In the world of accounting, a CPA, CFA and CFP are very different positions. You should not make the mistake of confusing these very distinct careers simply because they have very similar initials. The difference is more than just the name. Each of these career titles comes with different responsibilities, educational requirements and opportunities.
CPA – Certified Public Accountant
A CPA will spend the majority of his or her time working with clients and businesses to prepare for tax season. They prepare tax returns and carry out audits. They have many responsibilities. Education for a CPA may include courses in analyzing, planning, tax preparation and other specializations. Working as a CPA requires a license in most scenarios, depending on the state the individual lives in. The material on the licensing examination will differ from state to state. CPAs are generally required to hold bachelor’s degrees with coursework in both business and accounting. Anybody who wants to pursue a career in auditing should obtain this license.
CFA – Chartered Financial Analyst
While CPAs are typically recognized within the United States, CFAs are recognized throughout the world. The program is quite broad and covers economics, accounting and statistical analysis. A CFA should hold four years of work experience and complete the CFA examinations, which include three six-hour tests. A Master of Business Administration will also help you get your foot in the door. Membership to the CFA Institute and adherence to the prescribed ethical standards are also necessary to achieve licensure. Most people who obtain their licensure will work as financial analysts for organizations and businesses. Jobs in this area are thought to be more lucrative than those that CPAs occupy.
CFP – Certified Financial Planner
A CFP focuses on investments rather than financial analysis and tax preparation. If you are working in this career path, you should plan to work with individuals rather than entire organizations. A CFP can have a bachelor’s degree in any field, but coursework related to finances is much more helpful. Three years of financial planning are expected of most employees. The required examination also takes 10 hours to complete. Test takers are required to understand concepts related to investments, insurance, risk management and retirement planning. People who work in this field will have direct contact with their clients, individuals who need help making smart decisions with their finances. For some people, this is an entrepreneurial endeavor.
As you can see, each of these positions has its own requirements regarding duties and educational requirements. You may find that working as a CPA is not at all what you thought it would be and you were actually hoping to work as a financial analyst. By paying attention to the job description, you can see if your interests are in line. It is important to consider the title and its various responsibilities as you determine which financial career is most suitable for you.