CPWA vs. CFP: Which Financial Advisor Do You Need?

·5 min read
SmartAsset: CPWA vs. CFP Designations for Financial Advisors
SmartAsset: CPWA vs. CFP Designations for Financial Advisors

When working with a financial advisor, their certification can help you quickly determine what kind of advisor they are. Although there is usually some overlap between what a CPWA and a CFP can do, understanding the key differences between both certifications can help you determine which is a better fit for your needs. A financial advisor with a certification can help you create a financial plan for your specific needs.

What Is a CPWA?

A CPWA stands for Certified Private Wealth Advisor. Generally, this certification is for experienced financial professionals who want to work with high-net-worth individuals.

As a part of their CPWA certification, an advisor will learn the details behind the obstacles that wealthy clients face. A few topics of expertise include growing assets, protecting assets, developing succession plans, and minimizing tax burdens.

CPWA qualifications. Someone pursuing a CPWA designation would need to meet these five requirements:

  • Must hold a bachelor’s degree from an accredited university or college.

  • Must hold one of the following licenses or designations: CIMA, RMA, CFA, CFP, ChFC, or CPA.

  • Must have five years of experience in the financial field.

  • Must have an acceptable record with the Investments & Wealth Institutes’ Admissions Committee.

  • Must take a Private Wealth Essentials course from the Investments and Wealth Institute.

Once a financial advisor has obtained a CPWA qualification, they must continue completing coursework bi-annually to maintain their certification.

CPWA costs. If you want to become a CPWA, be prepared to cover a relatively steep cost of $7,295. The certification fee includes a background check, application fees, tuition, one exam attempt, and course materials. It also includes room and board for an executive education experience. But if you need to retake the exam, you’ll be required to pay $225.

What Is a CFP?

SmartAsset: CPWA vs. CFP Designations for Financial Advisors
SmartAsset: CPWA vs. CFP Designations for Financial Advisors

A CFP, or Certified Financial Planner, is a financial advisor who has the knowledge to help clients build financial plans. In many cases, when you think of a financial advisor, you are thinking of a CFP. That’s because the CFP designation is the most common choice for financial advisors.

As a part of the CFP training, potential advisors will learn the financial pitfalls individuals face. In many cases, CFPs don’t exclusively work with high-net-worth individuals. Instead, they often work with clients that have a wide range of net worths.

The solid financial principals learned as a CFP apply to financial plans of all shapes and sizes.

CFP qualifications. Anyone pursuing a CFP designation will need to meet these five qualifications:

  • Must pass a background check.

  • Must hold a bachelor’s degree from an accredited university or college.

  • Must complete CFP coursework.

  • Must pass the CFP exam, which includes questions about communication, risk management, and professional conduct.

  • Must demonstrate 6,000 of professional experience related to financial planning or 4,000 of apprenticeship experience.

The process of becoming a CFP is rather extensive. With such requirements, clients can feel comfortable knowing their CFP has passed all of these hurdles.

After these initial qualifications lead to a CFP designation, the CFP must complete continuing education requirements to renew their certification every two years. According to the CFP Board, this education includes 28 hours of financial planning content and 2 hours of ethics education content.

CFP costs. The cost to become a CFP varies significantly based on your choices. One of the big requirements is a 4-year degree from an accredited university or college. Since college can cost over $10,000 per year at a public school, those costs can add up quickly.

After completing the college requirement, you’ll pay a $200 application fee. If you pass the test, you’ll pay a $455 certification fee as of October 1, 2022.

CPWA vs. CFP: What’s the Difference?

It’s clear that both a CPWA and CFP certification come with extensive educational requirements. Both are fiduciaries who are required to act in the best interest of their clients.

But a CPWA designation seems to come with a bit more prestige than a CFP designation. That’s because a CPWA is only available to advisors with extensive experience in the field.

As a client looking to make the most of their financial future, the choice between a CPWA vs CFP comes down to your finances. If you have an extremely high net worth of over $5 million, then you’ll likely want the specialized knowledge of a CPWA.

But regardless of your net worth, a CFP can help you map out a plan for your financial goals. Whether you want to pay for college or cover retirement costs, a CFP can help you make a plan to make it happen.

Bottom Line

SmartAsset: CPWA vs. CFP Designations for Financial Advisors
SmartAsset: CPWA vs. CFP Designations for Financial Advisors

When choosing a financial advisor, you’ll find CFPs more widely available. But CPWAs are out there too! Consider your needs before working with either type of advisor. If you are looking for a general plan, then a CFP will be able to help. If you have unique questions as a high-net-worth individual, a CPWA may have the right answers for your situation.

Financial Advisor Tips

  • A financial advisor could help you build an investment portfolio to support your financial future. Finding one doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • CPWA and CFP are just two out of many certifications that a financial advisor can hold. Here are 10 common financial certifications.

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