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Chartered Financial Analyst - CFA Qualifications & Exam


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Introduction

It can take several hundred hours to achieve Chartered Financial Analyst accreditation. And, of course, putting in the hours provides no guarantee of success. You still have to pass the exams.

So given the effort and risk involved, what benefits does a CFA bring? And who should undertake this gruelling journey?

Is it a passport to a lucrative asset management role, regardless of your current career path? Or is it the preserve of fund managers and investment analysts?

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What does the CFA course cover?

The CFA course focuses on 10 main topics:

  • Ethical and Professional Standards
  • Quantitative Methods
  • Economics
  • Financial Reporting and Analysis
  • Corporate Finance
  • Equity Investments
  • Fixed Income
  • Derivatives
  • Alternative Investments
  • Portfolio Management and Wealth Planning

The subject matter increases in complexity as you move through three main levels, each requiring the passing of a six-hour exam:

Level One – Basic knowledge of the 10 main topics’ areas and simple analysis using investment tools.

Level Two – Application of investment tools and concepts, focusing on the valuation of all types of assets.

Level Three – Synthesis of all concepts and analytical methods in a variety of applications for effective portfolio management and wealth planning. 

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What do I need to apply for the CFA?

The pre-requisite for enrolling in the CFA is a bachelor's degree or equivalent. However, exemptions can be made if you are in the final year of your undergraduate program or have four years of professional experience.

How much does the CFA cost?

The standard registration fee costs around $1,000 (you cannot pay in any other currency), although discounts are available for early registration. The registration fee covers the cost of a full electronic version of the curriculum, practice questions and mock exams.

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What are the benefits of gaining the CFA qualification?

The benefits of a CFA are said to be manifold:

  • It enhances your career prospects, boosting your CV and providing you with knowledge central to the investment industry
  • You are more likely to see a direct and significant increase in your salary compared to other qualifications, e.g. MBA, IMC, IOC, etc. It therefore offers a good return on investment
  • As a qualification with global recognition, it helps open up the opportunity to work overseas

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But is the CFA for everyone?

The relevance of a CFA depends greatly on the path you have taken up until now.

A move from a back or middle office role to an investment-focused one is not unheard of, but it can be rare.

This is in contrast to graduate or trainee front office programmes, where the completion of a CFA is normally included as part of the training.

Traditionally, CFA-related positions include the likes of research analyst, investment analyst, investment risk, financial strategy, client fund manager and, of course, portfolio or fund manager.

Tellingly, many asset managers make the CFA a prerequisite of any successful client fund manager candidate.

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Who shouldn't do the CFA?

This is a difficult question to answer. The CFA is certainly not a golden ticket to a front office role. But for the right person in the right company, it can sometimes provide a bridge. It really depends on your own individual circumstances.

If your current role is quite generic within a business and not directly related to investments – e.g. marketing, IT – sacrificing time and money in the pursuit of a CFA could largely be in vain.

Worse still, you could find yourself between two stools: over-qualified for your current job but unable to make the step up to something more in keeping with your shiny, new CFA.

If this is the case, we would advise you to pursue an Investment Operations Certificate (IOC) or an Investment Management Certificate (IMC). These are shorter and less expensive courses.

Doing one or both will give you a better idea if the CFA path is for you and your ambitions are realistic. And they won’t render you overqualified for your current position.

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When should I do the CFA?

If you are lucky enough to have secured a front office trainee role, the CFA will probably form a compulsory part of your career development. The advantage of this is that your employer will foot the bill.

A word of caution, however: the cost of any resits may fall on you and if you leave the company within a certain time-frame you may be asked to repay some or all of the original fee – this can run into thousands of pounds.

If you are currently in a back office or middle office role but you’re adamant a front office career is for you – based on not just your ambition but also your talent - then enrol for your CFA as soon as time and money allows (it is unlikely you’ll receive 100% funding).  

Many candidates make the mistake of believing they can do their CFA once they’ve secured a front office position.

Strangely, this is a common misconception among more rather than less experienced applicants. It’s not something you can do when you are in the role. Nowadays the CFA is a pre-requisite for most front office roles in nearly all asset managers.

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Is the CFA really worth it?

The CFA is a hard, hard qualification to obtain. For at least six months you’ll have to sacrifice life outside of work. And if you are self-funding, it’s a significant amount of money. So think seriously before undertaking it.

If you pass but don’t quite secure your dream role, the CFA can still help with a lateral move – containing as it does economics, financial reporting, corporate finance, ethical and professional standards, etc.

And if you are lucky enough to find yourself in the running for a front office role, you will be in a much stronger position. Not only will you have the right knowledge but you will be demonstrating a huge commitment to fulfilling your career aspirations.

And at interview, explaining you would like to do a CFA is nowhere near impressive as saying you’ve done it.

In short, if your dream is to work in a front office role, the CFA is for you. It may not guarantee you a job but it can help your chances greatly.

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