CFA^® Charter vs CFP^® Mark: Everything You Need to Decide

Posted by: Kaplan Schweser
Updated: August 20, 2019

If you’re thinking about a career in finance, you might have heard about the CFA^® and CFP^® designations. So, what’s the difference and which is right for you? Let’s take a look at the CFA charter vs. the CFP® mark in detail so you can make a better decision.

CFA^® Charter and CFP^® Mark: What Do They Mean?

“CFA” stands for Chartered Financial Analyst^®. It is the professional credential offered internationally by CFA Institute to investment and financial professionals. The program covers a broad range of topics relating to investment and portfolio management, financial analysis, stocks, bonds, and derivatives. Industry professionals worldwide recognize the CFA charter as the “gold standard” of all financial analyst designations.

CFP^® certification is a professional designation for financial planners. Also known as the CERTIFIED FINANCIAL PLANNER^™ mark, its governing body, CFP Board, administers the credential. CFP® professionals help individuals create comprehensive plans for meeting their long-term personal financial goals, such as retirement, college tuition, business startup, a home, and so on. It is considered to be one of the most prestigious designations in personal finance or personal financial planning.

CFA^® Charter vs. CFP^® Mark: Similarities and Differences

If you are interested in becoming a financial advisor, both credentials can serve you well, although the CFP® mark is the more common designation for that job role. To earn either mark requires passing exams. These exams require a great deal of study, practice, and commitment to learning and analysis, and they each include questions on the topic of ethical and professional conduct. Although a bachelor’s degree is recommended for both designations, you do not have to have graduated to begin the process of earning either credential.

The differences between the two include the structures of their exams and the type of finance professional a candidate wants to be. The CFA exam has three levels, and you must pass all three to earn your charter. The focus of these exams is financial and investment concepts and how to apply them. By contrast, there is only one level of the CFP® exam, and it focuses on financial planning activities. The emphasis of each credential’s exam aligns with the career paths of those who earn the designations. CFA charterholders commonly help individuals and institutions invest and allocate assets. A CFP® professional is likely to be a financial planner, wealth manager, or financial advisor.

It is possible to hold both designations. Having both the CFA charter and the CFP® mark signify expertise in institutional asset allocation and personal financial planning. This expertise is beneficial if your goal is to work with high-net-worth individuals in the field of wealth management or if you are thinking of starting a registered investment advisor firm. In fact, having the CFA charter can help you earn the CFP® mark. CFP Board has approved holding the CFA charter as fulfilling most of the coursework requirements for CFP® certification.

Considering the CFA charter? Before you choose your CFA exam date, download this free Before You Decide to Sit for the CFA Exam eBook.

CFA® Charter and CFP® Mark Requirements

To become a CFA charterholder, you need to:

1. Have a bachelor’s degree (or equivalent) or be in the final year of your bachelor’s degree program. If you have 4 years of relevant work experience or a combination of professional work and university experience that totals 4 years, you are also eligible to start the CFA Program.
2. Take and pass the Level I, Level II, and Level III CFA exams.
3. Become a member of CFA Institute (which costs $275 USD and requires agreeing to abide by its code of ethics).
4. Provide CFA Institute with proof that you’ve been working full-time for 2 years in a role that involves investment decision-making, or with a product that contributes to that process. This can include any work experience you had before passing the exam, as well as after.

Earning the CFP^® certification involves the following steps:

1. Complete a CFP Board-registered education program and make sure CFP Board is notified.
2. Sit for the CFP^® exam.
3. Hold or earn a bachelor’s degree from an accredited university or college within five years of passing the CFP^® exam.
4. Demonstrate financial planning experience. This can be 3 years of full-time, relevant personal financial planning or 2 years of apprenticeship.
5. Pass CFP Board’s Candidate Fitness Standards,

CFA^® Exam vs CFP^® Exam: Topics, Formats, Fees, and Pass Rates

Here’s what you need to know about the topics, formats, fees, and pass rates of the exams for each designation.

The topics of the CFA exams are:

• Ethical and professional standards
• Quantitative methods
• Economics
• Financial reporting and analysis
• Corporate finance
• Equity valuation
• Alternative investments
• Fixed income
• Derivatives
• Portfolio management

The Level I exam is offered in June and December. Levels II and III are offered in June. The format of the first two levels is multiple choice. Level III has a written portion called constructed response, along with a multiple-choice portion. CFA Porgram exam fees range from $620 to $1,610 USD, depending on your CFA exam level and when you register. The pass rates for the CFA exams (as of 2018) are as follows: Level I: 43 percent, Level II: 45 percent, and Level III: 56 percent.

The topics covered on the CFP^® exam include:

• General financial planning principles
• Investment planning
• Retirement savings and income planning
• Risk management and insurance planning
• Tax planning
• Estate planning
• Professional conduct and regulation
• Education planning

The CFP^® exam is a multiple-choice, computer-based exam. It consists of two 3-hour sessions separated by a 30-minute scheduled break. It is offered three times a year in March, July, and November at almost 50 locations nationwide, and it costs between $625-$825 USD (depending on when you register). In 2018, the overall pass rate was 60 percent, and the pass rate for first-time exam takers was approximately 64 percent. CFP Board does not reveal the passing score.

Preparing for the Exams

Another similarity between the two designations is that the exams are nearly impossible to pass if all the candidate does is last-minute cramming. So, whether it’s the CFA exam or the CFP^® exam, you should start studying early.

To prepare for the CFA exam, CFA Institute advises a minimum of 300 hours of study for each level. You should focus on the Learning Outcome Statements (LOS) from CFA Institute because they detail exactly what you are expected to do on exam day. CFA exam preparation classes can really help, as will immersing yourself in practice questions. In addition, you should plan to take as many mock exams as you can to get used to the whole exam process.

CFP Board recommends you spend at least 250 hours studying for the CFP^® exam. You’ll need to pace yourself because the exam asks you to apply knowledge to case studies. So make sure you have the space in your life to dedicate the necessary hours to study. Most of the time, failing the exam is the result of not preparing properly. If you put together a stellar study plan and are willing to invest in exam preparation, you can increase your odds of passing.

CFA^® Charter vs. CFP^® Mark: How to Choose

Deciding which designation to pursue really depends on what you want to do in your financial career or what direction you want to take if your goal is to be a financial advisor. If you’re interested in becoming a portfolio manager, research analyst, consultant, risk manager, financial analyst, or investment banking analyst, then the CFA charter is a good fit for you. The most common careers for those with the CFP^® mark include financial planner, wealth advisor, estate planning specialist, trading and research associate, financial representative or a branch manager at a financial firm.

Of course, you don’t have to choose at all. As we mentioned at the beginning of this article, you can hold both designations. It’s more common for someone with a CFA charter to decide to sit for the CFP^® exam^, especially since CFP Board waives much of its education requirements for CFA charterholders. But, earning the CFP^® mark first has worked well for some investment analysts with CFA charters as well.

No matter which path you choose, there is a wealth of information out there that can help you earn the credential or credentials you need.