ASIA is rising. Even as economists downgrade Chinese growth prospects, emerging markets (and developed economies) in Asia-Pacific are still racing ahead in the development of their human capital.
India and China are famously churning out MBA graduates in record numbers – and increasingly using their own business schools to do so. But in other areas too, like in the numbers of chartered financial analyst (CFA) charterholders, the region has experienced significant growth over the past five years. According to the CFA Institute, although only 15 per cent of its members are based in Asia, a full 44 per cent of the 219,000 candidates who sat the exams globally in June 2012 were from the Asia-Pacific region.
The CFA programme was historically dominant in the US. Although the Institute was founded in the 1960s, it wasn’t until 1985 that the first CFA exams were taken outside North America. Even now, 66 per cent of members are based there. The charter is also not the only credential open to investment practitioners. The Investment Management Certificate (IMC), the UK-specific entry-level qualification, is just one of many locally-focused competitors to the CFA charter.
But what Ed Bace, head of education for Europe, Middle East and Africa at the CFA Institute calls the “global investment passport” has clearly increased its worldwide relevance. And this may throw up some implications for the career development of individual professionals.
A GLOBALISED PROFESSION
For an investment research firm like Morningstar, based in the US but with divisions operating across the world, a premium is placed on the portability of its employees’ skills and knowledge. As such, it helps to subsidise the educational development of its staff – specifically those who choose to undertake the CFA charter.
Carolyn Valahu, international training manager at Morningstar, explains how this works. “Globally, Morningstar supplements the educational stipend for those studying for the CFA exams.” The company pays for registration fees and helps provide discounted rates for study programmes and materials. And, according to Valahu, its gaining popularity.
Morningstar’s support for the CFA reflects broader trends. Investment practitioners (whether they work in research or investment management) are dealing with an industry that spans the world. Operating from a London office obviously doesn’t imply that a career will solely be spent in London. Nor does it mean that you won’t be dealing with non-UK clients or non-UK investments.
ORIGINS OF CREDIBILITY
But why does the CFA charter have this global credibility? Bace argues that the programme was “from the start, intended to be a global qualification.” But it has undergone a process of evolution, and he considers the way it has changed as crucial to its growing popularity in Asia and elsewhere. One example has been a move away from teaching the US-specific Generally Accepted Accounting Principles (GAAP), within its focus on financial reporting and analysis. According to the Institute, since 2000 it has shifted towards a focus on International Reporting Standards (IFRS), “consistent with a global trend towards IFRS and harmonisation of accounting standards.”
Bace also cites the CFA programme’s breadth of knowledge. Although certificates like the IMC – or alternatives in Japan or China – do deal more specifically with the regulatory or market environment of those countries, the CFA is more portable because it provides a more general focus. “Teaching things like ethics can address, to a large extent what regulation is designed to address – best practice, and not ripping off the customer.”
Will Goodhart, chief executive of the CFA Society of the UK, which runs the IMC, largely agrees. “The CFA offers a deeper education.” And this depth is more portable than the specific market knowledge of a localised investment qualification.
ENOUGH TO GO GLOBAL
But is this enough? Can a “global investment passport” smooth your way to another financial jurisdiction? Alternatively, is London about to see an influx of Asian professionals?
Firstly, the CFA charter can’t do all the work for you. As Abraham Harris, analyst in global talent management at BlackRock says, holding the CFA charter “does not give you the hands-on experience of how things work.” The charter may open doors, but it’s still necessary to gain relevant experience to turn a London-based career into one with a more global aspect.
Secondly, to some extent, the breadth of the qualification does limit your ability to operate in a foreign market. Whereas the CFA charter offers the wide knowledge curriculum for a successful career in investment, the IMC – regulated by the Financial Services Authority – is actually a requirement to practice investment in the UK. Other countries demand similar basic regulatory knowledge.
But, regardless of its limitations, the CFA charter has evolved to become the standard global credential for investment professionals. And its widening influence offers plenty of opportunities for UK-based practitioners.