CFA - worth it for bankers?

citycondor's picture
Rank: Monkey | 52

I'm a 1st year analyst in a MM in lev fin and am looking into taking the CFA this year. I've read a lot though that for banking and PE it's not really beneficial. I would be doing it against my banking hours too. The views of any experienced bankers and PE guys would be really helpful here in deciding if it's worth the 200-300 hours just to have it in terms of future career prospects and its value.

Comments (66)

Jan 16, 2016

Depends how much free time you have and how well you can stay disciplined. CFA is mainly about swallowing and digesting a very large volume of concepts and facts which are not that intellectually challenging. If you have the time and discipline to carve out, say, an hour a day for 3 - 4 months in the lead up to each exam, you should be fine. The earlier you start shoveling through the material, the easier it is. If you get the Schweser mp3 audio of the their texts, that also helps a lot as you can listen on your commute etc.

I've rarely found CFA knowledge directly relevant in my banking work. However, there is indirect benefit in that it improves your brain fitness for finance concepts. And likely it's helped me fill in gaps and pick up new finance concepts faster than I would otherwise.

In terms of resume building, it likely has some use. I've never had anyone mention it as an important factor in giving me roles over the course of my career, but who knows whether it had an impact or not? In any case, I've got an M.Fin and another multi-year post-grad finance course qualification on top of my CFA, so my CFA may have just been blended into the mix.

A less direct benefit is the discipline training you'll get from doing CFA while working full time. Being able to stay match fit and able to run a career, study on the side and have an active personal life is a great way to be. There are more productive ways to spend your non-work hours than on the couch playing console games. But, if you're really disciplined, you can squeeze that in too.

Best Response
Jan 16, 2016

Also, I'm generally in favour of more education whenever possible, as it makes it far easier to be lucky. A large part of "being lucky" is having all the prerequisites you need to seize an opportunity when it presents itself. In finance, a CFA is probably the best recognised accreditation (outside an MBA or M.Fin, which usually require full time work).

If you can squeeze in CFA study, you may be thankful later when it crystallises a job opportunity for you. If not, you'll still be a more disciplined, knowledgeable and wiser person. That is a worthwhile end in itself.

    • 6
Jan 31, 2016

Thanks for such a detailed response. Really appreciated - I've decided taking the exam far outweighs not taking it.

Nov 30, 2018

Have to respectfully disagree. I don't think investing, or even the broader finance field, is about accreditation. The CFA Institute and its army of followers are highly incentivized to make you think that their particular accreditation is valuable, which means their first task is to make you think that accreditation matters at all. But it doesn't. That's why an analyst promote Associate is treated as equally valuable to an MBA Associate. Same pay and same (if not a bit more) respect without the MBA. I'm not saying don't get an MBA (I did) but do it for what you learn, not for the letters.

People care what you actually know, not what pieces of paper you've earned. Yes, of course good schools are highly represented in banking, but that's just an efficiency game where banks spend their time at the best schools because that's the easiest way to get bright/motivated kids. Not because the actual credential is important.

The best post below is the one by dosk17 explaining how the CFA isn't useless but your time is much better spent doing other things. That is 100% correct. Coming from someone who sat for Level I and II, passed them both on the first try, and still decided the remaining 200 hours for Level III was not worth my time. Never signed up, and don't regret it for a second.

    • 4
Jan 31, 2016

The exams are a lot of work, and mostly not revevant. If you are interested in Asset Management (LO or HF), it will be helpful, but you are not likely to see much ROI outside that world. I would buy an old CFA text ( like ten bucks on Amazon ) and read through before you plop down 1200 on the registration plus who knows how much on prep materials. PM me if you want to know more.

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Nov 30, 2018

New to this; what is "LO" asset management?

Nov 30, 2018

Long only

Nov 13, 2016

In short, you should not do a CFA for investment banking. If you would like a designation that will help you to get an analyst or associate level position at an investment bank, I would suggest pursuing the CI designation. The CI (Chartered Investor) designation is granted by the CI Institute, and tests you on your financial modeling and valuation skills in an investment banking and private equity context. There are three levels for the CI Program, just like the CFA:

LEVEL I :

Comp Company Modeling

Comp Transaction Modeling

DCF Modeling

Financial Statement Modeling

LEVEL II :

LBO Modeling

Merger Modeling

LEVEL III :

Advanced LBO Modeling

Advanced Merger Modeling

Feb 8, 2019

Is this real? I may just be out of the loop, but I have never heard of this and can't find info online. Can you post a link to the website?

Nov 13, 2016

If you want buyside (fundamental hf's/asset managment), progress in the CFA program helps get a foot in the door. Some of the material is helpful, but a lot of it is bullsh!t. It's just another hoop to jump through.

A lot of buyside shops love the CFA designation, because you can "market" the designation to institutional investors.

Nov 13, 2016

"A Lot of it is bullshit"??

What are you talking about? Have you actually done the curriculum? Some of the PWM stuff on LIII was kind of BS, but the majority of the curriculum is very useful.

From an education perspective, it is definitely worth it. If you're truely into finance, then its something you should do.

From a career perspective, it is big in mutual funds & sell side ER,PWM & to a lesser extent, investmet consulting. Adds no value to corporate fiance, and very little value in IB/PE (due more to culture than applicability). I have no clue what traders think of it, but I see little correlation with trading.

Depending on your goals, it may be worth it. Even then, it will not replace the need for networking, experience et al., but will give you a slight leg up in a crazy workplace.

Nov 13, 2016
joemontana:

"A Lot of it is bullshit"??

What are you talking about? Have you actually done the curriculum? Some of the PWM stuff on LIII was kind of BS, but the majority of the curriculum is very useful.

Yes. How can you read the curriculum (not schweser) and not recognize all the bullshit?! Can you even recall the majority of the curriculum?

Why do you think the historic pass rate is so much better than the current rates? They've added more hurdles (ie bullshit) over time to maintain some semblance of exclusivity.

All the stuff you still retain is the useful stuff. All the material you know longer remember after taking the test is the bullshit.

Nov 13, 2016

How challenging is it? Sorry for the naive question but I can't seem to find example questions. Are the questions essay type? Or are they multiple choice like the SII ones?

Thanks

Just my 2c.

Just my 2c.

Nov 13, 2016

all multiple choice...and pretty fucking hard. last year only 35% of test takers passed. the material itself isn't particularly difficult, but there's a loooot to cover.

Nov 13, 2016

The breadth of material is daunting, especially considering that you work full time. Still, it isn't rocket science. A reasonably smart person will pass L1 with 100-200 (depending on background) hours studiying, and LII & LIII with 200-250.

But to give you an idea of the challenge, the pass rates when I went thru were: 50% for LI and 40% for both LII & LIII. So, appx 8% of the people who started with me made it thru without failure, and they were all college grads, and most had finance/accoutinge xperience.

Nov 13, 2016

you're assuming that pass rate of first time takers=pass rate of 2nd+ time test takers. Also, level3 pass rate was never less than 50%.

Tests are hard, and get harder as you go along. Not because anything on them is hard, but because there's so much that you have to know well. On level1 you can get by if you generally understand everything. Level 2&3 you have to know everything pretty well as the questions are more in depth.

The content itself is a bit superficial. You don't really go into depth on much. High level overview of finance.

No one will hire you or even interview you just because you have a CFA. When qualified and applying for a job w/ a CFA vs. someone w/o, it might help you stand out and get the interview. After that, it's all on you. CFA isn't going to help you land the job.

Nov 13, 2016

the only major bs i recall was some of the PM efficient markets mumbo jumbo which only a moron would follow in the real world. Can you point out the stuff that was BS?

Nov 13, 2016
storch:

the only major bs i recall was some of the PM efficient markets mumbo jumbo which only a moron would follow in the real world. Can you point out the stuff that was BS?

I would disregard any comments from those that have never sat for any level of the CFA exams. There is very little bs on the exams although it all seems bs when you are studying and cursing the CFAI under your breath. Sure, if you're a PWM advisor you probably won't need to know anything from the quant or FRA sections, but that doesn't mean those topics are bs. Very few actual positions are going to have relevancy to every topic in your day to day responsibilities.

There are a few that are bs though. I'm on L3 and GIPS is by far the most mind numbing subject matter and is complete bs... There is a 0% chance I would ever need to recall anything about GIPS once the exam is over.

To answer the OPs question, it depends on what you are doing. I don't want to get into a CFA and/or MBA battle, but if you are working in finance the CFA will definitely help open some doors. The more relevant the CFA is to your current work the more value it has for your career progression.

Nov 13, 2016

From a knowledge standpoint, what I gained from clearing my first two levels of CFA was (1) I got a really good handle on accounting (2) After solving so many numerical problems during my preparations, I got very confident about my conclusions on many different corporate finance issues. Haven't explored the job market after clearing the two levels. So I can't really provide any insights in the marketability aspect.

Nov 13, 2016

Borrowing the thread. I was under impression that CFA was not worth it, if in IBD. However, I came across a GS IBD Analyst job ad where they required at least CFA level 1. Wth?

The surest way to make a monkey of a man is to quote him.

Nov 13, 2016

I don't mean to promote another forum, but if you want good information regarding the CFA exam check out analyst forum.

http://www.analystforum.com/

The forum helped me get through the CFA curriculum and also answered some questions and or clarified concerns I had before I decided to enter the program. A few years later I have 3 letters next to my name and now many people within banking/finance have given me a pass (rightfully or not) regarding my knowledge of finance/investments. I'll take any advantage I can get.

Good luck if you decide to take level 1!

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Nov 13, 2016

You're not willing to pay $275/year to say you're a CFA charter holder......?

Nov 13, 2016

Is passing 3 levels any less impressive? What? lol I mean come one. Most CFA charterholders make well over 100-150k if not more. Is paying the yearly membership fees that are around 400 bucks that big of a deal?

Nov 13, 2016

Lmao, does the CFA seriously make you pay to SAY you're a CFA charter-holder, even AFTER you passed all 3 levels?

Does anyone know if accountants have to do this with their CA/CPA charters?

Nov 13, 2016

Pretty much any "professional" doctors, lawyers, real estate agents, cpas, etc. have to pay dues.

Nov 13, 2016

It depends what industry you are in. You posted this in the IB forum, so I assume that you're interested in IB. While the CFA is impressive to have, it is irrelevant for IB. No one will ever hire you in IB just because you're a charterholder.

Nov 13, 2016
undefined:

It depends what industry you are in. You posted this in the IB forum, so I assume that you're interested in IB. While the CFA is impressive to have, it is irrelevant for IB. No one will ever hire you in IB just because you're a charterholder.

Unless I get fired, I have no plans to look for a job in the near future.
Also could care less if I'm able to say I'm a charterholder.

I'd feel ridiculous if I had CFA next to my name in a CIM, but I've seen it done before.

    • 1
Nov 13, 2016

Haha, yeah MBA makes you pay $100k but at least that's only one time, right?

Nov 13, 2016

From a sheer value standpoint, I think I would. Going through all 3 levels can total $3,500+. If your firm is willing to foot that bill and you can approach the exams relatively stress-free, it would be remiss not to take advantage.

Nov 13, 2016

If you have atleast L1 completed, getting an interview at a fund for a post-MBA entry level ER/PM type position is possible.

If the company is paying for it, why not?

Nov 13, 2016

If you're pursuing a career where the CFA Program matters, I would recommend getting it out of the way as soon as possible and in as few tries as possible.Forget whether or not it will help you for post-MBA recruiting, though that's certainly one reason. You don't exactly want to be taking it when you have 2 kids and you haven't studied for an exam in 12 years.

Nov 13, 2016

At first glance this would be a no-brainer.

But you also have to consider the degredation of your social life when studying for the CFA. Chances are (if you're like me and 90% of the other guys who have studied for the CFA) you're going to have little to no social life for 2-4 months. That means no going out after work, not on the weekend, little female interaction, and no bros over for the football games on sunday.

If you're willing to sacrifice all these things for a designation that you don't need, but may have a chance at making you more enticing to recruiters, go ahead.

Nov 13, 2016

Exactly my thoughts rothy, thanks.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Nov 13, 2016

HPM,

What are you trying to do down the road/post-MBA? If it is AM/ER/PB/HF I think you should go for it. If you are thinking banking/PE, don't bother.

Nov 13, 2016

I honestly love the work I do now (strat) and the firm that I work for so I don't know to be honest. I figured it was worth, at the very least, exploring the possibility.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Nov 13, 2016

If it's free, and there's no pressure on paying things back if you don't pass, why not? The program is quite costly if you foot the bill yourself, and the material can be interesting. If you start early, you can do the CFA without being super stressed.

Nov 13, 2016
Kanon:

If it's free, and there's no pressure on paying things back if you don't pass, why not? The program is quite costly if you foot the bill yourself, and the material can be interesting. If you start early, you can do the CFA without being super stressed.

True. However I would not dedicate myself to doing something unless I knew I was going to complete/pass it. If you go in with a care-free attitude like that, you probably won't pass. And you will waste hours of your life.

Nov 13, 2016

Like dufft said, if you want to move to investment management, it almost a must (In Toronto is a must). Look at the profiles of almost anyone in that industry that's under 35 and you'll see the CFA letters everywhere

Nov 13, 2016

If you feel you can handle the hours and the firm pays for it regardless if you pass or not. Id give it serious consideration. Even if you might not apply the concepts now may come in handy down the road. CFA is not something you can wing... it will take a lot of your time so make sure you are dedicated. Cheers

Nov 13, 2016

can't*

Nov 13, 2016

you definitely don't need the CFA in order to be an FA; you're gonna need to get CFP, CRP etc.

Nov 13, 2016

Straight from Investopedia, "...the CFA Institute's definition of acceptable experience is fairly broad, encompassing such areas as trading, economics and corporate finance." My interpretation is that if you can provide proof of the work you've done in your company related to finance, you might be able to slide through. You'll have to join the CFA institute before taking the CFA, they would be able to give you a more accurate answer; however, more due diligence on your part is necessary unless you want to waste a lot of your time.

If you're looking to be an FA almost all firms want you to have your Series 7 & 66 beforehand; however, you cannot take either exam unless you are sponsored by a FINRA member or a self-regulated organization. Some firms (mine included) have recently started hiring candidates without these registrations and giving them a probation period in order to pass the exams. This would be your best bet if you want to become an FA.

If becoming an FA is something you really want to do and you want a leg up when interviewing, I suggest buying/borrowing a copy of the Series 7 book and begin studying since you have a lot of time on your hands. Become comfortable with the material and use your knowledge to your advantage. In a few months if your prior commitments have lessened and you can begin the job hunt you will have a major leg up. My firm recently ended a long hiring freeze and I know other firms are hiring pretty rapidly, so this could be an opportunity to enter the field ready to hit the ground running.

Long story short - hold off on the CFA, its grueling, and unnecessary for an entry level FA position. If you progress through the ranks to a senior position, then the CFA is typically sometime to consider, but typically only after obtaining your CRPC designation. Lastly, once hired, most firms will provide you with the study material needed to pass the exams as well as the cost incurred for taking the exam, so it would behoove you to wait if you do land a job.

Good luck

Nov 13, 2016

If you want to go into IB....maybe the first level but thats about it. M&I has some articles on this

Nov 13, 2016

I just took the first level of it this past December, still waiting on results.

It really does drill into your head some very important concepts. Studying for it was very difficult due to time constaints but by the end of my studying I had learned quite a bit.

I don't know how applicable it is in different Finance jobs but I have found my current job (not in Asset Management) to be much more easier since sitting for the level 1 exam.

It is the gold standard, and people are impressed if you have the CFA, but I'm not sure if the body of work that is the CFA is very helpful in most jobs.

"Don't quit. Suffer now and live the rest of your life as a Champion" - Muhammad Ali

Nov 13, 2016

Yeah M&I has a great article on this. If you're going for IB, then it is not necessary. If you're going into research, you will need it to move up the ranks. most analysts have a CFA

Nov 13, 2016

I'm I'm IB now, but it would help if moving to the buy side later in a career, no?

Nov 13, 2016

Ok, apparently not (just read m&i)

Nov 13, 2016

It shows an interest in finance if you are from a non-finance background but it's not useful in the sense that if you start CFA banks will say "Wow they are doing CFA, we have to interview them." Probably better to spend your time networking or doing an internship at a boutique.

"Well, you can do whatever you want to us, but we're not going to sit here and listen to you badmouth the United States of America."

Nov 13, 2016

I dont think it would hurt, unless you think like others it is a serious waste of opportunity cost. I have done the designation (and now will be doing my MBA), and it is very well respected, but unfortunately the CFA doesnt come with any OCR or alumni like an MBA, and in this economy you need the network. You can network at local society events and use the local job boards for postings but it is all initated by you. If you want to be in ibd in the next 2 years the CFA will not help you unless you already work at the firm and they think you are a smart guy, then doing it may just be enough, thus it is a career accelerator. If you do an MBA at a reputable school there is a much higher chance that you will be in ibd in the next two years.

In Canada some ibankers do have the CFA, i hear it is much rarer in the US. It is more pertinent to sales and trading, and of course ER, PM, AM etc.

Nov 13, 2016

It's not that the CFA is "useless" - it's that it is not the best use of time if your goal is investment banking / PE.

If you want to do portfolio management, ER, or arguably some types of hedge funds, sure, or if you're in a certain geography that values it more (e.g. South Africa), then go right ahead.

Let's say that you want to get into IB and you have 500 hours over the next 6 months (19-20 hours per week) to do it. Those 500 hours would be FAR better to spend on networking or even doing an unpaid internship at a local boutique than on a certification, no matter how well-known it is (plus you need more than that for all the CFA levels anyway).

If you have already done all of that and have spoken with hundreds of people and have tons of free time on your hands and don't know what to do, then sure, go ahead and do the exam.

However 95% of the people emailing me about it usually say, "So I haven't networked / I go to an unknown school / I've been working for 4 years, and I have no way to get access to recruiters - the CFA will definitely get me into banking, right? Right?"

And the answer is no, because you will not even get anyone to look at your resume/CV unless you pound the pavement or go to a school that has on-campus recruiting.

This is probably the single most misunderstood point on the site. It's not that the CFA is useless, it's that you have limited time (24 hours per day - sleep - school/work etc.) and if you haven't already networked and gotten solid work experience, both of those have a much higher ROI than the CFA.

Nov 13, 2016
dosk17:

or arguably some types of hedge funds.

I would say anything that requires securities analysis the CFA would be useful. If you are a buyside analyst for a hedge fund heavily invested in equities CFA will be as beneficial than anything.

Nov 13, 2016
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