CFP vs. CPA: What’s the Difference and Who Should You Hire?

There are more than 200 designations and certifications available to financial professionals, comprising an alphabet soup of distinctions that confuse consumers and fellow professionals alike. If you are searching for a financial planner, know that quality is more important than quantity. Distinguishing between various distinctions, such as CFP® vs. CPA, is key to making sure you receive the best advice.

Two of the most recognizable financial credentials are the CPA license and CFP® certification. CPAs and CFP® professionals have different but complementary areas of expertise, and some professionals hold both credentials. When considering who to hire, it’s important to understand their roles individually and to know when it makes sense to work with an adviser who has both credentials.

To earn the CPA license, accountants must complete at least 150 hours of education, pass a rigorous four-part exam and meet experience requirements, according to the Association of International Certified Professional Accountants (AICPA). In a corporate setting, CPAs can offer financial statement audits and other attestation services to help inform investors about the financial health of organizations. Additionally, they often provide tax, financial reporting and advisory services to corporations, small businesses, nonprofit organizations, governments and individuals.

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A CPA can be helpful in the realm of personal finance as well. A CPA is useful for individuals in tax preparation and for discussing an individual’s tax situation with the IRS. CPAs can also be useful to business owners for bookkeeping and tax matters associated with an individual’s business. Some CPAs even have additional training that may help with business valuation, or detecting fraud, which can be helpful to business owners.

CPAs complete rigorous training and are helpful in very specific circumstances. But most accountants do not feel comfortable advising on the various complexities inherent in personal finance or myriad other important financial decisions that may require advice from a specialized expert. To truly achieve your short- and long-term financial goals, you will likely benefit from working with a professional who is trained to take a more holistic and forward-looking approach to your personal finances.

In short, a financial planner is an individual who advises clients on their personal finances. The CERTIFIED FINANCIAL PLANNER™ certification is the standard of excellence in financial planning.

Much like the CPA license, the CFP® certification requires completing coursework, fulfilling relevant experience requirements, agreeing to adhere to a set of ethical mandates and passing the CFP® exam, which consists of two three-hour sessions over one day. The requirements for CFP® certification are just as rigorous as for the CPA license, and the education requirements include similar foundational topics, such as tax regulations and risk management.

The comprehensive education for CFP® professionals, however, expands into the general principles of financial planning and other personal finance topics such as investments and retirement planning. 

In recognition of the overlap between CPAs and CFP® professionals, the Certified Financial Planner Board of Standards, Inc. (CFP Board) provides an accelerated path for professionals with select credentials, including the CPA license, who are working toward CFP® certification.

While CPAs can assist with examining past financial information to reduce taxable liability retrospectively, financial planners consider a wide range of opportunities to grow and protect your wealth through careful planning. CFP® professionals focus heavily on strategic financial management and maintain a strong interest in budgeting, savings, insurance and estate planning. CFP® professionals closely review your current financial standing and, based on your financial goals, develop an investment and financial plan to help you accumulate wealth.

Although both CFP® professionals and CPAs can help clients maximize their incomes by reducing taxable liability, financial planners are also looking ahead to find new ways to grow their clients’ net wealth.

CFP® professionals are continuously looking for new ways to strengthen and deepen client relations at different touchpoints throughout the year. CFP® professionals understand that discussing your financial future can be emotional and stressful. That is why CFP Board recently added a new section to its exam topics, the Psychology of Financial Planning, to teach the emotional and interpersonal aspects of financial planning. This topic prepares CFP® professionals — and CPAs who complete the accelerated path program — to counsel clients who are experiencing monetary conflict or financial stress, helping them to move forward holistically.

If you are looking for a professional to help you evaluate your past financial statements and solve some portion of your tax situation, a CPA may be helpful, especially if you have complicated income streams.

However, if you’re looking to begin a relationship with someone who can provide ongoing, forward-looking advice as well as financial peace of mind, a CFP® professional could be a better fit. Whether you’re looking to save for retirement, establish an estate plan or make strategic investments, a CFP® professional will typically be better equipped to evaluate and navigate the best route for you.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

A financial planner reflects at 50

By Lazetta Rainey BraxtonFor Next Avenue

I’m turning 50 this year. As a financial planner, I rehearse in my mind conversations with my Gen X clients about reaching and surpassing this beautiful milestone in their lives. I recall their bundled emotions — fear and excitement — about decisions made and future opportunities for living their best lives.

One would imagine that I would show the same care to myself as I extend to my clients. I have some work to do, and I hope my confession transforms into wisdom for you and me. Let’s explore my realizations as an approaching half-centurion through the lens of the financial planning journey.

Each year during tax season, my husband and I update our Lifestyle Plan (income and expenses or budget) and our Net Worth Statement (all of our assets and liabilities) as we compile our tax forms and statements for our tax professional.

We reflect on how our decisions during the year show up in our checking, savings, investment balances and property values based on how we spent and saved money. We discuss many competing goals: managing household expenses, paying for our daughter’s education, redeploying capital for my growing businesses, covering estimated taxes, saving for retirement and finding funds for college visits and vacations.

It’s not clear, however, if our financial habits and one-year reviews afford us the peace that we’re on track for a comfortable future. We’re fortunate to know the rules of thumb, such as living within our means, paying off credit cards each month, saving with high-yield savings accounts, investing in brokerage accounts, maxing out deposits to our 401(k)s (including catch-up contributions) and Health Savings Accounts (HSA), getting a state tax deduction on contributions to a 529 college-savings plan and securing insurance and estate-planning documents.

Real-life circumstances — job transitions (including my season as a Chief Family Officer, stay-at-home mom or domestic engineer), residing in high-cost-of-living areas and founding businesses — consistently challenge our intent to maintain these financial best practices.

If I’m honest, I fear knowing the answer to these two looming questions: What is the cumulative effect of our financial circumstances and decisions, and where do we go from here? Assistance with answering these questions with confidence and assurance is one of the many valuable attributes of a financial planner.

A survey by MagnifyMoney in March 2021 found that 76% of Gen Xers haven’t hired a financial planner, and I confess that my husband and I are in that majority.

The good news is that it’s never too late to act on your financial planning journey. I believe this mantra and will hire a financial planner as one of my 50th birthday gifts to myself.

Ideally, I will find a planner who shares my family’s values, possesses cultural competency, believes in holistic financial planning and values leading with EQ (engaging our humanness) to enhance the IQ (knowing the craft).

While these characteristics reflect my revered team at my firm, 2050 Wealth Partners, I desire a new partnership that will give me fresh perspectives on what I believe to be true for my family, my team and the people we serve.

Making this investment in me and my family is worth it. I am no longer hesitant about adding this recurring line item to our Lifestyle Plan.

In my quest to be wealthy, as I define it, I realize that physical health holds a significant piece to the financial health puzzle. As my husband and I advance to our retirement years, I acknowledge that Fidelity’s 2022 Retiree Health Care Cost Estimate suggests that we may need approximately $315,000 saved (after tax) at age 65 to cover health care expenses in retirement. We’re not that far away! This figure does not include long-term care costs to support our activities of daily living (ADLs) if needed, as we age.

I confess that I neglected my health as the stress of balancing life and career as a wife, mom, sandwich-generation daughter, employee and entrepreneur grew over the years. While I celebrate these roles — and being among the 1.9% of 94,968 Certified Financial Planners who is Black, according to the 2022 CFP Board of Standards — I realize that advice about staying healthy is as significant as guidance on financial matters.

My focus on improving my physical health as a proactive way of managing my medical costs includes addressing my mental health. Life and workplace trauma often weigh down one’s ability to maintain good physical health while also affecting one’s financial health.

I’m proud to be among the 26% of Gen Xers who, as reported by the American Psychological Association, have received treatment or therapy from a mental health professional, and I have extended this wealth opportunity to my Gen Z daughter.

While I’m turning 50 this year, my confessions and reflections assure me that anyone can achieve the life and legacy we desire and deserve. Focusing on the right mindset, securing the right team and doing the work will serve us all well as we navigate the opportunity to live longer and better.

Lazetta Rainey Braxton is a certified financial planner and co-founder of 2050 Wealth Partners and CEO and founder of Lazetta & Associates. She was named a 2021 Crain’s New York Business Notable Black Leader and Executive as well as one of the Top 10 of Investopedia’s 100 Top Financial Advisors in 2020 and 2021. 

How a financial therapist can help you with money anxiety

Money commonly negatively affects people’s health, causing feelings like anxiety, stress and depression. For some people, it’s a persistent problem: Nearly one in three (29 percent) U.S. adults who say money has a negative impact on their mental health are impacted daily, according to a recent Bankrate survey.

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When those money worries remain for weeks or months at a time, it may help to reach out to a financial therapist who can provide support. Over the past decade, more counselors specializing in financial therapy have begun to help people understand how finances affect their mental health and give them the steps to build better financial mindset habits for the future.

A financial therapist can’t manage your money for you, but they may be able to help you through the stress that can come from money. Here’s what a financial therapist does, and why they can be a resource when money affects your mental health.

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More than half (52 percent) of U.S. adults say money at least occasionally has a negative impact on their mental health, according to Bankrate. The largest percentage of them say it affects them daily:

Gen Zers (ages 18-26) and millennials (ages 27-42) are more likely to experience daily negative mental health due to money than older generations like baby boomers (ages 59-77). Around one-third of Gen Zers (32 percent) and 38 percent of millennials who say money has a negative impact on their mental health say they worry about money daily:

Source: Bankrate

Note: Among those who say money has a negative impact on their mental health

In comparison, only 26 percent of Gen Xers and 22 percent of baby boomers who say money has a negative impact on their mental health say they worry about money daily. More baby boomers who say money has a negative impact on their mental health say they worry about money monthly (32 percent).

Turning to a financial therapist can be a way to find support when money is negatively impacting your mental health. The idea of a financial therapist is relatively new; one of the first self-described financial therapy organizations, the Financial Therapy Association (FTA), began in 2009 and started publishing studies that same year.

The trend of financial therapy has grown as more Americans generally begin to seek mental health care to learn new coping strategies for anxiety, depression and other mental health conditions. In 2021, 11.1 percent of U.S. adults were counseled by a mental health professional, according to the latest data available from the Centers for Disease Control and Prevention (CDC), up from 9.5 percent in 2019. The FTA’s database now has 80 members offering financial therapy or non-clinical guidance, specializing in subjects like receiving sudden money, insurance, layoffs, retirement, budgeting or trauma.

Financial therapists can break down financial stressors that may be affecting you, help unpack financial trauma and provide other therapeutic guidance. A financial therapist is typically not a licensed financial advisor and they may not have a fiduciary duty, meaning they won’t manage your money for you.

For Lindsay Bryan-Podvin, a Michigan-based financial therapist and coach, her role is less about guiding people through the nuts and bolts of how to manage a bank account and more to do with understanding emotions tied to money.

“A financial therapist really helps people at the intersection of how emotions, psychology and systems impact why they do what they do with money and to help them make choices that feel best for them about their personal finances,” Bryan-Podvin told Bankrate.

Financial therapistA financial therapist is usually a licensed mental health professional who specializes in helping mental health symptoms caused by financial stress, as well as help clients budget or set financial goals. They may have additional financial training or certifications, though no one certification is required for someone to call themselves a financial therapist.

Licensed Master Social Worker (LMSW) or Licensed Clinical Social Worker (LCSW)LMSW and LCSW refers to two different social work licenses, providing non-clinical or clinical social work services, such as therapy. Both licenses require at least a master’s degree. Additionally, LMSWs require an exam and LCSWs require two years of field experience.

Financial advisorA financial advisor can help you create a budget or estate plan, manage your investments or guide you on when to take Social Security, among other hands-on financial duties. A certified financial planner is licensed by the Certified Financial Planner board and acts with a fiduciary duty, meaning they are legally required to put your interests before their own.

Bryan-Podvin was already a therapist specializing in anxiety and depression disorders when she began to feel underqualified to help clients with the emotional side of money. When she struggled with bills after graduate school, commonly available personal finance advice wasn’t helping.

“Every time I picked up a book, I felt like I was getting yelled at. It was, ‘It’s your fault you’re in this situation. You didn’t work hard enough. You didn’t save enough.’ And I’m like, I’m doing everything in my power,” Bryan-Podvin said. “I knew what it was like to be on the receiving end of incredibly individualistic and shame-laden personal finance advice, and I just thought that I was not alone in that.”

Fees for financial therapy vary from provider to provider, just like other forms of therapy. Financial therapists are obligated to clearly disclose their fees and billing structure in the first meeting or session.

Financial therapy is difficult to provide under health insurance, Medicare or Medicaid, according to Bryan-Podvin, though it’s easier if the mental health practitioner can classify the therapy under a diagnosis like anxiety or depression.

If therapy fees aren’t in someone’s budget, they can seek credit counseling through a non-profit organization. Credit counseling can’t address mental health issues directly, but counselors often offer free workshops, education and advice to help manage money and debt.

Cost can lock low-income people out of financial therapy, but Bryan-Podvin says she’s seeing more financial and mental health resources become available to minority communities.

“Even if it isn’t a specific financial therapist, finding communities, whether it’s a Substack newsletter or a hashtag that you follow, finding people who can validate, emphasize and normalize your lived experience actually [helps],” Bryan-Podvin said. “You’re going to be like, ‘Oh, I’m not alone.'”

Considering starting financial therapy? First, it may help to take stock of your financial picture. Here’s how you can better understand your finances before of reaching out to a financial therapist: