Nice article found at WSJ, published couple of years back: http://www.alexanderinvest.com/CFP%20versus%20CFA.htm For Financial Advice: CFP or CFA? By JONATHAN BURTON July 8, 2007 Scott Kays has spent what he estimates to be about 700 hours scaling the investment profession’s equivalent of Mt. Everest, and he’s no more than two-thirds of the way there. The Atlanta-based investment adviser recently took the second of three rigorous tests to attain the coveted chartered financial analyst, or CFA, designation. The distinction is a career pinnacle for anyone absorbed in nitty-gritty investment research and analysis, and the route to the top is demanding. On his examination day in early June, Mr. Kays and about 675 other hopefuls filled a large room in Atlanta’s World Congress Center. For three hours in the morning and another three in the afternoon the test-takers would be grilled about the inner workings and valuation of stocks, bonds, hedge funds, derivatives and other exotic investments. In 89 countries around the world that day, almost 100,000 people faced the same hurdle. Mr. Kays will find out in August how he did. If he passes, he’ll advance to the third, final test. But why would Mr. Kays, who attained the certified financial planner, or CFP, mark more than two decades ago, knock himself out in this grueling quest for the grail? With apologies to Sir Edmund Hillary: Because it’s there. “For someone who really wants to expand their knowledge, especially of the investment area, the CFA curriculum is just great,” Mr. Kays says. “It’s helped me do a much better job of actually analyzing the investments themselves. I have a much better understanding of what drives valuation, different markets and investment returns.” The CFA exam takes a hard, analytical look at stocks, bonds, hedging strategies and company financial statements. People who achieve the designation typically manage institutional money and mutual funds or become involved with corporate finance. So if you have an adviser who is among the few who have earned the CFA designation, or if his or her firm has a CFA on the payroll, consider it a plus. Wide Range of Issues In contrast, certified financial planners maintain a broad-based approach to retirement, education, taxes, insurance, estates and other life issues. Investing is a major part – but just one part – of the big picture. “You can’t just be crackerjack on investments and get through the CFP certification exam,” says Karen Schaeffer, a Rockville, Md.-based financial planner and chairman of the CFP Board of Standards, which regulates CFP practitioners. “It would be hard to do financial planning without understanding investments, but there’s a great deal of financial planning that goes on” beyond investment strategies. More Knowledge Needed Yet with many financial advisers now steering clients beyond mutual funds and exchange-traded funds into individual stocks and bonds, there can be a need for the expertise the CFA mark endorses. “If I were looking for someone who was going to manage a portfolio of individual common stocks and do the selection and analysis, I’d look for the CFA designation,” says John Markese, president of the American Association of Individual Investors. “The CFA has the ability to look at the financial statements and arrive at an informed opinion,” he adds. Of course, you have to understand stocks, bonds and other investments to attain the CFP certification, but it’s a more generalized knowledge that’s relevant to straightforward personal finance. If your adviser starts highlighting more specialized portfolio strategies, Mr. Markese recommends asking what in his experience and education makes him qualified for the task. “If someone has the CFA on board,” he says, “that’s all the more evidence that they have the confidence to do it.” Deciding to put clients into individual securities prompted Mr. Kays to pursue the CFA charter. His Level 2 exam in June, for example, covered derivatives, currencies and other sophisticated investing topics. Plus, he’s logged many hours poring over balance sheets and income statements to get to the root of a company’s accounting and valuation. “The CFA takes one area and goes into tremendous detail,” Mr. Kays says of the process. “You dig a two-foot hole 10 feet deep. The focus is on investments – hard-core investments, not estate planning or life planning.” That finer appreciation of investment techniques also led David Strege to seek the CFA mark 20 years ago. The West Des Moines, Iowa-based adviser is a rare investment professional with both the CFP and CFA distinctions. Portfolio Creation “The CFP certification is more about comprehensive financial planning, helping individuals with all facets of their financial life,” he says. “The CFA really focuses more in-depth with the creation of investment portfolios and manager or individual securities selection. It helped train me to ask appropriate questions.” Still, only about 2% of the 55,000 CFP holders in the U.S. also claim the CFA charter. Just one in five CFA aspirants completes all three levels; there are currently a total of 90,000 CFA designees world-wide. “The CFA program is the ultimate meritocracy,” says Bob Johnson, managing director of the education division at the CFA Institute, the CFA program’s governing body. “Anyone can enter; you have to prove your way out.” “It’s the Big A – analysis,” Mr. Johnson says. “It has always been extremely challenging, but the investment-management profession has gotten nothing but more complex over time,” he adds.
haha. 675 is a very small number. In Boston, there were close to 8K candidates.
I know him. What a small world.
this is pretty funny. when in my undergrad, i asked a cfa and a cfp what the value of having both would be, as i was already a LI candidate and enrolled in a cfp endorsed program, and they both said nil. i think there is a lot of value in learning both, coming from both a finance and financial planning background.
I could use the CFP knowledge for my own personal investing/planning. However, I don’t see it adding value to a career unless you’re in PWM/Advisory. I imagine CFA+CFP is great for those roles.
Should I find out I passed L3 this year I will have both and I definitely think the combo has value. CFP touches on many areas the CFA doesn’t go near. Although most of the areas would not be of use to a straight up analyst (which I am not) - Estate, tax, insurance, etc. I agree the combo works well in PWM and advisory.
yes, 90 percent sure i will study for the CFP if i pass this exam.
^ Me too. Would you self study or do the classes?
My plan is to study it like I did the CFA, no classes. I still need to get through CFA and school first. Plans change
not so much CFP for me, I am considering CAIA, some overlap with CFA program, I figured to knock that out while my memory is still fresh.
yeah definitely pwm. i use financing planning software for about 10% of my day. i could take the cfp exam and get both charters on the same day. may as well.
im a cfp in pwm and also level 2 candidate waiting on my fail results. it certainly helps in pwm. most people in pwm look at the cfp as the pinnacle of licenses. when you get the cfa, they see you on a completely different level. primary downside is most jobs that cfp works for are commissioned base. you get the combo though, and now you are talking management in pwm firms.
how do you guys plan on getting the experience requirement completed for CFP?
needhelp Wrote: ------------------------------------------------------- > how do you guys plan on getting the experience > requirement completed for CFP? +1
Wouldn’t these be useful (not only for personal investing), but for running your own investment company? General Principles of Finance and Financial Planning Insurance Planning Employee Benefits Planning Investment and Securities Planning State and Federal Income Tax Planning Estate Tax, Gift Tax, and Transfer Tax Planning Asset Protection Planning Retirement Planning Estate Planning
The combo is great for PWM and is of particular use for anyone doing retail portfolios. Generally speaking, the CFA is better for institutional money management while the CFP is better for retail money management. There are major links between the two and at the very top of PWM, the lines blur. Especially over the last 2 years, I now know many retail brokers with higher AUM than some funds and fund management companies, including some large publicly traded fund managers.
Don’t do either. Get a job working for someone who really knows how to invest (not useless textbook knowledge) and work your butt off to learn their system. The NPV of that approach is multiples of wasting time studying useless stuff.
Start a business bribing state officials and selling organs