Difference Between CPA and CFA
The full form of CPA is Certified Public Accountant and it is opted by students that are willing to gain an expertise in tax, audit, and accounting whereas the CFA is the short form for Chartered Financial Analyst and this course is taken up by students who want to gain an expertise in skills pertaining to finance and risk management.
The primary difference between the two is the core covers and the career opportunities it provides. CPA is considered to be “black belt in accounting” and prepares you for careers in Accounting and Auditing, whereas, CFA Program focusses on investment management covering broad topics like corporate finance, portfolio management, derivatives, fixed income, alternative investments and prepares you for careers in investment banking, portfolio management, financial research, etc.
Rather than asking this question that “Which is better?”, you should ask “Which is better for YOU!”
Deciding a credential is sometimes deciding your fate because eventually, your career is going to be in your chosen line. This thought itself might give you nightmares, isn’t it? But believe me, if you have identified your interests and know your skills well, this is not difficult.
I am assuming you may have decided to take either Certified Public Accountant (CPA) or the Chartered Financial Analyst (CFA ®) as you want to boost your expertise and knowledge in the area of finance. This is, in fact, a good idea and one of the finest ways to go up the ladder in an industry where you wish to make your fortunes.
This article would be helpful to those who want to find out the difference between these two certifications CPA vs CFA ® in terms of exam details, requirements, and career which will ease your apprehension regarding them.
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We will discuss the following in this article –
- What is a Certified Public Accountant (CPA)?
- What is Chartered Financial Analyst (CFA®)?
- Exam Requirements
- Why pursue CPA?
- Why pursue CFA®?
CPA vs CFA ® Infographics
What is a Certified Public Accountant (CPA)?
- CPA has been so far the most known credential for advancing a career in accounting and auditing.
- It is considered to the “Black belt in accounting”
- A CPA license is legally essential in order to do specific jobs, such as public accounting i.e. independent auditing.
- It permits you to charge for the accounting services you provide to the public.
- CPA is quite useful when it comes to corporate but essentially it is valuable in the public sector.
According to the AICPA, CPAs roughly earn 10-15% more when they begin working compared to non-credentialed accountants. Also CPAs are more attractive to employers than non-CPAs.
According to the U.S. Bureau of Labor Statistics (BLS), accountant and auditor occupations, which includes CPA’s among other accounting professionals, were projected to grow by 13 percent between 2012 and 2022
What is Chartered Financial Analyst (CFA®)?
The CFA® Program focuses on investment management. The top employers of charterholders include the most respected financial corporations in the world, e.g., JPMorgan, Citigroup, Bank of America, Credit Suisse, Deutsche Bank, HSBC, UBS, and Wells Fargo, to name a few. Many of these are investment banks, but the CFA® program focuses on the knowledge and skills most relevant to the global investment management profession from the standpoint of a practitioner.
- Investment professionals who hold the CFA®designation (or CFA® charter) meet rigorous educational, work experience, and ethical conduct requirements.
- Only those who complete three graduate-level examinations, four years of work experience, and annual membership renewal (including ethics and code of professional conduct attestation) are permitted to use the CFA® designation. Complementary codes and standards (such as the Global Investment Performance Standards and Asset Manager Code) help enhance this professional distinction.
|Educational Pre-requisites||This varies by state, but typically, in order to appear for the CPA exam, applicants should have a bachelor’s degree along with 120 semester hours||You would require only a bachelor’s degree. Even in case, you do not have one this condition can be satisfied if you have 4 years of professional experience|
|Additional educational Pre-requisites||It generally comprises of 24 to 30 semester hours in accounting, earned through a graduate or bachelor’s degree in business. Many students also pursue a master’s degree in order to complete the educational requirements||Not required|
|Work Experience Pre-requisites||As far as the work experience is concerned it would vary across states but mostly they require to have completed at least 1-2 years working directly for the CPA||CFA® would require four years’ professional experience in a related field that has a direct role to play with the investment banking process. Furthermore, they need to be the members of the CFA® institute|
|Overall Pre-requisites||To obtain the CPA certification, applicants must clear the Uniform CPA Exam, gain applicable work experience and meet additional educational requirements||To obtain the CFA® certification, applicants must clear the CFA® exam and gain applicable work experience|
Looking at the pre-requisites we can clearly see that CPA is more restrictive when it comes to the educational requirements, but once you get qualified, the process would be much faster. On the other hand, the CFA® is less restrictive and has a lower entry barrier but it takes much more time to complete and achieve the charter.
Why Pursue CPA?
- Accounting as a career choice is an in-demand and will continue to be so.
- To pursue your career as an auditor, CPA would be a must or else you would be limited to only entry-level jobs.
- A CPA license is extensively appreciated as an indicator of quantitative skills and high standards of professionalism.
- Once a CPA is within this area of public accounting, you could work for any sized firm, from a large CPA firm to a small local accounting firm.
- At the firm, you could work on any of these varied fields such as audit, tax, and management consulting.
- Also in case you want to work for any business corporate, you could choose a field in financial accounting and reporting, management accounting, financial analysis, and treasury/cash management, hedge funds, etc. On the other side at the government end, you could work for either at the federal, state or local levels. There are also various opportunities available for non-profit organizations.
- CPA in a sense is required because it will help ensure the public maintains a sense of trust. Otherwise, finances in the wrong hands can be highly unsafe.
Why Pursue the CFA® Designation?
In order to get the best jobs in an investment bank you either require an MBA from on the top institutes or the second-best option would be to have the CFA® designation and good relevant experience (confused between CFA® and MBA, look at this CFA® or MBA)
- The differentiating benefits of earning the CFA® designation include:
- Real-world expertise
- Career recognition
- Ethical grounding
- Global community
- Employer demand
- The sheer demand for the CFA® charter speaks to the difference it makes. More than 160,000 CFA® exam registrations were processed for the June 2015 exams (35% in the Americas, 22% in Europe, Middle East, and Africa, and 43% in the Asia Pacific). For more information, refer to- CFA® Programs
The decision to take up either CPA or the CFA credential is dependent upon the choice of the direction you want to give your career. In all, we could say that each one of them is quite unique and focused on areas of accounting and investments respectively. I hope this write up will help you make an informed choice for your career. All the very best 🙂
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This has been a guide to CPA vs CFA. Here we discuss the difference between these two certifications in terms of exam details, requirements, and career which will ease your apprehension regarding them. You can learn more from the following articles –