« Previous | Main | Next »

The Wall Street Journal (WSJ) recently published an article, For Financial Advice: CFP or CFA?, July 8, 2007. The Certified Financial Planner (CFP) and the Chartered Financial Analyst (CFA) designations are two of the most well know financial services designations in the marketplace. To many, however, the designations seem synonymous - both deal with investments, risk, asset pricing models, valuation, security types, etc. However, while they may seem one in the same, the two designations cover the topics very differently in comprehension and application.

The WSJ article reveals how the CFA designation is more of a specialist designation that best prepares individuals for investment theory and security valuation. The CFP designation, on the other hand, is more of a generalist designation that provides the best preparation for comprehensive personal and estate planning. For example, the CFP curriculum would require a candidate to know what a callable bond is. The CFA curriculum would require the candidate to not only know what a callable bond is, but also know how to value a callable bond and to understand its use in portfolio management.

The WSJ article quotes Scott Kays, an investment advisor in Atlanta, who is also a CFA candidate: "For someone who really wants to expand their knowledge, especially of the investment area, the CFA curriculum is just great. 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."

Another key distinction of the two designations is the rigorousness of the curriculums. The WSJ article likens the attainment of the CFA designation to the investment profession's equivalent of scaling Mt. Everest. Only 20% of CFA candidates are estimated to complete all three testing levels. For the purpose of valuation and in-depth analysis, there is no better designation than the CFA.

Category(s):
Posted by Shina Culberson at 08:29 PM | Permalink | Comments (0) | TrackBacks (0)