And what does ‘relevant’ work experience really mean when you’re applying for your CFA charter?
No worries, we will take you through this tangled web of mess logically so you are completely up-to-date with with the latest CFA work experience requirements.
Let’s do this.
- What is the recent CFA work experience change?
- What is the current CFA work experience requirements for CFA charterholders?
- Does my work experience qualify?
- How to describe work experience: Some CFA work experience examples
- What happens if your CFA work experience is rejected?
- CFA work experience writing tips
What is the recent CFA work experience change?
The first point I want to make is that there is currently – until 3 March 2021 – a difference in work experience criteria for CFA program enrollment (4 years) vs. CFA Institute membership applications for charterholders (4,000 hours relevant work experience in at least 3 years).
From 3 March 2021, CFA Institute will update their CFA program enrollment criteria to match the current (new) CFA membership, summarized as follows:
|CFA Work Experience Changes||CFA Program enrollment criteria when registering for Level 1||CFA Charter work experience requirement for CFA Institute regular membership|
|Before 3 Mar 2021||– Have a bachelor’s degree (or equivalent); or|
– Be a final year university student; or
– Have a combination of professional work experience (can be non-investment related) and education totalling 4 years. Part-time work is excluded, full time paid internships are accepted.
|CFA Institute’s regular membership work experience criteria has been updated on 1 July 2020: |
– at least 4,000 hours of relevant investment-related work experience, completed in a minimum of 3 years. Full time, part-time or remote work arrangements completed before, during or after your CFA program can qualify.
|From 3 Mar 2021||– Have a combination of 4,000 hours of work experience (can be non-investment related) and/or higher education over a minimum of 3 sequential years. If applicable, assume 1,000 hours per year for higher education.||No change from above since 1 July 2020.|
CFA Institute members voted to make this work experience criteria change from 4 years to an equivalent of 4,000 hours, completed in a minimum of 36 months.
This was done mainly to promote greater inclusion of professionals who meet the high standard of membership and address the shift in work patterns of the global investment management workforce: mainly an increase in part-time professionals, flexible and remote working.
As you can see, while the common theme is 4,000 hours of work experience between the CFA enrollment and regular membership criteria, the latter requires it to be qualified, relevant work experience, whereas during CFA enrollment process, the work experience can be non-investment related.
Let’s delve into the details of what a relevant CFA work experience means when applying for your CFA charter (CFA Institute regular membership).
What is the current CFA work experience requirements for CFA charterholders?
After passing all 3 levels of CFA exam, you’ll need to qualify as a CFA Institute regular member for the right to use the CFA designation. For this, you’ll need 2-3 professional references and achieve the relevant work experience required.
Focusing just on the work experience requirement, you’ll need:
- at least 4,000 hours of relevant work experience, completed in a minimum of 3 years. These can be accrued from any previous or current position, and do not have to be continuous.
- relevant work experience hours must be directly related to the investment decision-making process or producing a work product that informs or adds value to that process.
- work experience earned through full-time, part-time, or remote work arrangements — before, during, or after your participation in the CFA Program — can qualify.
Does my work experience qualify?
In other words, your work experience will be considered relevant for CFA Institute’s regular membership if it:
- directly relates to the investment decision-making process, OR producing a work product that informs or adds value to that investment decision-making process;
- is accrued before, during or after participation of the CFA program. Note that full time, part time or remote work are acceptable.
- properly described in your membership application.
For most people, the question comes down to whether a particular work experience is ‘investment-related’. As a guide, an ‘investment-related’ qualified work experience should involve:
- evaluating or applying financial, economic, and/or statistical data as part of the investment decision-making process; OR
- supervising those who do such analysis; OR
- teaching others on how to analyze and apply the data.
Is there any way to pre-verify your work experience? Not exactly, but you can use the CFA Institute’s work experience assessment tool as a rough gauge of the relevance of a particular work experience.
That said, this tool just provides a guide to give you a better sense of the relevance of a work experience, CFA Institute would not guarantee that you’ll be accepted for membership as it ultimately depends on the work description in your membership application.
And there is a technique to that, which we will discuss in the next with a couple of examples.
How to describe work experience: Some CFA work experience examples
So here’s what we need to show in our work experience description for the CFA Institute regular membership application:
- at least 4,000 hours of relevant work experience completed in a minimum of 3 years;
- include only qualifying work experience (leave out unrelated roles);
- how each job task you did is related to the investment decision-making process, or adds value to the process.
In your work experience description, remember to focus on the independent analysis you did and how the output of your work impacts on the investment decision-making process to show relevance.
In reality, the 4,000 hours is not the limiting factor, but the requirement of relevant work experience over at least 3 years. Here’s a simple calculation: if we assume a candidate works 50 weeks a year at just 40 hours a week, that’s 2,000 hours itself, assuming 100% of their work is relevant.
So a good place to start is looking over your last 3 years of work experience and roughly estimating what % of time of your work is qualified CFA work experience, and adding it up to see if you make the 4,000 hours. In the actual membership application form, this will be calculated for you based on the number of months you have been working in each position.
In essence, the formula for a good work description for your CFA membership application is:
1) here is what I did
2) this is who it helped
3) this is how my work product affected or added value to the investment decision making process”.
Here are a few good, short examples of qualifying CFA work experience descriptions from various sectors, which focused on explaining the independent analysis they did and how it affected or contributed to the investment decision-making process:
|Work Experience||Qualifying Description|
|Corporate Finance (Example 1)||I prepare financial models based on publicly available data to derive valuation metrics. Then evaluated investment opportunities by analyzing cash flow, NPV, and IRR of each potential target company. The result of this work is used to provide recommendations to the investment committee.|
|Actuary (Example 2)||I perform an annual actuarial valuation process of the funded status of a define benefit (DB) pension scheme. This involves performing statistical analysis and long term projections of interest rate, inflation and demographic data, among other things. This analysis shows whether the DB scheme is in surplus or deficit, and what the characteristics of the pension liabilities are, which directly impacts the investment strategy of the pension assets.|
|Accounting (Example 3)||I manage a team that prepares financial statements as well as evaluates the potential return on investment on corporate projects. Our analysis includes cash flow and income projections, capital outlay, net present value and payback period. This analysis forms the basis of our recommendation to senior management on whether to invest in selected property, plant, and equipment fixed assets.|
What happens if your CFA work experience is rejected?
In this case, you will be a CFA Institute affiliate member with a “charter pending” status. You still have all the benefits of a CFA Institute membership except the right to vote.
From there, you can work towards getting into a role where your duties directly affect the investment decision-making process. Then, reapply after reaching the minimum of 4,000 hours in 3 years requirement.
CFA work experience writing tips
When submitting your work experience to the CFA Institute, keep these 7 tips in mind:
- Job titles alone are insufficient. Be specific about what work you did for the client, what output you generated that meets the work experience requirements above. Feel free to include the type of client or even client name (if not confidential work) to further demonstrate relevance.
- Only include positions that qualify. There’s no need to include everything in your CV, leave out unrelated roles.
- Write it like a cover letter. You have to treat your work experience application akin to writing a cover letter for a job application. Remember to highlight parts of your role to emphasize its relevance to the CFA work experience requirements.
- You must be helping people decide how to invest. The goal is to demonstrate that work contributes to investment-decision-making processes. You don’t have to be directly making the decisions – as long as investment decisions depend on your work in some way (e.g. your research, your analysis, your counsel), then it should be relevant.
- Teaching & supervising also counts. If you’re in a full time position which teaches required skills, or supervises those who carry out relevant responsibilities, this also qualifies as relevant work experience.
- Part-time positions are now eligible. Any work experience must be full-time. Internships also do not qualify as work experience.
- Managing your own investments does not qualify. So does running investment clubs, managing your family or friends’ investments, and so on. You need professional, paid experience, i.e. if you manage investments, it should be for paying clients.
Got any tips or experiences to share? Let us know in the comments below!
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