Looking for a Financial Advisor? Here’s the Difference Between a CFP and a CFA

financial advisor

Financial planning is important for everyone, but it can be even more critical for gig workers whose income can be less steady. Maybe you just realized that you should work with a financial advisor but don’t know where to start. Should you hire an accountant or financial planner? What do all those abbreviations stand for anyway? In this article, we look at the differences between a Certified Financial Planner (CFP) and a Chartered Financial Analyst (CFA) to help you make the best decision.

What is a Certified Financial Planner (CFP)?

A CFP is a financial advisor who helps individuals and families plan their financial future. Helping clients understand their investment strategies is just one of many pieces of advice this type of financial advisor may give to clients. CFPs also help people plan for common long-term goals such as retirement financing, saving money for children’s higher education expenses, or buying their first home.

When investigating leads for financial advisors, make sure that the person you choose has completed specific coursework in personal finance and passed the state examination. A CFP should have the credentials to provide guidance on each of the topics below.

  • Estate planning
  • Insurance planning
  • Retirement planning
  • Tax planning
  • Wealth management

A bonus for you as an independent worker would be finding a personal financial advisor with plenty of experience working with the self-employed.

What is a Chartered Financial Analyst (CFA)?

CFAs typically work with corporations rather than individuals. However, some CFAs do meet with individual clients to assist them with overall wealth management. The main focus of a CFA is helping individuals and corporations create an investment strategy that produces long-term returns. Because of this, CFAs are more directly involved with asset trading such as commodities and currencies.

Earning the designation of CFA requires a person to pass three rigorous exams that last for six hours each. Additionally, they must also have at least a bachelor’s degree in a finance-related field. Below are the topics that a CFA would be most likely to study and services they would provide to clients.

  • Education planning
  • Estate planning
  • General financial planning
  • Retirement savings and income planning
  • Risk management and insurance planning

A CFP would probably be your best bet as a gig worker. But, you may want to consider a CFA if you have significant assets that you want to pass on to others.

Other Financial Advisor Credentials You May Have Seen

If you don’t think hiring a CFP or CFA as a financial advisor would work for your needs, you may want to explore professionals with different financial credentials. The most common ones include:

  • Chartered Financial Consultant (ChFC). They oversee the work of other financial advisors and helps them overcome challenges on behalf of clients.
  • Certified Public Accountant (CPA). A CPA mainly helps with tax planning.
  • Chartered Alternative Investment Analyst (CAIA). CAIAs sell and manage alternative investments.
  • Chartered Retirement Planning Counselor (CRPC). They focus solely on helping clients prepare financially for retirement.

As an independent worker, you cannot rely on an employer to help you plan for retirement and other financial priorities. Fortunately, you have already proven just by virtue of working independently that you are up for the challenge.

About the Author: Lisa Kroulik has worked as a freelance content marketing writer for 10 years. She loves the work and the lifestyle it affords. Learn more about Lisa’s work and availability through Writer Access.

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