Deciding whether to become a Chartered Financial Analyst (CFA) or Certified Public Accountant (CPA) is an important starting point in your financial or accounting career. Both professional credentials are highly sought after and will help advance your career almost immediately.
However, the CPA and CFA qualifications focus on two very different areas of accounting and finance, so it’s important to choose the right one for your career direction. Depending on your career path and goals, one might be a better choice for you.
Let’s check out the differences between the CFA vs CPA certifications to see which qualifications is right for you and your career.
What is a CPA (Certified Public Accountant)?
Certified Public Accountant (CPA) is an accounting certification regulated by the State Boards of Accountancy and the American Institute of Certified Public Accountants (AICPA). Candidates who meet the education and work experience requirements along with passing the CPA exam are eligible to become CPAs. Licensed Certified Public Accountants are involved in the preparation of accounting financial reports, company management, and taxation compliance for individuals and companies.
A CPA understands finance and is an expert in accounting. Their focus areas include financial reporting, taxation, and auditing. They play a role in advising businesses on the best action to minimize taxes and maximize profitability. They can advise on various business organization types such as corporations, partnerships, and sole props. Most importantly, they can specialize in more than one area.
How to obtain CPA
To become a CPA, you should have a bachelor’s degree in accounting or related field. You have to complete all four sections of the CPA exam and meet the work experience required to get the certification. An ethics and standards exam is also necessary. The examination process typically takes candidates over a year to complete.
What is a CFA (Chartered Financial Analyst)?
Chartered Financial Analyst (CFA) is a financial certification administered by the CFA Institute and is typically regarded as the gold standard of professional certifications in the finance sector. A CFA holder is a professional that focuses on assessing businesses, understanding market conditions, and determining the ideal ways clients can invest their money.
A CFA understands accounting and is an expert in finance.The program prepares one for corporate finance, investment, and portfolio management profiles. Notably, a CFA will analyze financial reports including, statements prepared by CPA. They maintain a strict code of conduct and high ethical standards.
How to obtain CFA
To become a CFA holder, you need to have a bachelor’s degree. If you are in the final year of the degree, you may be eligible. You can substitute the degree requirement with four years of experience. Candidates are also required to complete the three exam levels. You should register for CFA Institute membership and hold a valid international travel passport.
CFA vs CPA – What’s the difference?
The difference between a CPA and CFA is a CPA preparing financial statements while a CFA uses financial statements to make investment decisions. A CPA reports the accounting and financial performance of the company to a CFA who analyzes the reports to decide how to invest capital based on the performance.
A CPA is an expert in accounting; where as, a CFA is an expert in finance.
Although the CFA and CPA are inter-related professional certifications, they have very different focuses and areas of expertise.
CFA vs CPA: Education Requirements
CPA Exam Education Requirements
In order to qualify to sit for the CPA exam, CPA candidates are required to complete a bachelor’s degree in accounting or business related major consisting of at least 120 college credit hours of coursework. Since the CPA certification is governed by the state boards, each state has slightly different course requirements that must be taken in your degree program.
Most states require at least 15 college credit hours of accounting courses along with 6 hours of business law and 8 hours of taxation. Some states also require CPA candidates to complete at least 150 credit hours before taking the exam, although most only require 120 credits.
CFA Exam Education Requirements
The CFA exam is governed by the CFA Institute, so there is one uniform set of education requirements no matter where you plan to take the exam. In order to qualify to sit for the CFA exam, CFA candidates must have a bachelor’s degree, but someone in their final year of the degree program can take CFA.
Interestingly, you can substitute the education requirement for CFA with four years of professional work experience.
CFA vs CPA Exam: Content and Format Differences
CPA Exam Topics
The CPA exam consists of four sections and is a uniform exam administered by AICPA across the US. CPA candidates are allowed to choose the order of the sections they sit for. Each of the four sections can be taken in any order and do not need to be taken sequentially.
CPA candidates have a time limit of 18 months to pass all four sections of the CPA exam. If all four are not passing in a rolling 18-month window, the first passed exam will expire and the candidate will have to retake that exam section.
Topics tested include:
- Audit and Attestation (AUD)
- Business Environment and Concepts (BEC)
- Financial Accounting and Reporting (FAR)
- Regulation (REG)
CFA Exam Topics
The CFA exam consists of three exam levels. In contrast to the CPA exam, the CFA exam is less flexible. CFA candidates must complete all three levels of the exam sequentially. Since the CFA exam tests candidates’ knowledge of specific topics in levels, candidates must pass the first level exam before moving onto the second and third.
Topics tested in the CFA exam include:
- Financial principles
- Financial analysis and accounting
- Portfolio management
- Asset valuation
- Wealth planning
- Investment tools
CFA vs CPA Exam Difficulty
Many students ask, “CFA vs CPA which is harder?” Although the CFA and CPA pass rates are very similar many candidates feel the CPA is a harder exam and certification to obtain. The CPA certification is typically viewed as more difficult than the CFA because it covers a broader set of topics. The CPA exam broadly focuses on all aspects of accounting while the CFA exam solely focuses on finance.
In the end, the difficulty of either exam depends largely on your knowledge and experience. Some people find financial accounting easier to understand that finance and vise versa. One exam might be more difficult for you and less difficult for someone else. It all depends on the person.
Deciding whether to choose the CPA or CFA credentials should be based on your desired career path and not the difficulty of the exam.
CFA and CPA Career Paths
Both certifications offer exciting carer prospects with limitless opportunities to grow.
CPA Career Paths
A CPA has a wide range of different career paths. Since every business, non-profit, and governmental body needs an accountant, CPAs can work in almost any field.
Certified public accountant career paths typically include:
- Public accounting: Public accountants prepare financial statements, audit financial reporting, and prepare taxation forms for publicly traded companies.
- Private accounting: Private accountants prepare financial statements, and taxation forms for private companies
- Governmental accounting: Governmental accountants audit public spending records and prepare financial statements for governmental bodies.
- Non-profit accounting: Non-profit accountants specialize in reporting for donor-restricted assets and accounting for donations and other not for profit activities.
- Academic accounting: Accounting professors teach the next generation of accountants.
CFA Career Paths
The career path for a CFA is much more restricted than the career path for a CPA. Since CFAs solely focus on corporate finance, their careers tend to stay inside that focus.
Typical CFA charter holders career paths include:
- Research analyst
- Portfolio manager
- Investment bank analyst
- Financial advisor
- Corporate financial analyst
CFA or CPA: Timeline & Duration to Qualification
There are four exam windows for the CPA exam in a year, and each window is roughly two months. After taking the first section, you will have to complete the remaining section within 18 months. You have the liberty of rescheduling the exam, and there is no sequence of taking it.
On the other hand, you need 300 self-study hours to complete the CFA exam, and unlike the CPA exam, where you have the chance to reschedule the exam, you cannot do so with CFA. The exam is offered twice a year, but level II and III are offered once; thus, you will need around four years to complete the course.
It typically takes a CPA candidate a 16 months to pass the CPA exam and another 24 months to complete the work experience requirement. Likewise, most CFA candidates take four years to complete the three CFA exam levels and another four years to complete the work experience. Thus, the CPA certification takes on average 3.5 years to complete; where as, the CFA certification takes on average 8 years to complete.
CPA or CPA: Costs and Fees
There is not much comparison in terms of cost since the cost for completing the programs is almost the same.
For CPA, the cost is $1500, while for CFA, the cost will be between $2,500 and $3,500 depending on registration time.
CPF vs CPA Salary
Salaries vary for both CPAs and CFAs based on experience, company size, and location. Let’s look at a few career paths to see how much you can make with each certification.
CFA Charterholder Salary
According to the CFA Institute, a CFA charter holder can earn between $60,000 and $200,00 per year. The average CFA holder salary is $93,947 per year in the US according to PayScale. This range very greatly based on the experience and position of the Charter holder.
Here are a few CFA careers and their respective average salaries:
- Research analyst: $77,000
- Investment analyst: $78,000
- Financial advisor: $83,000
- Portfolio manager: $102,000
- C – Level executive: $173,000
According to the AICPA, the average CPA salary is $86,979. The average CPA salary increases to $91,000 if you have a master’s degree.
Like CFA salaries, CPA salaries vary greatly based on the position and experience of the accountant. Here are a few CPA career paths along with their average salaries:
- Auditor: $61,000
- Tax Accountant: $69,000
- Corporate controller: $114,000
- Chief Financial Officer (CFO): $151,000
CFA or CPA – Which is Better?
Considering which is the better designation is subjective because both offer exciting career paths. The choice depends on which career path you want to choose.
With that said, the CPA is ideal for those who likes accounting, taxation, and auditing. It’s a great choice for someone who wants to climb the corporate finance ladder to become a CFO or someone who is interested in becoming a partner in a public accounting firm.
However, if you are interested in working in banking and finance, especially in equity research or investment management, CFA would be the ideal certification for you.
The bottom line is both certifications offer amazing career opportunities with different trajectories. You can be wildly successful with either of these certifications.
Can you get both the CPA and CFA Combination?
Yes, you can get both the CPA and CFA certifications, but it would be a lot of work to get both. It typically takes candidates about 5-7 years to get both CFA and CPA credentials. This also comes down to your career path.
Having both certifications will help you to become a finance expert in accounting and an accounting expert in finance. The combination will work for someone looking to work in research for investment banks, mutual banks, and hedge funds, or those considering another job in the finance community.
Having both credentials will offer you limitless carer opportunities and you will most likely earn a higher salary having both certification than having either single designation.
Is a CFA better than a CPA?
The CFA exam is better than the CPA exam for candidates who want to become experts in finance, investment banking, and portfolio management. Since the CFA exam focuses mainly on investment and analysis of financial statements, it is a better certification for candidates who want to pursue careers in finance.
Is the CFA harder than the CPA?
The pass rates for the CFA and CPA exams are similar, but the CFA certification typically takes candidates several years longer to obtain than the CPA certification. In that respect, the CFA certification is typically viewed as harder than the CPA because of the greater time commitment and work experience requirements.
Which pays more CPA or CFA?
On average CFA charter holders get paid 10-20% more than CPAs at the equivalent career and experience positions. Since CPAs have a wider range of career opportunities, it largely depends on the career paths, as many CPAs in executive positions make more than CFAs.