Individuals who enjoy working with money often choose to become Certified Public Accountants (CPAs) or Chartered Financial Analysts (CFAs).They are both very good yet different careers. Many mistakenly believe the two titles are used interchangeably. While there are some similarities, there is quite a difference between CPA and CFA. Here is an overview of these two professionals.
What is a CPA?
A certified public accountant is an accountant trained to provide various accounting services, including preparing taxes for individuals and preparing financial statements for large companies. CPAs can choose from various career choices, including tax advising, auditing, accounting positions for accounting firms or large corporations, government accounting or working in private practice.
What is a CFA?
A chartered financial analyst is a financial analyst who analyzes different financial options and provides investment options to financial planners as well as to upper management of investment companies. CFAs can work at various capacities, including portfolio managers, chief executives, research analysts, consultants, risk managers or corporate financial analysts and financial advisors.
Main differences between CPA and CFA
Although there are many differences between a CPA and a CFA, the main difference is their main purpose. If an individual needs help preparing their taxes, he or she would hire a CPA. If an individual has a large sum of money they wish to invest, the individual would hire a CFA. An individual who wants to work in accounting or tax firms would choose to work as a certified public accountant, whereas the individual who wants to work in investment banks or firms would choose to work as a chartered financial analyst.
Requirements for CPAs and CFAs
Another difference between a CPA and CFA is in the requirements it takes to become one or the other. A CPA must meet certain state requirements regarding education and experience. A CFA must complete his or her training through the CFA Institute. CFAs are usually required to be members of the CFA Institute.
The CFA should have at least a bachelor’s degree, but it may not be required if the individual has at least four years of work experience in this field. If the aspiring CFA chooses to complete a formal training program, it’s general a graduate-level CFA program, They must also pass the following six-hour exams.
- Level I exam – This tests the candidate on tools used for investment valuation and portfolio management as well as their knowledge of asset classes, securities, markets and the CFA Institute’s code of ethics.
- Level II exam – This tests focuses on asset valuation.
- Level III exam – This test focuses on portfolio management.
The CPA must have at least a bachelor’s degree and complete an additional 30 graduate hours for a total of 150 credit hours. The CPA must also have one year of accounting experience and pass the four-part Uniform CPA examination. CPAs are required to be licensed in all the states.
Each state has different requirements, so individuals are advised to check with their state’s Board of Accountancy. To maintain licensure as a CPA, the individual may also be required to complete continuing professional education depending on the state in which the CPA lives.
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The U.S. Bureau of Labor Statistics reports that accountants should experience a job growth of ten percent over the next 10 years. Certified public accountants and certified financial analysts have more training and can expect better career opportunities. Regardless of which career is chosen, both the CPA and CFA both see very good wages.