Do FRM or CFA help in HF
I am considering studying for an FRM or a CFA and want to know if either one of these would increase the chance of recruiting more than the other?
I understand that CFA is widely known but also more on portfolio management. While FRM is more technically intensive but used by risk/middle office. I am aiming for an investing/front office role and am exploring this to NOT just break-in, but also learn some useful skills that can help me in my career.
Or is there somewhere else I should be spending my time?
Yes of course the CFA helps, one of the main reasons people take CFA is to be a PM at an AM or HF
That’s a bit strong. Gives you the broad basics. Neither a prerequisite nor a pathway to becoming PM. Borderline compulsory in some traditional long only places, bit wouldn’t personally do it unless asked / forced to.
Agree with FamousTrader. I have taken the CFA but it only seems people at long-only / AM places are required to do it. Given the profiles where HF recruit from (IB, PE), you would not usually see a lot of charterholders in HF,
Not to say it's not useful, it's definitely broad-based enough to provide you with fundamentals.
It helps only to a certain extent. So they say.
The CFA is a great way to gain background in the world of finance, and teaches you a lot of basic concepts that you'll likely need as a foundation in AM, HF, or a bank doing ER.
That being said, there is a common misconception that getting an FRM/CFA/any professional certification will open doors regarding getting into a HF or AM shop. You have to remember that these roles are extremely competitive to begin with, and while certifications help, they aren't the end all be all.
Case and point: Have a very good friend that's highly smart; he previously worked in Institutional Equity Sales (managed a discretionary book for a client), and is trying to break into the HF world. He has a CFA, but has been unable to break in yet (he's been trying for a few years now). On the other side of the equation, I don't have a CFA, nor do any of my colleagues. Of all my contacts in the HF world, I can think of a handful that have CFAs. The rest have MBAs or other Professional Degrees with some exceptions (a few I know only have Bachelor degrees).
Certifications are great (nothing against them), but working your way into a firm is more of a function of you as a person, your experience, how you pitch yourself, and what you can bring to the table.
Not sure I agree with this in it's entirety. MBAs (particuarly from top schools) and professional degrees are extremely common for HF PM's/Analysts, but so are CFA's. I'd estimate conservatively that a quarter to a third of the managers I met with had the latter. Whilst they may not get you a job, a lot of funds in certain markets specifically seek out CFA's (particuarly L/S Equity).
Totally willing to accept that geographically these data points may differ, and that some funds may seek these certifications specifically.
To your point though, 1/4 to 1/3 of all managers you know having a CFA is not a huge number - meaning that 67% to 75% of your HF manager relationships do not have a CFA.
My bottom line here is that I see/get a lot of questions about the CFA certification from people I mentor, and there seems to be the idea (largely) that the CFA will increase your chances of getting into a buy-side role without prior buy-side experience. I personally think this is a fallacious concept.
Sure, you might get a few rounds of interviewing by piquing HR’s interest by having “CFA” on the resume (because that’s a listed requirement posted by the job), but I want to be sure to dispel the misconception that HF/AM are going to roll out the red carpet for you simply because you have a CFA.
OP here, I just want to clarify that I understand that certifications doesn't guarantee anything. But I do believe it shows interest, discipline, and can put you over the fence all else equal.
So based on the response, it seems like the CFA will give a slight edge in recruiting AND on the job for L/S fund, while the FRM wont really make the difference.
All things considered, with two candidates of equal footing (experience, skill, etc.), the CFA will give you an edge in recruiting.
I’m not trying to be anti-CFA, but again, I don’t see how having the certification will give you an edge in working in L/S equity or credit (except from a pure credential standpoint).
Just think about it this way - If you do land a role at a fund, you’ll likely be entering an environment where a number of your colleagues have had multiple years of experience in pitching equities/credit, speaking with management teams, modeling, etc. While your colleagues may not be up to date with the CFA material, they already have the core “on the job skills” needed to succeed in their role - likely years, if not decades of this experience. The CFA will not magically confer you those skills or give you an edge over your peers.
With all this being said, I would like to reiterate that the material in the CFA is helpful, robust, and a great foundation for learning the basics of what you would need to be successful at a AM/HF.
My view is that in reality, something else will break the tie, not the CFA.
No two people are so similar that a PM is unable to find something more credible to differentiate than earning the right to use the CFA designation.
I’m sort of laughing here - thinking about going to someone at my fund and saying, “I can’t decide between these two candidates, so I’m going with B because she has a CFA and A doesn’t.”
Right - this is the point I was trying to make. With all things completely equal, the CFA would demonstrate its value in one candidate edging out the other candidate. You can probably apply this thesis to every certification/degree out there as well.
I do think the CFA has value in the above scenario, but referencing my previous post, I truly believe that the differentiating factor between interviewees is a function of each candidate, his/her experience, how each thinks and presents themselves, and the core skillset each brings to the table.
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