The CFA is a mark of talent and also trust
In these troubled times, employers want people who know the basics, says Nitin Mehta
In recent years, a host of new products have been launched which promise to help professionals working in the investment industry. Often, these qualifications have been accompanied by hype and hope and not a lot else.
In the current conditions, many people face increasing competition to keep their jobs or find new ones. Rapid changes and restructuring in the financial services and investment industries mean that new skills are needed, and many companies are discovering that there is a deficit of talent in the right areas.
In such an uncertain environment, organisations and individuals realise that they ought to focus on the fundamentals of professionalism as the best way to improve their human capital and competitive edge.
Talent and Trust
The Chartered Financial Analyst (CFA) designation is a widely recognised indicator of talent – and just as importantly, trust. That is why there is a great growth in the numbers of people taking the qualification. Since 2006, registrations have increased from 116,000 to 175,000 this year. Earlier in June, 119,000 candidates worldwide – including over 7,000 in the UK – registered to sit the CFA exams.
They are attracted by the positive effect that the CFA has on your career. Ninety nine out of the 186 analysts recognised by the inaugural Financial Times/StarMine Global Analyst Awards this year hold the CFA charter. Currently there are 82,600 CFA charterholders worldwide and over 96,000 members of CFA Institute.
Their roles vary widely, working as analysts, hedge fund managers, private wealth advisors, and much besides. It is therefore not surprising that those who are investing in building their own human capital through education and professionalism are likely to be better placed to survive and thrive in the current crisis.
The CFA could be described as a global passport for the investment industry, and is considered by many investment professionals as the “gold standard” qualification.
By earning the CFA charter, practitioners announce to employers, colleagues and clients that they have attained a high level of proficiency in a core body of investment knowledge. Equally importantly, they have agreed to abide by high ethical and professional standards.
The three magical letters are highly coveted but they are not easy to earn. To get the CFA designation you have to pass three rigorous exams, each six hours long, requiring them to be knowledgeable about the practical application of investment techniques and theory. An average of 250 hours of self-study time in the distance-learning programme is recommended per exam.
It is not easy. Only about one in five successfully completing all three examinations and satisfying the requirement for relevant experience.
The Level I exams are held every December and June for and just once a year in June for Levels II and III. Level I tests candidates on fundamental investment tools, including financial statement analysis, quantitative analytical methods, and corporate finance. Level II focuses on the application of those tools and supporting concepts to perform asset valuation; and Level III is devoted to portfolio management. Each exam also features a section on ethics and professional standards.
The entrance requirements for the CFA Program are generally having a bachelor’s degree or four years of relevant work experience. In fact, though, more than a third of the candidates have a Master’s degree or higher, reflecting a compatibility with a Masters in Finance and Master in Business Administration (MBA) degrees.
CFA Institute partners with some of the leading universities where the programme has significant overlap with the CFA Program curriculum. Among a dozen in the UK, these include the London Business School, Edinburgh University and Oxford University.
A glance at job adverts reveals that employers increasingly value candidates with the CFA qualification. Many financial sector companies require that their fast track employees are either enrolled in the CFA Program or have an ambition to pursue it. The CFA is fast becoming a de facto professional license to practice.
Nitin Mehta is CFA Institute’s Managing Director for Europe, Middle East and Africa. Prior to joining CFA Institute, Mehta was Head of International Equities at Henderson Global Investors.