Many finance professionals choose to pursue these qualifications because they want to improve their career options, get promoted, or make more money.
Each career path has distinct differences in educational requirements, responsibilities, and opportunities. The best way to choose which certification to pursue is to understand how they are different.
CFA and CPA Differences
CFA is the professional credential offered by the CFA Institute to investment and finance professionals. The CFA is recognized worldwide and is the equivalent of a master’s degree in finance with minors in economics, accounting, statistical analysis or portfolio management. For those who are interested in a career as an equity analyst, fund manager, asset management, or hedge fund manager, the CFA is an excellent choice.
CPA, on the other hand, is the title held by accountants in the United States who have passed the Uniform Certified Public Accountant Exam and have met additional state education and experience requirements for membership.
Originally a designation for public accountants, the CPA is now highly relevant for non-public accountants, tax accountants, and finance professionals as well. CPAs also have legislative rights to sign certain tax forms and audit reports, which gives them additional ethical and professional responsibility. Each individual state’s laws govern the different functions a CPA may perform.
For both designations, candidates must meet certain educational requirements in addition to passing the exams; however, to become a full-fledged CFA you must also have 4 years of qualified investment experience.
CPA versus CFA Exams
The CPA Exam
There are four parts to the CPA Exam. The exam is uniform throughout the US, meaning that the content and structure is the same in every state.
There are specific windows in which candidates can schedule the CPA exam. Each window is two months long, and there are a total of four exam windows throughout the year: Jan/Feb, Apr/May, Jul/Aug, Oct/Nov. As of 2012, the individual parts and content are as follows:
- Business Environment and Concepts
- Financial Accounting and Reporting
- Audit and Attestation
- Regulation: also know as REG
Pass rates for the exam are typically 50% or slightly lower, and the exam is only offered in English. In 2014, cumulative pass rates for the four parts of the CPA exam were 46.35%, 55.46%, 47.60%, and 49.41%.
The completely computerized exam consists of multiple-choice questions, task-based simulations (case studies), and written communications. Testing centers in Japan, Brazil and four Middle Eastern countries make it possible for candidates outside of the US to sit for the CPA exam as well.
The CFA® Exam
Compared to the CPA exam, the format for the CFA® is much less flexible. Three levels of the exam must be passed sequentially, and the CFA institute recommends that candidates begin to prepare at least six months in advance (at least 300 hours of study) for each of the three levels of the exam.
The CFA® exam is offered only on specific dates. You cannot schedule this test at your convenience, as candidates all over the world take the exam on the same day. The CFA® Level I exam is offered twice each year, in June and December, but Levels II and III are offered only once a year in June. Unlike the CPA exam, the CFA® is a pencil and paper test, rather than computer-based.
In 2016, 43% of exam-takers passed the Level I exam (June), 46% passed the Level II exam (June), and 54% passed the Level III exam (June).
CPA vs CFA Salary
CPAs earn anywhere between $40,000 and $120,000 or more, whereas CFA salaries typically fall between $70,000 and $150,000 or more.
Overall, the CPA is the more widely recognized, safer, and more traditional path for those interested in a career in finance or accounting. By contrast, the CFA is probably a better option for those pursuing careers as financial advisers, investment banking analysts, portfolio managers, private bankers, research analysts, and traders.
In choosing a career path, you should determine what interests you most about finance and whether you are a risk-taker or more traditional. The CFA has a lower entry barrier, but takes much longer to complete (it takes the average candidate 4 years to pass all three levels of the exam and obtain the credential). Becoming a qualified CPA is a more flexible process that can be accomplished within a much shorter time frame. Both certifications are valuable and worth the time and money invested if you are planning for a successful career in the financial industry.
If you ultimately decide that becoming a CFA® is the right path for you, then you need to prepare yourself as best as possible. One of the first steps in your preparation should be choosing a test prep that will lead you to success!