When a finance or business student is looking to either specialize or expand their accounting credentials, there are a plethora of licenses and certifications for them to choose from. Although some may opt to accrue multiple certifications such as both a CPA and CMA, this may not appeal to others for either financial or time investment reasons. Therefore, we have been compiling a number of articles that provide a brief overview into the different certifications which we hope will help you to gain some clarity on which to pursue. In this article, we will briefly be explaining what a CP and CFP do, as well as the differences between them both in terms of requirements for licensure, and in terms of career possibilities and financial reimbursement.
What is a CPA?
A Certified Public Accountant (CPA) is someone who has passed the NASBA Uniform CPA exam in one of the US states and jurisdictions and subsequently received licensure to practice public accountancy in that locality. The license itself is issued by the American Institute of Certified Public Accountants (AICPA.) Although the prerequisites differ from state to state, there are certain basic requirements for licensure, such as receiving at least 75% for each section of the CPA exam within an 18-month window, meeting the 150 semester hour requirement and fulfilling some sort of work experience requirement.
What is a CFP?
A Certified Financial Planner (CFP) is someone who has received certification from the Certified Financial Planner Board of Standards, Inc. This qualifies them to help their clients to manage their personal finances, estates and investments. This is also often referred to as assisting with ‘wealth management.’ Some examples of the areas that they assist with include retirement plans, debt management, investment options, insurance, tax advisement and retirement planning. Although they overlap in some ways, the primary difference between a CFA and a CFP is that a CFA focuses on investment management for institutions and businesses while the CFP is designed around holistic financial planning for individuals. The CFP is also considered to be an easier exam than the CFA.
|4-part exam||2-part exam, both on one day|
|US licensure||Global certification, available in over 27 countries|
|Available in English||Available in English|
|Requirements vary from state to state||A Bachelor’s degree or higher within 5 years of passing the CFA exam 4,000-6,000 hours of experience prior to licensure|
|Broader topics||Focused specialty|
|Exam available in 15 countries||Exam available in US only|
|Each exam part takes 4 hours (240 minutes)||Each exam is 3 hours long, both on the same day with a break in between|
|As of November 2021, there were 696,000 CPAs globally. 669,130 of these were based in the US||As of late 2020 there were over 190,000 CFPs globally|
|The exam parts have a 46.37% – 61.76% pass rate (75% requirement to pass)||The exam had a 58% pass rate as of June 2021|
|The average exam cost is $4,400 (varies per state)||There is an early registration fee of $825.00, the standard registration fee is $825.00 and the late registration fee is $1,025.00|
|Average annual salary of $72,149.00||Average annual salary of $66,000.00-$75,000.|
|Exams available throughout the year||March 8-15, 2022 July 12-19, 2022 November 1-8, 2022|