CFA® Losing its Luster?
CFA® Institute announced an influx of 200,000 new candidates this year. Some opinions I've heard say there is an over abundance of CFA® Charterholders as is. What do you guys think?
I'm currently preparing to sit for level 1 on june 5th. Either way I will continue to go for it, but are there any charterholders here who have opinions? Do recruiters value a person who has passed a few sections trying to break in or is it just a cap in the feather to an already established financier? Will passing the CFA®exams be enough to get into finance or should someone also pursue a masters?
Personal experiences appreciated.
hey can i still register to take the june 5th exam?
https://www.cfainstitute.org/
I wouldn't say it's losing its luster. It's still well respected, and you acquire a lot of valuable knowledge.
Having said that, people need to be realistic about what a CFA can do for you, and this is something I've discussed multiple times on WSO. If you are currently NOT in equity research/asset management, a CFA alone will not allow you to make that transition. Not saying it's impossible, but it will be VERY tough. The best path is to go to an elite business school (HBS/Wharton/Stanford/Booth/Columbia), and go through campus recruiting. If you can land a job in IM or a long/short equity hedge fund straight out of b-school, that would be ideal. Otherwise, try to get a job in equity research at a BB and then try to move to the buyside after a few years.
Most IM firms require their employees to eventually get a CFA, if they don't have one already. So clearly asset managers and research analysts value it. But don't think the CFA is a panacea that will allow you to make awesome career transitions. For that, get an MBA from an elite school; it's the only way.
Just make sure to shine it once in a while, it'll be fine
200,000 new candidates globally doesn't mean that many will become charterholders. Taking an average or 35% pass rate for each exam, 8575 of these people will pass the exams. After that, you need the work experience as well. It will not become like a CPA or something if thats what you are implying.
Might want to work on your math there bro. @GTRnitro, if you're not a troll, no. Seriously, a google search will take like 10 seconds.
Math is correct but calculation used is not exact. It's meant to be a general statement. It's under the assumption that no one will re-take the exam, you will pass all exams on the first go, and a set % of people will always pass. This is obviously not the case but I didn't want to a build a probability model on an internet forum to prove my point.
Honestly, I've been told that if I HAVE TO get it, then do it. But to move to a job, the focus is networking and grad school.
I plan on getting it just because I think having it outweighs the relatively minimal time and effort. That said, I know a lot of huge idiots that have it, and many that get it think they can automatically go work at an investment bank or hedge fund.
Agreed. If you want to transition into a hedge fund or IM, an MBA from a top school is essential.
reddog, djr's math is 100% correct bro. 200,000 @ 35% passage rate for tests 1 2 and 3 equals 8575
Someone's not getting their CFA...
;-)
You're right, djr was assuming independence. It was a rough estimate and it was obvious what he was doing, reddog was just being a douche
I wouldn't say the CFA is losing its luster. You also have to weigh all those new candidates with all the people who want to get into finance these days.
Pursuing the CFA is pretty much the standard for anyone in AM. Not being a charterholder can put you at a disadvantage to charterholders, but being a charterholder doesn't necessarily give you an advantage. Does that make sense?
As far as the MBA vs. CFA goes, here is my opinion on the subject:
http://www.lifeonthebuyside.com/mba-vs-cfa/
Good luck on the 5th.
I agree with both Analystforhire and Brady4MVP.
Becoming a CFA charterholder is relatively less time and money than a grad school program, but it's more of a check-the-box for people in industry or for young people trying to prove they're interested/qualified than for career switchers.
If you go on any LinkedIn group for CFA candidates, you'll find a million people with no finance experience asking if they get a job now that they've passed level 2. On the flip side, mid-level buyside positions often ask for either an MBA or CFA, but also require previous finance experience.
Not sure if it's even less time. Unless you study straight through all 3 levels without taking a break and passing them on your first try. That will be roughly the worst 18 months of your life. B-school, in contrast, is more expensive, but it's easily the best 2 years of your life, and the right school will open professional doors that you can only dream about.
Yes and Yes.
More time in terms of months from start to finish, less in terms of hours and opportunity cost. I totally agree tha it's not comparable to an elite MBA interms of connections/opening doors.
As I have only been out of ungrad for one year my experience requirments for MBA programs are too low to be admitted into a good program. Would a MS in Finance allow someone to break into the industry with a few CFA exams behind them? If so, how does one rank MS programs?
MSF programs work. What are you doing right now?
"Pursuing the CFA is pretty much the standard for anyone in AM. Not being a charterholder can put you at a disadvantage to charterholders, but being a charterholder doesn't necessarily give you an advantage. Does that make sense?"
Best words on the subject
The CFA Institute advises that 20% of people who sign up for Level 1 actually end up attaining the charter, there were 111,731 total candidates (all 3 levels) in June 2010. There were 46,863 'new' Level 1 candidates (but this also includes those who re-took the test) plus 46K more who wrote Level 1 in December. 5,742 recieved a CFA charter in 2009 brining the total to just over 90K
There arent 200K new candidates globally, and while there are more people who are writing and passing the exams than ever before that will not make the designation less prestigious, it will just call more attention on the designation. Its like saying a top business school expands its class size and is now less prestigious, we know that isnt the case.
Historical CFA pass rates:
http://www.cfainstitute.org/cfaprogram/Documents/1963_current_candidate…
I disagree... if everyone has it... who cares? If Harvard started letting 50% of applicants in, it means far less that you went to Harvard.
Part of the "prestige" is that not everyone has the charter or is able to get it. Hence the attractiveness.
The whole point of the paragraph above that was to show that not everyone has it. There are only 90K charterholders around the world, and only 9K newly minted ones in 2009. Thats not a whole lot in the grand scheme of things.
And yes if Harvard started letting everyone in it would mean less that you went to Harvard. But unlike Harvard the CFA lets everyone in, and doesnt let everyone pass. Just becuase you start the CFA doesnt mean anything, and we all know people who are in IT and say oh im writing Level 1, well call me when you get the charter. Business schools are hard to get into, and easy to finish. The CFA is easy to get into and hard to finish. So dont be fooled by the number of people signing up, keep an eye on the number of people that are actually recieving their charter.
Will passing the CFA exams be enough to get into finance or should someone also pursue a masters?
I have the charter, and I am doing an MBA, there are recruitment, networking and learning opportunities in an MBA program that arent available in the CFA program. You will meet some people through the CFA, at exams, seeing them study at the local library etc. and their are job boards at the local societies for work opportunities but its not like a top MBA school where you have on campus recruitment or access to alumni and career counsellers, or spend 2 years with the same group of people almost everyday and build long relationships with them.
The CFA is best used as a career accelerator at your existing firm (in my opinion very valuable in this regard), or can be useful to someone fresh out of undergrad with little experience in Finance to try and break into a role. So many times on this board you see posts about graduating from a non-target with a 3.2 and no job in finance and non of my networking or contacts or interviews have panned out, passing a few of the levels will help you break in somewhere in this case, ive seen it happen many times.
Okay - I mistook what you were saying. I assumed you were implying that regardless of how many pass (and earn charter), it means the same.
in the past, if you have CFA after your name, you are bound to get a job in ER or AM, one way or another...
now its more like a requirement to just break into the industry, especially if you want to advance your career in the field
Its a great designation if you know how to use it, as in applying the concepts taught and/or market yourself properly. I am in valuations with no designation and have surpassed charterholders; I lead a team of CFAs, CAs, etc. My claim to fame has been hard work and client relationships. The time I could have spent on the designation was redirected to swing/position trading. I hope to walk away from my position soon and get an MBA using the profits made from trading.
So, it all depends on how you use/market the designation.
This is laughable.. the CFA will definitely not lose it's luster based on any passing number.
The sheer difficulty of obtaining the designation is enough to make any manager bat an eye when he finds a candidate with a CFA designation.
Especially those who have the charter know the dedication in passing all 3 exams and having the work experience, sponsorships, etc.
If anything the increasing # of people taking the charter is going to boost it's reputation even more. Sometimes you will run into people in the world of finance who doesn't know what the CFA is all about, and honestly it is a sin. The more well known it becomes, the more well known it will be known for it's thoroughness and difficulty.
What? Where are you running into "finance" people that don't know what the CFA is? Your local bank in bumfuck, Mississippi?
And your argument as to how more people taking it will boost its reputation is retarded. You're saying, for example, if suddenly 5x as many people started passing Navy SEAL training, it would become more reputable? No. Exclusivity is much more effective in that regard.
I dont completely agree, 5X as many people becoming charterholders, ya that would be negative but as word gets out (by more people trying to take the exam) about the CFA the more of a brand it obtains in the industry. RIght now everyone admits that it is very tough to pass all three exams and it garners some respect. 10-15 years ago I am sure most people hadnt heard of a CFA designation, so its popularity has improved its brand. Which is why people think wow you're a baller for wearing a rolex, and dont necessarily know that you are wearing an expensive watch if you have on a piaget even though it costs 2-3X more.
I didn't say they didn't know what the 'CFA is', I said they didn't know what the 'CFA is all about'. A lot of hiring managers in entry/mid level positions equate the CFA to just another designation, or in worst cases a license like the S7.
Your assumption that just because more people have it that it is worth less is lacking in logic. If the number of Navy Seals were to double would that mean that they are that less skilled? Not necessarily. Like the Seals, the CFA requirements don't get easier as more people apply; in fact CFAI makes it harder.
The sheer popularity of the designation has nothing to do with how well their candidates prepare.
It's like saying Stanford is better than Harvard because they let less people in. Who cares? Were talking about substance here, not the perception of substance.
As more people take the CFA, it is becoming more of a requirement for those who go into PM or institutional sales. This is a fact. If anything it is a boost to those who already have/are taking it. If you want to get into this whole game of 'what designation/school has the least graduates', then be my guest. But there is clearly a reason more people are going to take their CFA. And it is a good reason.
I myself don't like to play this whole 'elite' game in which you only believe something is elite if few people have it. It's an extremely negative way to think.
**Sorry to hijack but I was recently discussing the pros and cons of a CAIA-edit* over a CFA with my pops. I currently have an MSF and will start FT in S&T in a few weeks. I was wondering which distinction would better help advance a career in S&T.
I am one of the few people not necessarily looking to go to the buyside in the next 18-24 months.
wtf is a CFAI? if you're discussing w dad you're probably set anyway
the CFA is great if you're a Harvard grad and worked at GS for the past four years. if not, don't expect it to help you much. it's better than nothing though
Good question I mistyped I ment to ask about the CAIA.
http://caia.org/
Dude, is that the Indian CFA imitation or some shit like that?
yeah and only 25% percent of the people that start the designation actually obtain it. I've also heard that 1/15 people pass all exams in the first try.
I'm banking on the CFA being more well known in 5 - 10 years so when I decide to make a move into investment management in Latin America it would make me a prime candidate (considering CFA is ultra rare over there)
The bottom line is this. Unless you're a CFA than you can't speak to the value of the designation. Every CFA I know is a clever, dedicated, money loving, calculating son of bitch. That's what you see in the real world. That's all that matters. Harvard MBA doesn't have shit on a Charter. YOU CAN"T BUY A CHARTER.
Can't build relationships through a textbook.
I'll go with HBS, thanks.
^^ but you can build a reputation
Much easier to do so face to face than on the basis of three letters next to your name (as difficult to achieve as they may be). I fully respect the CFA. I personally don't plan on getting it, nor do I plan on getting an MBA, but I know how much more powerful personal relationships are and how much further the Harvard (or similar level) name will get you. As posters above me have said, the CFA will only help you if you're already in the industry, but an elite MBA will help regardless.
reputation to do what... read a textbook?
jokes. i respect the charter. but it's what you make of it... which is what damn.analyst said so i'll keep quiet now
Arguing any more over it is pointless. I see your views clearly and as you said you see mine. In fact, I totally agree with you that no designation nor grad school can really achieve what good networking would achieve.
Please don't use the text book vs. networking analogy though. Not all of finance is networking and you should really heed a lot of respect to those who get down and dirty and really put in the necessary work to achieve such things as a top MBA or CFA. In actuality, the individuals taking the exams are usually guys you will meet on weekends who have great social & networking lives, but know how to balance their coursework and social lives effectively. To have someone who is doing just one of these (networking) try and tell us that we need to spend more time out in the field than in the books is insulting to say the least. It's not exactly easy to work 50 hours a week, study 20 hours a week, and still have time for a social life.
Not to mention, CFAI offers a HUGE network of CFAs and you'll be pressed to find a CFA who doesn't hold a very prestigious position.
The CFA is all about memorization of facts, formulas and jargon... similar to the SAT and the Bar Exam
Not entirely... some is... but if you go in with a mindset of memorizing everything, you will probably fail.
You're better off understanding the theories.
you obviously failed Level 1
No...took the Stalla course
I really wish people would stop fighting about this and start figuring out a place in Manhattan to drink heavily at 4:01 pm on June 4.
Gray Fox.
Those who will be drinking at 4:01pm must be ridiculously smart or don't like to check their work.
I'm not actually in the industry, but I come from a background that's surrounded by people in AM / PB. Everyone I've spoken to says the same thing: the CFA is still a benchmark within the industry. Not only does it allow firms to ensure you know what you're doing but will allow you to move up the corporate ladder. A friend of mine failed it in December and is facing quite a lot of trouble from his Boss for it.
If what you are talking about is diminishing returns then you have to assume that the CFA is already at that point where there are too many and that increased volume of applicants is actually reducing the value, I dont think that we are there yet for the CFA.
10 to 15 years ago there were not that many CFA's around and the ones that did have the charter were highly sought after, however, their demand was probably lower too, there was only a certain percentage of people who knew back then what the CFA was how hard it is to get etc, and few roles that required those skills. Fast forward to today where you have a much larger pool of charterholders and applicants and almost everyone in finance is aware of what a CFA is or how hard it is to get, but now what happens is that the roles that CFA's can get placed in also expands. Its not only value focused ER and PM's anymore. Indivdual financial advisors, consultants, treasury managers, PE associates and analysts, hedge funds, S&T, even some IB etc. So as the talent pool gets larger, the knowledge of the program grows and there is more demand for it.
Diminishing returns dont occur until the market has been saturated with CFA's. If all the M7 schools increased their class sizes by 7000 they could be absorbed, sorry to the non-targets, but yes if it was 25,000 then there would be issues with its value being watered down.
Very well said.
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