Feb 22

Comparison of CFA and CFP

by David Harper, CFA, FRM, CIPM

Exams |

Andy Terry and Ashvin Vibhakar published a comparative analysis of CFA and CFP Designation (pdf). This is a helpful report for career-minded professionals especially because they surveyed 300 people who hold both designations (most of whom earned the CFP before the CFA). Their findings support conventional wisdom: the CFA is perceived as a specialist designation for investment analysis and portfolio management while the CFP is perceived "as a generalist designation [that prepares people] for personal financial planning."

A customer of ours, with genuine 'Wall Street cred' and who has already sat for the FRM, is sitting for the upcoming CFP. To us he characterized the CFP as tending toward the generalist: "this test covers a broad scope of disciplines, particularly in the arenas of income taxes, retirement planning, health care, SSA, estate planning and education programs for children" and he implied the CFP is more conceptual and less mechanical/mathematical. (Thank you, John!)

The other way you could view the difference: CFPs tend to advise individuals and their estates (e.g., high net worth). CFAs tend to advise institutions (e.g., mutual funds, pensions, hedge funds).

Highlights from the Terry Vibhakar research:

  • According to US Dept. of Labor, the number of personal financial advisors could jump up to 35% over the next five years; the number of financial analysts is expected to increase 10 to 20% (not annually, cumulative five years). 
  • Curriculum overlap includes: time value of money, economics, ethics, and investments & portfolio management
  • In regard to career preparation, the CFP got the best marks for helping professionals prepare for: advisory to individuals and families, and advisory on insurance, tax, and retirement planning. In regard to the CFA, highest marks for: investment and portfolio advice, corporate financial statements, individual securities, and institutional portfolios.
  • Clearly this sample viewed the CFA as more difficult. 97% said the CFA is "very or extremely challenging" but only 13.5% said the same of the CFP

Comments

  1. syed atif ali bukhari 27 Aug 2007

    may you live long

  2. Lee Munson 20 May 2008

    Lorraine Ell wrote an informative piece describing the differences between a CFP and a CFA Charterholder. The PDF link is below:
    http://www.portfoliollc.com/FINANCIAL%20ADVISOR%20CREDENTIALS.pdf

Leave a Comment