The Future of the CFA® Designation
Its commonly assumed that the CFA® is mainly useful for Asset Management, portfolio management, research, but increasingly, I see on LinkedIn that a lot of people in other positions, IBD, PE, HF, even business development at a BB are taking the CFA® and putting their most recent passed exam on their resumes. A lot of MSF programs and even MBA programs sell themselves by being a CFA® partner, prepping for it, etc. Is the future of the CFA® that its going to become a dime-a-dozen, that you need it to keep up with the competition, or is this such a specter a product of the job crunch? Will soon, all serious Wall Street professionals have one? I'm doing an MSF and am considering the prep course they offer and taking it when I graduate, no matter what kind of position I land in, or even if I am still looking, and I want to know if thats a smart idea.
It is definitely nice to have as it expands your job opportunities. I have heard of HF and AM firms using it as an entry requirement of sorts (heard some firms even require first passes on all exams). However, it is pretty much useless for getting a job in traditional IBD, and for good reason. Unless you are going into GCM, it is of limited relevance to IBD-type work.
A lot of people do it because of their interest in the subject or to challenge themselves, not for practical career advancement. As for the MS programs being partners, sure they advertise this, but I have yet to hear of anybody wanting to get into IBD/CF/BD choosing a postgrad school because it was a CFA partner.
I doubt it will become a "dime-a-dozen" in a general sense, because it takes a significant amount of time, effort, and money to complete, it's scope of relevance is limited to occupations which are centered around actually investment-related, and pass-rates are pretty low which will deter a large number of people from starting or finishing it. I do however see it becoming somewhat of an industry standard for the fields that it is relevant to (AM/HF/PM, etc.) in the next 10-20 years, sort of the same way that an MBA is in many cases required for IBD associates.
Plus I think it's just a matter of time until other professional certifications for fields like IBD appear, and existing ones gain more traction and take up some of the market share. Just my 2 cents.
I've met several people like this. Granted they aren't in it to get the exams down in 18 months and they aren't working 80 hour days while doing it, but I don't know why this is surprising.
I don't think so, you need to realize the history of the CFA and where the program is today. Ben Graham helped create it as a way for the public to ascertain whether or not someone was a reputable analyst, since in his time there were a lot more shady characters and less regulation than today. It's since morphed into the gold standard of all things financial analysis, from AM to research & modeling, to even trading to some degree. If you look at pass rates over time, they fell for something like 20 years but L1 has hovered in the low-mid 30s for a while now, with levels 2 & 3 much higher. I think that as long as they keep the difficulty of the exams at its current level and just update the curriculum, it will never be a dime-a-dozen, unless the talent pool increases. the barrier to entry is simply too tough to just get the CFA just because. If you've ever taken an exam (I passed L1, taking a break at the moment), you'll notice that about 1/2 of the room is L1, sometimes more, and the other half is about equally split between 2 & 3. there are several people who literally walk out of L1 as soon as they see the exam, because of the difficulty.
where I think the CFA is meaningful is in career changes/advancement. it gives non-targets a fighting chance if trying to get into ER & AM, and it might give you a leg up on competition for promotions, all else being equal. honestly though, I could not care less if my sell side analysts had the charter, so long as their research was good.
my reasons for taking it originally were to open up my career options, but now that I'm settled in PWM, I stuck with it to further complete my finance knowledge as well as to make myself more competitive in big money situations (people are superficial, they like seeing acronyms). I'm working on building up our business (trying to grow by 30%+ in the next several years) so I intend on finishing the program once we've grown a bit and I can cut back my hours.
I think its becoming the gold standard of finance. Saying this, a lot of people high up in finance don't have the CFA in funds management. Some do, some don't.
If you have ever done an exam before, its not easy.. I'm doing it for two reasons 1) to enhance my reputation and 2) to learn more technical aspects of investing and accounting. I graduated with a first class honours degree in accounting and finance and the CFA level 1 exam was harder than anything I have ever done before.
Disclosure: Level 2 candidate for June 2014.
Curious, did you go to a target/good school? I haven't heard someone consider L1 so challenging, but I don't have as many data points as I should.
Semi-target. But its not as if the course is any different to a target. still did financial econometrics, advanced investment analysis, derivatives (ie. greeks) etc.. i'd say main difference between semi target and a target school is reputation.
Its not the content which makes the CFA L1 difficult, its the volume. I studied for two and a bit months before exam... pretty much suicide.
I'm preparing to write my L3 exam now and I am NOT doing it to challenge myself. The amount of time you have to commit requires way too much sacrifice especially if you have a full time job that's not 40 hours a week.
Another thing which makes CFA difficult is that the questions are real-world. You learn theory but questions expect u to know how to apply the theory in practice, and often unlike the End of Chapter. Its not as if you just need to learn how to calculate CAPM or a DDM to get the marks, which is the case in university.
re: CorpFinHelpful's comments, that is what I'm doing.
I work in a Corporate Strategy role, work 40 hours a week and appreciate the extra mental stimulation... Same reason I wrote the GMAT without worrying about whether I'll actually go for an MBA.
Everyone complains about writing the CFA exams, how hard they are etc. It's an interesting personal challenge to try and pass all 3 exams first try. If I fail one I certainly won't bother retaking, but I'd be shocked if I failed Level 2 a couple days ago.
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