A CFA (chartered financial analyst) is a finance professional who analyzes companies’ financial data and stock prices to make meaningful predictions about future performance. CPAs (certified public accountants) are often responsible for compiling the financial data CFAs then analyze. Choosing between a CFA vs. CPA certification can be difficult — both are highly respected signifiers of expertise in the finance industry and can be great ways to make yourself more marketable to employers.
What Is a CFA?
A CFA is a chartered financial analyst — a finance professional who has received a certification through the CFA Institute. This certification shows the analyst deeply understands economics, financial analysis, investing ethics, and investment management.
One of the key responsibilities of a financial analyst is a process called discounting.
CFAs need to “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 those estimated future cash flows are worth today.”
In a practical setting, discounting helps analysts figure out if “a stock price is too high or two low, and it’s a skill that can be used to determine which project a company should invest in next,” adds Cunnison. A CFA certification teaches analysts how to discount cash flows and make financial models.
Many different roles in finance can benefit from CFA certifications. Investment bankers, portfolio managers, accountants, and risk analysts commonly obtain CFAs to make themselves more marketable and to improve their analytical skills.
>>MORE: Explore the broader differences between financial analysts and accountants.
What Is a CPA?
A CPA is a certified public accountant — a specific type of accountant who has passed the CPA exams administered by each state’s Board of Accountancy and the National Association of State Boards of Accountancy (NASBA). Public accountants, as opposed to private accountants, typically work for large accounting firms and perform accounting duties for multiple client companies. Private accountants (who can also hold CPA licenses!) work for a single business and only perform accounting tasks for their employer.
“CPAs have the authority to perform audits, reviews and other assurance engagements,” says Kathryn Kaminsky, vice chair and U.S. Trust Solutions co-leader at PwC. “They can provide an individual assessment of an organization’s financial statements and compliance with accounting standards and provide assurance to stakeholders on the accuracy and reliability of financial statements.”
CPAs also handle tax forms and perform audits for publicly traded companies because all public companies are required by the U.S. Securities and Exchange Commission (SEC) to undergo periodic external audits.
However, “accounting is about more than just a financial statement audit,” says Kaminsky. “As stakeholders demand more transparency from businesses, CPAs are well-positioned to provide assurance over non-financial information as well.”
>>MORE: Learn how to choose an accounting career path.
CPA vs. CFA Salaries
The U.S. Bureau of Labor Statistics (BLS) reports that financial and investment analysts make an average annual salary of $108,790. However, CFAs are a specific type of financial analyst, and having a specialized credential often leads to higher pay. In addition to base salary, CFA holders often receive additional compensation in the form of commission, stock shares, and performance or annual bonuses.
According to the BLS, accountants and auditors earn an average salary of $86,740. However, while all CPAs are accountants, not all accountants are CPAs. The Accounting Institute for Success reports that the average CPA salary is $62,410, but this is averaged across all industries, companies, locations, and experience levels. Experience level plays a vital role in both CFA and CPA salaries.
| Experience Level | CFA | CPA |
|---|---|---|
| Early Career (<1 Year Experience) | $106,200 | $84,100 |
| Average for All Experience Levels | $125,300 | $98,800 |
| Experienced (>15 Years Experience) | $192,200 | $169,700 |
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How to Become a CFA vs. CPA
CPA vs. CFA Certification Requirements
The requirements for CFA certification include:
- Have or be working toward a bachelor’s degree or have at least 4,000 combined hours of higher education and relevant work experience
- Pay an enrollment fee and registration fees for each exam
- Pass the three CFA exams
The CFA exams cover asset valuation, portfolio and investment management, financial reporting and analysis, and quantitative analysis.
The CPA license requirements are:
- Have a bachelor’s degree or higher with 150 credit hours of relevant coursework
- Pay an application fee and fees for each subject-matter test
- Pass the four CPA test sections
The CPA tests include auditing and attestation, business environment and concepts, financial accounting and reporting, and regulation and ethics.
CPAs and CFAs can seek additional certifications, too. For example, a CPA may also choose to gain a certified management accountant (CMA) designation to show leadership and financial planning skills.
Education
For CFAs, having a solid foundation in finance and business can make passing the exams easier, and most analysts choose to study finance, economics, business, or accounting. However, having a different background can give you a different skill set. For example, a degree in data science can show high-level quantitative analysis skills, which is vital for CFAs.
“Majoring in accounting is not always required to become an accountant,” says Kaminsky. “Take me, for example. I have a history degree!”
However, like CFAs, a background in accounting or finance does make passing the exams easier. Additionally, many CPAs and CFAs go for advanced degrees like a master of business administration (MBA) since it can help them meet the exam’s education requirements and make them more marketable to employers.
Skills
Both CPAs and CFAs need to be able to read, review, and analyze financial data and find meaningful insights from that information. To do this, they need skills like:
- Analytical thinking
- Problem-solving
- Communication
- Attention to detail
- Mathematics
- Excel
- Familiarity with financial statements, like cash flow statements
CPAs specifically need to understand the generally accepted accounting principles (GAAP) and other accounting-related concepts such as:
- The accounting equation
- Using ratios of financial performance like the current ratio
- Measurements of profitability like EBITDA and profit margins
>>MORE: Check out more skills accountants need on their resumes.
CFAs must have financial modeling and predicting skills, like:
- Completing comparable company analyses
- Discounting using discounted cash flow (DCF) analysis
- Predicting investment growth with compound annual growth rate (CAGR) calculations
Bottom Line: What’s the Difference?
In the finance industry, having a CPA or CFA certification is highly respected — these designations show commitment, dedication, and expertise. Both titles are great options for anyone entering a career in finance.
While CFAs primarily analyze financial data, CPAs often compile that financial data, making analysis possible. Ultimately, both are necessary for accurate and insightful financial analysis and decision-making.
Explore these careers in-depth and learn valuable skills employers want with Forage’s free job simulations.
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