Is a CFA worth it?

I'm a PhD quant at a tier one BB. I decided to make the jump over to buy side, and will be starting soon at a major fund. The job is much less quanty than the one I'm doing now (it is not a quant fund). I have a pretty good understanding of markets from the perspective of sell-side trading in liquid products (mostly fixed income).

Is there any reason for me to do the CFA? What sort of signal does it send about somebody with my background (good signal: not "just" a quant, interested in finance more broadly, client focused; bad signal: does useless certifications).

Are here any other certifications (other than an MBA) which send good signals on the buy side?

Thanks ahead of time for any input.

Comments (18)

 
Dec 3, 2011 - 8:48pm

If you are a PhD quant, getting a CFA should be a walk in the park.

You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.
 
Dec 3, 2011 - 8:50pm

If you got the job without a CFA I am not sure you really need one.

 
  • Principal in HF - Event
Dec 3, 2011 - 9:01pm

Getting the CFA won't be that difficult, but will require time and effort. I know it's not required for the job I'm taking; the question is about the future (whether at the same fund or another one). Remember that it's never too early to think about what happens when you leave the place you're at...

 
Dec 4, 2011 - 5:59pm

rothyman:
Ravenous:
The CFA is useless. Apply that time to your job and you will get a 10x return vs. the CFA.

You're an idiot.

-1

CFA is useless when you consider the time investment it requires. ROI is very low, unless you are someone where your opportunity cost for that time was low, in which case a CFA wont save you.

 
Dec 4, 2011 - 10:40am

I feel like these threads turn into a bunch of broken records but I think in your situation there's not much to be gained. The subjects on the CFA relevant to you ("quant" methods, derivatives, portfolio analysis) will likely be extremely easy for you and far below what you deal with day to day, while the other items on the test just aren't relevant to you even in a less quantitative position, unless you're making a wholesale change to a fundamental analyst role.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
  • 1
 
  • Principal in HF - Event
Dec 4, 2011 - 6:08pm

A couple of points:

1) I think you guys understand the tradeoffs here. The question is some time (not too much, given that I would stand a fair chance of passing level 1 today with no prep) and some money against the upside. There is obviously some disagreement about the value to me.
2) Brady, I'll be doing stuff which is more portfolio management than anything. I'm probably never going to do equity research or anything similar, though.

Thanks for all the responses so far.

 
Dec 5, 2011 - 3:13pm

Sorry, it is useless. I have it and passed 3/3 and work at a top HF so I am qualified to say that. And it definitely, no questions about it, won't help for a quant role. You can read the CFA syllabus and realize that in 10 seconds. It is also basically useless for front office finance roles. That statement goes against the grain, but when you realize the breadth of the CFA and the time committment against what you would need to know for such a role, it's clearly not a good use of time. The accounting is subpar, and the valuation material is misleading (DDM -- are you serious?). The curriculum is based around CAPM and EMH -- many successful value investors have been outspoken about how wrong headed these theories are. Buffett calls them "Alice in Wonderland," Klarman rails against, etc. I spent 750+ hours reading this crap and have never used any of it on the buyside. I wish that I never completed the CFA program, and I refuse to pay dues or use the letters anymore because it is such a crock of shit.

If you have a clear counter argument for why obscure academic theories (which have been proven wrong by industry experts) hold water in the real world, please feel free to enlighten us.

 
Dec 5, 2011 - 3:34pm

Ravenous:
Sorry, it is useless. I have it and passed 3/3 and work at a top HF so I am qualified to say that. And it definitely, no questions about it, won't help for a quant role. You can read the CFA syllabus and realize that in 10 seconds. It is also basically useless for front office finance roles. That statement goes against the grain, but when you realize the breadth of the CFA and the time committment against what you would need to know for such a role, it's clearly not a good use of time. The accounting is subpar, and the valuation material is misleading (DDM -- are you serious?). The curriculum is based around CAPM and EMH -- many successful value investors have been outspoken about how wrong headed these theories are. Buffett calls them "Alice in Wonderland," Klarman rails against, etc. I spent 750+ hours reading this crap and have never used any of it on the buyside. I wish that I never completed the CFA program, and I refuse to pay dues or use the letters anymore because it is such a crock of shit.

If you have a clear counter argument for why obscure academic theories (which have been proven wrong by industry experts) hold water in the real world, please feel free to enlighten us.

I really can't disagree with anything you say, but I will point out that for me as a non-business major the CFA has been good for self-education on a lot of concepts that I don't get exposed to otherwise. For example while you're 100% right that the dividend discount model is completely worthless day-to-day, it was actually helpful to me when I was taking level 1 as someone who was completely brand new to finance because it makes you think conceptually about what creates "value" to a holder of a security and it's structurally a building block of a lot of more complex return on capital models.

This isn't to say that the material is something that I USE every day or that the CFA curriculum is the best way to learn them, but it's A way and it does give me a credential that is fairly well known and at least moderately-well regarded by the finance community at large.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
  • 1
 
Dec 5, 2011 - 4:18pm

I agree, Kenny: It's a way to learn some topics that might come up in a finance job. I was also not a business major and didn't take any finance, accounting or econ courses in college. It would be impossible to have been greener than me. When I passed the CFA exams, I thought, hey, that's great, I know something about finance now. But I didn't really.

What I needed to know were things like how to model, financial statement analysis (the stuff on the CFA is pretty esoteric, or at least was when I took it), how to properly value companies, how to analyze industries, the impact of private equity in the market, synergies that might be achieved from a strategic buyer, etc. but none of that was present. Instead, I learned how to value esoteric derivatives, GIPS, boot stapping on bonds, and a bunch of other stuff that I will literally never use during my career.

In other words, after spending all of that time, I really had no idea how to tell someone if a stock or bond was cheap or not. And so, what's the point? I knew how to run Black-Scholes (which is also flawed to an extent), but didn't have any skills that were actually employable. My current boss didn't know this (nor did I when I took my current job), and he chewed me out for not knowing things that I "should know after passing the CFA exams" (even though he was wrong about that). So I had to hustle extremely hard to catch up -- sort of my fault for not being a business major, but mostly just a flawed and disingenous program from CFA. It's the gold standard of nothing. I would have been 10x better off just reading Margin of Safety, Buffett, Greenblatt, etc.

So I recommend that everyone skip the program, spend the time learning to invest by reading relevant books and looking at stocks, and succeed that way. Most of the best investors in the world don't have the CFA and don't care about it.

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