The CFA Designation: Necessity or Vanity?

Posted by Andy Solnik in CFA Designation

The CFA certification is often called the “Gold Standard” for investment professionals. Many of us are enrolled to sit for the exam, or at least plan to do so soon in hopes of advancing our careers. The CFA program is extremely demanding, moreso than any other professional designation: An estimated minimum of 250 hours study time per level, which amounts to a whopping 750 hours minimum for all three levels. I must have studied close to 1,000 hours, which equals a masters degree, until the coveted CFA charter was finally mine. So you may wonder: Is the CFA really worth doing? Does it help my career?
 

Long story short: Yes, it helps you advance in your career.

Let me explain why: A professional designation related to your field always sends a strong signal to your employer. You distinguish youself from less able co-workers and show that you’re serious about your career. If you were in the bosses shoes, wouldn’t you want to promote dedicated employees, rather than slackers? Whether you’re enrolled in the CFA, the CAIA, or the FRM, there is a very high chance that this will be recognized by your boss rather sooner than later.

The CFA is very demanding on your mental ability and endurance compared with other professional designations. The CAIA is also tough, but the CFA is really very close to a second masters degree (minus the thesis). The CFA is also called the “MBA in Finance” from time to time. So it’s not only about what you learn in the program, also that you’re willing to subject yourself to such a stringent program speaks for you. If you’re planning to work in portfolio management or if you’re involved with large private client accounts, you most likely will need a CFA at some point in your career. Most hedge fund analysts and private equity professionals often aren’t even hired if they don’t have the coveted three letters behind their name. Surprisingly, one recruiter recently told me that he even prefers candidates with the CFA over a PhD. Why is that? Because there is a Standard Body of Knowledge with the CFA. A PhD thesis can be about almost anything, and no recruiter will read your PhD thesis before inviting you for an interview. With the CFA, the bar is even for all charter holders.

All that said, I think you learn a great deal about portfolio management with the CFA. It’s actually quite interesting to study for the designation. If you like your job in finance, you will get a kick out of studying the latest research in the field. The CFA syllabus is quite vast, but highly interesting. It’s sufficient to study for each level, but to practice and drill the concepts, I recommend you use practice exams or a review tool (such as the Financial Analyst Study Notes for the CFA Exam) to help you learn what you have read.
 

In conclusion: Definitely get the CFA while you can.

Study for the designation requires a lot of time, so to attempt it earlier in your career is definitely better. Many universities also offer the CFA alongside with a masters, so look into this with your school. In most cases your employer will pay for the program if you ask nicely.

I wish you all the best on your journey to the CFA designation!