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[EDITED 4TH MAY] CFA Institute has announced partial or full cancellations for the May 2021 CFA exams in these cities:
- Ontario, Canada
- Doha, Qatar
- Santiago, Chile
- Lima, Peru
- Buenos Aires, Argentina
- India (all locations)
I’ve just been informed/reminded by @Sophie that CFA Institute has indeed previously stated that “your exam will be voided if you didn’t schedule your exam appointment” despite registering for the exam.
However it seems that CFA Institute has removed this wording from their website now.
Will let you know if we learn anything new.
What are the differences and advantages of the CFA, specifically over CPA?
- CFA vs CPA career paths:
- The CPA is fundamentally a qualification for those on an accountancy-focused career path, with job roles such as accountants, comptrollers, financial managers, CFOs, etc.
- The CFA charter is for investment management and advisory, such as investment analysts, portfolio managers, investment strategists, consultants, wealth managers, etc.
- Compulsory vs not compulsory: An important difference is that CPA is often compulsory of at the very least heavily-encouraged in relevant roles, whereas the CFA charter isn’t.
- Program Focus
- CFA focuses on investment management and valuation
- CPA focuses on auditing, financial accounting, regulation
- This anecdote about CPA vs CFA might help: CPAs prepare and audit financial statements, while CFAs read and analyze the financial statements.
- Depth of material
- The difference between CFA and CPA in terms of depth of material is about the same, when comparing similar topics such as pension accounting and FRA topics.
- Generally speaking when comparing similar topics, neither one would be harder than the other.
- I would say that the material goes into similar depths, but CFA exams have the trickier and more confusing questions.
- Breadth of material
- The CFA exam covers a whole lot more in terms of breath of material compared to the CPA exam.
- This not only means there’s more areas and studying to do, but makes the exams harder, as you have to remember a lot more material at the same time.
- CFA exam = 3 levels, CPA = 1 level
- Each CFA level also builds on the curriculum from the previous level, i.e. CFA Level 2 will require a strong knowledge of CFA Level 1, and CFA Level 3 will require a good understanding of CFA Levels 1 and 2.
- The CPA exams are comprised of 4 exams but arguably this is just 4 parts of one ‘level’. The material for each exam is exclusive to its own, which means you can study for each exam without having to remember material from another exam. You don’t even have to take them in order, and finish all 4 exams in 18 months.
- New material to learn
- One important thing especially if you’re considering CFA from CPA, is that when you’re eligible to take the CPA exam, you’re likely to have learned 90% of the information needed to pass the exam already – you just need to revise and review.
- The CFA exam is likely to involve a lot more learning of new material and concepts.
- Study time needed
- Because the breadth of material is not as wide, and candidates are likely to be reviewing concepts they learnt at work already, the CPA exam requires significantly less time to prepare for than the CFA exam.
- The AICPA recommends that candidates spend between 300-400 hours to study for the entire CPA exam.
- The CFA exam usually involves 300-400 hours of study per level.
- So the CFA exam requires approximately 3x more study time than the CPA exam.
What is the difficulty level of CPA vs CFA?
Points 4, 5, 6, 7 and 8 above combined make the CFA exams a lot more challenging to undertake and pass than the CPA exams.
Our calculations show that the CFA exams are 2-3x more difficult than the CPA exams.
- CFA exams requires typically 3x more study time than the CPA exams
- CFA exam involves learning new concepts rather than reviewing material you already use at work
- CFA exam material covers a lot more than the CPA exams
- Every CFA exam level requires knowledge from the previous exam, whereas the CPA exams do not
Important: Often-cited CFA vs CPA pass rates are NOT comparable. You have to look at ‘pass ratios’.
- CPA exams pass rates:
- CPA exams historically average about 50-60% for each exam.
- But as these exams are not inter-dependent on each other, you’ll find that usually the same well-prepared candidates are passing most of the 4 exams, and the less-well-prepared candidates are the ones in the failing bucket for most of the 4 exams.
- Additionally, with the CPA exam, failing candidates are allowed to apply to retake their exam 24 hours after receiving their results. You can now even retake this within the same exam window, meaning you can retake the exam pretty much immediately.
- Deducing a ‘300Hours pass ratio’ – a metric comparable across qualifications: You can deduce an ‘overall’ and more comparable pass rate by dividing the average number of qualified CPAs by the number of CPA candidates each year. Using data from the AICPA Trends report across the most recent 3 years, this gives an average / overall / blended pass rate of about 62%.
- Since I was unable to find anybody else using a similar metric, I shall modestly name this metric the 300Hours pass ratio. This pass ratio means on average, about 62% of CPA candidates go on to become CPAs.
- CFA exams pass rates:
- CFA exams pass rates are about 40-50% for each exam level. This is where the confusion of CPA vs CFA pass rates comes from. 40-50% CFA pass rate is only slightly less than 50-60% CPA pass rate, right? Wrong.
- Every failed CFA Level 2 candidate has previously passed CFA Level 1. Similarly, every failed CFA Level 3 candidate has previously passed CFA Levels 2 AND 1. And even with the recent changes, it still takes a heck of a lot longer to retake a CFA exam (6 months) compared to a CPA exam (a few days).
- You can also calculate a pass ratio by dividing the average annual number of new CFA charterholders by the average annual number of CFA candidates. When you look at the data, you see that crucially only about 24% people that register for the CFA Program end up passing CFA Level 3.
- Comparing 3H pass ratios:
- CPA pass ratio: ~62%
- CFA pass ratio: ~24%
- If you compare both pass ratios, the conclusion is that a CPA candidate is 2-3 times more likely to go on to become a CPA than a CFA candidate is to become a CFA charterholder.
- This implies that factoring in everything, becoming a CFA charterholder is 2-3x more difficult than becoming a CPA.
I’ll cover salary data in a follow-up reply later as I’ve spent waaaay too much time on this already. Hope this helps.
- CFA vs CPA career paths:
CFA Institute has just announced further cancellations (some partial) in more locations. The current full list is:
- Doha, Qatar
- Santiago, Chile
- Lima, Peru
- Navi Mumbai
- New Delhi
We are also receiving reports that candidates in other at-risk locations, including other Indian cities and Ontario, Canada have been emailed by CFA Institute offering an option to defer their May 2021 exam to November 2021.
Latest and FAQ for May 2021 postponements here:
CFA Instiute have responded:
Withdrawal is not a self-service option right now, but candidates can withdraw by reaching out to our contact center. We disabled the self-service functionality because candidates were misunderstanding what it meant to withdraw and accidentally cancelling their registration. We hope to have the self-service functionality reinstated in the future.
So you’ll need to manually contact CFA Institute at email@example.com to withdraw from your CFA exam.
Hope that helps!
@diya I should introduce you to my friend – he works for Need for Speed and all he seems to do is test supercars in their special test circuits.
I don’t know much about German green energy efforts, but they are quite environmentally conscious!
@vincentt @diya Here’s how my thinking works. I’ve been told that this doesn’t necessarily make sense to some people because my thinking is a little weird, but here goes.
Imagine there is an FX trader willing to trade at that mispriced rate. The way I figure out what to do is to ask this question: how do I screw this poor mispriced trader over?
So if the mispriced rate is 139.02/139.10 and the true rate is 138.14/138.21, this means that in order to screw this FX trader over, I need to buy JPY from him (since he’s undervaluing JPY i.e. giving me too much JPY per unit GBP). Therefore I buy JPY and sell GBP.
If say the mispriced rate is 137.02/137.10, he’s willing to take too little JPY per unit GBP (i.e. he’s overvaluing JPY for what it really is). So I’ll sell him JPY (as he’s not taking enough as he should) and buy GBP (elsewhere).
This logic works beautifully for me, although I know it doesn’t for everyone. But hope it helps you!
@shane I think your experience should qualify – the issue is with getting the necessary references. I must say I’m not sure how references for an independent day trader would be. If you can find suitable references it should be fine.
@bobbarkerplaysplinko that sounds pretty alright to me.
@clwcain Can you give us more detail on what is your FP&A experience? That sounds pretty relevant to me.