TL;DR: Is the CFA worth it for breaking into FO public markets roles and does it help you once you're in them? Please give answers from a recent perspective, from a respectable source (if not first-hand).
Apologies in advance for the lengthy post....
I feel like this question has not been properly answered for some time.
Some context: I'm in my first year in SS ER in London, I've passed Level 1 and always thought that I'd do all 3 levels to help break into LO AM. I've realised I haven't given this as much thought as I should've for something as time consuming as the CFA exams. I've asked management at my bank and they don't really care about the charter. A minority of the floor has their charter (and/or pays their fees) from what I can tell.
I've found that most people giving advice on whether to take the CFA have some sort of ulterior motive or are out of date in their perspective: either they make money from its continued uptake or they took it themselves and think others must also share the pain or took it themselves 10 years ago and are not aware of the changes in the hiring market. So...
I want to answer two main questions:
1. Does taking the CFA help you become a better analyst/PM?
2. Does the CFA help break into AM/ER/HF? And, if so, in what specific cases (asset class, candidate background etc.)?
Question 1 is subjective - for those of you who have at least passed Level 1 and work in AM/ER/HF etc., it would be great if you could share how you feel CFA has impacted your capability, if at all.
Question 2 is anecdotal - for those who have been on hiring committees or interviewed for roles where holding the CFA could be deemed relevant, it would be great to hear how a candidate's CFA progress or lack thereof has impacted decision making.
If this gets enough responses, I'll edit some main points into the post or make a new post for future use. I'll also be reaching out to the few head-hunters I know to get their perspective (feel free to do the same if you can be bothered!)
Hey man,
I work in an RX group and when I got the charter, no one in my group congratulated me. They simply didn’t care. I know that the CFA is irrelevant for RX, but I still hoped for a pat in the back.
To be honest, I believe the CFA is not worth the time and effort for IB as there are better ways to spend your time to sharpen relevant skills.
Ahh is HL a solid shop?
Yep, top RX shop and top M&A shop by volume
Do you see many RX lawyers making the jump to a place like HL?
I have seen it yes, in big offices such as NY/London/HK and often preceded by a top MBA
.
CFA won't help you become a better analyst, it's about how well you can prepare and regurgitate information. For sure you may learn some things but there will be a lot you don't need to know that you will also learn. I think CFA is best for people who want to move from MO/BO into FO who will learn the most.
To me CFA is a tick-box exercise. It's a rite of passage that signals people you are smart, interested and dedicated to the industry BS only (AM/HF) but others still respect it. When I passed exams and achieved my charter my bosses all congratulated me (most had the CFA and respected the work to get it). FYI I'm on BS so thats probably why.
If you look at AM/HF IPs, so many have the CFA so will ask why you havent done it. While it might not prevent you from getting a job, it may help you stand out. Some larger AMs also expect you to get CFA to help climb the ladder (it's not required but not getting it will be frowned upon). For headhunters, they really rate the CFA. I found that after I got my charter, more recruiters returned my calls (note that I switched from a different FO role to Eq analyst)
I saw the headlines that the numbers taking the CFA has fallen again. I think this is a natural consequence of so many people taking the exam over the past decade as its prominence has risen. Despite the number of CFAs increasing, the exam remains as tricky as ever so its still a very respectable qualification. I do think you may see an alternative qualification come to prominence in the coming years that improves on the CFA but for now it is still the gold standard despite its flaws.
Thank you for the insight. Good little tidbit about recruiters returning your calls more after you got the charter.
I'll ask you a similar question I asked Monkey below: have you done any recruiting at your current shop and how does the conversation around CFA go?
You've somewhat answered this, just looking for more detail if any.
in terms of hiring, in my experience having CFA helps most with getting past that first hurdle of HR screening. If HR see you have a CFA it ticks a box for them. That is not to say though that it will automatically get you an interview, i just think it helps.
The CFA alone will not get you a job but as monkey said its a signalling thing. People know you have to give up social life to pass it. I personally recommend it to most but it is NOT a requisite. The reason I say that is that in my previous firm they like people of a certain rank having the CFA, it meant that it took you longer to get promoted etc. if you didnt have it. Additionally, so many PMs and analysts have it, people might wonder why you dont have it (but most will recognize its not be all and end all).
I think if you have good SS ER experience at a good shop at a ranked analyst it shouldnt matter a huge deal. You are more likely to be asked why you dont have it than a question around your experience of taking it etc..
IMO, I think in the same way some people on the BS like to hire from BBs or AMs they used to work at, CFAs like to see other CFAs because it validates them taking it lol
those are my experiences / thoughts
I agree with this sentiment. However, I will share my experience getting the CFA.
Are you under 35? I did it within my first 3 years after undergrad. It was a meaningful promotion/comp leverage tool against my peer group. Note, several star performers in group had it and was well perceived... may not be the case for everyone. When I'm in client meetings now, it definitely helps validate me as a younger guy. Also, helps when clients have it and create common ground others may not. Overall, I think if you can complete by 30 is a high IRR and starts to diminish by then.
Would add the tradeoffs for studying also get higher as you age. For me, it was a little less xbox and daydrinking on the weekend. CFA is not a silver bullet and it is what you make of it. I would add the CFA societies depending on your city are great for networking and job opportunities. Good networking for both your peer group, but also networking up to more senior folk. Definitely, some big boozing events/boozers as well, which is an underrated positive.
I used it as a promotion lever and viewed it as a cheap MBA for networking. Think it's great for this.
Yeah I've heard very little about the societies aspect of CFA. Never sure what kind of people actually turn up for those and whether it was really the type of people you cared to network with or just a 100+ other people looking to network with some seniors (kind of like tinder but where the seniors are the girls and juniors are guys).
agree on the point about adding gravitas as a younger professional (did it within 3 yrs also with 1 fail) when you are in meetings with clients and more experienced people
also agree that it is much easier doing it now and giving up xbox and a couple nights boozing rather than when you're older, like one colleague who was trying to do it after having a baby which was very difficult. something to be mindful it you end up at a place that want you to have it
Get a master's either an MBA or if you want to cover the material of the CFA but actually learn it, get a master's in Finance. My classes were taught out of CFA institute books. It looks good on your resume if you don't have the connections.
My firm plenty of people have it and they don't even have anything in their signature or on LinkedIn in their title showing it. There are some other certificates out there that will be more relatable to your actual career path. Most firms budget for people to pursue these.
I already had a decent opinion on my first question, I won't lie. It won't reach you to be a better analyst generally.
My most important (and what should've been my first) question is do people in positions of hiring power care? That's really what everyone wants to know right?
That's why I wanted to hear from those in those seats who can say "yes I care, here's why" or "no I don't".
right. pay $100-150k so that somebody will read Schweiser for you (omitting 70% of material).
The answer is Yes, having a CFA helps with all of the above. The real question is it worth the time given the incremental benefit from the charter.
And note, that yes of course it will help you be a better analyst. Who do you think is a better analyst all other things equal? A person who read one finance book in undergrad or someone who read 20 finance books? Likely, the latter will be a little better given all that extra knowledge. However, is he or she so much better that you should go read 19 more finance textbooks versus doing something else? That's the real question.
1) Not really, although if you have come from a non-finance background (like I did) some of the accounting / valuation / portfolio theory stuff in level 1 & 2 will be useful background to have. There are much cheaper ways (time & money) of learning this stuff however. Level 3 content is almost entirely useless (from an equity analyst / PM perspective).
2) Still very useful for long-only / more 'long-term' HFs (I have no experience of trying to recruit for a MM platform so no idea if they value it). Mainly as a signalling device and mainly for making that first move across from the sell-side - it's a crowded pack of people trying to do this and helps you at least get past the HR filter and get in front of the team that is hiring.
Thanks Monkey, always good to see your comments. Have you done any hiring yourself on the BS? Was CFA even brought up post-HR screen?
Because 12 months more of lost social life sounds pretty dear for passing a HR screen...
I would typically ask a candidate why the haven't finished the programme / why they haven't thought about it as part of a 1st round interview. Absolutely not a deal-breaker for me, just a conversation starter. I would care far more about quality of their stock pitch / how they think / how they respond to pressure.
But to emphasise the importance of 'passing the HR screen' / 'passing the headhunter screen': the last time we hired a junior analyst we hit high 3 figures in # of applications. A lot of these will have been completely irrelevant (wrong amount of experience / lacking the type of experience we explicitly asked for), so easy to rule out immediately, but as a hiring team we only spoke to ~10 candidates ourselves in the first round. HR (or the headhunter if it's a small fund with no internal HR) have to do a huge amount of filtering before anyone gets in front of one of us. That's the filtering things like the CFA help with - it's just another way of getting that funnel of applicants down to a vaguely manageable number.
1. Won’t make you a better analyst
2. huuuugely important for a lot of firms, others are more lenient. My firm has an unwritten rule to get the CFA as do other top growth funds I know
As I noted above, I think this statement is false. It's basically saying that studying more finance will not make you better at all. If studying your craft and industry doesn't make you better, then nothing makes you better.
Now, I'm not saying that it's going to make you an incredible or great analyst, but if you spent your weekends studying the CFA versus slamming beers and streaming Netflix, you're going to be a somewhat better analyst than the person who does nothing at all to learn more about their field.
This is a false comparison you're drawing. It's not CFA vs. watching Netflix. It's CFA vs. reading investment cases / doing fundamental research / reading industry-specific blogs / etc -- where yes, the CFA is a complete waste of time in relation
Doing the CFA isn't 'studying your craft.' I've passed all 3 levels and I use less than 5% of what I've learned in my day to day. Probably learned more reading 1 investment book than I have in this entire curriculum. If you know nothing about finance, CFA can add some initial value. But if you have a general lay of the land, it's useless from a skill standpoint
So I'm in the same position as you rn. I did my undergraduate degree at a non target, terrible education made me go for the CFA. I passed level 1, then passed level 2 while doing my master's degree at a target. Right now I don't have the luxury to just walk out, so I'm doing level 3 now. So take my word with a bucket of salt because I only started my ER internship last week.
If it weren't for studying the CFA I personally wouldn't have become this knowledgeable about analysing companies and what makes them good or bad. The CFA mushes together all the financial products and rigid but extremely practical quantitative ways to price and analyse them. In contrast, in my MSc we learned how to use calculus for time series analysis, when on the job you will never do that. The practicality of the CFA is quite stunning. I personally don't think this abundance of knowledge can be compiled in a realistic way elsewhere. I hope and expect it does make me a good analyst.
Hi! Saw your comments here. I'm currently a rising senior from an ABSOLUTELY non-target and want to go into the equity research space. Would you mind sharing some of your insights into whether to go into a graduate school (considering the expensive cost, I was also considering PhD in finance) or try to get some boutique consulting/IB job first and then transfer to equity research. Sorry I've reached my daily dm limit, so I have to ask you here. Thank you so much in advance! (background: dual degree bachelor for biochemistry and finance, had 5 internships in professional service but only one is banking)
American (based on the unrelated double-degree titles)?
American (based on the unrelated double-degree titles)?
Not as relevant here but thought I’d share my experience:
over COVID I payed (only get reimbursed if you pass for company I work for) to take level 1, and it was cancelled due to Covid, while I rescheduled via email and over the phone, I didn’t “register” (their are two forms both rescheduling and registering) and after studying for ~8 months, I was informed I would not be allowed to take it due to the fact I didn’t check a box related to where I wanted to take the exam. Spots were not filled I just didn’t select which location 3 months before the exam. I have seen a number of other people with the same issue. Due to this, I view the CFA society as unethical and I understand why their enrollment rates are down so much since Pre-Covid.
LMAO I did the exact same thing. Missed the scheduling deadline by 2 days (scheduling was a new thing compared to old paper exams), called CFA up and they told me to pound sand so had to pay again. Even tried to claim I had technical difficulties scheduling but they deadass checked my account logs to see when I'd last tried to schedule. Fucking bastards.
First lucky thing is I hadn't started studying yet (long story). Second lucky thing is I was reimbursed by a previous co for the original cost and was joining a new co who also reimbursed the new cost. Sometimes you just have to make a deal with the devil I guess.
Lmao definitely agreed on the lucky bastards. I tried to use the technical difficulties as well but they did the same for me.
Glad the situation out well in the end for you though!
Before python and data science = somewhat useful. same with mba programs.
nowadays, not useful.
Can you elaborate
The only guy at my firm who has a CFA is our loan ops manager.
If you are in Equity Research, especially at some LO shops, CFA's are typically the price of entry.
But for almost every other avenue in finance, CFA's are by and large useless.
I was in HY/LL research on the SS and BS, and I would say that maybe 15% of the FO professional's that I worked with had CFA's.
I am now in Private/Opportunistic Credit, and I can count on one hand how many colleagues I know took the charter.
Quick bump and update.Thanks everyone for your answers so far.
I spoke to a HH recently and they spoke very similarly to the comments above about CFA. Basically said it's not a necessity but they recommend it:
1. Many sell-siders or just people in general quit at Level 1, getting the charter helps stand out
2. Not having the charter or any progress in CFA can ice you out of some high quality firms
3. HFs generally care much less than LOs (as expected)
There's been a lot of thoughts about whether buyside cares, any thoughts on whether sell side cares?
i posted this as a poll on our linkedin
Awesome, thanks Andy
I just don’t understand how you’re supposed to study for it when you’re working 60-70 hours a week on the sellside. Seems like a big ask to my personal life and mental health
With a lot of pain and sacrifice... Basically. Just have to be extremely disciplined and basically work like an IB analyst for 6 months (+15 hours a week for 24 weeks). I think the best setup would be +1 every weekday +5 on the weekends, to keep some realm of sanity. Could probably get away with less because you'll take a week off before the exam for FT studying which should account for ~30-40 hours. Doable but ofc not easy at all.
I was just thinking about this as I’m currently at a fork in my ‘career’ choosing between ER and IB.
Given that hours wise, SS ER + CFA = IB, but that the equation doesn’t hold with compensation, is it even worthwhile entering SS ER (and taking the CFA) over pursuing IB (with the vision to jump to public markets BS)?
Obviously work is very different at the junior levels between ER and IB, but given the compensation gap, wouldn’t it be prudent to gun for IB instead which also opens doors to private markets/investing? (This is assuming a BS firm views ER equally as favourable as IB - please correct me if I’m wrong)
All else equal obviously better to have than not. But I think it's useless in the sense that it doesn't make you a better investor at all and most places don't care. Although some LO's do care about it at the junior level (T Rowe comes to mind). I've never looked at a resume and had CFA be a deciding factor. I think a much better use of time to network if you're on the sell side or hone your craft on the buy side.
Anecdotally, junior guys tend to view it as more impressive than senior guys.
For #1, I think it takes both knowledge and experience to become a better analyst/PM. CFA helps you (partially) achieve the first part but not the second, which is arguably increasingly more important as you advance in your career. To me, level 1 is more like a "knowledge check", ensuring that you know the basics of finance. Level 2 is much more in depth in each topic, but a lot of it may not be very applicable depending on your role (for example I'm in ER and only accounting, equity and corporate finance are somewhat applicable). Level 3 is mostly about portfolio management, which may be helpful for buy side (I'm on the sell side so can't comment on that).
I'm only one year into ER but already feeling that CFA does not provide even a tenth of what I need. Where I feel most limited is knowledge about the company/industry and experiences with complex corporate situations and working with clients. I'm not saying CFA is useless - it's a starting point and a good foundation especially if you don't have a solid finance background in university, but it's important to realize that you still need the experience to become a better analyst/PM (and that only comes with time).
For #2, I first joined ER as a summer student. The analyst knew that I've passed level 1, but I think he was more interested in my accounting knowledge (learned in uni and no I was not an accounting student) and the ability to build models from scratch (which I talked about and also showed him throughout the summer). I think those ultimately got me the full-time offer as he realized that he didn't need to train me much to get started. If you don't have the opportunity to show your work to the recruiter/future boss, then I can imagine that CFA can be a good way to signal your knowledge.
Nope. If you are in college or a fresh grad and need something to boost your resume for ER, then a solid Level 1 pass is enough to “show interest” and might make up for a perceived “preftige” gap. That way you can always say “I’m in the CFA program…” and never finish it. Outside recruiting for ER, I think toilet paper is more useful.
I will always hire the person with a CFA, it’s more important than the school you went to and the banks you’ve worked at in the past.
Why You Shouldn't Do the CFA
1. Does taking the CFA help you become a better analyst/PM?
IMO not at all, I think its more of a litmus test to see if you're smart and dedicated to the field.
2. Does the CFA help break into AM/ER/HF? And, if so, in what specific cases (asset class, candidate background etc.)?
Yes - I passed level 1 while applying to jobs and I think it helped me break in from a middle office role.
Define worth. At many AM shops, it is a requirement to have a seat at the table. The table is quite valuable. It doesn't really matter why they want you to have it. If they want it, get it. It will open many doors, either advancement at current firm or access to higher level job at other firms. All of those will compensate you well. I realize it's a bear and takes so long. Price of admission for many firms.
Speaking as a charterholder with 3 years sell-side experience:
1) Not really. As an analyst on the sell-side or buy-side, your job is very simple - research stocks, develop a view, pitch it, and then hope the stock moves in the direction you want... the CFA program doesn't help you get better at this. Most analysts cover a specific sector and to be well rated it is far more important to understand those stock specific drivers, have a view on where those are going and what is being priced into the stock today. What the CFA program does do is improve your overall understanding of how different aspects of finance work and interact with each other. It also teaches you skills such as attention to detail and time management which are invaluable in any job.
2) Depends what part of your career you are in. If you have just graduated college and looking for an internship or graduate position at a HF/LO/ER then the competition is fierce. Getting level 1 could really be the differentiator in getting your foot in the door because it tells the employer... hey, I'm serious about this industry and committed. I haven't just watched the big short and thought that sounds cool, I'm actually putting in the work.
In my position now, if I wanted to move to the buyside, having a reputation as a good sell-side analyst is far more important than spending 3 years doing CFA. That means, pick up coverage of your own stocks as soon as possible, understand those stocks as well as anybody and make good calls. Remember what these money managers are ultimately being paid for...they are there TO MAKE CLIENTS MONEY. That is it.
If you can prove a history of good stock calls on the sell-side, you really think Fidelity/Capital/Citadel/Millennium etc wouldn't hire you just because you didn't have the CFA? That's incredibly stupid.
Charterholders are typically biased. The say it was worth it because admitting to yourself that it wasn't, after putting in 300 hours of work and sacrificing a social life, hurts the ego. The reality is far more case-specific.
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