Earning the chartered financial analyst (CFA) designation can move your resume to the top of the pile in extremely competitive fields, including portfolio management, investment banking, business development, and corporate mergers and acquisitions. The catch is that to earn the CFA, you must pass a grueling, three-part exam.
“When I see a candidate with a CFA, it brings to my mind the seriousness they have in being successful in their career,” says Doug Rickart, division director for Robert Half Financial Services Group in Minneapolis. “You have to have the self-discipline to study for it and stay on task during the three-year process. It adds something to the credentials and really proves your abilities.”
How much the CFA will do for you depends in part upon what you’ve already done, he says. Investment-related companies rate entry-level candidates based on credentials, competitiveness of the applicant’s school and grade point average. “If you don’t have the credentials, if you haven’t gone to a highly ranked school or your GPA isn’t great, you’re not going to get even the courtesy of a return phone call,” Rickart explains. Adding the CFA will boost your chances of landing an interview if you’re lacking in one of those three areas.
Passing the CFA exam can be a bridge if you’re in finance or accounting and want to jump into investment-related work. When you’re trying to shift career gears, tenure in the job you’re leaving is vital. Someone who’s changed jobs every two years and then passes the Level I exam is still going to look like a job-hopper, Rickart says.
Even if you do pass the CFA, there’s still no guarantee you’ll end up with the job you covet. “I don’t think there’s any credential anywhere that’s a guarantee, because it’s only part of your personal portfolio,” says Bob Johnson, CFA, PhD, the CFA education division managing director.
While you may get into a top-tier school by having your parents donate a new library, there’s only one way to put the CFA initials after your name. You must pass the three different levels of the CFA Institute’s CFA exam. After you pass the exam, you'll still need four years of qualified work experience to become a CFA.
“The program is a great equalizer,” Johnson says. “Every year, I get correspondence from people who say, ‘There’s something wrong with your program. I have an Ivy League degree, and I failed.’ I have people who graduate from community college who pass this exam.”
Few Go the Distance
You may begin the CFA program with good intentions, but chances are you won’t finish it -- only 19 percent complete the entire three-test program. “Many people [who start the CFA program] have not tasted failure in any sort of testing or school environment,” Johnson explains. “Once they realize how rigorous it is and how high the standards are, many of them back away.”
Plan to study about 250 hours total for the Level I exam, or 15 hours a week for four months. “And that may be on the light side,” Johnson says.
Self-study isn’t the only option for CFA hopefuls. The CFA Institute partners with about two dozen undergraduate and graduate programs that incorporate at least 70 percent of the CFA material into their degree programs.
David Krause, director of Marquette University’s applied investment management program, says more than 70 percent of his graduates typically pass the Level I CFA exam, much higher than the 40 percent pass rate the CFA Institute reported for 2006.
Krause recommends forming a CFA study group. “The ethics piece, especially, needs to be studied, thought about and discussed with others,” he says.
If you have an undergraduate degree, consider a graduate degree from a CFA partner school such as Quinnipiac University’s MBA or Boston University’s MS in investment management. A university program will put you ahead of the pack for all three CFA exams, but you’ll still need many hours of self-study to pass, Johnson says.
A 2005 CFA Institute survey found that, on average, CFAs earn about 54 percent more than investment analysts with similar experience who do not hold the charter. CFAs with 10 years’ experience or more even out-earned MBAs, pulling in a median of $236,510 versus $200,000. However, CFAs who also had MBAs earned the most -- a median of $255,000.
The CFA Institute's 2007 compensation survey revealed that the three highest-compensated positions at all levels of experience are equity portfolio managers ($456,000), investment bankers ($275,000) and sell-side research analysts ($195,000).