Is the CFA a certification

Posted by: Kaplan Schweser
Published: December 12, 2019

In the finance industry, there are a number of certifications, such as Certified Public Accountant (CPA), CERTIFIED FINANCIAL PLANNER (CFP®), and the Financial Risk Manager (FRM®) certification. If you’re new to finance, you might assume that the CFA® charter is a certification, too. In fact, some sources on the web even call it one. But is it? This article answers that question and explains the difference between a charter and a certification.

Charter vs. Certification: What’s the Difference?

The difference between charter and certification, especially in the U.S., is not very distinct. In forum discussions, the consensus is that a charter gives its holder the right to do something, such as use a mark to demonstrate proficiency. A certification is simply proof that you have the skills or have completed specific education to do a specific task.

More formal sources define a chartered professional as an individual who has been recognized as having reached a specific level of skill or competence through the award of a formal credential by a professional organization. The term originated in the U.K., where royal charters were issued to professional organizations by British kings and queens.

By contrast, certification is described as an attestation that a professional has met the education and experience requirements for practicing in a specific field. Certifications are more likely to be awarded by several organizations or educational institutions. Charters are usually the purview of one organization created for the purpose of granting the charter.

For a better understanding of the difference, consider the accounting field, which has chartered accountants and certified public accountants. According to indeed.com, a chartered accountant is qualified by a specific organization to offer financial consultation and keep financial records. It then explains that a certified public accountant has completed the necessary education and training to become a public accountant.

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Does This Mean the CFA Charter Isn’t a Certification?

The simple answer to that question is yes. The CFA charter is not a certification. It is a charter offered internationally by CFA Institute to investment and financial professionals. The program for this professional credential covers a broad range of topics related to investment and portfolio management, financial analysis, stocks, bonds, and derivatives.

The focus of the three levels of the CFA exam is demonstrating your ability to apply analytical skills to client situations and not proving that you have the education to do so. This focus is the reason industry professionals worldwide recognize the CFA charter as the “gold standard” of all financial analyst designations. The charter signifies that you have real-world expertise that will help you better serve your clients for the rest of your career.

Charter or Certification: How to Decide

If you’re still not clear on the difference between a charter and certification, don’t be too concerned. If you know you would like to work in an investment firm as a fund manager or analyst, the CFA charter might be right for you. This CFA charter article has more information about how to become a charterholder. You can also explore exam preparation options here.

If your interests lie in personal financial planning or financial risk management, these articles have more information on the CFP® and FRM designations. If you’d like to compare and contrast, read these articles about the CFA charter vs. the CFP® mark and the CFP mark vs. the FRM designation.

Before You Decide to Sit for the CFA Exam

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CFA Fundamentals eBook

Free eBook: CFA® Program Fundamentals, 2nd Edition