US CPA Vs. Financial Advisor, which role to choose for your career?

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US CPA Vs. Financial Advisor, which role to choose for your career?

Introduction 

Many students in the commerce field face a tough choice when choosing their career as a CPA vs. Financial Advisor. Both roles are finance-related, but they branch out into completely different job profiles. With the lack of resources online, students find it difficult to pick the right stream for them and forge a career ahead.

In this article, we will look at the key differences regarding “US CPA vs. Financial Advisor so that freshers can compare their skill sets with the requirements for both, making it easier for them to select the right career option. 

Like any other job profile, both roles also demand a set personality type, and the learner can gauge the role that would suit them best by choosing the appropriate training course. Let’s understand the different aspects.

What is CPA?

CPAs are Certified Public Accountants, a designation bestowed on licensed accounting professionals accredited by AICPA. The US CPA needs to hold a bachelor’s degree and should be a member of the NASBA. Each state has its own set of parameters for qualification for the US CPA exam that needs to be met by the aspirants. 

The US CPA aims to bring about uniformity in the field of accountancy, equivalent to the CA designation. A graduate who is mixed up in the confusion of US CPA vs. Financial Advisor should consider that the former involves analysis of financial data, auditing and reviewing, consulting services, financial planning, tax preparation, and litigation consulting, among other things.

US CPA Exams

Suppose the students go for US CPA when presented with a choice of US CPA vs. Financial Advisor. In that case, they must pass an exam conducted by AICPA (American Institute of Certified Public Accountants).

To be admissible for the role of a CPA requires, one to pass the following eligibility criteria:- 

  • Master’s degree or educational qualification equivalent to 150 credit points. However, 120 points are required to apply for the certification exam.
  • Two years of work experience under the CPA
  • Pass four exam parts

The CPA exam mainly consists of 4 subjects/parts, which are as follows:-

  • Auditing & Attestation (AUD)
  • Business Environment & Concepts (BEC)
  • Financial Accounting & Reporting (FAR)
  • Regulation (REG)

Each exam is of 4 hours with a 15 minutes break and gauges the student’s competence in auditing, business concepts, business law, taxation, and accounting. It also tests the candidate’s ability to apply business-related knowledge and professional ethics.

Each CPA exam is further divided into five testlets containing only a specific type of question. Let us look at the different sections in each exam:- 

Section Multiple-Choice Questions (MCQs) Task-Based Simulations (TBSs) Written Communication (WC) Tasks
AUD 72 8 0
BEC 62 4 3
FAR 66 8 0
REG 76 8 0

The US CPA exams aim to assess the remembering & understanding, application, analysis, and evaluation skills of the candidate. 

The following chart represents the exams along with the percentage weightage for each skill. 

Section Remembering &Understanding  Application Analysis Evaluation
AUD 25-35% 30-40% 20-30% 5-15%
BEC 15-25% 50-60%** 20-30% 0%
FAR 10-20% 50-60% 25-35% 0%
REG 25-35% 35-45% 25-35% 0%

**Includes Written Communication. 

Roles & Responsibilities of a CPA

When deciding on a CPA vs. Financial Advisor, it is extremely important to consider the roles and responsibilities of both so as to make an informed decision. Though a CPA’s tasks differ depending on the employer, the common duties include:

  • Advising clients on financial matters.
  • Preparing and filing tax documents.
  • Creating financial reports.

Let’s take a look at the key obligations of a CPA 

● Examine Financial Records

● Calculate Tax Returns

● Prepare Financial Documents

● Conduct Forensic Examinations

● Advice clients on Financial Decisions

● Manage Financial Information

Job Prospects of a CPA

As the roles & responsibilities of a CPA differ from that of a Financial Advisor, the job prospects also vary. 

Let’s look at some key sectors where a CPA can be appointed in India.

1. Public Accounting

2. Business, Government, and Not-for-Profits

3. Improvement Specialist

4. Forensic Services 

After having a look at the sectors enumerated above, let’s take a glance at the roles a CPA can serve in various capacities:- 

  • Risk and Compliance Professional
  • Senior Financial Analyst
  • Accounting Software Developer
  • Corporate Controller
  • Personal Financial Advisor
  • Information technology Accountant
  • Finance Director

Hence, now students can assess their skills and job prospects and make the right decision when choosing theCPA vs. Financial Advisor.

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Advantages of Hiring a CPA

With the innumerable roles and responsibilities of a CPA, the benefits of hiring one are also abundant. But let’s take a look at the major advantages of recruiting a CPA.

  • Audit for Compliance:- A CPA will keep all the necessary records of assets and liabilities, which will later aid in tax returns, and save the business from a possible deduction. 
  • Maximize Tax Deductions:- Every business wants to increase profitability and maximize tax deductions. A CPA is a qualified and trained professional who can assist you in your quest to scale up the business. 
  • Prepare for Audits:- When filing the audit statements with the Registrar of Companies (ROC) of a particular area, a CPA can prove to be handy in minimizing liabilities and protecting your finances by saving you from penalties.
  • Protecting the Business from Liabilities:- As mentioned previously, a CPA is well versed in the nitty gritty of tax law and hence can minimize the chances of any financial penalties.
  • Saving Money:- A CPA creates budgets for a business that provides a blueprint for the financial year, encouraging companies to stay more efficient and organized.

Thus, we have listed the importance of hiring a CPA. Students going through this article can refer to the above points and decide their career between a CPA vs. Financial Advisor.

CPA vs. Financial Advisor – Comparison Table

  US CPA Financial Advisor
ROLE Works in the accountancy and auditing role. Offers advisory services for investments
QUALIFICATION Individuals have to pass 4 US CPA exams There are various certificates available for different advisors depending on their area of expertise.
KNOWLEDGE FOUNDATION Involves thorough technical knowledge One needs to have technical knowledge and marketing essentials.
SALARY 6.13 LPA – 13.8 LPA 5 LPA – 8 LPA
JOB PROSPECTS Can be employed as risk and compliance analyst, accounting software developer, corporate controller Can be employed in financial planning firms, the insurance industry, investment firms, etc.

As we have already discussed CPAs, let’s take a look at the specifics of a Financial Advisor in detail so that you can rationally choose the best designation among “ CPA vs. Financial Advisor.

What is a Financial Advisor? 

A financial advisor operates on finances on a personal or corporate level. The advisor considers the goals of his/her clients and suggests ways to improve budgeting, saving, and investments and achieve their benchmarks.

For example, a financial advisor can help with the retirement plan by knowing the income and suggesting investment plans that help the client when he/she has retired. 

Financial advisors, in short, help with portfolio management services, professional conduct requirements, and wealth management. Another important requirement for financial advisors is that they must possess competent marketing and sales skills, which helps them increase their client base and revenue. 

There are chiefly four main types of financial advisors, depending on their specific advising niches, as listed below:-

  • Investment Advisors

An investment advisor, as the name suggests, is someone who manages the investments of his/her clients. Investment advisors help their clients build assets irrespective of their income.

An investment advisory firm is technically known as a Registered Investment Advisor (RIA). Investment advisors who work for these firms are known as investment advisor representatives.

Advisors help recommend customized plans according to the needs of their clients, considering their income and risk tolerance. Chartered Financial Analysts (CFAs) are considered to be the best lot of Investment Advisors. However, if you want to advise in a more comprehensive financial service covering all monetary aspects of a client’s life, you can also become a financial planner.

  • Financial Planners

Certified Financial Planners (CFP) cater to the client’s needs in every aspect of their monetary requirements. They help the client plan for future emergency funds, education funds for their kids, and retirement plans. Hence, financial planners know the monetary intricacies of their clients. CFPs are considered to be more suitable than normal financial planners. 

  • Wealth or Money Managers

Wealth or money managers are financial advisors that have high net-worth clients. They offer similar services to those of financial planners, except that they are also experts at philanthropic money management and estate planning. It is important to note here that financial planners can call themselves wealth managers, but not every wealth manager is a financial planner. 

  • Stockbroker

A stockbroker, as the name suggests, specializes in the sale and purchase of stocks. They are registered with SEBI and operate in two major stock exchanges in India, namely SEBI and NSE.

After reading about various financial advisors, let’s check the ways one could get a professional certification as a FA so that you can choose the right career path between CPA vs. Financial Advisor

Professional Certifications of FA

Since the FA tasks are exceedingly niche-specific, there are several different certifications available depending on the category in which you want to build your career. Here let’s take a look at the major certifications and their advantages:- 

Chartered Wealth Manager HNI clients for taxes and real estates
Chartered Financial Analyst Stock management techniques with portfolio management
Certified Financial Planner Budgeting and planning for retirement, education, insurance etc.
Chartered Alternative Investment Analyst Alternative investment like private equity, real estate, and venture capital.
Financial Risk Manager Investment banks and individuals who require counseling.
Chartered Mutual Fund Counsellor Mutual funds.
Certified Management Accountant Financial statement, budgeting, supervising the accounts department
Financial Modelling and Valuation Analyst Bookkeeping, spreadsheet, finance, financial modeling
NISM & CRISIL Certified Private Wealth Advisor Wealth management for clients
SEBI Investment Advisor Life insurance planning for high net-worth individuals

 

Roles & Responsibilities of FA

We are listing the roles and responsibilities of a financial advisor below that will help students to chalk out a plan for themselves between CPA vs. Financial Advisor.

  • Analyzing clients’ data- A Financial Advisor analyzes clients’ financial data and understands their needs to gain insight and plan their future.
  • Laying down SMART goals- The word S.M.A.R.T. stands for Specific, Measurable, Achievable, Realistic, and Time-Bound. A good financial advisor measures the clients’ needs concerning these five parameters and then lays down financial goals for them.
  • Reviewing plans- A good FA reviews plans regularly and may also revise the goals and the steps taken in order to match the current financial landscape.
  • Preparing financial documents- An expert FA prepares financial documents such as summaries, investment performance reports, and income projections for the client.
  • Updating client portfolio- Another task of an FA is to update the client portfolio depending on the data extraction from financial institutions.
  • Enlarging the client base- FAs are not only technical advisors but also need marketing skills. FAs keep on contacting newer prospective clients and spreading awareness about maintaining good financial health. 

Job Prospects of FA

Though the job prospects of FA are limited to a few sectors, they can generate immense wealth depending on their clients. Here we are listing a few sectors which need an FA to contribute to its growth:- 

  • Banks and Building societies
  • Financial Planning firms
  • Independent financial advice companies
  • Insurance companies
  • Investment firms

A FA can also be self-employed and work on a client-to-client basis. Thus, you can evaluate the job prospects of a FA with those of a CPA while making a decision of CPA vs. Financial Advisor.

Benefits of Hiring an FA

We have covered all the topics comprehensively, so let’s look at the benefits of hiring a FA. It is extremely useful when you decide on CPA vs. Financial Advisors as you can evaluate your value for the industry:-

  • All-time dedicated attention:- Clients usually don’t have the required time to check their portfolios and make smart decisions on a day-to-day basis. Financial advisors keep themselves updated with the industry and contribute to improving the financial health of the client.
  • Consistent review of investments:- All the investments that a client has made in the past can be reviewed by a financial advisor, and the goals and plans to achieve them can be changed as per the current financial landscape.
  • Time-Saving:- Financial Advisors help the client make informed decisions and save a lot of potential time.
  • Learning about one’s finances:- Hiring a financial advisor is a constant source of learning about one’s own finances and being aware of the market. 

Now, after comprehensively covering the differences between “ CPA vs. Financial Advisor,let’s look at the common queries that arise in a candidate’s mind.

FAQs

1. What’s the Difference between a CPA(Accountant) and Financial Advisor?

While CPAs look after the accounts, tax audits, and financial documents and advise the client on threats and opportunities for their businesses, a financial advisor manages personal finances and helps the client to invest in products.

2. What is the financial advisor’s salary?

Financial Advisors, when employed, can earn anywhere between 5 LPA to 8 LPA. Self-employed financial advisors can mint money with no limits depending on their advising and marketing competencies.

3. What is the salary of a CPA?

The average salary of a fresher CPA is 6.8 LPA and can be as high as 13.8 LPA

4. Which Course is best for CPA or Financial Advisor? 

Financial Advisors can do a number of certificate courses depending on their desired area of expertise, whereas for US CPA, one can enroll in the top coaching like North Star Academy and get assistance from top experienced mentors for a complete roadmap to success.

Conclusion

From the above elaborations, students would have had a complete understanding of the CPA vs. Financial Advisor and can now choose the career path that suits them best.

To forge a profitable career as a financial advisor, aspirants can also check the certificate courses mentioned above. If you decide to go for the lucrative career of a US CPA, then you can refer to the top CPA coaching in India – NorthStar Academy (NSA). NSA offers comprehensive guidance to kickstart your career as a US CPA and even offers placement assistance in Big 4s, MNCs, and various corporations. Our US CPA course is one of the most successful courses, with a pass percentage of 75%, providing you with well-organized & researched study material in association with Becker Professional Education.

To make it easier for students to access the course, it is also available in online mode, and one can choose the platform as per their wishes even without the internet.  

So don’t wait; enroll at NorthStar Academy right away and begin laying the groundwork for a lucrative future as a US CPA! Call us at +91 8147470707  right away to resolve any queries you have!

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