Is the title confusing?
Let us clear it out.
This article will be a comparison between Chartered Wealth Manager (CWM), Certified Financial Planner (CFP) and Chartered Financial Analyst (CFA) professions.
We will be going through a brief on these professions, how to get these degrees / certification and how to gain professional leverage with them.
Chartered Wealth Manager (CWM)
What is CWM?
CWM finance certification is awarded by the American Academy of Financial Management based in the United States.
It is a certifying council which grants other certificates also, such as Chartered Asset Manager (CAM), Chartered Market Analyst (CMA), Chartered Portfolio Manager (CPM), Master Financial Professional (MFP) and Chartered Trust and Estate Planner (CTEP).
This certification lets you concentrate on capital and financial markets theory, financial services organisation principles, portfolio management, investment management and other professional additions.
The completion of CWM ensures that you will be able to fulfill certain financial management capabilities such as assessing the value of listed companies, perform financial estate analysis, understand portfolio management time horizon, balance risk and returns, identify market opportunities, market products, handle asset allocation and manage clients.
Can everyone do CWM course?
Ideally, if you are working in the positions listed below, doing a CWM certification will give a boost to your career. The positions are:
- Portfolio and Asset Managers
- Wealth Managers
- Corporate Account Managers
- Brokerage and Market Analysts
- Investment Managers and Analysts
- Portfolio and Asset managers
- Heads of Financial Accounts
- Financial Controllers
- Private Bankers
- Retail Branch Managers
- Family Office Professionals
- Investment Advisors
- Financial Planners
- Stock Market Professionals
How to get CWM Certification?
You have to clear both Level I and Level II examinations. The enrollment happens through the AAFM website and the exam scheduling is done by Pearson Vue. A certain charge is applicable.
To become eligible, you should have 3 years of relevant working experience and a qualifying Graduate degree which could be Masters in Finance, Economics, Tax and Wealth Management from ACBSP accredited Double Business School, ABA accredited Law School, EFMD EQUIS accredited Double Business School and some other verified accreditations you can see here.
CWM Job Description
Actually passing the CWM will be a significant addition to your career goals.
You can continue working in the current company, join any other or become a self employed professional. Either way, you need to leverage the full potential of the CWM certification.
How to do that?
Begin by making the certification visible. By that, we mean adding the CWM® in business cards, cover letters, after your name, website, corporate photo ID, publications, name plates, badges and others.
Inform the HR or the CEO of the new credential, announce it within your professional network through mediums like LinkedIn, wear the CWM® pin in industry events, display certificate in office and you can also become a mentor.
Certified Financial Planner (CFP)
What is CFP?
CFP is a financial certification requisite for those interested to enhance their financial planning careers. Within the United States, the certificate is conferred by the Certified Financial Planner Board of Standards and outside the United States, the same is conferred by the 25 organisations associated with Financial Planning Standards Board.
If you already have approved CFP designations like Chartered Accountants (CA), Chartered Certified Accountants (ACCA), Certified Public Accountants (CPA), Chartered Wealth Managers (AAFM), Chartered Financial Consultants (ChFC), Chartered Life Underwriters (CLU), Chartered Financial Analysts (CFA) and attorneys, you can directly enrol for the CFP exam.
How to become a CFP?
As mentioned, if you already have the designations listed above, sit for the exam directly. If not, you need to follow certain educational, ethical and experience requirements.
Two ways are determined by the Board to complete the educational requirements:
First, you need to have a relevant Bachelor’s degree or higher in any one discipline from an accredited institution.
Once the CFP Certification Examination is cleared, you have to provide a transcript from the institution as a proof of your degree.
Second, you can complete a Board sanctioned Education Program from affiliated colleges and universities.
These programs contain both the credit and non-credit certificates and these can be attempted through online instruction, classroom instruction or self-study, whichever suits you amicably.
It’s an exhaustive exam; spread over 2 days, 10 hours and zillions of multiple choice questions, it’s not an exam to be taken lightly.
The exams happen thrice a year in March, July and November in various registered locations.
A certain fee is attached to every exam. If you’re not good at self-study, you should take professional exam preparation help.
At least 3 years (or, 6000 hours) of experience is necessary, working in the area of financial planning.
It could be about preparing financial plans, handling investments, retirement counselling, selling insurance and such.
The experience brief should be submitted with the form. There are two requirements to fulfill here:
The first requirement is that the experience should be in one or more of the six primary personal financial planning elements. These elements are:
- Data gathering
- Client relationship building
- Client financial status evaluation and analysis
- Developing financial planning strategy
- Implementing financial planning strategy
- Monitoring implementation of financial planning strategy
The second requirement measures the nature of your experience which should be one or more of the five ways.
These five ways are:
Supervision of client delivery, personal client delivery, supporting client delivery, teaching and residency programs / teaching.
You can find more details on the official website.
Once all the requirements are fulfilled, you become a Certified Financial Planner (CFP).
CFP Job Description
How will the CFP certificate help your career?
According to the U.S. Bureau of Labor Statistics (BLS) 2013, the average median salary of a CFP is 75,320 USD.
With the CFP certificate, you can work with individual clients or handle them within an organisation to manage their long-term and short-term financial goals.
You can advise them on legal restrictions, financial laws, estate planning, investments planning, insurance benefits, tax planning and other things.
As the financial planner, you need to possess a holistic understanding of client’s business and offer complete financial solutions.
The duties would include interviewing clients, preparing financial plans, executing them and monitoring the outcomes.
Strong analytical skills and good people communication skills are crucial for this business.
Learning to use databases and excellent research skills are mandatory too.
You can work as self-employed or be employed by investment companies, insurance companies, banks, loan institutions and other financial companies. Further, there are options like conducting workshops, financial consulting and teaching too.
Chartered Financial Analyst (CFA)
What is CFA?
CFA is a globally recognised certificate conferred by the US – based CFA Institute, formerly known as the Association for Investment Management and Research. When you clear the CFA exam, you are known as a “CFA charter holder”.
An extremely difficult exam, the exam pass percentage historically is as low as 32%. Candidates who are successful take about four attempts to clear the charter.
How to Become a CFA?
Of course, you have to clear the exam.
To become eligible, a relevant Bachelor’s degree is mandatory.
Experience-wise, 4 years of qualified experienced is taken into consideration. You can become a member of the CFA Institute and get membership from the local CFA community.
There are three exams of six hours each and you have to clear all the exams.
The first exam happens in June or December and the remaining exams happen in June only.
It’s like if you fail the second or the third exam, you have wait for an entire year to take the exam again.
All the three exams check your knowledge for financial analysis and sense of ethics.
The first exam tests the financial concepts basically; the second exam tests financial analysis skills and intensive accounting procedures while the third exam tests portfolio management skills and decision-making potential.
Lastly, it is of utmost important that you, the charter holder, maintain the norms and regulations recommended by the CFA Institute Code of Ethics and Standards of Professional Conduct.
CFA Job Description
Once you get the charter, you can begin working for institutional investors as a financial analyst.
You can work in the capacity of a Money Manager, Financial Advisor, Portfolio Manager, Financial Risk Analyst, Securities Trader, Investment Banker, Sales Professional, Investment Firm Manager, Chief Investment Officer and Chief Executive Officer.
There is a lot of scope for CFA charter holders. According to the Bureau of Labor Statistics, there will be a 23% increase in jobs for Financial Analysts, 15% increase for Commodities Agents and 9% increase for Financial Managers between 2010 and 2020. Of course, you need to have CFA charter to get these positions.
Difference between CWM, CFP and CFA
Here is a chart highlighting the differences.
Any of the courses have the potential to give shape to your career. Choose any of these carefully, understand what direction will they give to your career and should you be pursuing them. If you have any doubts, ask below.