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SmartAsset: CMA vs. CFA Designations for Financial Advisors

When searching for a financial advisor, you’ll come across numerous designations and licenses. It can be hard to understand what they mean and how they’re different. The CMA and CFA are two common fiduciary designations for financial advisors. Let’s compare the key differences to help you pick the best advisor for your portfolio. A financial advisor can help you create a financial plan for your needs and goals.

What Is the CMA Designation?

The certified management accountant (CMA) designation is for advisors who specialize in accounting. It illustrates that the professional has expertise in financial accounting and strategic management. This designation is primarily for accountants who work outside of CPA firms, so it can provide a solid foundation for understanding the financial needs of clients. Most applications complete within one year because it is not as intensive as the requirements for becoming a CPA (certified public accountant).

What Is the CFA Designation?

The chartered financial analyst (CFA) designation provides a strong foundation in real-world portfolio management and advanced investment analysis. These professionals often make investment decisions as research analysts or portfolio managers for investment firms, family offices or high-net-worth clients. Candidates study accounting, economics, money management and other relevant topics as they prepare for their exams. Certification requires passing three notoriously challenging exams: Most students fail the first one.

How Are They Similar?

The CMA and CFA are both prestigious professional designations that require rigorous study of various financial topics to qualify for exams. Central bodies governed and administer these exams. They also adhere to a code of professional ethics and demand that their members do the same. Members must meet continuing education requirements covering changes in laws and regulations to maintain their membership.

How Are They Different?

SmartAsset: CMA vs. CFA Designations for Financial Advisors

While there are many similarities when comparing the CMA vs. CFA, there are differences as well. These are the main differences that you should know:

  • Accrediting entity. Different governing bodies administer the exams for each designation. The Institute of Management Accountants offers the CMA, while the CFA Institute governs CFA certification.
  • Testing requirements. Testing requirements for the CMA and CFA are also different. The CMA has a two-part exam covering 12 competencies, while the three CFA exams cover advanced knowledge of investment tools, asset valuation, portfolio management and wealth planning.
  • Focus of the designation. The CFA designation focuses on investment analysis, while the CMA designation signifies expertise in financial accounting and business strategy.

Which One Is Best for My Portfolio?

When comparing the CMA vs. CFA designations, both are prestigious and require in-depth knowledge of important financial topics. However, when looking for a financial advisor, the CFA designation is generally a better fit for the average investor.

Because of the accounting and strategy focus of CMA professionals, their expertise caters to the needs of small business owners and large corporations. The certification covers financial topics like financial reporting, cost management and risk management. These are critical factors for the success of the business but are generally not aligned with the average investor’s portfolio decisions. CMAs often find work as corporate treasurers and controllers.

By comparison, CFA professionals study asset valuation, portfolio management, wealth planning and other investing decisions. While many CFA holders work for large investment firms, their expertise is probably a better choice for working with investors than a CMA professional.

Bottom Line

SmartAsset: CMA vs. CFA Designations for Financial Advisors

Professionals in the investment world often hold certifications and designations that the average investor is not familiar with. They study long hours to pass exams to qualify for these prestigious certifications. While all of these professionals hold valuable knowledge, some certifications are a better fit for working with investors. When comparing the CMA vs. CFA designations, a CFA’s focus on investments, company valuation and wealth planning may be the better choice for a retail investor over a CMA’s credentials in corporate accounting and business strategy.

Investing Tips for the Future

  • When investing for your future, it is good to have financial goals for your money. Our investment calculator forecasts the growth of your portfolio based on different inputs. Adjust the timeframe, expected rate of return and ongoing contributions to see how different strategies affect your portfolio growth.
  • Creating an investment strategy that meets your financial needs can be a challenge for many investors. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Photo credit: © iStock/Jay Yuno, © iStock/AzmanJaka, © iStock/SrdjanPav

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