What are the Financial Certifications?
Finance certifications are professional credentials that financial experts can earn to establish their knowledge and competency in an area of finance topics. There are numerous financial certifications available in many different specializations. Some of the designations you might encounter include CFA, CPA, CFP, FRM, FMVA, and CAIA, but which is the right one for you?
The best finance certifications for your career are the ones that specialize in the area of finance that you want to work in.
The financial designations show the area of expertise of an individual in the financial sector. Obtaining financial certification will make you assess and refine your skills in a particular finance field, which will make you desirable to potential clients and employers. Most importantly, holders should take continuing education to enhance skills and be up to date with financial regulations.
Let’s take a look at each finance credential to examine their pros, cons, and areas of study, so you can see which is the right financial certification for your career.
Top 6 Finance Certifications Compared
Here is a list of the best finance certifications to grow your professional financial career:
- Certified Public Accountant (CPA)
- Chartered Financial Analyst (CFA)
- Certified Financial Planner (CFP)
- Chartered Alternative Investment Analyst (CAIA)
- Financial Risk Manager (FRM)
- Financial Modeling & Valuation Analyst (FMVA)
Certified Public Accountant (CPA) License
The Certified Public Accountant (CPA) certification is most popular and useful accounting credential because of its wide area of focus and application. The American Institute of CPAs (AICPA) administers the CPA exam in conjunction with NASBA, but the individual State Boards of Accountancy are the bodies that actually issue the legal CPA license.
To obtain a CPA designation, you have to complete 150 hours of education and then pass the CPA exam testing candidates on Audit/attestation, Financial Accounting and Reporting, Regulation, and Business Environment and Concepts.
The license is vital for tax preparers, accountants, and financial analysts. Unlike other finance certifications, the CPA license is required by law to perform certain tasks like audits and IRS representations.
The CPA license is helpful for those seeking financial advice regarding organizing investments and reducing taxes. The certification is vital for those working in taxation, government accounting, public accounting, financial advisory, management accounting, and compliance, among other roles.
The average CPA salary in the US is $119,000 per year, but those with more work experience will earn more.
Chartered Financial Analyst (CFA) Certification
The Chartered Financial Analyst (CFA) certification is a designation that focuses on investment banking, financial analysis, and securities trading. The CFA is often considered one of the top financial certifications for finance professionals looking to work on Wall Street.
The CFA Institute regulates the CFA credential by administering the exam, regulating the professional requirements, and issuing the certifications.
The designation comprises three levels and takes around four years to complete all the levels. To get a certification, one must complete an exam on topics including ethical and professional standards, economics, corporate finance, fixed income, financial reporting and analysis, portfolio management, alternative investment, and derivatives.
The CFA Institute program typically costs between $4,000 and $5,000 to complete.
The certification is essential for those planning to become asset managers and security analysts. Similarly, financial professionals aspiring to become fund managers, equity analysts, or hedge fund managers can consider having the certification.
The average CFA salary is between $50,000 and $153,000, depending on the level of experience.
Certified Financial Planner (CFP) Designation
The Certified Financial Planner (CFP) credential specializes in financial investment concepts and risk management. It’s aim is to give financial professionals the knowledge they need to advise clients how to invest their money and savings.
The CFP Board regulates the CFP certification along with the exam, qualifications, and certification process. To become a certified financial planner, you should complete a course on general finance principles, risk management, investment planning, professional conduct, and tax planning.
CFP certification is vital for those considering fee-based financial planners who want to manage their clients’ finances.
The certification is necessary for those considering asset management, estate planning, employee benefit, tax, insurance, and education roles.
According to PayScale, the average CFP salary is $62,556 per year, depending on education level, industry, and geographic location.
Chartered Alternative Investment Analyst (CAIA) Designation
The Chartered Alternative Investment Analyst (CAIA) designation specializes in alternative investment strategies with an emphasis on asset managers and hedge fund managers.
The CAIA Association administers the certification, exam, and the qualification process. The CAIA program entails the basic and advanced study of hedge funds, managed futures, private equity, credit derivatives, and real estate.
A large part of the exam involves ethics and borrows from the CFA Institute’s Code of Ethics and Standards of Professional Conduct. This designation is of interest for individuals considering putting their portfolio in alternative investments because they need experts in the field.
Financial Risk Manager (FRM) Credential
The Financial Risk Manager (FRM) certification specializes in portfolio management, risk assessment, and other financial investing analysis. This is a great certification for people who want to start a career as a risk officer or risk analyst.
The Global Association of Risk Professionals (GARP) confers this certification by administering the FRM program. One has to complete two exams evaluating fundamentals of markets and products, quantitative analysis, valuation, and risk management.
The second level focuses on market, operational risks, credit, investment management, risk management, and financial market issues. The certification is crucial for those who want to work in banks as risk managers, risk analysts, and risk officers, among others.
According to PayScale, a certified financial risk manager average salary is between $55,000 and $211,000 depending on experience level, with senior managers and directors earning more.
Financial Modeling & Valuation Analyst (FMVA) Certification
Financial Modeling & Valuation Analyst (FMVA) certification is a new and increasingly common certification for corporate finance professionals offered by the Corporate Finance Institute. It involves the building of financial models to advanced sensitivity analysis and valuation techniques.
This is the newest and least stringent of all the financial certifications. There is no exam or qualification requirements to become certificated.
To obtain the certification, one should complete 24 courses on financial analysis, business evaluation, financial modeling, real estate, and advanced applications such as sensitivity analysis, scenario analysis, and mergers & acquisitions modeling.
There is no salary estimates for FMVA holders, as this is typically an add-on certification to build a resume. Most FMVA holders already have an authoritative certification before obtain the FMVA credential.
Best Finance Certifications Online
Here is a list of the best finance certification programs online.
- Certified Financial Planner (CFP)
- Capital Markets & Securities Analyst (CMSA)
- Financial Planning & Wealth Management Professional (FPWM)
- Commercial Banking & Credit Analyst (CBCA)
- Financial Risk Manager (FRM)
- Financial Modeling & Valuation Analyst (FMVA)
Each of these programs has a slightly different focus in finance and can be applied in your financial career in different ways.
Easiest Finance Certifications
The easiest finance certification is the Financial Modeling & Valuation Analyst (FMVA) certification. There is no authoritative exam required nor does it require any educational qualifications. The FMVA is an easy resume building finance certification that looks more professional than it is.
The CFI issues your certificate upon completion of their self-study course.
With a weekend course, you can add these letters to your resume and impress any unknowledgeable HR staff sifting through resumes. It’s a great certification to add to your list for this reason.
Hardest Finance Certifications
The hardest finance certification is the Chartered Financial Analyst (CFA) certification. This grueling three-level exam and certification process generally takes candidates over four years to complete. Many CFA candidates simply stop after level 1 or level 2 because of the difficulty.
This speaks to the quality of the CFA Institute program as well as the knowledge required to pass the extensive exam process. The CFA is by far the most difficult financial certification, but it is also one of the most respected. It’s a great certification that will undoubtedly build your career.
Short-Term Certification Courses in Finance
Here is a list of the best short-term certification courses in finance:
- Certified Financial Planner (CFP)
- Chartered Wealth Management (CWM)
- International Financial Reporting Standards (IFRS)
- Chartered Alternative Investment Analyst (CAIA)
- Certified Fund Specialist (CFS)
- Certified Treasury Professional (CTP)
Taking a short-term finance certification is a great way to build your career, especially directly after you graduate from college. These courses help you specialize in different fields of finance and open the doors to different career paths at banking, investment firms, and other financial institutes.
Why Get a Financial Certification
Getting financial certification allows one to specialize in a specific financial sector, and the document confirms that an individual has a particular skill set. Taking the best financial certificate depends on the kind of job one plans to take or career path. Most importantly, the certification will make you more marketable in the job market. Also, some managerial positions may require individuals with certification and this having a designation is excellent in career growth.
With continuing education, which is necessary for certified professionals, one continues to acquire new skills to boost workplace performance. Also, since certified individuals do belong in a professional body, one will benefit from a community of like-minded individuals considering the professional bodies usually encourage collaboration and help their members to create sector-wide solid networks.
Also, if you want to earn more, then you should consider getting financial certification. It is because candidates with designation tend to earn more than their uncertified peers. It is vital to note that the various certifications’ significance depends on whether one will offer institutional or retail financial services.
Which Finance Certification is Right for You?
To decide which is the appropriate certification for you, you should consider what you aspire to become or your career path.
The right certification will help you close a knowledge gap, lead to salary increment and career advancement. Choose a certification that will make your skills more desirable to clients and potential employers.
The two most diverse and useful certifications are CPA and CFA. Start your search with these two and branch out from there.
FAQ
Which certification is best for finance?
The best certification for finance is either the CFA or CPA. If you plan to work in investment banking or funds management, you will likely want to pursue the CFA. If, on the other hand, you want to work in accounting and auditing, you will need the CPA certification to expand your career in finance.
What is harder CFA or CFP?
Generally, the CFA exam is harder than the CFP exam. The CFA has a published pass rate under 45%, making it much more difficult than the CFP exam. The CFA is also a multi-level exam process that requires more than 4 years to complete. The CFP is only a single exam.
Are finance certifications worth it?
Yes, finance certification are worth pursuing. A financial credential will develop your skills and knowledge of many professional financial topics allowing you to seek many different careers in finance that require some type of certification.
What is the hardest finance certification?
The hardest finance certification is the CFA (Chartered Financial Analyst). The CFA is a 3-level exam and certification process that takes the average CFA candidate over 4 years to complete. With a pass rate of under 45%, the CFA exam is the most difficult finance certification exam.
