7 Reasons for You to Consider the CFA Charter

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This article is originally from 300Hours.com. You can read the full article here.

There's a lot of information on the internet on the CFA qualification and why you should do it, but most of them comes across as too 'infomercially', that is, they often are written by people trying actively to get more CFA enrollments. What we really need is a bunch of people who've done the whole thing to give an honest skinny on what they really think is useful about the CFA charter.

Here's a straight-to-the-point, frank list of reasons why a CFA could be useful to you. If you're on the fence and seeking to know more, use this information to make a wise decision on whether this challenging set of exams is worth the effort.




1. It Enhances Your Finance Career Path.

Industry professionals. A CFA charter can be useful as a career enhancer if you're already in finance, or to switch to a particular role. A CFA charter would particularly help in these roles:
  • Research analysts
  • Asset Management roles, including:
    • Portfolio managers
    • Private bankers
    • Fund of fund managers
    • Financial advisers
    • Relationship managers
  • Financial strategists

For more information, check out this handy tool from the CFA Institute to see what roles are currently held by CFA charterholders all around the world.

Non-investment professionals. Other professionals such as attorneys and accountants have also pursued the CFA. Quite often these are gained as complementary qualifications to broaden professional expertise. Not particularly crucial, but it does help.

Students. If you're keen on being in banking, you may want to consider the CFA charter. If you can afford the time and money, it makes sense to add another notch to your CV, but don't make the mistake of thinking it will magically bring you a job. As a student, knowing how to network and getting good work experience will work better in getting you a job in banking.

2. It's Affordable.

The total cost of a CFA charter is variable depending on type of prep materials you get and how many exams you end up taking, but it probably will range from $2,500 to $8,500.

That's still pretty cheap as far as professional qualifications go. The CFA charter is more about the time commitment. It's definitely affordable.

3. A Good Grounding In Finance.

As you may know, the CFA is tough to pass. Really tough.

And there's a reason - the material is very thorough, and very extensive. It's not that difficult to understand - it's retaining all the information all at once that often proves the challenge.

But it also means that if you succeed in obtaining the charter, you can be assured of a great, solid grounding in financial knowledge and expertise. The syllabus is also updated continually to account for recent innovations and events, so you'll always be learning from the most recent experiences and discussions among industry experts.

4. Global Recognition.

The CFA charter is one of the most recognized professional qualifications in finance in the world. The great thing about global recognition is that the CFA charterholder becomes more easily transferrable across markets. If you were planning on moving to Asia, for example, employers in Asia would also recognize your CFA charter earned in Europe. 

It's the exact same qualification, and candidates are earning their charters all over the world. Today about 100,000 charterholders are working in 130 countries worldwide.

5. You Don't Have to Choose Between CFA and MBA.

It’s all about your personal goals and situation. If you’re looking for a qualification to enhance your career in finance or establish your finance credentials, the CFA is highly recommended. If you’re looking for a qualification to boost your career outside of finance, or looking to move across industries, an MBA might be a better bet.

If you had to choose just one.

At the end of the day, there are many people who end up obtaining both a CFA charter and an MBA. If you’re hell-bent on making your CV the best damn piece of paper the world has ever seen, by all means take both - it’s in no way a either-or situation.

6. It Helps You Get A Job. 'Helps', Not 'Guarantees'.

The CFA charter is a great thing to add to your CV to boost your finance credentials. But let’s just get one thing clear - nothing on your CV ‘gets you a job’. And yes, this also applies to the CFA charter.

Nothing you can put on paper is a sure fire way of landing a job. Getting hired is a multi-stage process. Your CV and networking skills gets you the interview, and the interview is what gets you the job. No amount of CV padding is going to replace interview skills so you need to address all steps to successfully score the job you want.

7. Higher Pay, On Aggregate.

Pay is a very tricky question to answer. There are numerous surveys on CFA member compensation, so you could go into the finer details of compensation of a typical CFA charterholder.

However there are some recent studies on comparing the effects of compensation of roles with and without the CFA charter - that is to say, studies that attempt to place a ‘monetary value’ on the CFA charter. The CFA Institute last covered this in their 2005 compensation survey, where the concluded that CFA charterholders’ median salary was 54% higher than non CFA charterholders (a median annual salary of $180,000 for charterholders vs $116,850 for non charterholders). This was a higher effect that even MBAs. But note that this was back in 2005, so make your own conclusions.

Ultimately, suffice to say that acquiring a CFA charter will open more opportunities in finance to you and make it easier for you to explore others. As a result you can expect your career to benefit from more flexibility and higher compensation compared to if you didn’t have a CFA charter.

Agree? Disagree? Want to share your experiences? Shout out to us below.

Comments (23)

Oct 8, 2012
300 Hours:

For more information, check out this handy tool from the CFA Institute to see what roles are currently held by CFA charterholders all around the world.

I love how the top employers of CFAs globally are all the major sell side banks. I guess that's because it's based on absolute number of people hired and they have more employees by many multiples, but still.

Oct 8, 2012

CFA is definitely on my radar.

If you ain't gettin money dat mean you done somethin wrong.

" If you have built castles in the
air , your work need not be lost;
that is where they should be .
Now put the foundations under
them." - Henry David Thoreau

Oct 8, 2012

great post! SB

Oct 8, 2012

Can someone who didn't focus on finance/econ/ math in undergrad still learn the material well enough to pass the CFA levels, or do you have to have a quant heavy educational background?

"I'm a historian, and that freaks me out."- Mike Tyson

Oct 8, 2012
brownfield:

Can someone who didn't focus on finance/econ/ math in undergrad still learn the material well enough to pass the CFA levels, or do you have to have a quant heavy educational background?

As long as you have some sort of inherent quantitative skills, you should be ok. The quant sections can be a bit tricky without any stats classes, but they aren't a huge portion of the exam and what is included tends to be rather straightforward.

I would say a history major taking the CFA exams would probably have the most difficulty learning accounting. Most of the actual math outside of quant is just basic arithmetic and algebra.

Oct 8, 2012
brownfield:

Can someone who didn't focus on finance/econ/ math in undergrad still learn the material well enough to pass the CFA levels, or do you have to have a quant heavy educational background?

Yes, I passed L1 last december, and my background was in molecular biology and hadn't taken a econ or business class in my life (and didn't know the difference between a stock and bond for that matter). If you are a total novice like I was I would check out 'Kaplan CFA Basics: The Schweser Study Guide to Getting Started' to get warmed up on basic concepts in finance (or just hit up investopedia or wikipedia), then just get Schweser or Elan notes and you will be fine. This stuff is not rocket science.

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Oct 9, 2012

I'm an engineering major myself. I know historians and English majors that passed it too.

Sep 21, 2018

You certainly do not need to have any sort of background. People of all different academic backgrounds have tested their abilities against the CFA. I would say that coming from a quant heavy background can often times make the material easier to understand, but it is not an absolute requirement to start the charter. I would say determination and grit are qualities that set apart CFA haves and CFA have nots.

Best Response
Oct 9, 2012

I didn't have any background in finance / econ / accounting and I brought the noise 3/3 on these exams in 18 months. It can be done. The content is not hard, there i just a lot of it.

I think the CFA is most helpful for people without any background who need a piece of paper saying they know something about finance. I would not recommend it for anyone else as the return on time is quite low (the material is largely worthless for real buy side jobs IMO). Not trying to be a hater, that's just the truth -- I use <5% of what I learned in that role as a bottom up equity analyst at a top hedge fund (i.e., the job people actually want). I wouldn't use it in a portfolio manager role either. I know several people that have the charter who are running their own funds and none of them think it is useful, either.

In terms of a job, it helps most for making your jump from entry level job to something better (second job). Before that, it's largely about UG pedigree and networking. After that, it's largely about networking and actual skills. I've been offered several jobs at the partner level or similar in the last few months and the CFA never came up even once during the discussion. It was all about how I could, you know, actually make money for the firm, which is not taught at all in the CFA program.

Basically, if I could do it again, I doubt I would study for the exams.

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Oct 9, 2012

Isn't that like saying a JD isn't useful to be a trial lawyer, because in an intense courtroom showdown it's largely about "actual skills". That may be true. And in the finance universe the CFA is probably not going to do much to directly make you generate alpha or make brilliant insights. But I'd argue it's still good to have some credential that demonstrates a basic level of knowledge about a broad range of topics related to your field, and I think that's what the CFA does, arguably better than an MBA for investment related roles. I think within an investment related role it's good to have from a presentation standpoint, whether you're presenting yourself to company management, clients, industry experts, peers (other research analysts or portfolio managers), or potential employers. Of course if you're at the partner level then it's not going to matter as much, but I think it's still pretty decent for junior bros like me.

Oct 9, 2012

I've never been to law school so I can't really say, but I thought that a good law school was supposed to teach its students about the law. The CFA teaches some kind of weird academic finance that doesn't hold water in the real world. If law schools are also philosophically disconnected from the actual practice of law (I don't know), then it's a good comparison.

MBA > CFA if only because the accounting is highly relevant to real finance jobs (fundamental analysis at HF / MF / PE). If you want to enter academia or asset management tweaking model portfolios, then CFA would probably be better.

There's just no beef in the CFA program. It tries to be too many things to too many people. Knowing GIPS has zero relevance on my ability to pick winning stocks (smh, what a waste of time).

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Oct 9, 2012

The CFA teaches 'weird academic finance' and the MBA is 'highly relevant' when business degrees are obtained from academic institutions? MBA = Academia. When I was an even younger lad I took classes that were undergrad and MBA mixed and not much of what was discussed turned out to be all that relevant to the real world. For example, I took a fixed income class and the professor spent weeks and weeks going over the minutiae of the Vasicek model. I seriously doubt any bond manager or fixed income research analyst uses or cares about the Vasicek model. I don't think the dichotomy you're presenting is fair.

I do agree that the CFA doesn't focus enough on depth, and due to its very broad curriculum there are inevitably going to be areas that are not relevant to a given person. However, even using your example of GIPS, while it was pretty frustrating to learn, I would imagine that if you were a fund manager, having some understanding of the best ways to present your fund's performance could have relevance in gaining new clients.

Now if all you're doing is picking stocks, and Mr. Einhorn is any example to follow, then you best be sharp with your poker chips.

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Oct 9, 2012

The accounting in an MBA program is highly relevant for someone without an undergrad finance degree. No one's talking about fixed income (cool non sequitur though). If you have no background in accounting, you will have the option in almost any MBA program to take basic and intermediate or advanced courses and come out with proficiency in reading financial statements. That is simply not true in the CFA program, which, at least when I took it, focused on arcane and worthless concepts like percentage of completion accounting and balance sheet translation for foreign currency impacts (fuck you CFAI). I have used % of completion once in my entire career and never used forex balance sheet translation. It's really unbelivably stupid that the CFA program picks out minutiae like that while completely ignoring fundamental concepts.

The only other useful things in the program were basic knowledge of derivatives (level 1 -- not the weird shit like butterfly spreads or whatever (who cares)), basic bond math, and basic equity valuation stuff (although the DDM is shit). You could take 90-95% of the CFA program and throw it out.

Again, that stuff is useful for "something" -- just not the jobs that people actually want. I guarantee 98% of people entering the CFA program are doing so because they think they're going to be the next super star hedge fund manager, and they're going to be sadly disappointed after they finish the program if that's the case. It's just not relevant for fundamentally-based finance roles. When I do hiring, I always look at CFA on the resume and think, "Aww fuck, we're going to have to retrain this guy from scratch -- who else can I interview instead?" I'd rather have someone without the CFA because at least it's a clean slate. In fact, I didn't even renew my dues this year.

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Oct 18, 2012
Ravenous:

The accounting in an MBA program is highly relevant for someone without an undergrad finance degree. No one's talking about fixed income (cool non sequitur though). If you have no background in accounting, you will have the option in almost any MBA program to take basic and intermediate or advanced courses and come out with proficiency in reading financial statements. That is simply not true in the CFA program, which, at least when I took it, focused on arcane and worthless concepts like percentage of completion accounting and balance sheet translation for foreign currency impacts (fuck you CFAI). I have used % of completion once in my entire career and never used forex balance sheet translation. It's really unbelivably stupid that the CFA program picks out minutiae like that while completely ignoring fundamental concepts.

The only other useful things in the program were basic knowledge of derivatives (level 1 -- not the weird shit like butterfly spreads or whatever (who cares)), basic bond math, and basic equity valuation stuff (although the DDM is shit). You could take 90-95% of the CFA program and throw it out.

Again, that stuff is useful for "something" -- just not the jobs that people actually want. I guarantee 98% of people entering the CFA program are doing so because they think they're going to be the next super star hedge fund manager, and they're going to be sadly disappointed after they finish the program if that's the case. It's just not relevant for fundamentally-based finance roles. When I do hiring, I always look at CFA on the resume and think, "Aww fuck, we're going to have to retrain this guy from scratch -- who else can I interview instead?" I'd rather have someone without the CFA because at least it's a clean slate. In fact, I didn't even renew my dues this year.

I agree with you as much as I hate you. Why didn't you write this 3 years ago so I could have saved hundreds of hours? But out of curiosity, do you intend to permanently give up your charter?

The Auto Show

Oct 9, 2012

If you're so gung-ho on accounting, why don't you just hire CPAs? It goes without saying that being good at accounting doesn't make you a good stock picker. It also goes without saying that to run a fund you need clients, and while you apparently see the CFA as a clear red flag, I really doubt that your fund's investors view it as such. Also, I didn't realize that the "jobs people actually want" are at top hedge funds that are in the habit of spoon-feeding people basic concepts because their slate is clean. I will add that it sounds like you took the CFA several years ago and the content has improved during that time from what I can tell.

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Oct 9, 2012
Going Concern:

If you're so gung-ho on accounting, why don't you just hire CPAs? It goes without saying that being good at accounting doesn't make you a good stock picker. It also goes without saying that to run a fund you need clients, and while you apparently see the CFA as a clear red flag, I really doubt that your fund's investors view it as such. Also, I didn't realize that the "jobs people actually want" are at top hedge funds that are in the habit of spoon-feeding people basic concepts because their slate is clean. I will add that it sounds like you took the CFA several years ago and the content has improved during that time from what I can tell.

I'm pretty much in your camp on this one. There's no point in nitpicking the more annoying details of the CFA curriculum without looking at the bigger picture - it gives you a great foundation in all aspects of finance. About 5% of what I learned across the 3 levels has been useful for banking, but that 5% has been extremely useful. I think from strictly an understanding perspective, the CFA is far more useful than an undergrad business, finance or accounting degree (maybe combined).

Stuff like GIPS might seem ridiculous, and to some extent it is, but I have looked at some investor decks for some VC and private equity funds and I immediately start picking up on things that other people might not know to look for. If that isn't valuable in my job, it is at least valuable for my personal decision making down the road.

Oct 9, 2012
duffmt6:

There's no point in nitpicking the more annoying details of the CFA curriculum without looking at the bigger picture - it gives you a great foundation in all aspects of finance. About 5% of what I learned across the 3 levels has been useful for banking, but that 5% has been extremely useful. I think from strictly an understanding perspective, the CFA is far more useful than an undergrad business, finance or accounting degree (maybe combined).

Agreed. Having finished the program, I'll fully admit that only a small percentage of the material do I actively use on a day-to-day basis, but there's no doubt in my mind that it gives a great broad foundation of concepts.

Oct 9, 2012
Going Concern:

If you're so gung-ho on accounting, why don't you just hire CPAs? It goes without saying that being good at accounting doesn't make you a good stock picker. It also goes without saying that to run a fund you need clients, and while you apparently see the CFA as a clear red flag, I really doubt that your fund's investors view it as such. Also, I didn't realize that the "jobs people actually want" are at top hedge funds that are in the habit of spoon-feeding people basic concepts because their slate is clean. I will add that it sounds like you took the CFA several years ago and the content has improved during that time from what I can tell.

I'm curious, do you work in the business at all? That might change your perspective. My perspective is based on working directly for one of the best value investors in the world for the last 4 years and knowing several other well regarded value investors across a wide age range. I can only think of one that has the CFA, and the rest do not care for it. Perhaps that is to be expected because successful value investing is contrarian by nature, but that really only reinforces the idea that the CFA program is pretty wide of the mark of what actually works in real life.

Some hedge funds prefer to train high potential candidates largely from scratch (assuming some basic knowledge). Most of the degrees / programs out there miss the mark, and CFA is one of those. Value investing is a highly nuanced discipline. I would much prefer a CPA to CFA and have hired that way in the past (I have never hired a CFA).

I don't think the program has changed much from 2006-2008 when I passed.

Fund investors don't know. If you have good returns and infrastructure, that's enough. If you are a start up fund, you need to convince people to invest with you, and the CFA won't do that (neither will a top MBA).

The CFA program is basically a clever business model -- you need the gold standard in the investment world! Take our exams! And then pay us annual dues for the rest of your career. It is the gold standard of nothing and there is a reason tons of other exams are trying to copy the CFA (CAIA, CHP, whatever -- all worthless).

I know you want to believe, that's cool. My guess is that after you pass the program and work in the industry for 3-5 years in a real job, you too will realize the program is worthless. You've been warned.

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Oct 9, 2012
Ravenous:

I'm curious, do you work in the business at all?

I work at a top buy side shop.

Oct 17, 2012

Comparing a program like the CFA which has really gained popularity in the past ten years to how many investment managers have it today is irrelevant because those managers were probably already in the industry. How many of the top managers ten years from now will have the CFA? It's like looking at the value of an MBA program in the 70's compared to today.

Oct 17, 2012

im debating on whether i should sign up for level 2 and it's basically coming down to if i could better spend the time studying working more. id argue that at this point in my career that putting in more work is easily more beneficial for me but i don't want to get stagnant and never finish it up. while i do love my job, i completely acknowledge that i may settle down one day and want a more laid back AMish kind of job where it will be valued much more. we have a few charterholders at my fund but no one acts like it's anything special or they came from a background that valued it more. i gotta give it props though because i wouldn't have this job right now if i didn't pass level 1.

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Oct 17, 2012
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