CPA vs. CFP: What’s the Difference?

Finding the right financial advisor can be tough. Many advisors study for advanced certifications, and understanding those designations is helpful when deciding who to work with. Two of the most common certifications are the certified public accountant (CPA) and certified financial planner (CFP). So, what exactly is the difference between the two, and how do financial advisors use them? Turns out, there are key differences between them everyone—especially potential clients—should know about.

What does a financial advisor do?

A financial advisor is a qualified professional who works with clients to achieve financial success and meet their money goals. Clients don’t have to be individuals—financial advisors could work with companies and firms, too. Financial advisors work with a number of people from different financial backgrounds.

One way financial advisors can specialize their work is to get certified. That’s where the CPA and CFP certifications come into play.

What do CPA and CFP certifications entail?

CPA stands for certified public accountant. Financial experts with this certification usually work with accounting matters and taxes and typically work with an accounting firm, but they can work with other clients. For instance, public accounting firms may work with individuals or bigger firms.

A CFP, on the other hand, is a certified financial planner. CFPs usually handle financial strategy and management. Someone who has a CFP certification could be a wealth manager, financial planner, or financial advisor for individuals. CFP is the most common certification for a financial advisor.

Take a look at the table below to compare the services offered by CFPs and CPAs:

How do you become a CPA?

To become a CPA, one needs to gain certification and become part of the Association of International Certified Professional Accountants (AICPA), which handles certification.

CPA hopefuls are required to complete specific education requirements and must pass the CPA exam. They also need experience in public accounting.

In terms of education requirements, future CPAs need to have a bachelor’s degree, at a minimum, and need to have at least 150 semester hours under their belts. Since a bachelor’s degree is usually only120 semester hours, many CPAs hopefuls get their master’s degree.

Keep in mind that individual states may have specific educational requirements for CPAs, too, which could mean more schooling. The CPA exam is the same across states, though. Expect multiple choice, real-life simulation, and written communication questions on the exam.

How do you become a CFP?

The Certified Financial Planner Board of Standards handles CFP certification. The process is similar to becoming a CPA: CFP hopefuls must also meet education requirements, pass the CFP exam, and have professional experience.

One must have at least a bachelor’s degree with some college-level study in financial planning to become a CFP. Once you have that educational requirement, you can take the exam, which takes place in one day for two three-hour sessions. Typically, it’s multiple choice and uses real-life situations.

In terms of experience, CFP hopefuls need 6,000 hours of experience with financial planning or 4,000 hours through an apprenticeship program.

Wrapping up CPA vs. CFP

The CPA and CFP certifications are both common certifications for financial advisors. Each certification has its strengths, so the key is to work with someone who has the right certification for your needs. For instance, a CPA could provide tax help, while a CFP may be better for overall investment strategy.