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CFA or CPA: Which Qualification is Better?
Finance professionals often pursue professional qualifications in order to advance their careers. Certified Public Accountant (CPA) and Chartered Financial Analyst (CFA) designations are arguably the two most prestigious titles in their respective fields. We’ll cover the difference between CFA vs CPA to help you decide which is right for you. Ultimately, you may decide to pursue both!
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CFA or CPA: An Overview
The CFA and CPA titles cannot be compared apples-to-apples because they represent qualifications in two different sub-sectors within the general accounting and finance field.
CPA is for accounting. CFA is for finance.
What is a CPA? What Does CPA Stand for?
CPA, or certified public accountant, is the “black-belt” in accounting. It is originally a designation for public accountants, but non-public accountants, tax accountants, and finance professionals also seek the CPA title to prove their number crunching expertise. In addition, a CPA license holder has statutory rights to sign audit reports, which makes the title special.
What is a CFA? What Does CFA Stand for?
CFA, on the other hand, is the gold standard in finance and investment. For those who are looking for career as equity analysts, fund managers, and professionals in asset management or hedge fund houses, this is the best title you can get.
Some people mistake the initials to stand for “chartered financial accountant” or “chartered financial analyst,” but the true title is “chartered financial analyst.”
CFA vs CPA: Application & Qualification
CPA Qualifications
The CPA license is granted by each of the 55 states or jurisdiction in the United States. There is no centralized administrative body and each state has slightly different CPA exam and licensing requirements.
The CPA requirements are the most difficult to achieve among all finance related qualifications. Candidates must have at least a four-year bachelor degree and in most cases, 150 credit hours (equivalent to five years of higher education) to sit for the exam.
Because of the high barrier of entry and complicated application process, it is quite a challenge for non-US candidates to take the exam.
CFA Qualifications
CFA is a designation granted by CFA Institute, a global non-profit organization. The institute is based in the US, but there are three regional offices and 200 local chapters around the world. Candidates apply through the institute and application is relatively simple.
As long as the candidate has a bachelor degree or four years of practically any working experience, this person can sit for the exam. The candidate can even take the exam before graduation.
CFA vs CPA Difficulty
As far as the difference between CPA and CFA general qualifications, the CPA licensure is the more complicated of the two. The credit hour requirements are very specific and often vary by state. Therefore, most international students have to have their educational transcripts both translated and independently evaluated before a state board of accountancy will accept their degrees.
It is much harder and more complicated to get qualified to take the CPA exam, especially for non-US candidates.
CFA vs CPA: Exam Content and Format
CPA
There are four exam sections: Financial Accounting & Reporting, Audit & Attestation, Regulation, and Business Environment & Concepts.
The exam is 100% computerized consisting of multiple-choice questions, task-based simulations (case studies), and written communications. CPA Exam grading is mostly computerized.
You can choose to take the four parts one at a time, two at a time, or even four at the same time. Although you used to have to wait for a CPA exam testing window, as of July 2020, continuous testing is now available. If necessary, you may now retake the test as soon as you receive the results from your previous attempt.
You may take the exam at any Prometric testing center throughout the US. There are also testing centers in Japan, Brazil, and four Middle Eastern countries.
CFA
The CFA exam format is less flexible. There are three levels of the exam, and you need to complete one in order to move on to the next. The exam content is focused on financial analysis and portfolio management instead of accounting, audit, and taxation.
Recently, thanks largely to Covid-19 restrictions, the CFA exam switched to an entirely computerized format. This has enabled the CFA Institute to offer it more often. You can now take Level 1 in February, May, July, August, or November. Similarly, Levels II and III are now offered in May, August, or November. In each of these months, there is a six- to ten-day window in which you may schedule your exam.
Despite the move to computer-based testing, you still must take the exam in a designated testing center. There are many international testing centers for the CFA exam in major cities and metropolitan areas.
The CPA exam has four exam parts. You can take each part in any order and any time thanks to a new policy of continuous testing.
The CFA exam has three levels. You must take the three exams sequentially, and each exam is offered within three to five windows per year.
CFA vs CPA Exam Difficulty
When it comes to the qualifying exam, many candidates rightly want to know whether CFA or CPA is harder. While the answer to this question may be subjective, depending on your personal strengths and weaknesses, comparing recent pass rates is useful. In 2020, the average pass rates for each section of the CPA Exam ranged from 49.98% (FAR) to 65.56% (BEC). In contrast, the most recent scores available for the CFA exam show pass rates ranging from 49% for Level I to 56% for Level III.
This makes it look as though the exams are of approximately equal difficulty. However, the 2020 CFA exam pass rates are comparatively high. For the years 2010-2019, the CFA pass rate averages were 41% for Level I, 44% for Level II, and 53% for Level III. This would suggest that the CFA exam has historically been more difficult. Additionally, while opinions differ, some people who have taken both think that a current CPA would have a harder time passing the CFA exam than vice versa.
CFA vs CPA: Time Required to Become Qualified
CPA
Most candidates aim to pass the CPA exam within a year. Some who have the time and commitment can study all materials within six months, take all four parts of the exam in one go, and pass.
Most state boards require one year of accounting experience before getting the license, and for most states this experience has to be supervised and verified by a CPA in the USA.
CFA
The new continuous testing timeline may allow for quicker completion of all three exam levels. However, as of now, most candidates take four years to complete the exams. Thus, it takes much longer to become a CFA than a CPA.
Four years of relevant experience are required to get the CFA designation. However, your supervisor who verifies your experience does not need to be a CFA. This adds a lot of flexibility to the process.
Because one can take the CPA exam parts at the same time, it is possible to complete the exam within a few months. There is a one to two year experience requirement after the exam.
For CFA, most candidates take four years to complete the three levels, plus four years of relevant experience. The exam taking and work experience can start at the same time.
CPA vs CFA Salary
CPA Salary
According to 2020 data from Payscale.com, the average base salary for a CPA in the US is $68,090. Eighty percent of all CPA salaries fall in the range of $49,000 to $114,000. The specifics will depend on cost of living in your area and the stage of your career. For example, an entry-level CPA will earn about $54,000, rising to $71,000 mid-career and topping out around $96,000 in a late career.
CFA Salary
In comparison, the average base salary for a CFA is $92,432, with a range of $52,000 to $153,000. However, a CFA’s salary takes longer to peak over the course of a career. An entry-level CFA in the USA can expect to earn about $77,000, rising to only $80,000 mid-career and only peaking at $101,000 to $143,000 after 15-20 years in the industry.
CFA or CPA: Which is More Valuable?
On the surface, it seems obvious that CFAs make more money. However, there is still significant variation based on where you live and what sort of specific CPA or CFA accounting you do. In other words, every CFA is not automatically guaranteed to make $25,000 more a year than any CPA.
How about CFA and CPA?
Stephanie chooses to be a CPA only, but John is a CPA CFA.
The CFA CPA combo helps the professional to be seen as an accounting expert within finance, and a finance expert within the accounting field. In our case, this powerful combination helped propel John’s career to become the CFO of a private equity and later the head of a reputable family office.
It took John a lot of time and effort to complete the two qualification, but if you start early before family commitment builds up, it is actually quite doable. John was able to obtain the CPA and CFA titles within five years of graduation.
CFA or CPA: Which is Better?
When deciding whether to go for CPA or CFA, the first and foremost consideration is the relevance to your career. Other than that, CPA has more restrictive education and experience requirements, but once you get qualified, the process is much faster. CFA has a lower entry barrier, but it takes much longer to complete.
Of course, it also depends on your career goals and personal interests. If you earn the CPA, finance will make up far less of your workload. Similarly, CFAs will do less accounting work. However, that’s not to say you can’t be a CFA accountant or a finance CPA. If you have the time and the motivation, you can certainly pursue both.
The paths towards CPA and CFA have their own challenges. It’s most important to choose based on your career aspiration. You can do both!
You Know Our Choices. What’s Yours?
Will you be Stephanie, who goes for one accountant qualification, or John, who goes for both? Which one are you going to start first? Pick one and explore further:
Frequently Asked Questions
Is CFA harder than CPA? Or is CPA harder than CFA?
It depends on what you mean by “harder.” If CPA vs CFA difficulty is judged purely by the exam, then CFA is the harder qualification to achieve. However, if you’re measuring by other requirements like application and education, particularly for candidates outside the US, CPA is more complicated. The relative difficulty of transitioning from accountant to financial analyst may depend on more than just the barrier of entry.
What about CFA vs CPA salary in other countries?
Luckily, Payscale also gathers salary data from other countries.
- CPA vs CFA salary in India: Indian CPAs earn an average of ₹693,555 per year, while their CFA counterparts earn ₹678,706.
- CPA vs CFA salary Canada: As for CFA vs CPA Canada, CPAs earn an average of C$61,843, and CFAs earn an average of C$77,663.
- UK CPA vs CFA salary: In Great Britain, CPAs earn £55,552 on average, whereas CFAs earn £51,561.
As you can see, the US pattern of the CFA earning more is true for Canada, as well. However, in other countries like India and the UK, the reverse is true.
Is the CPA Exam worth it?
“Worth” can be measured in a number of different ways in terms of CPA vs. accountant. Speaking monetarily, a CPA will earn about $16,000 more a year than a regular accountant. A late-career CPA also stands to earn nearly $40,000 more a year than a late-career accountant. In general, CPAs tend to earn more respect, career security, and job satisfaction, as well. So, yes, it’s usually worth the hassle of passing the exam.
However, it does take quite a bit of commitment to studying, and that doesn’t even take into account the other requirements for earning and maintaining CPA licensure. I would argue that pursuing a CPA is worth it, but accountant vs. CPA is a decision you’ll have to make for yourself.
How do CFP vs. CFA certifications compare?
CFP, or certified financial planner, is yet another qualification that finance professionals might seek. To receive this certification, you must have a four-year degree in any field, complete coursework in a curriculum of financial planning topics, pass a standardized multiple-choice exam, and have between 4,000 and 6,000 hours of experience.
Comparing CFA vs. CFP, a CFP works with individual clients planning personal finances, while a CFA works with corporations to manage investments. Although they’re both qualifications for finance professionals and the preparation required for each certification is similar, the knowledge base is slightly different. For example, the CFA exam covers topics like economics, financial analysis, and corporate finance, whereas the CFP exam covers topics like risk management, retirement planning, and estate planning.
A CPA vs. financial advisor is a little more difficult to compare since they have such different job duties. Ultimately, in terms of profession and requirements, a CFP is far more similar to a CFA than a CPA.
What about a CMA qualification?
A CMA is a certification in management accounting, and it represents a slightly different career path for an accountant. A CMA stands to earn an average of $91,299 a year, substantially higher than a CPA or CFA. There are also benefits to pursuing a CMA after you’ve gotten your CPA. A CPA CMA combo boosts your resume substantially if you want to get into private or management accounting. This career path has its own advantages and disadvantages, which you can read about on my other site, IPasstheCMAExam.
