Throwaway post.
Random opening thought: I think it's natural for everyone to 'talk their book', after all there's a reason we choose to be positioned in certain ways in life.
I work in the AM industry, and sometimes hear people mention the CFA® as a 'must have', (not literally of course) whether for career advancement... image/prestige... genuine knowledge... an ability to set job candidates apart at the margins, and various other oft quoted benefits. A networking tool, or just a foundation to build upon... etc etc
I couldn't be more of a seller.
1) The M&I argument - that the opportunity cost of the 300 hours of study (~6 months of your marginal spare time) per exam, is just too high. Sure, in pure isolation, if you offered it to me for free, why not. But all things come at a cost... and whether your time would've been spent at work trying to get ahead by putting in those extra hours, or building relationships with family and friends... or if we're sticking to professional activities, then networking on your own with industry professionals and reading to learn for learnings sake vs. taking a test, I think it's hard to argue that the best use of 6 months of time is to take a CFA® test. In general, if you're happy with your job, invest your time in getting better at it or growing in your role... if you're unhappy, invest time in landing that next gig. Some say a CFA® opens doors, but I'd be surprised if the only thing that gets you there is passing a test...
If you'd otherwise have spent the time on something useless (hanging out and drinking or watching reruns of Sherlock) then fine, but that's hardly a fair argument.
Nobody debates an MBA vs. relaxing at the beach or working in IBD vs. unemployment. Anything is easily justified when reviewed in total isolation. Dedicating 900 hours to any other more directly beneficial task (finding a better job, etc) is likely to also pay dividends, and who's to say which is truly better. Some will take the CFA® . Others will pass.
The M&I argument is tough to refute, and in my view more people have gotten ahead by actually going out there and hitting the pavement to build a personal network, then passing exams, and that'll always be true.
2) It doesn't prove anything, other than that you dedicated 1.5 years (or longer, X years I suppose) to reading finance textbooks or prep materials and were able to pass a series of tests on the aforementioned materials.
I suppose there are people who put a lot of credence and value to such an act. I'm not hugely impressed tbh. I'm certain those who have the designation already, will be actively talking their book by showing respect to such an individual, enough to let them through a resume screen perhaps. But in general, in my admittedly brief time in industry, the few times I hear of people discussing why they took the CFA® , it was generally a "I wanted to break in and needed another thing on my resume" or a "my firm required it/was paying for it and I had nothing better to do so why not", or lastly, a "fear of being left behind, all my peers at my last firm did it so I got involved". Overall, it doesn't feel like a particularly strong suite of reasons.
3) A heck of a lot of people don't have one, and are doing great.
A weak anecdotal, totally unscientific argument... but are there any major HF managers who have a CFA® ? Einhorn and Paulson don't, and yes I know I know, they're the "exception", and don't prove anything. Us mere mortals need things like the CFA® to ensure we stay sharp etc...
Bottom line: Everyone gets the CFA® for a reason - you want something out of it... either a better job, a better network etc. Instead of putting 900 hours into the tests hoping for ancillary benefits, just pursue whatever it is you directly want instead. That seems viable to me.
Thoughts?
It also doesn't make you a better investor or teach you how markets work but it does show that you have a good "base" well rounded knowledge of certain basic underlying parts of finance. I personally think the heavy focus on accounting is annoying as balls and think cima and CAIA actually have more interesting material on them but they're also not the gold standard
I could not agree more. I think the CFA is useful from a pure knowledge standpoint, ESPECIALLY if you did not study econ or finance in school. It's very comprehensive, and you will learn a lot.
Having said that, after talking to TONS of CFA charterholders and doing extensive research on this, I am not convinced that a CFA is that helpful for allowing one to transition into a front-office investment management role. The counter-argument I hear is something along the lines of "well most people at BlackRock (insert some other big AM firm) have a CFA, so it's pretty much required." The problem with that line of reasoning is that we don't know if those people got in because of the CFA or whether they took the CFA AFTER they got their jobs. From what I have seen, it is the latter in the vast majority of cases. Big AM firms will often hire someone and say "look if you don't have a CFA we will sponsor you; take it because it will help you with your job."
The only purpose of going through the work and effort of a CFA or an MBA for that matter is to enhance your professional prospects, plain and simple. Those who say you should do the CFA just to learn are smoking crack. If learning is your only priority, just buy some books on Amazon and read them on your own time.
Finally, the CFA has become oversaturated. Lot of back and middle-office types have passed the exams in hopes of getting that dream front-office gig. Most have been disappointed. To this day I have met very few CFA charterholders who said explicitly that the charter helped them get to where they are professionally or that it allowed them to break into IM.
This.
Personally I don't think the content in the CFA program helps you grow in any specific finance field. It's really a mile wide, inch deep curriculum, so you become conversant on a basic level across all topics. For me that meant I learned some of the language for fixed income and options, but the corporate finance and accounting stuff didn't help at all.
However having those letters after your name does send a signal to potential clients and interviewers. It shows that (1) you like finance enough to put in the time to study for and pass the exams - you're not just some realtor who suddenly decided they want to run a mutual fund; and (2) you have at least some baseline level of intelligence needed to pass the exams (it isn't rocket science but somebody makes up the 50% that fail every year).
Sure, it's not going to get you AUM to manage on your own or anything, but it does come up as a simple screening tool for resumes and on the client side.
I agree w/Downtown... I haven't done the CFA (as it's utterly useless in my setting), but I have seen enough of it to know that it really offers very little in terms actual knowledge and understanding. It's extremely broad and, as a result, extremely superficial.
What value it offers, IMHO, is in that it sends the same message as good college grades, as Downtown has mentioned.
I'm just going to throw MS as you because i'm so tired of seeing these threads. You don't like it? Don't do it. Simples.
Jared D has started a shitstorm, but I'll reiterate what I said before. For people like me (non target), the CFA can serve as the icing on the cake for jobs if trying to make a move. It will not make you a better investor, it could make you a better analyst however. I will also say that for someone who didn't major in finance, it's a great way to catch up on the essentials. Full disclosure, I've passed level 1, didn't major in finance, went to a non target, and am taking a break for the next exams.
I'm also pretty sick of seeing these threads. Why people on here are writing multi-paragraph essays to trash a widely accepted certification in the industry is beyond me. My only explanation is some form of rationalization...you don't want to spend the time to do it even though you know it has benefits, so you want to convince yourself that it's not worth doing in the first place. Pathetic.
Completely agree. Mind you I don't even have the CFA (or any of the levels). The hate and going as far as 'it's utterly useless' is beyond me.
Agreed. A guy that seems to be a rates trader/PM is saying it's completely useless when I'm 99% sure that I could pull out the chapters on fixed income or market microstructure and start dropping random questions and he wouldn't get them all correct. There is a tremendous amount of material in the curriculum and it is extremely unlikely that any person could know it all (even within their specific area of work) without having gone through the program or at least having some sort of advanced degree (Masters, PhD) in the area in question.
I think it's pretty damn valuable. I think I recruited much better in b-school than my peers who did not have the Charter, even though my background was arguably less relevant. It has nothing to do with making you a better investor. It's about signaling your interest level in finance, and providing you with a very deep toolkit that you can use and tailor to your own strengths and style of analysis. Can you develop good investment insights without it? Sure. Is it obvious to an interviewer that you'll be able to do this ex ante vs. someone with CFA after their name? Not at all.
Now if we want to argue over annual dues... I'm probably in your camp that those are b.s.
I disagree with the OP on almost every point. Most people take the CFA exams when they are relatively young. 900 hours of studying is a small amount of time compared to the time one is likely to work in this business. There are absolutely benefits to becoming a CFA charterholder. First, most higher level jobs require one to be a CFA charterholder, or have an MBA or have both. Being a CFA charterholder does not mean you will get a job but I would think it will get you more interviews.
Also, the curriculum gives you a good investment foundation. Of course, being a CFA charter holder does not necessarily translate into making better investment decisions. With that said, it shows employers that you are disciplined and capable of passing very challenging exams. I would think that employers would view those attributes very positively.
I'm sitting on the fence when it comes to this argument.
Disclosure: completed CFA level 1
Pros: - if you went to a semi-target, it adds emphasis to your CV - some basic topics are helpful. In all, level 1 didn't really teach me much. The only thing I learnt was what backwardation and contango is (something that semi-targets arent exposed to lol)...
[This is actually why i'm not sure about continuing the course. i want to learn more about off-balance sheet accounting, derivatives, and futures so that when i analyse companies, I have a better understanding.. I have a better understanding of what looks good or not - I'm not sure if the CFA will give me this.]
Cons - Time.. I agree with the poster on this respect. Time is valuable and life is short. In this case, networking, working harder at your job, reading about something that interests you, enjoying your time... this is a huge trade off! - A lot of people have the CFA - how valuable is it really? - CFA Insitute recently created a short course - claritas investment certificate... i feel that this reduces the institutes credibility.. is the institute just looking for money? - A lot of people dont have it that are high up and dont really care much for it (although some do) - I dont believe in any of the economic academic theories... I dont really want to waste my time learning about something I dont believe in.
claritas is more for admin people, rather than PMs or analysts, so it's apples & oranges imo
have a buddy who worked at Lehman in Manhattan, had a fiance and a dog and managed to network his way into PE and pass level 1 all around the same time. you have to dedicate weekends to it and use your firm's resources (some BBs do this, some don't). life is about balance, not so much either/or
about people high up not caring about it, this will depend on the shop. some PMs are almost against it because it's traditional finance to some extent. others it's almost a requirement
I agree on the theory part, but my recollection of L1 & L2 is that EMH, CAPM, MPT, etc., is relatively small when compared to the entire curriculum. sure, there may be entire chapters dedicated on it, but as far as page count, I think it's relatively insignificant. plus, when someone (potential clients usually) questions why I'm an active manager, it helps to know more about EMH & MPT than the competition
your perception is likely skewed by the company you keep. this has been written about but CFA's value depends on your industry and target firms. for example, if you're interested in working in IB in NYC, probably not that valuable, but if you want to be an analyst at a quant value shop, it's probably pretty valuable.
delete
Damn right! It worked for me though. I switched careers into finance from software engineering. I have to say that getting CFA level 1 was a strong indicator of my interest in finance which, I believe, played a part in getting my foot in the door. That said, now that I am in finance I ain't even dreaming of doing level 2 or 3.
Just curious, but all you guys shitting on the CFA, are any of you actually charterholders?
would not be surprised if it was just some college kids who registered for level 1 and never showed for the exam because they forgot to study.
Being a L1 candidate at a big firm in PM I think CFA is very helpful and almost all managers have it. Definitely isn't required but highly sought after and respected at my firm. At least in PM and PWM...
This thread is full of ignorant comments about the CFA program. These comments resound those that are often invoked by candidates who have failed or are afraid of failing the CFA exams - sort of like a defensive mechanism. There are too many things wrong that discussing all of them would be a waste of my time. Here are responses to some of the more egregious comments:
The CFA exam is the gold standard of investment credentials worldwide. Over 100,000 people register for all levels of the CFA exam each year. With historical pass rates that are less than 50%, on average, at each level, the difficulty of the exams should be a deterrent for those that don't think they have a shot at passing. Also, consider the cost of the exam, which may not be much for people that work in the US and other developed countries, but many people take the CFA exam in third-world countries. The cost of each exam could be prohibitive in those situations. Hence, the sheer number of people that keep on trying to get the CFA charter is signal enough of the value of having one.
The quality of business school education globally has high variance and the understanding of finance, even among students at top MBA programs, also has high variance. The CFA exams have a standard level of quality such that a candidate that passes the CFA exam in the US, Asia, Europe, etc. all passed an exam of the same rigor. Since employers (and your peers) know the quality of the CFA exam, those that pass get the benefit of that higher quality signal.
There was a comment about the CFA curriculum is that there is a lot of memorization and regurgitation. The curriculum itself is meant for you to UNDERSTAND the material and that is why it is that long. However, if you want memorization and regurgitation, you can go buy the books from Schweser that are focused on helping you pass the test. You can pass the test either way, but you have a choice to learn the material if you want.
Go look at job postings. You will see many that prefer and some require a CFA charter or some pursuit of the CFA designation. There are also many factors that allow a person to get or not get the job that they want and having a CFA charter may help but I can't imagine a situation in which having the CFA charter can hurt.
Although there is a growing number of CFA charterholders, the total number is just a tad over 100,000. It is still a pretty small group considering you have over 100,000 candidates taking the exam globally each year.
Great arguments OP. Way to go.
I smell bunch of idiots who got stuck after passing L1. As someone mentioned above, it's indeed a waste of time. This thread is full of misinformation.
you actually believe it's a waste of time? that's interesting to me because I haven't found any other charterholders who believe this. (I've got the charter and work with ~40 others who do as well.) I'm wondering if it's an issue of where in finance you sit. If you're in IB or perhaps PE or other 'plug and chug' type roles, I could probably see why it doesn't make much sense. But for AM/HF/econ consulting/valuation or any research or PM type track, I think it's extremely valuable.
I should've clarified what I meant. I meant it's a waste of time to even discuss here due to excessive misinformation. Obtaining CFA Charter is definitely not a waste of time.
Anyone who says the CFA is a waste of time doesn't know what he's talking about. There is no doubt that the knowledge gained from going through it is pretty valuable. I'm not so certain that the CFA helps that much with career transitions into front-office AM (based upon talking to dozens of charterholders, people in the industry, etc.). Ideally having both a top MBA and a CFA is a killer combo, but I will probably wait on the CFA until the firm sponsors me to take it.
Interesting you should say that, because a year ago you claimed to have the CFA. Can we believe anything you say?
//www.wallstreetoasis.com/forums/is-cfa-level-3-worth-it
So what's the story here guys? Maybe he had one level but not the rest? Very curious to hear some responses on this, but a bit lazy to click the quoted link. ::popcorn::
I won't comment on the merits of the CFA curriculum because that's already been discussed ad nauseam elsewhere and it is a completely subjective and pointless discussion. What I will say is how there are as many charterholders out there as there are people currently in the pipeline (ppl at one of the levels). Sure not everyone will finish, and many will give up. But the point remains that the amount of charterholders will be going through the roof in the very near future (~5 years). That said, I think it's completely reasonable to think that it may go the way of the bachelors degree within finance (something that started off "impressive", and over time due to excess supply transformed into a mere baseline prerequisite). Sure I could be wrong, but I'd rather finish it and be wrong than not finish it and be right. Just my $.02.
If you can't figure out how to apply the CFA to your investment career, you probably didn't think hard enough.
I don't exactly use all the material as well, but you have got to be full of yourself to think no one else will ever use those techniques and insights.
And how can you think critically about investing and big picture stuff people love jerking off to if you don't memorize the details and simple stuff first.
If anything, many investors could benefit from a CFA. How many equity guys you know who can intelligently explain the most basic fixed income or options. Unless you're a warren buffet, I'd expect professional investors to explain interest rate and vol models
How many CFAs can? Its a test. Once you pass, you forget it if you don't use it or refresh it often enough - that's just general human nature. Do I remember HS trig and identities? nope. But I got a good grade in pre-calc.
Once again, not commenting on the exam, but the argument.
As usual, it's context that matters. If you just take a test and never bother using the material, then the test probably wasn't as useful. But doesn't mean nobody is resourceful enough to put that knowledge to good use.
kind of like how people trash PWM - there are people who have the resources to spin PWM into IB, for others, not so much.
delete
I agree 100%. My argument is that most people who take it don't use it, not that it is useless.
The sentence I was picking on was: "How many equity guys you know who can intelligently explain the most basic fixed income or options."
I am sure there are plenty of CFAs who are too busy doing channel checks, late night calls or whatever, to bother about refreshing basic other things (for better or for worse), whereas there will be plenty of non CFAs who can.
No big deal. We are probably arguing the same thing.
Cheers
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