If you are a finance professional, deciding to advance your career via a Chartered Financial Analyst (CFA) or a Certified Financial Planner (CFP) program is a significant move. The differences between the two are essential to understand when shaping your career path. This article will offer some considerations to help you make the right choice for your circumstances.
1. Program Choices
The CFA Charter program can take anywhere between 2-5 years to complete. The culmination of approved experiential knowledge, approximately 300 hours of study, an expansive curriculum, and three stamina-based exams is only the first step in advancement. The next is an application for approval. Upon acceptance of the application, the candidate will have earned the esteemed designation of CFA Charterholder.
Earning the CFP designation can take between 18 and 24 months to complete. It is a significantly less time-consuming program than the CFA since it requires passing only one comprehensive exam.
However, before you can use the CFP designation, you need a lot of work experience. This entails either 4,000 hours of apprenticeship that meets the CFP requirements or 6,000 hours of professional experience related to the financial planning process. Candidates must complete the hours of experience no later than five years after and no earlier than ten years before completing the CFP exam.
2. Job Descriptions
Charterholders typically work for financial institutions and corporations. They provide financial analysis and investment advice for high net worth individuals and institutional clients, including endowments, pension funds, and asset managers.
Charterholders also offer consulting to companies that require internal risk management and analysis. Operating on both the buy and sell sides of transactions, they provide expertise in such areas as underwriting, mutual funds, hedge funds, fixed income, and derivatives, to name a few.
Chartered Financial Planners routinely serve individuals and families. A large portion of their work is educational. CFPs typically help clients achieve financial goals centering around retirement planning. They also advise clients on insurance needs. CFPs can work in firms but also tend to own independent businesses.
While their expertise is required in the final decision-making process of individual and family investments, ultimately, their work is valuable if they can transition from making decisions for their clients to having clients “take the wheel” for financial decision-making.
Determining the best career path in any field can be tricky. One would think that wouldn’t apply to finance, where numbers should guide the delineation. However, numbers don’t always tell the whole story. Entrepreneurs, top executives, and entry-level professionals account for the extreme ends of the spectrum that help create the “average” in average salaries. Be sure to check labor and employment statistics in your area for more data so you can make an informed decision on your career path.
4. Career Prospects
Top 5 CFA Careers
- Buy-side research: Average salary $83,660
- Consulting: Average salary $87,660
- Investment banking: Average salary $115,000
- Risk management: Average salary $96,630
- Corporate executive: Average salary $197,840
Top 5 CFP Careers
- Lead adviser: Average salary $163,000
- Personal financial planner: Average salary $127,000
- Client services adviser: Average salary $97,000
- Associate adviser: Average salary $68,000
- Wealth management adviser: Average salary $125,000
Source: Business and Financial Occupations: Occupational Outlook Handbook: US Bureau of Labor Statistics
Developing your career and financial portfolio will depend on which path you choose to advance your skill set. Check out how the CFA Charter compares with other finance certifications by reading our insightful article, CFA® Charter: The Value of the CFA.
Learn more about the CFA Charter and CFA Exam at UWorld Finance.