What is the difference between a CFA® and CPA?

Although both a Charter Financial Analyst (CFA®) and a Certified Public Accountant (CPA) play significant roles in the financial industry, the tasks often done by them might be difficult to differentiate. When deciding on which career path one wishes to take, it is important to have a solid understanding of the differences between the two.

CFAs typically work as investment analysts, portfolio managers, strategists, consultants, or wealth managers among other roles. CPAs often hold accountants, auditors, controllers, and chief financial officer positions.

What Exactly are CFA Charterholders and CPAs?

CFA Charterholders and CPAs have certain commonalities when it comes to offering financial advice and aiding individuals with money management. However, when it comes down to the responsibilities of a CPA and a CFA, they differ from one another.

A Chartered Financial Analyst, also known as a CFA charterholder, is a professional designation that is awarded by the CFA Institute (CFAI®) to financial analysts in order to evaluate their level of expertise and integrity.

CFA charterholders are employed by financial institutions looking for top-tier financial talent. High net-worth individuals and institutional customers, including endowments, pension funds, and asset managers, benefit from their expertise in financial research and investing. Companies in need of internal risk management and analysis may also turn to charterholders for their expertise.

CPA is someone who has earned a professional designation through a combination of education, experience, and licensing. A certified public accountant focuses primarily on the tax issues of customers. CPAs are adept at managing substantially more intricate situations. CPAs may be of assistance to businesses, wealthy individuals, and others with complex financial problems.

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CPA is someone who has earned a professional designation through a combination of education, experience, and licensing. A certified public accountant focuses primarily on the tax issues of customers. CPAs are adept at managing substantially more intricate situations. CPAs may be of assistance to businesses, wealthy individuals, and others with complex financial problems.

CPA licensing requires a bachelor's degree, about 150 hours of study, and passing all four exams. The CFA certification, on the other hand, also requires a bachelor's degree, about 300 hours of study, and passing three levels of the exam (per a Minimum Passing Score), and about 4000 hours of professional work experience.

Certification and Licensure - CFA vs CPA

Individual exams must be passed in order to earn the CFA or CPA distinction. However, knowing the criteria for each test is only the first step in your preparation. Here's a preview of what to expect:

The CFA Institute (CFAI), a non-profit organization established in the United States, awards the CFA charter. The CFA Institute is based in Charlottesville, Virginia, and includes eight regional offices as well as 160 active organizations worldwide. The CFA Exam, like the CPA exam, must be passed to receive the CFA charter. On the other hand, the CFA exam is divided into three levels: CFA Level I, CFA Level II, and CFA Level III.

How to Start the CFA Charter process:

  1. Make an online user account using your email address
  2. Fill in data such as your name, age, jurisdiction, and so on
  3. Register for the Level I examination (via the CFAI website)
  4. Make a Prometrics appointment and remember the CFA registration deadline

Steps to Obtaining the CFA Charter:

  1. Pass all three exams in sequence
  2. Collect evidence of qualifying job experience
  3. Send in reference letters to back up your application.
  4. Apply to become a CFA Institute Charterholder.

The CPA license is given by the United States to the different State Boards of Accountancy in all 55 jurisdictions. The National Association of State Boards of Accountancy (NASBA) administers and regulates CPA licensing, which does not have a centralized administrative organization. To take the exam, candidates must fulfill the state standards established by NASBA. Furthermore, your employment duties as a CPA professional may differ based on the state in which you practice.

Steps to Obtaining a CPA License:

  1. Check the CPA licensing requirements in your state - Since these state boards will ultimately license you, check with them to ensure you can take the exam in your state or jurisdiction.
  2. Complete your school requirements for a degree and acquire experience - To obtain your license in the state where you intend to do so, you must meet the academic standards set forth by that state.
  3. Pass the CPA Exam - Your understanding of accounting standards, the legal obligations of the profession, and much more will be tested in the four components that make up the CPA exam.
  4. Finish the certification process - While some jurisdictions might mandate an ethics test, others might mandate that registered CPAs take continuing professional education (CPE) annually to keep their licenses.

Requirements

In order to become a CFA charterholder, a bachelor's degree and four years of relevant professional experience are required, in addition to passing all three levels of the CFA exam. Candidates who wish to enroll in the CFA Program and register for the exams for the first time must have an international travel passport. In addition, CFA candidates must have 4,000 hours of relevant professional job experience (which can be in areas other than investment-related). Other prerequisites include residence, citizenship, and a social security number.

A bachelor's degree, 150 semester units or 225 quarter units (some states allow you to sit for the exam with 120 hours, then require the full 150 hours for licensure.) At least 24 semester units in accounting are required. Most states require at least one to two years of public accounting work experience.

Exam Difficulty - CFA vs CPA

The CFA examinations are separated into three difficulty levels: CFA Level 1, CFA Level 2, and CFA Level 3. CFA exams are far more difficult than other professional examinations, with an average pass rate of 34% as of November 2021. Financial principles, portfolio management, financial analysis, and accounting are some of the areas covered on the CFA examination.

Note: The CFA Level 3 exam pass rate has historically been higher than the other levels.

Level 1 Level 2 Level 3
2013 41% 43% 49%
2014 43% 46% 54%
2015 43% 46% 53%
2016 43% 46% 54%
2017 43% 47% 54%
2018 44% 45% 56%
2019 42% 44% 56%
2020 49% 55% 56%
2021 31% 41% 42%
2022* 37% 44% 49%
Average 41.10% 45.70% 52.30%

The CPA exam is definitely difficult and extensive. Candidates who have just graduated from college, on the other hand, have an advantage since most accounting principles are taught during the core curriculum. Financial Auditing and Reporting (FAR), Auditing and Attestation (AUD), Regulation (REG), and Business Environment and Concepts (BEC) are the four sections of the CPA exam. FAR is often regarded as the most difficult test to pass, while BEC is considered the easiest. Here are the CPA 2021 Pass Rates:

Section Q1 Q2 Q3 Q4 Cumulative
AUD 48.56% 50.49% 47.21% 45.04% 47.98%
BEC 62.16% 63.31% 61.73% 60.27% 61.94%
FAR 46.64% 42.63% 47.83% 40.70% 44.54%
REG 59.29% 58.81% 63.12% 57.78% 59.88%

Salary and Career Paths - CFA vs CPA

The salaries of CFA charterholders and CPAs may vary substantially depending on individuals' educational background, job experience, location where they live, the size and industry of their current company, and the professional path that they have chosen.

While several factors contribute to the variance in one's compensation, the CFA credential generally raises overall salary and benefits, giving charterholders an advantage in the job market. According to the CFA Institute, charterholders may earn higher pay than other finance professionals. Charterholders with a bachelor's degree earn a median total compensation of $162,500, while those with a graduate degree earn a median total compensation of $237,357.

According to the Bureau of Labor Statistics (BLS), on average, a CPA's annual pay, without bonuses, is around $119,000 per year. CPAs with less than one year of experience earn an average of $70,000 a year, while those with more than 20 years of experience earn an average of $150,000 annually.

Robert Half International, a financial employment agency, indicated in its compensation recommendations that accounting professionals with a CPA license earn an average of 5 to 15% more than accountants without a CPA credential. The following were the median yearly salaries of accountants and auditors in the top industries in which they worked:

  • Finance and insurance - $79,310
  • Management of companies and enterprises - $78,540
  • Government - $77,290
  • Accounting, tax preparation, bookkeeping, and payroll services - $77,080

The decision to become a CPA or a CFA charterholder is an excellent professional decision. These marks not only serve as a significant credential for accountants and analysts seeking to advance their careers, but also provide a diverse range of job opportunities. Furthermore, the accreditation demonstrates to your prospective employer your confidence and ability to achieve challenging goals.

CFA Career Path
Top 5 Roles Average Salary
Buy-side research $83,660
Consulting $87,660
Investment banking $115,000
Risk management $96,630
Corporate executive $197,840
CPA Career Path
Top 5 Roles Average Salary
Accountant and auditor $100,000
Financial controller $101,300
Information Technology Accountants $102,910
Corporate Controller $112,000
Teacher in Accounting $127,000

*Source: https://www.bls.gov/ooh/business-and-financial/home.htm

Pros and Cons of CFA Charter & CPA License

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CFA vs. CPA - Key Summary

Details CFA CPA
Requirements 3 exams and one of the following: a bachelor's degree, be within 11 months of graduation from the date you set for the Level 1 exam, a combination of 4,000 hours of full-time work experience and University education accrued over a minimum of 36 months 4 exams, bachelor's degree, & 150 schooling hours
Costs $2,550 to $3,450 $1,000 to $3,000
Number of exams 3 4
Exam Pass Rate 30-50% 40-50%
Content Focus Portfolio Management, Investments Financial Reporting, Audit, Tax
Career Path Investment Analyst, Portfolio Manager, Strategist, Consultant, Wealth Manager Accountant, Comptroller, Financial Manager, CFO
Study Time (hrs) 300-350 per exam 300-400 hours for entire exam
Completion Time (Course Duration) 3-5 years 2.5 - 5 years
Average Salary $180,000 $70,000

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