Choosing between a Certified Financial Planner™ (CFP®) and a certified public accountant (CPA) depends on your financial needs. A CFP specializes in personal financial planning, including investments, retirement, and estate strategies. A CPA, on the other hand, focuses on tax planning, accounting and business financial management. While both professionals offer financial expertise, their roles differ significantly. If you’re looking for long-term financial planning and wealth management, a CFP may be the right fit. If you need tax preparation, auditing, or business accounting, a CPA could be more suitable. Understanding the CFP vs. CPA distinction helps in selecting the right professional.
Financial advisors who hold credentials like the CFP or CPA designations have expertise in specific areas of finance. Match with a fiduciary advisor today.
What Is a Financial Advisor?
A financial advisor is an expert who helps clients achieve their financial goals. Clients may be individuals, but there are also advisors who work with groups and firms. Some advisors serve a wide range of clients, while others specialize in specific financial areas. On the other hand, other advisors will specialize. For example, there are some advisors who focus specifically on taxes.
Some advisors focus on specific groups, such as professional athletes, women or business owners. In some cases, an advisor will demonstrate his or her specialization by going through a certification program. Two common programs are the CPA and CFP certifications.
CPA vs. CFP: What These Certifications Indicate
Individuals with the CPA credential typically work with matters of accounting and taxes. CPAs usually work with an accounting firm but the type of clients and the exact services they provide vary widely. Public accounting firms serve both individuals and businesses. Some CPAs focus on auditing financial accounts, while others provide tax consulting.
CFPs typically focus on comprehensive financial planning and management. Common occupations for a CFP include financial planner, wealth manager and financial advisor. CFPs usually work with individual clients.
Both of these certifications are common but CFP is the most common certification for a financial advisor. That doesn’t necessarily make it a better certification. It is simply more tailored to helping individuals with financial planning. An advisor with either certification has gone through a rigorous program, which we outline in the next section.
If you’re choosing between a CPA or CFP certification, consider your career goals and preferred financial expertise. For a quick comparison, the table below breaks down five common services offered by CFPs and CPAs:
| CFP Services | CPA Services |
|---|---|
| Investment portfolio and asset allocation | Tax advice, planning and filing |
| Estate planning | Audit and assurance services |
| Retirement planning | Bookkeeping |
| Education planning | Business management and consultation |
| Debt management | Forensic accounting |
General Requirements for Becoming a CPA
The Association of International Certified Professional Accountants (AICPA) oversees the CPA certification program. In order to gain certification, you will need to become a member of the association. There is an entry fee and there are also annual membership dues.
To become a CPA you will need to complete certain educational requirements and the CPA exam. In addition, you need to have experience in public accounting.
All CPAs must have a bachelor’s degree and complete at least 150 semester hours. A typical bachelor’s degree is only 120 semester hours, so many CPAs also have a master’s degree. Individual states may have specific educational requirements.
For example, Alabama requires an individual’s 150 hours to include at least 24 semester hours of accounting (not including introductory courses), nine hours in financial accounting, three hours in auditing, six hours in taxation, three hours of management accounting, three hours in governmental and not-for-profit accounting and at least three hours in business law. Many accounting programs cover these requirements.
The CPA exam is uniform across all states. The exam includes multiple-choice questions, real-life simulations and written communication exercises. Those questions cover four sections:
- Auditing and attestation
- Business environment and concepts
- Financial accounting and reporting
- Regulation
After passing the exam, you must gain public accounting experience before becoming certified. The exact experience requirements vary by state. Most states require one to three years of doing accounting work, but the exact type of firm you work with is usually flexible. For example, Alabama only requires one year in public accounting or two years in industry, business, government or college teaching.
General Requirements for Becoming a CFP
The Certified Financial Planner Board of Standards administers the CFP certification. In comparing CPA vs. CFP, CFP applicants also have to meet education requirements, pass the CFP exam and have proper work experience.
To earn a CFP, you need to have at least a bachelor’s degree with some college-level study in financial planning. Once you’ve met that educational requirement, you can take the exam. The exam takes place in a single day during two three-hour sessions. The multiple-choice exam uses real-life scenarios to test financial planning knowledge. As for experience, all CFP applicants must have 6,000 hours of experience with financial planning or 4,000 hours through an apprenticeship program.
When to Work With a CFP vs. CPA
A CFP is ideal when you need comprehensive financial planning. If you’re focusing on retirement savings, investment strategies, estate planning, or overall wealth management, a CFP can help create a long-term plan tailored to your goals. They provide guidance on budgeting, risk management, and financial decision-making to keep you on track.
A CPA is best for tax and accounting needs, including tax preparation, bookkeeping and financial reporting. They can also help with IRS audits, deductions, and compliance to optimize your tax situation.
In complex financial situations, working with both professionals may be beneficial. A CFP can develop a financial strategy, while a CPA ensures tax efficiency. Business owners and high-net-worth individuals may benefit from both a CFP for strategy and a CPA for tax efficiency.
Bottom Line
The CPA and CFP certifications are both common for financial advisors. Both certifications indicate a high level of financial expertise. However, if you’re considering the CPA vs. CFP question, you will probably lean toward a CPA if you are looking specifically for tax help.
If you’re pursuing certification, choose a program based on your financial interests. The CFP program is also less-rigorous overall than the CPA program. CFP certification has fewer education and experience requirements than CPA certification.
Tips for Finding a Financial Advisor
- It can be tough to know exactly what kind of financial advisor you need. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- This article covers two common certifications but there are many others. For example, an advisor with a CLU is probably your best choice if you want life insurance help. As you go through your search, visit our guide of the most common financial certifications.
Photo credit: ©iStock.com/simonkr, ©iStock.com/simonkr, ©iStock.com/sturti