CPA vs. CFA®
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In the financial world, a certified accountant and a financial analyst are both very important roles. However, the roles and responsibilities of a Certified Public Accountant (CPA) and a Chartered Financial Analyst (CFA) differ significantly. The main difference is that a CPA qualification is for those seeking careers in auditing, taxation, or accounting, while a CFA qualification is for those who want a career in financial management or to build corporate financial portfolios. Let's look at the main differences in depth.
What Is The Difference Between CPA and CFA?
A Certified Public Accountant (CPA) is a professional who has passed the U.S. Uniform Certified Public Accountant Exam. To practice accounting in any specific state, CPAs must meet the state's licensing requirements. State licensing requirements vary but typically include 150 hours of education (30 hours beyond the typical 120-hour bachelor’s degree in accounting).
The CPA qualification has become one of the most sought-after titles by professionals worldwide, and they are qualified to work in most sectors, with various options for career paths.
A Chartered Financial Analyst (CFA) is a person who has met the program standards set by the CFA Institute. CFAs are usually referred to as the "Black Belts" of finance and investment. This is the finest title to earn if you want to work as an equity analyst, fund manager, or a professional in asset or hedge fund management. The CFA program covers a broad range of topics relating to investment management, financial analysis, stocks, bonds, and derivatives, and provides a generalist knowledge of other areas of finance.
Licensure, Application, and Requirements
| Segment | CPA | CFA |
|---|---|---|
| Licensing Body | American Institute of Certified Public Accountants (AICPA®) | CFA Institute (CFAI®) |
| Levels | Four parts | Three Levels |
| Time Frame | All 4 parts to be completed in 30 or 36 months | 4 years |
| Syllabus |
|
|
| Exam Fees | $1500 | $2,500-$3,500 depending on the time of registration (assumes passing the first time on all 3 levels) |
| Exam Difficulty Level | Moderately difficult with passing rate of ~50% |
Challenging with ~10-13.5% of the candidates clearing all the levels |
CPA Licensure
The CPA License is granted by the U.S in all 55 jurisdictions by the respective State Boards of Accountancy. CPA licensure does not have a centralized administering body, but it is administered and regulated by the National Association of State Boards of Accountancy (NASBA). Candidates need to meet the state requirements set by NASBA to take the exam. Additionally, as a CPA professional, your work requirements may vary depending on the state in which you practice.
Steps to Follow to Obtain the CPA License:
- Check the US CPA eligibility as per the State Board Requirements
- Send your notarized transcripts to the State Board
- Fill in the CPA exam application and pay the exam fees*
- Get your Authorization to Test (ATT)
- Log in to your NASBA account and pay a fee of $180-$250
- Wait for your Notice to Schedule (NTS)
- Once you’ve received the NTS, schedule your US CPA Exam via Prometric
- Pass the exam to obtain the license
CFA Charter
The CFA charter is granted by the CFA Institute, a non-profit organization based in the US. The CFA Institute is headquartered in Charlottesville, VA, has eight regional offices and 160 active societies across the globe. The CFA Exam, like the CPA Exam, must be passed in order to obtain the CFA charter. However, the CFA exam has three levels: CFA Level I, CFA Level II, and CFA Level III.
Steps to Register for CFA Charter
- Create an online user account with your email ID
- Fill in details like your name, age, jurisdiction, etc
- Register for the Level I exam (via the CFAI website)
- Schedule a date on Prometrics and keep a note of the CFA registration deadline
Steps to Become a CFA Charter:
- Pass the Level I exam to qualify for the next levels
- Gather proof of qualified work experience
- Submit reference letters to support your application
- Apply to become a Charterholder in the CFA Institute
- Pass all the levels to obtain the license
Eligibility Requirements - CPA vs CFA
To become a CPA professional, you must have a bachelor's degree and have completed 150 credits of coursework or a related professional certificate, as well as two years of work experience in a relevant field. To become a CFA charter holder, however, you must have a bachelor's degree and four years of relevant professional experience. An international travel passport is required for everyone who wishes to enroll in the CFA or CPA Program and register for the exams for the first time. Also, CFA aspirants must have accumulated 4,000 hours of relevant professional work experience (can be in areas other than investment-related) Other requirements include residency requirements and a citizenship or social security number.
What are the requirements for obtaining the CFA® credential?
- Pass CFA Exams (3): The CFA Program contains three levels of the curriculum, each with its own exam. Passing the exams for all three levels is required to obtain the CFA charter. Exams must be taken and passed in sequence.
- Possess Qualified Work Experience: Candidates must complete work experience requirements to earn the Charter. The experience must be directly involved with the investment decision-making or producing a work product that informs or adds value to that process.
- Submit Reference Letters: In support of the application, candidates must provide 2-3 professional references. These references will be asked to comment on your work experience and professional character.
- Apply to Become a Charterholder: Apply to become a regular member of the CFA Institute. Once your application is approved and you have joined the CFA Institute, you will have earned the CFA charter.
Exam Difficulty - CPA vs CFA
The CPA Exam has three core sections: Financial Auditing and Reporting (FAR), Auditing and Attestation (AUD), and Regulation (REG). Candidates must also pass one discipline section from the following options: Business Analysis & Reporting (BAR), Information Systems and Controls (ISC), Tax Compliance & Planning (TCP). Here’s a look at recent CPA Exam pass rates by section:
| CPA Exam Section | 2021 Pass Rates | 2022 Pass Rates | 2023 Pass Rates | 2024 Pass Rates* |
|---|---|---|---|---|
| AUD | 47.98% | 47.90% | 46.75% | 46.53% |
| BEC | 61.94% | 59.85% | 47.44% | n/a |
| FAR | 44.54% | 43.76% | 42.12% | 40.59% |
| REG | 59.88% | 59.85% | 57.82% | 63.26% |
| BAR | n/a | n/a | n/a | 40.59% |
| ISC | n/a | n/a | n/a | 59.14% |
| TCP | n/a | n/a | n/a | 75.42% |
The CFA exam has three levels: Level I, Level II, and Level III, with varying levels of difficulty. CFA exams are considerably more difficult than most professional competitive exams. In the broader spectrum, CFA exam topics can be classified as financial principles, portfolio management, financial analysis, and accounting.
| Years | Level 1 | Level 2 | Level 3 |
|---|---|---|---|
| 2013 | 40% | 43% | 49% |
| 2014 | 43% | 46% | 54% |
| 2015 | 42% | 46% | 53% |
| 2016 | 43% | 46% | 54% |
| 2017 | 43% | 47% | 54% |
| 2018 | 44% | 45% | 56% |
| 2019 | 41% | 44% | 56% |
| 2020 | 43% | 55% | 56% |
| 2021 | 29% | 41% | 42% |
| 2022 | 37% | 43% | 49% |
| 2023 | 37% | 47% | 48% |
| 2024* | 45% | 59% | 49% |
Career Paths and Pay Grade - CPA vs CFA
CFA charterholders and CPAs both deal with financial data, interact with clients, and evaluate the sustainability of various firms and organizations. CFA charterholders focus on analyzing market circumstances, evaluating firms, and deciding the best method for organizations or individual clients to invest their money. They are likely to work as investment analysts, financial counselors, and portfolio managers, with some eventually rising to the position of Chief Financial Officer (CFO).
CPAs, on the other hand, compile financial records. They may compute taxes payable or evaluate corporate procedures to identify cost-cutting opportunities. In addition, they must guarantee that all necessary financial regulations are fulfilled. Accounting skills are used by some CPAs to identify evidence of fraud or other crimes. Salaries for CFAs and CPAs can differ based on region, experience level, and organization size. Having said that, the average compensation for both CFAs and CPAs is much higher than that of non-certified financial professionals and accountants. Here’s a table of the top careers mentioning the CPA vs. CFA salaries with:
| CFA Careers | CPA Careers | ||
|---|---|---|---|
| Top 5 Roles | Average Salary | Top 5 Roles | Average Salary |
| Research analyst | $77,000 | Accountant and auditor | $100,000 |
| Financial advisor | $83,000 | Financial controller | $101,300 |
| Investment analyst | $78,000 | Information Technology Accountants | $102,910 |
| Portfolio manager | $102,000 | Corporate Controller | $112,000 |
| Chief Financial Officer | $173,000 | Accounting Professor | $127,000 |
The Bottom Line
Deciding whether to pursue a CPA or CFA involves many factors beyond the basics. In summary, each designation serves a distinct purpose, with the CPA specializing in accounting and the CFA focusing on investment. While we’ve highlighted some key differences between the two, your choice should ultimately align with your skill set, career goals, and personal preferences.
Frequently Asked Questions
Can I do CPA and CFA?
Who earns more, CPA or CFA?
Due to their relatively higher job profiles, CFAs are typically compensated more than CPAs. However, this is not always the case, as the pay scale is dependent on factors like the experience level, skill set, and other factors of a CPA or CFA candidate.
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