AT a time of mass job cuts, it is no surprise that City workers are trying to make themselves more attractive to employers. One increasingly popular way to do this is to take the Chartered Financial Analyst (CFA) qualification, a globally-recognised certificate for those working in investment management and financial analysis.
According to figures released on Monday by the CFA Institute, the US-based body that oversees the CFA curriculum and exams, numbers of those registering for CFA exams in London have risen in the past fiscal year by 18 per cent, to 13,300. Of those, 8,000 will be sitting down for a gruelling day of exams this Saturday at the ExCel Centre, with over a hundred thousand more around the world being examined simultaneously.
“In the current conditions, people are doing everything they can to demonstrate their skill-sets, and also to show their commitment to the profession,” says Will Goodhart, Chief Executive of the CFA Society of the UK. “Sitting the CFA programme is a pretty significant demonstration of that commitment, because of the time and effort required to achieve the charter.”
Gruelling is a word regularly applied to the CFA. A distance learning programme normally completed by those in full-time jobs over the course of four years, CFA candidates dedicate around 250-300 hours of study per year. There are three levels to complete, with an annual exam for each. Subjects covered include professional standards, investment tools, asset valuation techniques and portfolio management. On average, only one in five candidates succeeds in completing all three levels of the programme, and thereby progressing to full chartered status.
Despite being so tough to complete, the programme’s popularity has rocketed over the past decade – in 2000 there were just 70,000 European candidates registering, compared to almost 200,000 for the current round of exams (which take place in December and June each year). So why has it become so popular?
One reason, say CFA practitioners, is that Masters courses simply weren’t meeting the specific educational demands of the financial services industry. MBA courses were seen as too general for the specific technical skillsets required, while Masters in Finance courses went the other way, only being suitable for the most mathematically minded. Then there’s the obvious attraction a distance-learning course costing only a few thousand pounds holds over full-time courses costing tens of thousands of pounds and requiring students to suspend their careers while studying.
According to Nitin Mehta, the CFA Institute’s managing director for Europe, Africa and the Middle East, the charter’s global ascendancy has seen it become the yardstick by which the most able finance professionals can be judged.
“Employers have come to trust it as a benchmark,” he says. “There are so many masters courses around the world, and the quality varies greatly, whereas CFA is exactly wherever you are. It’s pretty arduous and not everyone manages to complete it, but that means it has even higher cachet – putting CFA after your name means you really are a leading practitioner in finance.”
EMPHASIS ON ETHICAL CONDUCT
With the banking and investment industry coming under scrutiny for the dubious practices and recklessness that contributed to the financial meltdown, one of the CFA’s strongest suits is being seen as the emphasis it places on ethical conduct. Not only does the subject of ethics and professional standards form a significant part of the curriculum at all three levels of the programme, but charter holders are obliged to adhere to a strict code of professional conduct, which they are required to sign up to each year.
The code takes in areas such as the integrity of capital markets – for instance, avoiding insider dealing and market abuse – duties to uphold interests of clients, duties of loyalty to employers and the avoidance of conflicts of interest. And not only are they are expected to apply the code to themselves, but if they supervise other people they have to apply it to them too, spreading the ethical word.
It’s all a lofty world away from the accusations of corruption and irresponsibility being levelled at banks. But Richard Fernand says that far from being something abstract and highfalutin, the value of such a code has been proved in the crisis.
“It shows you can actually do better by being ethical, because short term profit doesn’t result in long term gain,” he says. “People now see the need for holistic understanding of investment banks’ business, as opposed to a narrow view of where their next bonus is coming from. Had more people been following such codes, a lot of the things that have happened might have been avoided.”
“We ask for blood, sweat and tears from candidates, and in return we just give them a piece of paper,” says Mehta. “But that piece of paper is a declaration that these people have the drive, character, professionalism and integrity to be the best investment professionals in the world. These are the ideals we push.”