What is the difference between the CFA® Charter and CFP® Certification?

Pros and Cons of CFA Charterholder vs CFP Certification

CFA Charter

PROS:

• Big Investment Firms: Acquiring employment with some of the most well-known names in finance will be easier with the CFA certification.
• Finance Knowledge: mastering the curriculum will help you build a solid foundation of financial knowledge and abilities to help you achieve your long-term professional goals in the financial sector.
• Salary: Typically, CFA charterholders receive higher pay for the same position than those who do not have the CFA charter. A CFA charterholder's salary can range from $52,000 to $154,000 annually.
• Connections: There are already over 100,000 charterholders in 130 countries throughout the globe. The benefit of worldwide recognition is that a charterholder can be more easily transferred across the markets.
• Expertise Credential: The CFA certification is the gold standard of finance and carries enormous weight in the business and financial worlds. Anyone who recruits portfolio managers, pension fund managers, hedge fund managers, or Fund of Funds (FOF) professionals is familiar with the CFA Institute and its charterholders.

CONS:

• Program Duration: It will take four years to complete the exam and collect a minimum of 4,000 hours of work experience within 36 months.
• Difficulty level: The CFA exam is tough to pass because of its comprehensive and lengthy content. As per CFAI's historical data, spanning 10 years, the average pass rate was only 44%.
• Expensive: The cost of the three CFA exams, assuming three straight passes with no required travel to the testing center, is between $2,600 and $4,000.
• Cumbersome: Even if you pass all three levels, there are still additional requirements, such as fulfilling work requirements. Summer, part-time, and internship work do not qualify, nor does managing your assets.
• No job guarantee: Consider alternative issues before enrolling to jumpstart a stagnant career. As with any certification, the CFA charter doesn't ensure you get every job you apply for.

CFP Certification

PROS:

• Low start-up costs: Getting started as an independent financial consultant will not require a large initial investment. License fees and other expenses are unavoidable but modest compared to other businesses.
• Not difficult or expensive: Pass rates for the CFP exam vary from 62 to 66%, indicating that the exam is not very difficult. And the cost to get certification is $825, which is much less than the CFA charter.
• Flexible Schedule: Once an adviser has established a customer base, flexible work hours are possible, creating a good work-life balance. You can tailor your schedule to meet the hours during which you are at your most productive.
• Unlimited earning potential: Their revenues are determined by the quantity of new business they acquire and the number of commissions or fees they generate each year. They have the opportunity to make as much or as little money as they are capable of.
• High Growth Industry: From 2020 through 2030, the BLS predicts that there will be an average of 21,500 vacancies for personal financial advisers per year. Replacements for employees who are relocating or retiring are a significant factor in the number of job opportunities projected this decade.

CONS:

• Lots of stress: Due to the potential volatility of the financial market, a job as a financial advisor would always be fraught with stress. During market downturns, advisors must constantly manage their clients' anxieties and emotions.
• Continuous Prospecting: Obtaining customers is the most difficult aspect of becoming a successful financial counselor. When the adviser ceases prospecting, new business dries up. Until they have a substantial customer base, advisers must continually advertise themselves and their expertise in pursuit of new clients.
• Willpower needed: Financial advisers won’t achieve success if they lack the discipline and determination to work the hours. At times, the demands of one's job take precedence over everything else, and not everyone is adept at managing this shift smoothly.
• Compliance regulations: You'll need a license, and you'll need to remember to renew it annually. Financial advisers must keep up with constantly changing regulatory requirements to protect their clients against malpractice. This may be both time-consuming and costly.
• Lots of hard work to get going: At the beginning of this career, there is a lot of uncertainty, so financial advisors must be willing to work hard to succeed in the long run. It's not uncommon for new financial advisors to consistently work more than 50 hours per week.

CFA vs. CFP - Key Summary