CFA® Scores: Precision or Derision?

I took and passed CFA L1 in June 2007. Generally speaking I did mediocre (at best) but absolutely RAPED--HUMILIATED--the Ethics section (something like 90+%), which is given greater weight than its numerical number. So I passed even though I got something like 50% (maybe less) on economics. As an aside, I never sat for L2 because I entered the real estate industry.

Anyway, the scoring was definitely somewhat vague. If I had failed my biggest issue would have been the complete lack of transparency on how they determine a passing grade. How is it that I could get something like a 55% on the test and still pass while others were failing with 65%? When I left the test center that day I was positive I had failed--there was little doubt in my mind. When you leave a test that you are 100% sure you failed and you get a passing grade then that tells you something about the transparency of the scoring system. Although I believe the bar exam has similar "opaqueness" as a means of keeping it proprietary. I think the CFA Institute is worried that transparency will give rise to copy cats.

As another aside, the CFA exam is complete bullshit. You wanna make real money? Man up and stop trading/managing money of people who are wealthier than you. It's kind of pathetic. By the way, on test day I've never seen a crowd of so many pathetic looking people. Looked like Ellis Island or something. A bunch of immigrant looking people who think that passing these tests is a silver bullet to a high paid job. Truth is, 4 years later most of those people are no closer than before to having a great job--they've just pissed away several years of their lives studying for an exam that is only meaningful in a small subset of finance, probably didn't finished, and probably spent upwards of $10,000 on materials and prep.

Not to mention when you get your results, you do get the "ranges" in each of the topic areas - so you know if you got under 50%, between 50 and 70% or above 70% (I forget the exact bands they publish, but there's 3) in Ethics, Derivatives, PM, Stats, Econ, Etc...

So if you flunk, you know where to focus some effort to step up on the next attempt.

hahahahaha, Wow, I really struck a nerve with a bunch of test-taking losers. It's been almost 4 years since I got my results so I don't remember the exact scoring scenario, especially since after passing you don't care how it works (in fact, within 6 months I couldn't even access my scores via the website--have to have them specially requested from CFA I). I do know that the L1 IS difficult to pass--it's got something like a 39% pass rate, similar to the California bar (although I'm aware one is much harder than the other).

In terms of money spent, $2,000 per shot times an average 4 attempts to pass all 3 levels (if you're lucky) = $8,000. Add in other test prep material and you're easily approaching $10,000 to take the test. Not to mention the value of your time. I spent somewhere around 200 hours studying for L1. 200 hours times 4 average attempts = 800 hours. What is your time worth? $30/hour? That's $24,000. Given that most people taking it in their 20s are giving up MEANINGFUL time to test prep, then I'd say the intangible cost of the program is much higher.

I'm sorry, I didn't know people did equity research to invest their own money--could have sworn they were doing research for the investments of others. You're right--that's very distinct. They're not money managers. They're big dick swinging Wall Street Warriors. My mistake.

By the way, the top 25% of mortgage loan orginators would embarrass a CFA charterholder in terms of salary. So I'm neither that impressed with the pencil necked geek money managers nor with the CFA program, which spouts a bunch of lies on its website about what average CFA charterholders make. Definitely guilty of the lie of omission.

I think it's worth pointing out that there was a time when nobody knew what a CPA was. I am seeing more and more people in corporate finance, specifically directors of corporate strategy or corporate development with the CFA designation. These guys are pulling in about $230k/ year working from 9-5 and analyzing interesting stuff like mergers and aquisitions and product lines. I think it beats the hell out of Equity Research and Asset Managment for about 90% of the people in those feilds. I am not a charterholder, nor have I or will I ever sit for any of the exams. I'm just calling it as I see it and my point is that the CFA designation is becoming a lot more relevant to careers that it didn't matter to in the past. Since the financial crisis companies want experts in their feild an most CPAs can't claim valuation expertise. Can we get some comments from people who have actually passed level 3 of the CFA exam to shed some light on the subject?

I think whoever said that they don't want people to start comparing scores got it right.

And I really don't understand your point VT. You're obviously mad about the intelligence of these charter holders :) (most likely considering his 2.5 GPA) It's a respected credential that requires hard work to earn and people understand the commitment it takes. It sounds like you are one of the people who failed level 2 four+ times and holds a grudge.

so back to the original question - cfai states that all charterholders are on equal footing, even if one pasess all three exams on the first shot and get >70% on all sections and another takes multiple attempts at each level. basically, they want the cfa charter to be prestigious on its own and for outsiders (employers, clients, etc) not to care about the specific grades you got on the exams.

I will agree with you that once you pass the exams, you're not too concerned with the grading policy. if i failed an exam, i definitely would have wanted to get more granularity - scores, specific questions, etc.

Wow, do any of you actually work in the industry that you're trying to get into (AM, equity research, etc.)? Or are you a bunch of offended 22-year-old kids who have been sold a pipe dream by the CFA Institute? If you actually do work in the industry, why don't you prove it by going to Patrick of WSO and show us that you are legit by becoming "certified"? Otherwise you're a bunch of CFA candidates with actually no first hand knowledge of its benefit.

The reason I pointed out mortgage loan originators is because it requires a high school diploma and hard work--just a bunch of high school schmucks who blow the lid off of guys who spend 3-5 years of their best years in a library. The CFA exam has been around for decades but only became big in the last 10-15 years due to marketing. It's the CFA Institute that makes big money and SERIOUSLY inflates earnings of charterholders. The big winner in all of this is NOT you, it's THEM. That's what I find so funny about this. The same kind of hornets nest defense of the program reminds me of the Amway salesmen I meet on airplanes when they are on their way home from a conference.

And, bro, if the CFA has actually become the CPA of the finance industry, then you're on your way to $60-70k annual salary like the average CPA. It's not necessarily a good thing to be a dime a dozen.

What's your salary? What's your mom's maiden name? What hospital were you born in? What did the doctor tell you at your last visit? What is your social security #? Ok thanks, once I have all this info I will be happy. Oh wait, who did you vote for in the last election? What does your dad do? What's your billing address? What's your credit card #? Who was that guy I saw you with last week (he didn't look like your cousin, but you said he was)?

The point is, GENIUS, the CFA Institute inflates average salaries so to string people into the program. I started the program in December 2006--21 going on 22 years of age--under the foolhearted belief that passing a test would get me a $175,000/year salary after 4 years of experience. Of course that was dumb thinking, but how do you think there are so many candidates? The CFA Institute sells people an unrealistic dream. Most of them don't even finish and it nicely lines the pockets of the anal retentive organization.

So if you're gonna tell me how great the program is and about how it really helps you, show me the money. Show me that 3-5 years of your life slaving away, stressed out is worth it. Show me.

I'm going to express something crazy you may never of thought of which I've heard older candidates say. They actually get pleasure from learning the material. Who would of that not everything is about money? Such a foreign concept.

By the way, the PERSONAL attacks against me are hilarious and never get old. The cult-like reaction to my crticism of the program hasn't given an ACTUAL defense of the program but has just gotten me personal attacks. The one that never ceases to amuse me is the personal attack on my GPA (that I've listed in my profile). As if I couldn't easily change my GPA to 3.5 in my profile or simply leave it blank. This just never ceases to amaze me that people don't get that it doesn't bother me.

What's even more amusing is that I barely graduated from my state university finance program--as listed, 2.5 GPA. And yet less than one month after graduating I defeated L1 of the CFA exam, which had a pass rate of less than 40%. The VAUNTED CFA. The GLORIOUS CFA exam. No doubt people would ask me to prove it--if you'd like, I will. PM me and we'll work it out--I'll prove it all. I'll put my money where my mouth is, so why don't the rest of you cult members put up or shut up. Go to Patrick and get "certified" or STFU.

lol...some funny stuff here

not taking any sides but those in the know...know.

just want to point out that even though the CFA is without a doubt the standard bearing exam for the myriad of jobs mentioned above...

there are actually quite a few designations out there that cost a lot less and provide candidates with far more detailed and complex understandings of many industry relevant subjects and topics.

i'm purposely not naming any names since it's not a big mystery.

I tried to search for the CFAI stat on salary but couldn't find it on their site (it's a fucking maze). I am assuming it's in the neighborhood of VT's 175k/yr. I think that's probably pretty accurate. However, lets not forget that it will include all kinds of MD's, CIO's, etc. That's going to seriously inflate the stat over what you're average Joe makes, especially soon after he gets the Charter.

The CFA designation is not going to get you a job, nor is it going to get you a big fat raise if you're already in the industry. I do not have a CFA next to my name, hopefully I will in the very near future, but even if I do my salary will not change. No magical doors will open up for me. It will make it easier for me to transition into a more prominent role as Institutional investors want to see that their money is with people that have the initials after their name, but it wont make me a big Exec or MD or anything. Hell, I won't even get a better title!

It's not necessary to have if you're in AM/Research/etc, but if you don't, you better have gone to HBS or the like for your MBA, or else you have virtually no chance to really further your career.

CFAI does make assload's of money from all the people that sign up for the program. I think I read that 130k people or something took level 1 a few weeks ago.

Something Creative, I respect the program and the people who pass. My initial reaction is to tip my hat to them the same way I do when I meet Harvard grads. So yeah, I'm not putting down the program in terms of knowledge, but what has always bothered me is how the program is sold to people--that it will alter the trajectory of their lives. As pointed out, even if it costs $10,000, it's a nominal sum in the long run, but it's the time commitment people make that is so costly if people buy into the hype and commit their lives to the program believing it will alter their path.

So let me be clear--I HIGHLY respect the charter. I just wish the institute would be more careful to not send people on a wild goose chase.

Vtech: I look forward to taking the CFA exams for a few reasons. First of all, working on the CFA (1, 2, 3, charter) shows your potential or current employer that you're serious about being interested in what they do. Would it make a difference for Joe Target? Maybe not, but for a semi- or non-target, like myself, I feel it shows my dedication to wanting to be involved with asset management.

In addition to this, as I'm still in school, I see this as a great networking opportunity. I plan on going to the CFAI meetings in my area and networking with them because I know they're all at least interested in investing (or else why would you get a CFA...) and many of them could potentially give me a job/internship.

As for when i get out of school, I see a few benefits to having a CFA charter (or to plan on passing all 3 levels/get the charter). First, a lot of senior guys in AM (I'm using AM to refer to IM, AM, ER, PWM, HF etc btw, sorry if that wasnt clear) have their CFA charter. In my opinion, there's no better way to get a job than to show you have similarities to the person hiring you. Second, you know you at least have a strong foundation for the type of work you're selling. They may teach you everything you need to know on the job, but I'd much rather start a job where I know the basics really well, get trained more in those basic areas, and have a very strong foundation to build on. There are a few other upsides to getting the CFA, but I see those as the most important aspects. Knowledge + respected organization granting certificate + networking

On to the other things you said... First, I do agree a lot of people get into the CFA thinking it's a miracle worker for changing their careers. The CFA alone won't do that, but it will definitely show motivation and interest the subject area.

Also, I don't think there is anything wrong with being a money manager. There are a good number of entrepreneurs, trust fund babies, and even just your run-of-the-mill successful people that don't have the time to manage their money and keep doing what they're doing or do what they love to do. You also have institutions which need to have their trusts and funds managed, but you're not going to have professors and the like with little-to-no real world investing experience handling this for you. Who is going to do this if everyone goes into entrepreneurship or starts working for a company?

You can compare any two industries and have a shitload of people say one is better and a shitload of people saying the other is better. I for one like the idea of having the freedom involved with investing. I also like the idea of working for a large company and trying to work my way up to the top. The thing that sets investing apart from the corpfin road, in my opinion, is that corpfin seems to be a lot more linear and there's a lot more bureaucratic shit you have to deal with. Yes, I know I used corpfin instead of entrepreneurship as an example, but that's just because I don't think starting a business is for me, at least not at this point in my life.

Ah, started writing that before your last post. Since that's your problem with it, I'd say this is a case of buyer beware. Honestly, if someone goes to spend $1000s on a charter that they don't fully understand, then that's their fault.

Started out selling loans over the phone in 07 when things were good... Became a Financial Advisor...Starved to death in 2008 when the world just wanted to sit tight and "see what happens"... Got laid off...Started the CFA program... Got an internship at a PE shop Passed Level 1...Got hired on Full time as an analyst Passed Level 2...Boss tells me I'm getting bumped up to be an associate at year-end.

Although I'm moving up due to performance at work, the CFA definitely helps. Sales wasn't a fit for me. Sales was great when times were good, but it wasn't intellectually stimulating. I wanted a job where it was challenging and also interesting to me, so I signed up for the CFA. It's basically like any other college degree - it won't entitle you to anything, but it definitely helps separate you from the rest of the pack.

The CFA charter is like a secret handshake. You will never know the full benefits of having the designation until you actually receive it.

The ironic thing is that people who shouldn't be taking the CFA spend the most money and waste the most time taking the exam.

I work in the traditional AM industry, at a company where CFA is a prereq for moving up, at least within equities groups. I actually benefit a lot from taking the exam. I get all my exam registrations and test preps paid for by my company, not to mention getting 7 days off as study days.

The random big 4 accountant/backoffice programmer who thinks the CFA charter is some miracle meal ticket to a high paying position really doesn't benefit much from taking the exams, but they are the ones that spend thousands on registrations and test preps.

that's the biggest irony. People really need to be educated about what the CFA actually is for before they send their checks to the CFA institute.

jesus christ these epines are ridic....what it comes down to is that the CFA is a hidden requirement for those in the AM industry (sometimes HF) at top shops for career advancement, and its value for breaking in is pretty marginal at best. there will always be morons who think the higher salaries of charterholders is actually the cause for higher salaries for charterholders, just do not be one of them.

i personally need to pass all 3 levels of the damn thing to show the rest of the world i understand what some shit is even though I never ever will use it