CFP vs CFA: What you need to know about different types of financial advisers

Financial advisor consulting with young couple in living roomImage: Financial advisor consulting with young couple in living room

In a Nutshell

Both CFPs and CFAs are trained to help you manage your money, but the services they offer can be very different. CFPs advise on a wide range of personal finances while CFAs specialize in investing advice.
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CFP vs. CFA: What’s the difference?

When someone says they are a financial planner or financial adviser, it doesn’t tell you much about their background, their qualifications or what they can help you with. They may focus more on accounting or insurance, or have education and training related to investing. Or they may call themselves financial advisers but not actually have any meaningful credentials.

When shopping around for a professional to help you with your money, knowing what kind of training, education and experience they have can help you make a well-informed decision.

Two credentials that require a significant amount of training and education are the certified financial planner and the chartered financial analyst. People who hold these credentials are trained to help you with your money, but they are trained to do different things. Knowing whether to work with a CFP or a CFA comes down to understanding what they do — and how that matches your own needs.

What is a CFP?

A CFP is a financial adviser who has earned the designation of certified financial planner. To be certified, a CFP must have a bachelor’s degree from an accredited university, meet a financial education requirement, complete thousands of hours of practical experience and pass an exam.

CFPs are required by the CFP board to uphold high ethical standards and keep their knowledge up to date with continuing education every two years.

What does a CFP do?

A CFP can help you reach your short- and long-term goals by working with you to put together a personal financial strategy. A CFP is trained to help you with a range of financial planning topics, like retirement planning, estate planning, insurance needs, homebuying and saving.

Once you have a financial strategy, a CFP can help keep you on track by acting as a coach and advising on financial problems as they come up.

What is a CFA?

A chartered financial analyst is someone who has passed the chartered financial analyst exams and met the other requirements set by the CFA Institute. The process to become a CFA is rigorous — fewer than one of every five candidates completes it.

To become a CFA, a candidate must have a bachelor’s degree (or be in the final year of the program) or 4,000 hours of professional work experience (or a combination of education and experience), submit professional reference letters, complete a self-study program, pass three exams and have 4,000 hours of work experience in the investment decision-making process.

CFAs also have to commit to upholding the CFA Institute’s ethics code and professional conduct standards.

What does a CFA do?

The CFA exam is primarily focused on investment management, so it’s not surprising that two of the most common jobs for CFAs are portfolio manager and research analyst. A portfolio manager provides investment advice to clients, while research analysts study publicly traded companies and make investment recommendations.

CFP vs. CFA credential requirements

CFP credential requirements CFA credential requirements
Hold a bachelor’s degree from an accredited university

Hold a bachelor’s degree (or be in the final year of the program) or have 4,000 hours of professional work experience (or a combination of the two)

Submit professional reference letters

Complete a registered education program (or hold a different credential like CPA or CFA) Complete a self-study program
Pass an exam that covers topics such as general financial planning principles, retirement planning and investment planning Pass three exams covering topics like equity investments, fixed income, financial reporting and portfolio management
Complete 4,000–6,000 hours of personal financial planning experience Complete 4,000 hours of work experience in the investment decision-making process
Uphold the CFP board code of ethics Commit to the CFA Institute’s code of standards
Complete 30 hours of continuing education every two years (Continuing education is suggested)

CFA vs. CFP: How do I know which one to choose?

Both CFPs and CFAs are required to have work experience and education, pass exams and commit to upholding certain standards of conduct and practice. The difference is that CFPs will create financial plans for their clients covering a range of financial areas, while CFAs primarily focus on analyzing investments and providing investment advice.

Before deciding whether you should work with a CFP or CFA, think about your goals.

If you’re looking for someone to help you with a variety of financial matters like retirement, buying a home and sending your children to college, a CFP might be the right choice. If you’re looking for specialized investment advice and portfolio management, you might consider working with a CFA. 

Researching your CFP or CFA

Once you figure out the type of adviser you want, it’s time to do some research.

Check their credentials

You’re going to be entrusting your CFP or CFA with sensitive financial information and seeking their advice for important decisions. It’s a good idea to check their credentials to ensure their certification is valid and to make sure there are no disciplinary issues on record.

You can check a CFP’s credentials, disciplinary history and whether they’ve had a bankruptcy in the last 10 years on the Certified Financial Planner Board of Standards website. If you want to work with a CFA, you can check their status with the CFA Institute.

If the person you’re considering working with is also an investment adviser, you can look up their background using the BrokerCheck online tool.

Check their fee structures

Whether you choose to work with a CFP or CFA, you’ll be charged for their services. There are a variety of fees you can be charged — and not all of them are obvious.

Learn more: How much does a financial adviser cost?

Ask questions

Although understanding the different services offered by a CFP or CFA is a good place to start your research, you may still want to ask your CFP or CFA some key questions about things like their background and experience, their investment philosophy and any conflicts of interest they may have.

Bottom line

Knowing whether you should hire a CFP or a CFA to help you manage your money comes down to the type of support you need. Think about whether you want someone to manage your investments or create a full financial plan. Then you can start your search to find the right person to help you meet your financial goals.

About the author: Erica Gellerman is a personal finance writer with an MBA in marketing and strategy from Duke University. She’s also the founder of The Worth Project: a weekly money newsletter you actually want to read. Her work has b… Read more.