CFA vs CPA: What's the difference? (2024)

in CFA (trained financial analyst) is a financial professional who analyzes the financial data and stock prices of companies to make meaningful predictions about future performance. CPAs (certified accountants) are often responsible for collecting the financial data that CFAs then analyze. It can be difficult to choose between a CFA versus a CFA. CPA Certification – Both are highly respected marks of excellence in...financesector and can be a good way to make yourself more marketable to employers.

What is a CFA?

A CFA is a Chartered Financial Analyst – a financial professional who has received certification through the CFA Institute. This certification demonstrates that the analyst has a deep understanding of economics, financial analysis, investment ethics andinvestment control.

One of the main tasks of afinancial analystis a process called discounting.

CFAs must “generate estimates of the present value of future cash flows,” says John Cunnison, CFA, Chief Investment Officer at Baker Boyer. Discounting allows analysts to “determine what these estimated future cash flows are worth today.”

In practice, discounting helps analysts figure out whether "one stock price is too high or two are too low, and it's a skill that can be used to determine which project a company should invest in next," Cunnison adds. A CFA certification teaches analysts to discount cash flows and create financial models.

Many different roles in the financial industry can benefit from CFA certifications.Investeringsbankiers,portfolio managers, accountants and risk analysts often purchase CFAs to make themselves more marketable and improve their performanceAnalytical skills.

>>BUT:Discover the bigger differences betweenfinancial analysts and accountants.

What is a CPA?

A CPA is a certified public accountant – a specific typeaccountantwho have passed the CPA exams administered by each state's accounting board and the National Association of State Boards of Accountancy (NASBA). Public accountants, unlike private accountants, typically work for large accounting firms and performfinancial accountingwork for various client companies. Private accountants (who may also have a CPA license!) work for one company and perform accounting duties only for their employer.

“CPAs have the authority to performrevisions, assessments and other underwriting obligations,” said Kathryn Kaminsky, vice president and co-head of the U.S. division. Trust solutions atPwC. “They can provide an individual assessment of an organization's financial statements and compliance with accounting standards, and provide stakeholders with assurance about the accuracy and reliability of financial statements.”

CPAs also handle tax forms and perform audits for publicly traded companies, because all publicly traded companies are required by the U.S. Securities and Exchange Commission (SEC) to undergo periodic third-party audits.

But “accounting is about more than just an audit,” says Kaminsky. “As stakeholders demand more transparency from companies, CPAs are well positioned to provide assurance on non-financial information as well.”

>>BUT:Learn how to choose oneaccounting career.

CPA vs CFA Salaries

US. The Bureau of Labor Statistics (BLS) reports that financial and investment analysts aaverage annual salary of $108,790. However, CFAs are a specific type of financial analyst, and having a specialized qualification often leads to higher salaries. In addition to the base salary, CFA holders often receive additional compensation in the form of commissions, shares and performance or annual bonuses.

According to the BLS, accountants and bookkeepers earn aaverage salary of $86,740. Although all CPAs are accountants, not all accountants are CPAs. This is reported by the Accounting Institute for Successthe average CPA salary is $62,410, but this is the average across all industries, companies, locations, and experience levels. Experience level plays a crucial role in both CFA and CPA salaries.

How to Become a CFA vs. C.P.A

CPA vs. CFA-certificeringskrav

The requirements for CFA certification include:

• Have a bachelor's degree or are working towards one or have at least 4,000 combined hours of higher education and relevant work experience
• Pay a registration fee and registration fee per exam
• Pass the three CFA exams

The CFA exams cover asset valuation, portfolio and investment management, financial reporting and analysisquantitative analysis.

The CPA licensing requirements are:

• Have a bachelor's degree or higher with 150 credits of relevant courses
• Pay an application fee and fees for each subject test
• Pass the four CPA test sections

The CPA tests include audits and attestations, business environment and concepts, financial accounting and reporting, and regulation and ethics.

CPAs and CFAs can also apply for additional certifications. For example, a CPA may also choose to obtain onecertified public accountant (CMA)designation for demonstrating leadership and financial planning skills.

Education

For CFAs, having a solid foundation in finance and business can make it easier to pass the exams, and most analysts choose to study finance.economy, business or accounting. But if you come from a different background, you can get different skills. For example, a training coursedata sciencecan demonstrate high-level quantitative analysis skills essential for CFAs.

“You don't always have to major in accounting to become an accountant,” Kaminsky says. “Take me as an example. I have a degree in history!”

However, as with CFAs, a background in accounting or finance makes it easier to pass the exams. Additionally, many CPAs and CFAs pursue advanced degrees such as a Master of Business Administration (MBA) because this can help them meet the educational requirements of the degree and make it more marketable to employers.

Skills

Both CPAs and CFAs need to be able to read, review, and analyze financial data and derive meaningful insights from that information. To do this, they need skills such as:

• Think analytically
• Problem solving
• Announcement
• Detail court
• Mathematics
• Excel
• Knowledge of accounts, such ascash flow statements

CPAs need to understand this specificallygenerally accepted accounting principles (GAAP)and other accounting-related concepts such as:

• Ofaccounting equation
• Use of financial performance ratios such asCurrent situation
• Measures of profitability, such asEBITDAIngo forward

>>BUT:view moreskills accountants need on their resume.

CFAs must have financial modeling and forecasting skills that:

• Finishcomparable business analyses
• Use discountDiscounted Cash Flow (DCF)-analyse.
• Predict investment growth withcompound annual growth rate (CAGR)calculations

In short: what's the difference?

In the financial industry, having a CPA or CFA certification is highly regarded; these designations testify to commitment, dedication and expertise. Both titles are great options for anyone looking to play onecareer in the financial world.

While CFAs primarily analyze financial data, CPAs often aggregate that financial data, making analysis possible. Ultimately, both are necessary for accurate and insightful financial analysis and decision-making.

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