What Is a CFA? – Chartered Financial Analyst

A Chartered Financial Analyst (CFA), is a professional accreditation given by the CFA Institute, or Association for Investment Management and Research (AIMR) to financial and investment professionals.

In the words of the CFA Institute: “The charter gives a strong understanding of advanced investment analysis and real-world portfolio management skills.”

The CFA institute is made up of over 150,000 members worldwide and is based out of Charlottesville, Virginia, United States.

A CFA designation is the “highest distinction in the investment management profession” —CFA Institute. Obtaining a CFA designation is a significant decision for anyone looking to pursue a career in finance, with a specified knowledge in portfolio/fund management.

To become a CFA, you are required to pass three levels of exams covering areas including economics, financial reporting and analysis, corporate finance and more.

How to Become a CFA Charterholder

Here are the steps to obtain a CFA Charter.

CFA Program Enrolment

To enrol in the CFA program, and subsequently register for the level 1 exam, you must meet one of the following education requirements, as seen on the CFA Institute website:

  • “Undergraduate education: A bachelor’s (or equivalent) degree or be in the final year of your bachelor’s degree program. You will have to complete your bachelor’s degree program in order to register for the Level II exam
  • Work experience: Four years of professional work experience (does not have to be investment related), or
  • A combination of professional work experience and education: that totals at least four years. Part-time positions do not qualify, and the four-year total must be accrued prior to enrollment.”

CFA Designation

To officially become a Chartered Financial Analyst, you must satisfy the following criteria:

  1. Enrol in the CFA Program and register for an exam
  2. Pass the level 1 exam, offered in June or December
  3. Pass the level 2 exam, offered only in June
  4. Pass the level 3 exam, offered only in June
  5. You must have 4 years of qualified work experience
  6. Join the CFA Institute as a regular member

CFA Exam Pass Rates

 The exam pass rates for June 2018 are shown below:

  • Level I: 43%
  • Level II: 45%
  • Level III: 56%

Exam pass rate for December 2018:

  • Level I: 45%

Don’t be discouraged if you are unsuccessful in your first attempt at an exam. The CFA Institute encourages unsuccessful candidates to use their exam results to guide their studies and re-take the exam later. You are also free to take as much time as you need before registering for the next exam.

Results for the CFA level 1 and 2 exams will become available to you within 60 days of the exam date. While the results for the level 3 exam will be available within 90 days. 

CFA Career Outcomes

The CFA Charter features a strict curriculum designed to set you up for success in the investment management field, without breaking the bank. You can obtain a CFA Charter for as little as $US2,400 depending on fee deadline.

CFA vs MBA

In comparison, obtaining an MBA at Harvard Business School will set you back $US73,440. This dwarfs the mere $US2,400 required to obtain a CFA charter. This comparison may seem unfair, as these designations focus on different fields of knowledge.

As mentioned above, the CFA focuses on building your investment management skills in areas including: economics, financial reporting, analysis, corporate finance and more.

Whereas, the MBA focuses on general management skills including marketing, finance, entrepreneurship, and human resources, to name a few.

Chartered Financial Analyst Salary

As seen on the CFA Institute website, the top five global charter holder roles include:

  1. Portfolio Manager – $84,316 – $113,318
  2. Research Analyst – $53,799 – $71,153
  3. Chief Level Executive – $160,108 – $192,522
  4. Consultant – $85,410 – $130,528
  5. Risk Manager – $84,362 – $92,094

Median annual salary, assuming the individual has 1-20 years’ experience in this position. These values are guidelines only, experienced individuals can expect to earn significantly more.

In US Dollars, Source: https://www.payscale.com/

Summary

The CFA charter is a highly lucrative qualification to possess; however, this designation is not obtained easily. The course will take about four years to complete, with each exam requiring you to allocate roughly 300 hours to study and preparation.

The CFA charter is the gold standard in the investment industry today. And there is no other qualification available that will provide you with such an in-depth level of knowledge on the investment industry and its workings.

To learn more about designations relating to the finance industry, finance our What Is a CPA? post.

Check out the video below to learn about the CFA Charter on our YouTube channel!