Is CFA® necessary for investment banking ?
I am doing my MBA in finance at a non-target B-School and wish to enter PE/IB/VC. I was planning to do my CFA® but several doubts have cropped up.
- Will passing all 3 levels of CFA® really give my a HUGE boost (when I say huge boost I mean can I directly enter as a BB IB Analyst after passing my CFA® Level I exam in Dec 2019) in my finance career?
- Studying CFA® will mean I have no time for other finance studies and projects (like solving problems and assignments from finance books, learning modelling, advanced Excel and VBA). So is the opportunity cost justified?
It would be really good if some of you guys could give their opinions on this. The registration window for CFA® Dec 2019 is fast approaching...
No.
Sincerely, A Charterholder
Seconded, and most bankers won't have it. That being said, charterholders (myself included) typically inflate the importance of it, so if a hiring manager is a CFA he is likely to look highly on the designation (I would hardly call this a frequent occurrence and certainly not a reason by itself to do it). I will add, the material might not be apples to apples applicable, but studying after classes/work is a good way to train yourself that the work day rarely ends at 5:30
Cheers. Are you Canadian by any chance? I was going to add on this thread, in Canada, it probably does help your chances to have a CFA because it's a thing here. Despite it not being very relevant to the job, it just ticks another box and to your point, it's kind of a perpetuating cycle. Your boss is more likely to have a CFA, so he/she is more likely to hire a CFA, who then becomes the boss etc.
Your point about the hiring manager having a charter is interesting. I've been seeing more job posts that include a desire for CFA in banking roles and been wondering why
CFA is more for Investment Management than I-banking. Since you go to a non-target grad school I would try and put all your efforts into networking to break into IB which will be difficult in and of itself. PE/VC is probably a huge stretch, it is already difficult for those going to MBA business schools">M7 with an IB background. Unless you have significant relevant pre-mba experience for PE/VC or connections i would put all efforts into networking into IB if that is the direction you want to go.
For investment banking, the CFA is not very useful (in fact, most people in banking don't even bother). If I were you, I'd allocate that time to networking, getting a high GPA, and working on your modeling / financial skills.
Getting your CFA in investment banking is like getting your first Rolex. Yes, you worked super hard for it, and you're very proud of it - but no one really gives a shit. It's not going to make you a better banker than the next guy.
If you do plan to leave banking and into ER, AM, etc., it may be worth considering, but since you mentioned IB is your goal at the moment, I would say your time is better spent networking and prepping for interviews.
Can this be the case that I use CFA to get into a premier investment management firm and then try to enter Investment Banking?
You would need all 3 levels done for it to matter and even at that point its not going "to get you into" anywhere, its just going to be a nice thing to have, nothing really more than that
I spoke with an MD about this as I was preparing for my CFA I last year and he told me it was a ZERO value add to his career... Ended up not taking it. No refund on the $1k too. Make sure you read the refund policy!
That refund policy is necessary! You should not attempt the CFA if you are unsure. The saying you will pay school fees for not knowing means exactly that. But evidently after all one should always get their money back should there be no services rendered. Thats just sinister from the CFA community.
CFA is useless for IB. Same for VC/PE, I'd argue. Only spot that still admires (see: obsesses) about the CFA is asset management; BlackRock, T. Rowe, Fidelity, etc.
Disagree.
CFA is very useful. However - is it necessary? No.
I agree that I would look favorably on, for example, an MBA Associate here with a CFA (many have these). However, it is just a small nudge in the right direction.
I passed the exams and no one in the investment banking world really cares. However, it has made me better at my job. The material is so vast, that knowing FCF calacukations from many angles helps you in valuation as well as somewhat nuanced FIG valuation. So it would be wrong to say it’s completely irrelevant.
Now the CFA likely is likely not the best use of your time.
In addition to ER and AM, Less sexy (but still lucrative) finance functions really place a lot of value on the CFA: Corp dev / bval / restructuring & turnaround consulting.
No real value for IB/PE, but it doesn't hurt.
Why do you see restructuring consultants placing value on the CFA? I thought most of those guys are former bankers?
There are tons of threads on this. It is not necessary for banking by any means, but the information you learn is valuable and it certainly won't hurt for a finance professional. It will not give you a "HUGE boost".
Short Answer: No, not necessary; certainly won't hurt you to learn though.
As many already said, CFA isn’t helpful here. You’re better off investing all that time into self-study using BIWS/WSP/Macabacus for technical study, qualitative study/understanding what you actually do in IB + resume story, mock interview practice and networking.
What age are you OP?
Are you straight out of school into an MBA or do you have any work experience?
I am 24 and did my undergrad in IT Engineering and went directly into MBA.
In this case, I'd see it as a way to review the basic finance, economics and accounting principles. And if you end up doing all three levels, you still get a nice title you can put beside your name on LinkedIn !
Then Level 1 is well worth it, As you have no finance background.
I question the need for an MBA straight after Undergrad. Maybe that's the US thing to do but its absurd as you have no work experience to draw on.
Currently studying for the June L1 test and have heard from multiple people I have brought it up to during networking that it is a respectable achievement, but does not necessarily apply heavily to IB.
Heard more than once that it is more applicable as a demonstration of ability to learn and retain large amounts of information and of your commitment to the industry than as a repository of useful skills you will need every day.
Just as a quick google check, we can see if Jamie Dimon, Gorman, and cha boi DJ D Solomon have a CFA. The answer is clearly no.
Clearly, time spent getting a CFA is going to be more productive than time spent in front of the TV or playing video games, but it's not necessarily going to be more productive than networking or just general industry research.
You mentioned that you're at an MBA program. What exactly is your story? How does your CFA play into that? If you can't even answer that question, then a CFA is definitely not worth it.
Actually I liked IT when I was in high school and decided to get into IT Engg. and did my undergrad in it. But then I realized coding was not the future for me and I got some exposure to business in the daily business and financial newspapers and wished to do marketing as a part of a business program. So then I decided to do my MBA and go for Marketing. However in my I year of the MBA program, I realized that marketing had a huge creativity and uncertainty side to it, which was not in line with my conservative and introvert bent of mind. Then finally I ended up in finance, falling in love with the numbers, the mix of real-world concepts and value. It was one of the subjects where I could get a clear sense of what is actually happening.
When it comes to CFA, its a recent choice, however. Due to my non-target B-School (even though its the top 20 in my country) and IT undergrad, I wished to do it because it would help me to get a clear sense of what finance is about along with furthering my career interests in moving into PE/VC/IB or even a core finance career. So I guess that is my whole story.
Look, I'm sorry to say this, but your pitch really needs work. The structure of your story kind of wanders around. Even if you don't believe it, you need to be able to paint a clear picture of your career trajectory that is going to help an interviewer understand why they should hire you. I'd also ditch the discussion about being an introvert and falling in love with numbers (bankers aren't mathematicians).
Are you aware that ultimately, banking starts to be more about sales than hardcore modeling? It really sounds like you need to reach out to some bankers in your network and get a feel for what they do every day.
While I agree with your result, using those names as an example is poor. Those are managers of organizations and only Solomon came up through the investment banking route. It's more useful to look at the profile of MDs at whatever type of bank strata you are interested in.
At your current situation - NO. You are better off taking investment banking bootcamps.
The only reason CFA is useful is perhaps in Asia even for VP positions. But that is if you already went to a good school, have a track record, and you are really bored out of your mind.
From CFA Level 2 candidate - did equity research out of MBA without any banking experience; went to the corporate side, now back to the sell-side.
No.
In my experiences I have seen individuals transition internally at a bank from a corporate finance/treasury function into IB after passing the exams. People use it as a way to prove themselves and show that they have some finance knowledge beyond the usual controller/FPA route. Its a lot of work when you could just trying networking your way in from an MBA but the long path might be your path (although nothing is promised).
No, it's not going to help you break in. But seeing how you don't come from much of a finance background, L1 will at least allow you to get a better understanding of the fundamentals in a wide range of topics which would benefit you in many different routes you choose to go down. L2 is where it starts getting a lot more technical, with different types of asset valuations strategies which isn't going to directly benefit you as much if IB is your goal.
Quia expedita dolores exercitationem ea ut tempore. Similique eveniet molestiae reprehenderit qui.
Quod rerum voluptatem cumque nihil. Tempora tempora vel eveniet deleniti quia. Qui repellendus velit quidem corporis molestias tempore.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Impedit eaque magnam nihil voluptatibus nesciunt consectetur. At vero autem sapiente est consequatur voluptas culpa. Fugiat fuga temporibus assumenda velit eaque sapiente. Consequuntur esse nam beatae vel. Culpa nihil possimus maxime. Pariatur dolores itaque consequatur quia sequi rerum.