You have likely noticed several acronyms within the financial industry; two of the most common you’ll probably come across are CPA and CFP® Professional. If you are looking for financial help—whether in tax preparation or investment planning—you will want to know the differences between a CPA and a CFP. Here’s your complete guide.

What’s a CPA?

A Certified Public Accountant (CPA) is a financial professional whose primary focus is taxes and general accounting. But remember, not all accounts hold the CPA designation.

Accountants vs. CPAs

Accountants are professionals with a Bachelor’s degree in accounting; they can either for themselves or other firms or businesses. On the other hand, CPAs are accountants who hold CPA designation. They also are:

Required to continue their education to maintain their CPA license
Held to a specific code of ethics and professional standards
Considered fiduciaries, meaning they must prioritize their client’s best interests

Although the jobs of accountants vs. CPAs may look similar, CPAs are typically considered more qualified and able to perform specific tasks that non-licensed accountants cannot.

The CPA Designation

To obtain the CPA credential, you have to meet a variety of criteria, including:

A bachelor’s degree, usually in a field like accounting, finance, or business administration
150 hours of additional education
A minimum of two years of experience in accounting
A passing score on the Uniform CPA Exam. The Uniform CPA Exam is a rigorous test containing 276 multiple-choice questions, three writing sections, and 28 task-based simulations.

The sections of the exam are divided into the following:

REG (regulation): deals mainly with taxation and law
BEC (business environment and concepts): involves business aspects such as corporate governance and operations
AUD (auditing and attestation): covers everything from audits and attestation engagements to the preparing, compiling, and reviewing of engagements
FAR (financial accounting and reporting): considered to be the most challenging part of the exam; covers topics like calculating depreciation

The exam has a pass rate of only 50%, making the CPA credential one of the most challenging professional credentials to obtain.

What Is a CFP® Professional?

A CERTIFIED FINANCIAL PLANNER™ professional (CFP® Professional) is a financial practitioner whose main task is helping clients improve their financial health while building wealth.

Financial Advisors vs. CFP® Professionals

Financial advisors are financial practitioners who perform similar tasks to CFP® professionals; the difference is that CFP® practitioners hold recognized credentials.

Just about anyone with some financial know-how can call themselves a financial advisor. However, most brokerage firms require that financial advisors have at least a bachelor’s degree from an accredited educational institution.

A CFP® practitioner is someone who not only has the official certified financial planner credential but also:

Is held accountable and monitored by the CFP® professional code of ethics
Has completed rigorous training and education
Must act as a fiduciary

So while you may be able to obtain the same services from a financial advisor as you would from a CFP® practitioner, CFP® professionals typically offer value in the form of certified knowledge and experience that makes them a generally well-respected group of professionals.

The CFP® Professional Designation

To earn a CFP® professional designation, you must complete the following:

Required formal education
Required work experience
Demonstrated professional ethics (specific to the CFP® Professional Board)
Passing the CFP® Professional exam

CFP® professionals must hold accredited bachelor’s degrees and complete CFP® Professional Board-specified courses in financial planning. They also must complete either 6,000 hours of professional experience or 4,000 hours of apprenticeship experience.

The CFP® professional exam is rather brutal, with 170 multiple-choice questions that cover everything from insurance, investments, and risk management to education, retirement, and estate planning. The exam is six hours long and has a national pass rate of about 64%.

CFP® Professional vs. CPA

Both CFP® professionals and CPAs can act as financial advisors. Both certifications give these financial practitioners the knowledge and strategies needed to help clients with their finances. Perhaps the most significant difference between the two is that CPAs are usually more qualified to handle tax matters.

Get the Help You Need Today

We hope you enjoyed this guide on the differences between the role of CPAs and CFP® professionals. As you can probably tell, finding the right financial help for your personal affairs or your business can be challenging. After all, finances are a critical aspect of both your personal and professional life, so you want to ensure you work with someone qualified, experienced, and trustworthy.

If you are a resident of Charleston, SC, our team at Good Life Financial Advisors of Mt. Pleasant is here to help guide you on your financial journey. As proud CFP® professionals affiliated with the Financial Planning Association, we are happy to sit down and answer all your questions with a complimentary discovery call. This meeting is a no-obligation consultation where we will discuss your current life circumstances, financial situation, and long-term money goals. It is also an opportunity for you to learn more about us and determine whether you feel comfortable moving forward with our team of financial professionals.

If you’re ready to discover the Good Life, contact us today to schedule your free consultation. Thanks for visiting our blog, and we hope to help you soon!

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