Looking for professional financial advice can be confusing. It is hard to know who to trust, and with so many potential licensesnand certifications it is difficult to know which professional is best for the sort of advice you need.
Let’s take a look at a couple of the more popular accreditations and see how they can benefit the average individual.
CFA vs CPA vs CFP
These are the three most popular certifications you will run into while searching for financial help. Let’s take a look at each of these and see when, and to whom, they may be helpful.
CFA stands for Chartered Financial Analyst, and it is typically something that a professional money manager looks to obtain. CFAs are expected to have an in-depth knowledge of the investment industry, and are typically portfolio managers or analysts at big investing firms or money management groups. These are not typically individuals that specialize in personal finance. Instead, they are running mutual funds, or serving as portfolio managers for large investment institutions.
If you already have acquired a material amount of wealth, and are looking for a money manager, then you want to make sure that whomever is managing your money is a CFA. Not only is the testing process very arduous, but CFAs have to go through continuing education to make sure that they stay up to date on all the nuances of the investment world.
CPA stands for Certified Public Accountant. CPAs focus on the accounting side of things. They typically have accounting degrees (but not always), and then go on to cement their credentials by passing the CPA exam. CPAs are good to seek out for some personal-finance questions because they typically have a good understanding of tax law and can help you make financial decisions with an emphasis on how those decisions will impact your obligations to the government.
CPAs serve a variety of roles in the business world. Some work as senior accountants for major corporations, some work almost exclusively as tax advisors for individuals, while others serve as advisors to small business owners on strategies they can use to improve their overall operations.
If you own a home, have children, or want to take full advantage of the tax deductions available to you, then it is wise to consult a CPA to make sure you are not leaving money on the table at tax time. They are also essential for small business owners or self-employed individuals who want to make sure they have their accounting standards correct and are running their financial operations as smoothly as possible.
A CFP stands for Certified Financial Planner. A Certified Financial Planner is someone you should turn to for advice on your household budget, which life insurance policy would be best for your situation or retirement or college planning. The primary responsibility of a Certified Financial Planners is to evaluate your current financial situation and make suggestions on how you can best improve your financial outlook.
For the majority of individuals, a CFP is the type of financial expert you need. The average household is mostly concerned with stretching their incomes and figuring out how they will pay for their children’s’ education, all while making sure there is enough money saved up for retirement.
If you are concerned about your financial situation, and want to make sure you are doing everything possible to safeguard the future for you and your family, you many want to seek out a CFP to get their input on how best to secure your financial future.
Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. In addition to writing for Fresh Brewed Media, Michael also wrote for AOL's BloggingStocks for three years, focusing most of his attention on the energy and technology sectors.