CFA vs. CFP: What’s the Difference? 

Did you know there are more than 200 professional designations currently being used in the financial services industry? Here’s an up-close look at two of the most common: CFA and CFP. 

When it comes to choosing a financial advisor, it can be headspinning to try to make sense of all the different credentials. Two of the most common are also frequently confused: CFA, which stands for Chartered Financial Analyst, and CFP, which stands for Certified Financial Planner. Both credentials are widely recognized and respected, and both entail rigorous courses of study and examinations. So what’s the difference? It boils down to the type of client each professional works with, as well as their scope: 

• A CFP is focused on a 1:1 relationship with an individual, helping them with all the various aspects of their financial life. 
• A CFA Charterholder typically handles investing in a corporate or investment firm setting and is directly involved in the trading of assets. 

Who does a Certified Financial Planner (CFPⓇ) work with and what do they do? 

A CFP works directly with individuals on all aspects of personal financial planning, usually with respect to holistic, long-term financial goals, including saving for retirement, starting a college fund, wealth management, and more. 

CFPs are particularly adept at working with people and building relationships with their clients over the long term. “When you work with a CFP, it isn’t just about your investment accounts but instead the focus is on your entire financial wellbeing,” says Rydan Case, ChFC ®, CFP ®, RFC, senior partner at Ironwood Wealth Management. “Often you may not even know what questions you should be asking or what areas your plan is deficient in. As you discuss your goals together, part of the process is figuring out how you are unique and how best to build a comprehensive plan that fits you.”

CFPs also train financial advisors in the firms where they work to create and execute financial plans for clients. 

The designation is administered by the CFP Board and CFP certification is awarded once an individual meets all the requirements, known by the board as the “4 E’s”: Education, exam, experience, and ethics. 

Education: CFPs hold a bachelor’s degree or higher and also must complete CFP Board Registered Program coursework before sitting for the exam. 

Exam: The CFP exam is used to demonstrate proficiency in everything a CFP will need to know to help an individual, couple, or family set and meet their financial goals: Retirement planning, estate planning, tax planning, insurance, wealth management, and other topics that can help those managing their personal finances. The 2019 pass rate was 67%.* 

Experience: The experience requirement has to do with the number of hours needed: either 6,000 hours of professional experience, or 4,000 hours of apprenticeship experience.

Ethics: Prospective CFPs sign an Ethics Declaration with the CFP Board, showing they will adhere to strict ethical standards and will always put their clients’ best interests first (otherwise known as fiduciary duty).

Who does a Chartered Financial Analyst (CFA) work with and what do they do? 

A CFA charterholder is more involved in investing on a much bigger scale, often for large investment firms. They might work for a corporation, managing the corporation’s wealth and providing internal financial analysis. They work as portfolio managers, research analysts and risk managers. 

A professional who earns the CFA charterholder designation has demonstrated deep knowledge of investment analysis, management and ethics. The global certification is administered by the CFA Institute here in the U.S., and earning it comes with its own set of requirements that are similar to those of the CFP board. 

These requirements include a bachelor’s degree (earned or in progress); nearly 1,000 hours of study over 10 topic areas including quantitative methods, economics, financial reporting and analysis, corporate finance, and equity investments; 4,000 hours of qualified work experience; and successful completion of three exams. Ethics and professionalism are also a primary focus. 

At Ironwood Wealth Management, we are fortunate to have team members with both of these designations, ready to assist you with your most complex financial and investing needs. Find out how our team can help you with your personal financial life and that of your business, all while focused on creating a strong relationship with you.