Definition
The CFA (Chartered Financial Analyst) is a globally recognized certification in finance focusing on investment analysis, valuation, portfolio management and ethical standards. The Series 7 (also known as the General Securities Representative Exam) is a U.S. license permitting the holder to sell all types of securities products except commodities and futures. The basic difference is that CFA focuses on analyzing securities while Series 7 focuses on selling them.
Key Takeaways
- CFA (Chartered Financial Analyst) and Series 7 (General Securities Representative Exam) are both finance certifications but they differ in their focus areas. The CFA focuses on investing, portfolio management, and financial analysis while the Series 7 focuses on selling securities like stocks, bonds, and mutual funds.
- The process and requirements for each certification are different. To earn a CFA, you need a bachelor’s degree and four years of professional experience in a full-time job that involves making decisions about investments. On the other hand, to sit for Series 7, it requires sponsorship by a FINRA member firm or self-regulatory organization.
- The two certifications also vary in terms of difficulty level and time investment. CFA is often considered to be more challenging with 3 levels of exams that require approximately 300 hours of study each. The Series 7 exam is less comprehensive, typically requiring less preparation time.
Importance
The finance terms CFA (Chartered Financial Analyst) and Series 7 are critical designations in the financial industry relating to the depth of knowledge and scope of practice. The CFA focuses more on investment management, including portfolio management, financial analysis, stocks, and bonds, making it more comprehensive and globally recognized.
It’s considered the gold standard in the investment management field. The Series 7, also known as the General Securities Representative Qualification Examination, on the other hand, is a license that permits the holder to sell all types of securities products except commodities and futures.
It primarily covers the buying and selling of securities. Therefore, financial professionals often choose to pursue these credentials depending on their career aims and the particular financial services they wish to provide.
Explanation
The Chartered Financial Analyst (CFA) and Series 7 designations serve distinct purposes geared towards different professions within the field of finance. The CFA program, managed by the CFA Institute, is a professional credential that is given to finance and investment professionals who have passed three levels of exams.
The purpose of the CFA program is to improve the investment profession by ensuring that investment practitioners meet high ethical and professional standards. Those possessing the CFA designation typically work in roles such as financial analysts, risk managers, and portfolio managers, where they apply the investment analysis and portfolio strategy skills that the credential certifies.
On the other hand, the Series 7 exam, managed by the Financial Industry Regulatory Authority (FINRA), provides a license that is required for individuals to sell a broad range of securities. It is the most comprehensive of several securities licenses that permit an agent to communicate with retail investors.
The Series 7 license allows financial professionals to sell stocks, bonds, options, and futures. Thus, you will find most Series 7 holders in roles such as stockbrokers and financial advisors, where their role involves offering advice to clients on these types of investments.
Examples of CFA vs Series 7
Portfolio Manager Career: A portfolio manager is a finance professional who handles investment decisions for a client’s portfolio. Someone who has a CFA (Chartered Financial Analyst) certification might choose a career in portfolio management as it could offer them a broader depth of knowledge needed to make accurate long-term financial projections, evaluations, and decisions which are fundamental for this role. Conversely, a Series 7 certification enables one to sell securities. Hence, a portfolio manager with a Series 7 license could focus on the investment and trading side of business. Sequence of obtaining might be important here since to get the Series 7 license one must be sponsored by a financial company that is a member of FINRA.
Investment Banker Role: An investment banker with CFA certification has high credibility because the charter indicates mastery of a comprehensive range of practical portfolio management and advanced investment analysis skills. Comparatively, someone with a Series 7 license as an investment banker might focus more on working directly with clients, selling securities, stocks, bonds and formulating investment strategies. The service they offer might be narrower in scope than the CFA, but they’d excel in their given area.
Financial Advisor Field: A financial advisor who has a CFA charter may have a solid foundation in advanced investment analysis and real-world portfolio management skills. They can present a holistic view of financial planning and work on creating comprehensive long-term investment strategies for their clients. On the other hand, a financial advisor with a Series 7 license is capable of advising on a wide range of investment options and securities. They are likely to have more hands-on, day-to-day interaction with securities and investments. To summarize, while both CFA and Series 7 are prestigious qualifications, a CFA certification typically provides a broader, more analytical perspective on finance and investment, making it suitable for careers that require long-term strategic planning. Series 7, on the other hand, is a more specialized license focused on trading and dealing with securities, making it ideal for roles like stockbrokers and investment bankers.
Frequently Asked Questions: CFA vs Series 7
What is a CFA?
The Chartered Financial Analyst (CFA) is a globally recognized professional designation given by the CFA Institute, which measures and certifies the integrity and competency of financial analysts. Candidates are required to pass three levels of exams covering subjects such as accounting, economics, ethics, money management, and security analysis.
What is Series 7?
The Series 7 is a license given by the Financial Industry Regulatory Authority (FINRA) that enables the holder to sell all types of securities products except commodities and futures. It’s officially called the General Securities Representative license.
What are the differences between CFA and Series 7?
The main difference between the CFA and Series 7 lies in the scope, career focus, and examination content. The CFA is more comprehensive and globally recognized, making it more suitable for those focusing on investment management. Series 7, on the other hand, is largely US-centric and is often required for roles such as Broker-Dealer.
What are the requirements to take the CFA and Series 7 exams?
For the CFA, candidates must have a bachelor’s degree or equivalent, or be in the final year of a bachelor’s degree program at the time of registration. For the Series 7, candidates must be sponsored by a FINRA member firm or a self-regulatory organization (SRO).
Which is more difficult, CFA or Series 7?
The difficulty is subjective and largely depends on an individual’s background and aptitude. However, it is generally agreed that the CFA is more challenging due to its wider scope and depth, with a lower pass rate compared to Series 7.
Related Entrepreneurship Terms
- Chartered Financial Analyst (CFA): A globally recognized, well-respected qualification that involves studying for and passing three extremely tough exams. It covers a broad range of investment topics and is often a preferred qualification for those interested in portfolio management and investment analysis.
- Series 7: Known officially as the General Securities Representative Exam, it is administered by FINRA (Financial Industry Regulatory Authority) in the US. It licenses the holder to sell all types of securities, except commodities and futures.
- Eligibility: A fundamental difference between CFA and Series 7. For instance, anyone can take the Series 7 exam as long as they are sponsored by a FINRA member firm, while there are specific prerequisites to be eligible for the CFA Exam.
- Content: While the two programs share some overlap in content, CFA covers a larger scope including ethics, quantitative methods, economics, and portfolio management, etc while Series 7 focuses more on financial products like bonds, options, and other securities.
- Career Options: Typically, those who earn the CFA certification work in fields such as investment banking, portfolio management, and financial analysis, while those who pass the Series 7 exam often work as financial advisors, broker-dealers, or in other sales-related roles within the finance industry.
Sources for More Information
- CFA Institute: This is the official website for the CFA Institute, which provides all necessary information about the Chartered Financial Analyst (CFA) certification.
- FINRA – Financial Industry Regulatory Authority: This is the authority that oversees the Series 7 exam. Find comprehensive information about the Series 7 and other financial examinations here.
- Investopedia: This is a trusted finance website that explains complex terms in simple language. Search for comparison articles on CFA vs Series 7 here.
- Wall Street Prep: This is a preparatory website that provides information on various financial certifications and exams, including the CFA and Series 7.
