The CFA Institute is, according to their website, “the premier global association for investment management professionals.”
The CFA Institute offers the Chartered Financial Analyst (CFA) qualification, which is a designation held by over 150,000 people worldwide. The CFA is considered a standard-bearer for professionals within the investment management industry, and all CFAs have to meet rigorous examination and work experience standards before they can add the letters to their name.
The CFA Institute also has a large number of societies around the world. In the UK, the society is called the CFA Society United Kingdom or the CFA United Kingdom for short.
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Where Can A CFA Qualification Take Me?
The Chartered Financial Analyst (CFA) qualification is a highly prestigious and highly-regarded qualification for professionals in the investment management industry.
As such, if you’re currently completing your A-Levels, or you’re a university undergraduate or graduate and you are thinking about a career in investment management, then the CFA is a qualification that’s definitely worth researching.
Often, people ask whether they should pursue a CFA qualification over other qualifications, such as the ACA, CPA, or even an MBA.
A CFA is not to be confused with a CFE, or Certified Fraud Examiner whose duties are very different!
Choosing which qualification – if any – is right for you and your career aspirations is a personal matter, and will depend on each individual’s circumstances. However, as a general rule, it’s worth pursuing an ACA or CPA qualification if you work, or plan to work, within the accounting industry or want a qualification that can help you in the broader business and financial world.
A CFA qualification is better suited to those who are working, or would like to work, in investment management, given the specialised nature of the qualification, while those wanting to pursue an MBA may do so because they want to develop their leadership skills, boost their potential earnings in the future, or would like to start their own businesses, among other reasons.
If you’re unsure of whether the CFA is right for you, try researching the investment management industry a little more, and see whether the roles within that industry sound like ones you would like to pursue. Speaking to your employer or careers adviser, as applicable, about potential qualifications can also help you make a decision.
If you’re set on the CFA, it’s worth understanding from the outset that the qualification is incredibly rigorous, with pass rates often being lower than other qualifications, such as the ACA.
However, if you have the commitment, time, and aptitude to dedicate to the CFA, having the qualification can be a huge boost to your career.
Even obtaining your CPA credentials is quite an accomplishment!
What Kind Of Positions Do CFAs Fill?
CFAs work in all kinds of roles, although predominantly they can be found in sectors such as asset management. It’s also not uncommon to see CFAs work within investment banking, and increasingly they can be seen in sectors such as private equity.
Typical roles for CFAs could be:
- Research analyst;
- Financial analyst;
- Portfolio manager; or
- Risk manager.
When it comes to when you should undertake the CFA qualification, the answer is again dependent on your own circumstances. Typically, many CFA candidates begin the Level I qualification and progress through the levels either before starting their career or within the first four years of working within a relevant industry, but equally, those with many years of work experience also undertake the CFA later in their career.
The main obstacle that students face is the time requirements needed to successfully study for the CFA (which run into the hundreds of hours) and also the funding requirements needed to pay for exam entry. You may find that your employer, or a potential employer, is willing to pay for your CFA exams, but it is worth confirming with them before undertaking the qualification.
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What Are The CFA Exams Like?
The CFA program is divided into three separate levels:
- The Level I;
- The Level II; and
- The Level III.
Candidates must pass the Level I exam before moving on to Level II, and Level III students must have passed both the Level I and Level II before completing Level III.
Each Level has its own examination structure, as outlined below.
The exam for the Level I qualification comprises 240 multiple-choice questions, which are answered over two exam sessions that add up to six hours in total.
The exam for the Level II qualification comprises “20 item set questions”, half of which are answered during a morning examination session, with the remainder answered during the afternoon examination session.
The exam for the final Level of the CFA qualification comprises a mixture of item set and essay questions.
As mentioned above, it can be really difficult to pass each level of the CFA qualification, and even having passed just the Level I is usually regarded as quite an achievement.
For some context, the CFA Institute has the pass rates for the June 2018 and June 2017 exam sittings listed on its website.
It stated that, in the June 2018 sitting, 43% of candidates passed the Level I, 45% passed the Level II, and 56% passed the Level III.
This is compared to 43% of candidates passing the Level I, 47% passing the Level II, and 54% passing the Level III in June 2017.
There are many reasons for the relatively low pass rates. For instance:
- The courses are predominantly self-study, although some study assistance is available through sources, such as the CFA Society in the United Kingdom;
- It requires a very high level of time commitment, which, for work, personal, or other issues, can be difficult for everyone to meet; and
- The course material itself can be challenging to learn for some.
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There are, of course, other qualifications those in the investment management industry may consider if they don’t wish to complete all three levels of the CFA.
For example, there is also a qualification known as the Investment Management Certificate (IMC), which is awarded by FCA UK.
The IMC is considered to be on par with the difficulty of a first-year undergraduate degree and can be a wonderful qualification for those working or wanting to work within the investment management profession, especially if it is combined with the Level I CFA.
It can help those working in a wide variety of roles, including:
- Risk management;
- Relationship management;
- Portfolio management; and
- Research analysis, to name a few.
The IMC qualification is made up of two separate units. Unit one is about the investment environment, while unit two is about investment practice. Overall, the qualification covers a wide range of topics, including accounting and economics to regulations and ethics.
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Boost Your Career With The CFA
Even if you’re still at school or university, it really helps to be informed about potential qualifications that you can work towards once your studies have been completed. This is because there are so many qualifications out there - from the ACA and CPA to the MBA - that it can be really confusing to understand and decide which qualification, if any, is the right one for you after you've graduated and entered the working world.
If you’re thinking about working within the investment management industry, then the CFA is certainly a qualification that’s worth researching in greater detail to see if it would be for you.
You may also consider becoming a Chartered Accountant...
As with any qualification, if you can speak to someone that has already completed the CFA and ask them to provide their thoughts and experiences of going through the qualification, then that can be a real help when it comes to giving you relevant and useful information that you can use to decide whether or not the CFA sounds right for you.
There are a number of factors when it comes to being successful in the CFA examinations, such as your academic aptitude, commitment, and hard work, but having the qualification can be worth it in the long run when you think about your future career prospects and earning potential.
If you feel that you may need some training to help ensure that your knowledge of maths, economics, or accounting is at a level where you feel good enough to start preparing for the CFA, then it may be worthwhile hiring an accounting teacher from Superprof in the areas that you need help in, whether that is maths, accounting or economics.
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