Is the CFA charter worth your time and effort?
I remember obsessing about this question as I was studying for the CFA exams. You invest hundreds of hours memorizing definitions, formulas and ethical guidelines but once you get your CFA charter is it really going to change your life for the better?
It depends. It depends on your current situation, it depends on your career aspirations and it depends on whether you leverage your CFA charter to its full extent. And in this post, I’ll help you find out. Let’s explore each of these 3 dependencies one at a time.
I Am A Student
The CFA Institute estimates that 24% of 2014 CFA candidates are students. In hindsight it probably would have been a great idea, if I had started studying for the CFA while completing my degree.
If you are currently a student you have still got all doors open to decide which career to pursue. If you believe investment research and/or portfolio management suits your skills and interests, then studying for the CFA is a great way to learn the tools of the trade and signal your commitment to prospective employers.
I’m Looking For A Career Change
A lot of people study for the CFA charter because they want to make a career change and “break in” to investment management from another discipline. If this is you, you need to think this through very carefully before signing up. If you have zero relevant work experience and no other relevant education, you will likely find yourself competing with graduates for the most junior positions, and many companies will prefer to hire somebody young and keen that they can “groom” into their corporate culture. I am not saying it is an impossible quest, but do not expect the doors to your dream Portfolio Manager job to be flung open, based on the CFA charter alone. Also have a look at this post for some additional inspiration about skills to boost your CV besides the CFA designation.
I’m Already in the Industry
If you are already working in a junior investment management role and want to build a career in the industry, studying for the CFA charter is likely a great idea. While more and more people study for the CFA charter having the three letters next to your name is still a much respected hallmark of achievement. Do not get fooled by the fact that some of the most legendary portfolio managers do not hold the designation. If current trends persist it is likely that the vast majority of the next generation of portfolio managers is going to be CFA charterholders.
If your career aspiration is to become a buy-side equity or fixed income career analyst or portfolio manager, studying for the CFA is likely going to be very relevant. The topics covered are directly tailored for these types of roles, and the designation is well recognized in the buy-side industry, so your efforts are likely to be appreciated by prospective employers.
Likewise if you are aiming for a sell-side analyst role the CFA charter is very much designed with your job function in mind.
Investment Banking and Alternative Investments
If however you are targeting the traditional IB route or trying to break into a hedge fund, private equity firm or other alternative investment management firm, it is not as clear if the CFA is going to be a good use of your time.
Yes, you are likely to learn some information that would apply in these roles too, but there are other designations like the CAIA more tailored to alternative asset classes if you are so inclined, and alternatives like a relevant master’s or MBA could be a better bet depending on the type of position you are pursuing. Again, I do not want to dissuade anybody, our personal situation and circumstances differ, but as a general rule, I would take a long hard look at the pros and cons before starting the CFA if my career aspirations were in these areas.
Studying for the CFA designation is a massive commitment of time and effort, so you really need to do your research first to make sure it is a good use of your time.
As a quick reality check, have a look at this post to confirm if your preferred job role is anywhere to be found amongst the most typical job roles of CFA charterholders? As you can see a healthy 36% of charterholders are employed as either analysts or portfolio managers. This number has actually increased to 37% in the latest study by the CFA Institute. Other top occupations in the latest analysis include executives (7%), consultants (6%), risk managers (5%), corporate financial analysts (5%), relationship managers (5%) and financial advisors (5%).
Continued Learning and Applying Knowledge Gained
The CFA Institute provides ample opportunities for continued learning, and actively encourages its members to continue the learning process upon completing the 3 exams. From my experience, coming straight out of university, I reached a bit of academic learning fatigue once I had completed the charter, but once that settles there is a wealth of opportunities available for you to continue the learning curve.
Right, so we have invested hundreds of hours, and finally earned the right to put the coveted three letters next to our name. What now?
Well, actually for a lot of people not a lot happens. They earn the letters, stick them next to their name (here’s how to properly do this on your CV and LinkedIn), and that’s it. Having completed all of the hard work, they do surprisingly little to capitalise on it.
If you are going to spend hundreds of hours earning the charter, don’t just sit around waiting for head hunters to catch wind of your achievement. Get involved with other charterholders and build your network. Your local chapter of the CFA institute is likely organizing a long list of events, open for CFA candidates too. So make the most of it and participate even while you study. Despite the prolific number crunching the investment industry is a people business at the end of the day. Have a look at this post if you are looking for inspiration on how to leverage your CFA charter to open doors.
Questions? Something to add? Let me know in the comments below.