Even though you have an undergraduate degree in finance, accounting or business, if you want to pursue a career in financial planning, investments or financial analysis, you may want to consider adding another credential that reflects your expertise in your chosen field. Many finance professionals obtain the Certified Financial Planner or CFP designation or the Chartered Financial Analyst or CFA designation. Which you choose to pursue will depend on the financial field you target and your career goals. Before deciding which way to go (or setting your sights on having both sets of letters after your name), do your homework. A good place to start your research is by looking into how the CFP and CFA designations differ.
The CFP designation is awarded in the U.S. by the Certified Financial Planners Board of Standards. To obtain CFP certification, an applicant must pass an exam on topics in seven major areas of finance and investing, including general principles of financial planning, insurance, employee benefits, investments, income taxes, retirement and estates. The 10-hour exam is given over two days (including a four-hour session on Friday and two three-hour sessions on Saturday) three times a year. Other requirements for CFP certification include a bachelor’s degree or higher (or the equivalent), work experience as defined by the CFP Board, and acceptance and adherence to the CFP Board ethics standards.
The Chartered Financial Analysts Association awards the CFA charter. To achieve this distinction, applicants must pass three six-hour exams (designated Levels 1, 2 and 3). The Level 1 example is given twice a year (in June and December) while the Level 2 and 3 exams are administered only once a year in June. Preparation for the exams involves a graduate-level, self-study program that covers a very broad curriculum in ten subject areas: ethical and professional standards, quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, fixed income, derivatives, alternative investments, and portfolio management and wealth management. In addition to passing the exams, CFA candidates must meet ethical and professional standards before being awarded a CFA charter.
For some finance professionals, the choice between obtaining CFP certification or a CFA charter is easy. For example, those who chose a career as an equity analyst or fixed income analyst probably will find the CFA charter the more relevant credential. Likewise, those pursuing a career in financial planning, which requires expertise in areas such as taxes, retirement planning, insurance and estates, are most likely to benefit from pursing the CFP designation. Others, for example, money managers who focus on high-net-worth individuals and, therefore, require expertise in both financial planning and financial analysis, may find that the expertise developed by acquiring both credentials is invaluable.
Before deciding with credential is right for you, find out what credentials are most valued in your chosen field. Also, talk to other finance professionals and ask their opinions about the relative value of a CFP certification or CFA charter.
Jonathan Burton, online.wsj.com, For Financial Advice: CFP or CFA? – WSJ.com
www.cfainstitute.org, CFA Program
www.cfp.net, Certified Financial Planner Board of Standards, Inc. – Become a Certified Financial Planner