CPA vs CFA, which is more difficult?

What are the differences and advantages of the CFA, specifically over CPA?

1. CFA vs CPA career paths:
   • The CPA is fundamentally a qualification for those on an accountancy-focused career path, with job roles such as accountants, comptrollers, financial managers, CFOs, etc.
   • The CFA charter is for investment management and advisory, such as investment analysts, portfolio managers, investment strategists, consultants, wealth managers, etc.
2. Compulsory vs not compulsory: An important difference is that CPA is often compulsory of at the very least heavily-encouraged in relevant roles, whereas the CFA charter isn’t.
3. Program Focus
   • CFA focuses on investment management and valuation
   • CPA focuses on auditing, financial accounting, regulation
   • This anecdote about CPA vs CFA might help: CPAs prepare and audit financial statements, while CFAs read and analyze the financial statements.
4. Depth of material
   • The difference between CFA and CPA in terms of depth of material is about the same, when comparing similar topics such as pension accounting and FRA topics.
   • Generally speaking when comparing similar topics, neither one would be harder than the other.
   • I would say that the material goes into similar depths, but CFA exams have the trickier and more confusing questions.
5. Breadth of material
   • The CFA exam covers a whole lot more in terms of breath of material compared to the CPA exam.
   • This not only means there’s more areas and studying to do, but makes the exams harder, as you have to remember a lot more material at the same time.
6. CFA exam = 3 levels, CPA = 1 level
   • Each CFA level also builds on the curriculum from the previous level, i.e. CFA Level 2 will require a strong knowledge of CFA Level 1, and CFA Level 3 will require a good understanding of CFA Levels 1 and 2.
   • The CPA exams are comprised of 4 exams but arguably this is just 4 parts of one ‘level’. The material for each exam is exclusive to its own, which means you can study for each exam without having to remember material from another exam. You don’t even have to take them in order, and finish all 4 exams in 18 months.
7. New material to learn
   • One important thing especially if you’re considering CFA from CPA, is that when you’re eligible to take the CPA exam, you’re likely to have learned 90% of the information needed to pass the exam already – you just need to revise and review.
   • The CFA exam is likely to involve a lot more learning of new material and concepts.
8. Study time needed
   • Because the breadth of material is not as wide, and candidates are likely to be reviewing concepts they learnt at work already, the CPA exam requires significantly less time to prepare for than the CFA exam.
   • The AICPA recommends that candidates spend between 300-400 hours to study for the entire CPA exam.
   • The CFA exam usually involves 300-400 hours of study per level.
   • So the CFA exam requires approximately 3x more study time than the CPA exam.

What is the difficulty level of CPA vs CFA?

Points 4, 5, 6, 7 and 8 above combined make the CFA exams a lot more challenging to undertake and pass than the CPA exams.

Our calculations show that the CFA exams are 2-3x more difficult than the CPA exams.

Main factors:

• CFA exams requires typically 3x more study time than the CPA exams
• CFA exam involves learning new concepts rather than reviewing material you already use at work
• CFA exam material covers a lot more than the CPA exams
• Every CFA exam level requires knowledge from the previous exam, whereas the CPA exams do not

Important: Often-cited CFA vs CPA pass rates are NOT comparable. You have to look at ‘pass ratios’.

• CPA exams pass rates:
  • CPA exams historically average about 50-60% for each exam.
  • But as these exams are not inter-dependent on each other, you’ll find that usually the same well-prepared candidates are passing most of the 4 exams, and the less-well-prepared candidates are the ones in the failing bucket for most of the 4 exams.
  • Additionally, with the CPA exam, failing candidates are allowed to apply to retake their exam 24 hours after receiving their results. You can now even retake this within the same exam window, meaning you can retake the exam pretty much immediately.
  • Deducing a ‘300Hours pass ratio’ – a metric comparable across qualifications: You can deduce an ‘overall’ and more comparable pass rate by dividing the average number of qualified CPAs by the number of CPA candidates each year. Using data from the AICPA Trends report across the most recent 3 years, this gives an average / overall / blended pass rate of about 62%.
  • Since I was unable to find anybody else using a similar metric, I shall modestly name this metric the 300Hours pass ratio. This pass ratio means on average, about 62% of CPA candidates go on to become CPAs.
• CFA exams pass rates:
  • CFA exams pass rates are about 40-50% for each exam level. This is where the confusion of CPA vs CFA pass rates comes from. 40-50% CFA pass rate is only slightly less than 50-60% CPA pass rate, right? Wrong.
  • Every failed CFA Level 2 candidate has previously passed CFA Level 1. Similarly, every failed CFA Level 3 candidate has previously passed CFA Levels 2 AND 1. And even with the recent changes, it still takes a heck of a lot longer to retake a CFA exam (6 months) compared to a CPA exam (a few days).
  • You can also calculate a pass ratio by dividing the average annual number of new CFA charterholders by the average annual number of CFA candidates. When you look at the data, you see that crucially only about 24% people that register for the CFA Program end up passing CFA Level 3.
• Comparing 3H pass ratios:
  • CPA pass ratio: ~62%
  • CFA pass ratio: ~24%
• If you compare both pass ratios, the conclusion is that a CPA candidate is 2-3 times more likely to go on to become a CPA than a CFA candidate is to become a CFA charterholder.
• This implies that factoring in everything, becoming a CFA charterholder is 2-3x more difficult than becoming a CPA.

I’ll cover salary data in a follow-up reply later as I’ve spent waaaay too much time on this already. Hope this helps.