CFA vs CFP: Which certification should you choose?

“Thanks to my engineering background I had a great network of working professionals with decent salaries who could invest a significant amount each month. I could build a decent SIP (systematic investment plan) book in no time,” he said.

In 2023, Jain discovered certified financial planner (CFP) certification. The curriculum appealed to him. “I could get an in-depth understanding of how to do financial planning. I have completed three modules and I expect to finish all my exams by March 2025. I’ll be certified only after I have three years of experience in financial services,” he said. “CFP certification will add value to my profile and boost my existing practice. I will complete my CFA, too, but the eventual plan is to become a Sebi-registered investment advisor,” he added.

Like Jain, many people are confused about whether CFA or CFP is right for them. Both certifications have different objectives, which we’ll now explore.

Chartered financial analyst

Mumbai-based Animesh Hardia (34), a mechanical engineer, worked as a technical consultant in a supply chain company before changing his career by taking the CFA exams in his early twenties. “I decided to do it because I could see it would give me a wider perspective of what happens in equity research, fixed income research, alternative investments, portfolio management and behavioral finance. This helped me have a broader starting point. CFP would have limited me to just being a financial planner,” he said. He started working with a financial services firm after completing his CFA level 1. He completed level 3 in 2016 and was earning ₹18 lakh a year.

The CFA programme has three levels and a practical skills module (PSM) at each level to help you apply what you learn to real-world scenarios. Candidates who have only two years remaining in their undergrad degree can appear for it. However, they get the charter only after gaining 4,000 hours of relevant work experience in a minimum of 36 months.

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You’ll need at least 300 hours of study time per level to prepare for these exams. “CFA candidates tend to spend more time preparing,” said Arati Porwal, country head, India, CFA Institute, adding that the overall pass rate is 40-45%. “Level 1 introduces you to concepts such as economics, financial statement analysis, quantitative methods, different asset classes, portfolio management and ethics. Their application is tested in level 2, and level 3 is more about analysis,” said Porwal.

A 2022 ‘Impact Assessment of the CFA Program’ report revealed that the average annual compensation for CFA programme candidates (levels 1 to 3) ranges from ₹9 lakh to ₹17 lakh. Advancing from level 3 to becoming a new CFA charter holder can lead to an average annual income of up to ₹29 lakh.

The report also highlighted a minor gap between the expected income after acquiring a CFA charter and the actual income of a recently acquired charter. Non-charterholders expect an average compensation of ₹31 lakh, which is about 11% higher than the average income of newly awarded charterholders.

“Annual compensation of a charterholders with eight to nine years of relevant experience is 40% higher, showing that work experience plays a major role in achieving the higher compensation after acquiring CFA charter,” said Porwal.

Certified financial planner

Siddharth Tamboli (30) completed his CFP certification in 2015 and has created 1,000 financial plans so far. “My mentor told me about this certification when I was in the first year of my graduation course. I felt it would not only make me ready for a job after my undergrad but also help me plan my own finances. I plan to do CFA now to get into financial research and get a technical understanding of the finance world,” he said.

CFP consists of four modules: investment planning specialist, retirement and tax planning specialist, risk and estate planning specialist, and integrated financial planning (IFP), followed by a financial plan assessment. The fourth module, IFP, combines the first three modules. Those eligible for the CFP Fast Track Pathway can directly appear for IFP. Once it is done, candidates have a month to create a financial plan for the case study given to them.

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One needs 200-240 hours to prepare for these exams. According to Krishan Mishra, CEO, FPSB India, the passing rate is 50-55%. “The curriculum is broad-based, introducing candidates to insurance planning, estate planning, retirement concepts and products such as NPS, PPF, EPF, and different asset classes, from equity and debt to derivatives. It also includes tax planning and economic factors that influence financial plans. Students also learn about various salary components, leave encashment, and other employee benefits. This knowledge empowers them to analyse clients’ needs holistically,” said Mishra.

Entry-level CFP professionals with at least three years of experience can earn ₹7-8 lakh a year, Mishra said, while the average annual compensation is ₹13-14 lakh, according to Economic Research Institute Salary Survey data.

Shikha Panchal, who works at a personal financial advisory firm, completed her CFP certification in 2024 and earned ₹4.5 lakh a year at her first job. “It would have been lower had I not completed the CFP. I now need one year of work experience under the supervision of a specialised expert to get a licence to practice as a CFP professional,” she said.

How do they differ?

CFP helps you understand the financial needs of individuals and their families. These experts analyse the income, expenses, liabilities and responsibilities of individuals to give them a comprehensive view of where they stand today against their future goals. CFA, on the other hand, has an institutional angle to it. “I chose CFP because it gave me an opportunity to dive deep into personal finance with practical and actionable knowledge,” said Panchal.

Financial consultant Kaustubh Kale, however, wanted to learn about capital markets after he became a chartered accountant (CA). “I preferred CFA after CA because to me it appeared more polished. I wanted a better understanding of capital markets and different asset classes,” he said.

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Aspiring CFA candidates should be aware of an upcoming change. From February 2025 onwards, CFA level 3 candidates will get a choice of three specialisations – private wealth, private markets and portfolio management. “While 65-70% the course will be the same for all candidates, 30-35% will differ as per the specialisation chosen. Those interested in financial planning can choose the private wealth course. Private markets are about private equity and venture capital, and portfolio management will teach advanced public-markets-focused content,” said Porwal.

FPSB India has tied up with various academic institutions to launch an programme combining postgrad with CFP certification. “NISM and KJ Somaiya Institute of Management are already admitting aspirants, while IIM Ahmedabad, Bengaluru and Lucknow will soon offer similar programmes. There are tie-ups with corporates such as Mirae Asset, Motilal Oswal Financial Services and Religare Broking to upskill qualified professionals under the fast-track mode,” he added.

Mint’s take: Neither CFPs nor CFAs are financial advisors. Only Sebi-registered investment advisors (RIAs) are authorised to give and charge for financial advice. This requires one to clear NISM-Series-X-A and NISM-Series-X-B exams. CFP is more about personal finance while CFA includes aspects of corporate finance. CFA also requires you to commit more time and money than CFP, so be clear about exactly what you want to achieve and in what timeframe.