Chartered Financial Analyst
A CFA, on the other hand, conducts investing in larger settings, normally for large investment firms on both the buy and sell side, mutual funds or hedge funds. CFAs can also provide internal financial analysis for corporations that are not in the investment industry. While a CFP focuses on wealth management and planning for individual clients, a CFA focuses on wealth management for a corporation.
To become a CFA, a person must complete a rigorous course of study and pass three examinations over the course of two or more years. In addition, the candidate must adhere to a strict code of ethics and have four years of work experience in an investment decision-making setting.
Scott Bishop, CPA, PFS, CFP®
STA Wealth Management, LLC, Houston, TX
With all the designations and acronyms in the financial services industry, it’s not surprising that you can be confused by these similar-sounding terms.
Becoming a CFP or CFA is difficult. Each has rigorous exams that need to be passed. Both also require continuing education to keep the designation.
CFPs mainly give advice to individuals, but some advise small business owners as well. CFPs also help with retirement planning, investing and other financial planning.
On the other hand, CFAs give advice to various institutions, such as banks, mutual funds, pension funds, insurance companies and securities firms. They focus on stocks and market analysis, helping companies and institutions make good investment decisions. CFAs also put together portfolio allocations for individuals.