I recently ran across an online post titled “Is the CFA losing its luster?” and had a good laugh. I laughed for multiple reasons.
The first reason was that an image of the seal on my CFA charter (see photo) becoming tarnished came to mind.
The second, and more important, reason was that online forums are full of people who are not CFA charterholders but like to weigh in on the validity of a program they know nothing about. (It would be like me weighing in on which theory of quantum mechanics is the best one.) And, as usually happens when people are jealous of things other people have, they decide to bash the very thing they covet but do not have.
Even worse, some claim things like “I am a CFA” and then proceed to bash the program.
I believe everyone is entitled to their opinions, but if any of you are considering doing the program, do yourself a favor and ignore those people. Their opinions are based on bullshit. They have either not completed the CFA Program or they failed miserably when they tried.
Or they are imposters, who are so much cooler online. The imposters are easy to spot because they often break the first rule of the CFA club:
Never talk about the CFA club.
Wait. Wrong club.
I meant to say: Never use CFA as a noun. These faux-CFAs (see—using the CFA as a noun again) are trolls living in their mommies’ basements, watching CNBC and pretending to be top investors. They will never make it in the money management business, nor will you if you take their advice.
It’s time to set the record straight on the CFA Program and the myths that surround it.
Myth #1: The CFA Program Will Make You a Great Investor
I’m pro-CFA, but this is a myth from the pro-CFA crowd that needs to die. The CFA Program will not make you a great investor.
Deliberate practice investing over time will make you a great investor. What the CFA Program gives you is very broad, yet detailed knowledge of finance and economics. You will cover everything in the CFA Program and be tested on everything.
And I mean everything.
The first time I took the Level 2 exam (oh yeah, I had to take that awful thing twice), I bombed a question about options on Treasury bonds. When I read the question my first thought was, “Who the f*ck writes options on Treasury bonds?” This was followed by more obscenities from my inner monologue and then a blank page.
Today I still know next to nothing about options on Treasury bonds, but at least I’ve been exposed to them. You never know what future the markets might hold for you, so the CFA Program offers a good base of knowledge to get you on your way.
Going through boot camp in the military doesn’t make you a great soldier, but it prepares you for the journey to become one. Think of the CFA Program as a white-collar boot camp for finance geeks like you and me.
Myth #2: The CFA Program Is Not Worth the Money/Time. I Don’t Need It to Be a Great Investor.
Let’s get the easy part out of the way first: I have never met a CFA charterholder who did not think the program was worth it.
And yet, the online world is littered with “CFAs” who like to tell people like you that the CFA Program is a waste of time. Just remember that these are the trolls I was talking about earlier. They’ve never been through the program and they don’t know what they’re talking about.
Listen, the CFA program is hell. We can all admit it. But successfully completing the program and earning your charter is a worthwhile endeavor. So what if “everyone” has completed the CFA Program. Was your high school diploma a waste of time? Was your university degree a waste of time? If the answers to those questions aren’t obvious to you, I suggest you stop reading now and go back to hanging out online with the trolls.
As for the second part of this myth, it’s not a myth. It’s true. You don’t need to go through the CFA Program to become a great investor. As I mentioned before, what the program does is give you a good base of knowledge to get there.
But if you aren’t going to take the time to go through the program, what exactly is your plan to becoming a great investor or top hedge fund guru? Will you pronounce to the world that you are a great investor and then sit back and watch the money from pension funds and high-net worths pour in? Will Warren Buffett see you watching CNBC one day and decide to hire you as Berkshire’s CIO?
There’s a word for this line of thinking: fantasy. If you want fantasy, check out Game of Thrones instead.
Imagine for a minute you want to be a writer and you accidentally run into a top editor at a bar one random night (you both were rooting for the same sports team). You can’t believe your luck and you ask this editor’s advice and, after a few drinks, ask if she can help you become a writer.
What do you think the editor will ask for next?
“Send me a sample of your writing and I’ll take a look at it.”
Did you think you’d get the chance to become a writer just by having the fortune to run into a top editor? The same is true in investing. No employer is going to take you at your word that you have the passion to become a top investor. You need to prove it.
Myth #3: Everyone Has a CFA These Days. It’s Not Worth the Same So I Don’t Need One.
This reminds me of that great quote by Yogi Berra talking about a popular restaurant:
“Nobody goes there anymore. It’s too crowded.”
The logic (or lack thereof) behind this myth is easily refuted when you ask the trolls what they think about university degrees. Everyone has one, so why bother going to college? Logic, people, logic.
What the CFA Means to an Employer
In a perfect world, employers would have a simple test at their disposal that candidates could take. Such a test would tell the employer everything they needed to know about the candidate and predict their future success as a buy side analyst.
Imagine a world with this test for a moment. There would be no need for resumes, cover letters, interviews, or even networking. You just show up, take a test, construct a financial model or two, and get hired (or rejected) on the spot. The job search process would be easy, efficient, and kind of awesome.
Unfortunately, there is no such test, so employers need to look for clues elsewhere to determine if the candidate is going to be a right fit for the investment team. Employers are looking for signals that you have three things:
- The ability to do the job
- The desire to do the job
- The personality to fit with the investment team
Number 3 is handled during the interview process, but before we get to that point we need signs that 1 and 2 exist.
Here’s where the CFA rogram comes in like a Swiss army knife because it accomplishes both. To measure your ability to do the job, we will be looking for some type of base education in investing. This usually involves scanning for a finance education background, but can be accomplished by having taken the CFA. Don’t have a finance degree? Take the CFA exams. Have a finance degree? Take the CFA exams and stand out from those with just finance degrees—after all, the CFA program is more in-depth than any undergraduate finance degree. Have an MBA with a finance degree? For the heck of it, why not throw the CFA exams on top and really crush everyone?
The CFA curriculum is diverse and detailed and signals to the employer that you have a good knowledge base. Portfolio managers don’t want to waste their time teaching new analysts the time value of money.
The CFA Program is a lot of work and requires a fair amount of desire by you to complete it since it is self-directed. Treat it as one more resume item you can use to prove you are serious about investing—if you are, that is.
How to Decide If the CFA Is Right for You
Now down to brass tacks: Is the CFA right for you? Well, the ideal entry-level analyst almost always has the following characteristics:
- Undergraduate degree in Finance, Economics, or Accounting
- 0-2 years experience in IB or ER
- MBA and/or CFA preferred
If you have everything on that list except for the CFA part, then you probably don’t need to worry about the CFA Program right now. If, however, you are lacking those characteristics, then how will your resume get past the candidate with all the credentials?
The good news is that you can start giving your resume a better chance of getting past the HR gatekeepers. If this situation applies to you, find a way to get started now as most employers don’t take you seriously until you’ve passed Level 2 (everyone seems to be a Level 1 candidate—whether they are or not).
The CFA Program will help you open some doors. It will.
What you do after that, though, is up to you. I need to get back to shining my tarnished charter.
What a great article! Thanks for this! Just enough snark to tell ’em how it is but not too much so as to turn people off, in my opinion at least. I am a senior finance major, just signing up for the Level I Exam this December. I know it’s going to be challenging, but I’m just excited to be able to continue my education while beginning my career, instead of trying to go get an MBA like some kids do (I’ve been told this actually a mistake, you should gain real work experience first before going out for an MBA according to most of my professors) At any rate, great post! And thanks for posting on LinkedIn so that I discovered this website.
I liked this article. Made sense that a read it as im struggling through level 2 exam.
Any ideas on opportunity cost? For example 200 hours of self study programming/grad school worth more or less than one cfa exam?
CFA program is surely a herculean effort. The pros are that it gives you a good foundation in all things related to investing. The cons are that it doesn’t teach you how to beat the market and add value. Over the course of my career, I’ve had to rework investment philosophy ad create a range of tools and techniques in order to consistently add value. Oh, and I used to be Dir. of Econ at CFAI, FYI…
I like your article. Its refreshing to see an article clearing the haze created by these ‘trolls’.
I am an ACCA affiliate with a few months of accountancy job experience. I took CFA level 2 exam a couple of weeks back. Looking for a job in investment or related firm. Keep writing!
Hi Jawad i am from Karachi. I am also sitting for CFA level 1 this december so can you share your contact information so that we can talk.
Hi Jawad,
Good to know I’m not alone. I am an ACCA member with three years audit experience with one of the Big4s. However, I have been felling restless lately as I don’t think accounting is what I want to do long term and I have been considering taking the CFA exams. I thought I was just bored or curious. But I’m glad to have read this.
How has it been though? Did you pass Level 1 at first sitting. I would really like to know how it was from you.
I’m from Nigeria by the way.
Why are you ACCA? Go do CA
Hi Jawad,
Just curious where you are from? Do you find that firms there appreciate the CFA credential? (I am former Dir. of Economics at CFAI…)
Loved the article. It was very informative and your writing style makes it interesting (also enjoyed the GoT reference!). I am heading to B-school this fall taking on an asset management concentration. Was wondering if you think it’s worth the time and effort to complete the Level 1 exam while in B-school in order to compete for those coveted internships. My background is in corporate finance, but I love the markets and really want to break-in to this industry.
Yes, it’s worth it. I waited until after B-school and wish I’d started in school. Plus, it’s an extra feather in your cap when looking for internships.
Just came across this site and your comments about B-school. Is your goal of getting in investing to beat the markets? Or, is it to simply get a job? I’m trying to figure out if people have an interest in becoming the next Warren Buffett or if they simply want a job. Honest question.
I really enjoyed this article. As someone who has passed all three CFA exams, I’ve been shocked by some comments about the CFA Program.
The reason that I joined the program and dedicated so many hours was that it is a great source of knowledge for anyone interested in investment management.
Just stumbled across this article and appreciate your comments. As the former Dir. of Economics at CFA Institute, I’m curious if people view the CFA as more of a practical tool to get a job or a way to beat the markets?
Great Article. Long live the Charter.
Bill Singh, CFA
Nice writing Mike. You were always a good reader.
Love from Mom
So now both my mom and dad have now commented on the blog …
Hello
I am taking my cfa level 2 exams this june . I know it is worth but still finding a job just on being a cfa will get you no where. I am a student( fresher) searching and available for job but can’t find anything suitable.
There are a LOT of people that have passed only Level 1. There are far fewer who have passed Levels 2 or 3. As a result, most folks don’t really count passing Level 1 as much of anything unless you have additional experience.
If you have to work so hard to defend CFA Program, then sure there is some merit in the criticism. Now coming to some some myth busting
Myth #3: Everyone Has a CFA These Days. It’s Not Worth the Same So I Don’t Need One.
Yogi Berra example is NOT a good analogy in this case.
If many people go to a restaurant the quality of food will NOT suffer. However if the supply of CFA outstrips the demand then the program will certainly loses some of its sheen.
Bachelors or Masters degree are applicable to wide variety of jobs and globally acceptable. CFA is applicable to a subset of Finance jobs. Show me a firm which hires CFAs without bachelors degree.
The major criticism of CFA is that 5 years is too long a time to learn the fundamentals of Finance. A much more time effective way would be to get a Masters in Finance. Cost is on the CFA side though and if someone cannot afford MiF tuition, CFA is a decent substitute.
Conclusion: I agree with the basic premise of your article that CFA is NOT as bad/useless as it is made out to be. However CFA is a mixed bad IMHO and your success depends a lot on your current location, your current job and your plans for MBA.
CFA takes 5 years… Really… how did I manage in 3 years…
Secondly I dont think its a substitute. On the contrary its supplements MBA Finance from any school. Pls appreciate , 1st 2 semesters of MBA are general management. Only Sem 3 that is 6 months contain decent Finance content. And according to u CFA is 5 years. I guess I answered..
Pls take some time out to scroll through the CFA content…. U wont speak abt demand and supply of labour after that.
Good luck
Abhishek does make some valid points – a CFA charter is required for some jobs, i.e Portfolio Manager, the CFA allows one to be a discretionary manager, Equity Analyst (more so at the senior levels) so it does directly apply to a small subset of finance/investment related jobs, but we’re seeing a lot more job postings where “having the CFA is nice” or “CFA considered a strong asset” – again, for certain types of jobs this makes sense, but for a vast majority I don’t see this relationship making sense, almost like overkill for the role. Perhaps the CFA institute’s marketing teams are doing their jobs properly.. i don’t know.
Earning the charter in 3 years isn’t unheard of, but you’ll find on average it takes most people 4-5 years, again, a valid point – you aren’t necessarily the norm.
At the end of the day, the individual needs to determine where their career path lies, will taking the CFA allow them to reach that goal. Doing it just for the sake of doing it cause its nice is completely the wrong reason.
I’ve looked into it myself but decided its not for me for what I want to do. To others, all the power to them and good luck
Being a bit older I got a bit nervous upon paying the money for the level 1 exam. It got me wondering “It it worth it?, Am I wasting my money and my time?” This article helped me realise that the quailfication is probably worth it for me if I can make it worth it. The qualification is not going to open doors all by itself and I will need to bring more than just this to the table.
Thanks for the article.
I agree with most of the things but not entirely. It depends on your background and future plans. CFA should not be a competitive edge, hence I disgaree when you say get a CFA even if you’re MBA Finance. I think CFA is a best option to understand trciks and trims of finance. It not only demonstrates strong financial understanding but very clearly reflects a hard-working, self driven personality; which is what most of the employers today are looking for. My advise is to do CFA only if you really want to add that value on your learning curve. Dont do it if you have strong work experience or if you’re already an MBA finance or a Masters in Finance. This will add no value and we all know 0 value addition projects are never undertaken by a smart CFO, especially when you consider the opportunity cost of this time that you could invest in for instance, learning a software such as R or MATLAB which will shoot up your ability of a solid analysis.
Best of luck 🙂
Thanks for the first legitimate comment on the forum
The article is really encouraging.can u say that if i get a cfa charter than do i need mba also to find a descent paying job or only b.com +cfa would do ,as i dont think mba would give me enough knowledge and nor am interested in doin it…..wats an avg sal for a cfa in india.
Nothing beats the difficulty of CFA charter in the Finance world, not even a Phd in Finance.
For 50 years, we have only about 110,000 charterholders. Numbers speak!
Please do not listen to this guy.
Every single person in my department has or is working towards a Charter, and I can promise you that the vast majority are not PhD material.
Please can you advice me…whether I should pursue CFA from ICFAI or CFA US institute? Which is better?
I am currently a finance associate in an E-commerce firm and im not doing tasks that are CFA like or proper finance like. Majorly trade payables and receivables, reconciliation basic accounting stuff. But i’m looking to take a professional exam that will enhance my earnings in the future. I prefer the financial roles e.g corperate finance, Analysis, Investment etc but i cant seem to get my foot in. Should i sit for the Level One exams. is it worth it? or Should i sit for a professional accounting exam since im in that field already?
What do you actually wish to do with your career?
The CFA is a huge time commitment, and it would be a shame to see you waste it if wealth management is not truly where you wish to work.
I believe whether or not one takes the CFA exams is completely based on the reason. If you are one of the thousands of people who want to take the exam as a cheap alternative to an MBA, save your time and money, and go for the MBA. If you know you wish to pursue a career, or advance your career in wealth management, then you definitely must obtain your Charter.
The biggest problem with the program that I can see, is an enormous number of individuals are really just looking for a job – any job. If you’re in 3rd or 4th year university, and are unsure of your career path, do yourself a favor and do not write the exam. Try your best to find your own true calling before you get yourself pigeon=holed in an industry that you misunderstood.
What a well written article! I am currently half way through my junior year as a finance major. My problem is that I am not in my thirties, all my work experience is in retail management, and since I work a salary job I keep wondering what to do once I finish my undergrad degree.
You article was very insightful and gave me a lot of hope. I’m leaning towards investment banking after college but I know well that life is unpredictable. So the main decision will be between an MBA or a CFA to get the job I want. It seems a CFA is the way to go and perhaps later an MBA to get that financial management job down the road.
Thanks for the article and I would appreciate any other advice!
Well you need to ask yourself whether or not your passion is in managing money, and why you want to do it. If your interest is in picking investments, then you should definitely start with the CFA as soon as possible. If you still don’t know however, then don’t, and you’re better off working first before getting an MBA or CFA. One of the biggest mistakes students make is getting an MBA immediately after undergrad before they know what it is they want (ok unless your parents have deep pockets and will pay for it), as an MBA for the sake of education is actually fairly limited = you go for the connections it provides, and occasionally the name of the school.
In summary, know what you want before pursuing additional education. As a hiring manager, I’ve seen too many charterholders with low end jobs being stuck in the lower echelons of wealth management because their skill or passion isn’t in the industry and they got stuck there because they wanted the first available reasonable-paying job. Most people who don’t like accounting would never go for a CPA. The same logic applies for wealth management and the CFA.
In the real investment world, if you fail to outperform, you will still get the sack, whether you are CFA or not.
It is also true that a lot of CFAs are not in the investments industry, they are just book warms with lots of time for level 2 and 3 studies.
What I have found is a lot of CFAs in the industry feels that because they are CFAs they have the right to move up the ladder automatically, however their value add to the firm are average at best… my old team there are two CFAs, but their managers and the manager’s manager are not CFAs.
A very good read. But I have been in a dilemma for sometime whether to pursue CFA or CIMA. In fact I have already had foundation level exemptions from CIMA. Just to give a brief summary I have a BBA in Finance and currently doing my MBA in Accounting. At the same time I am working in a leasing company, albeit in sales. My MBA finishes late 2016. And after that I have to decide whether I should go for CFA or CIMA. A lot can change in this one year though. I am starting to like sales but my preference is to have a career in financial analysis and that does not include the corporate finance that most organizations have; more like the investment/securities companies that financial institutions have.
So suggestions?
I agree it’ll open doors.
The reality is, a degree doesn’t mean what it used to. Everyone comes to the table with a degree now. That’s why post-college, niche certifications are growing rapidly now, especially since the last economic downturn when people fled to get more certs while they were out of work. There’s a lot of competition to get those additional door openers on the resume. The CFA is one of them that is growing rapidly, and because of its growth the value of it is actually increasing, not declining.
I am a CFA charterholder and I have 10 years experience investing in fund of funds in the UK (not an exciting world). I have been looking for a job over the last nine months and got only three interviews. I don’t think the CFA is of any use to make the difference on your CV, except maybe in the US. I would have rather done the ACCA as there are always jobs in accounting or in IB with an accounting degree. I have now taken the retired status at the CFA and I am looking for really any job.
Curious if any of you have advise for me.
I’m 35 and looking to get my foot in the door of really any finance job. My background is that I have been trading equities, mutual funds, and options for over 12 years now for my own retirement and trading account and also have been managing 3 family accounts for over 4 years. I have had successful years and some not so successful as most traders do. I have also been a contributor on Seeking Alpha for approximately 3 years.
My problem is that I only have an associates degree which happens to be in Culinary Arts, and am currently employed as an Executive Chef. Im starting to see the writing on the wall that I can’t be a chef when Im 60 years old, its just far too demanding physically. I do however have a strong passion for finance though and am trying to find the best way to achieve a career in this field without having to go back to school and rack up a giant amount of student debt.
Since I have quite a few years in trading and analyzing equities, and putting real money on the line, would this experience help me if I were to pursue a CFA? Or would it not be relevant given the trading wasn’t done through a firm that I was employed with?
Any comments or advise would be much appreciated!
Best,
Jeff
Hi Jeff,
The CFA designation alone will not work miracles in getting one’s foot in the door, however it is important if your passion truly lies in the industry. Unfortunately most managers will look at experience first and then designations second, and furthermore the CFA requires 4 years of related experience and a 4 year university degree before they will award the Charter.
Knowing that it is a tough road, if you are still serious about pursuing this route then the CFA is worth it but it will not negate the need to start from the bottom in an investment call center or other junior role to get you started.
Regardless best of luck
Hi. I want to do CFA to breakthrough into Finance industry but am not sure if its too late and am I going to earn the same as I am earning now. I am a project manager working in a software firm since last 7 years, holding a 5 figure net income. Since I come with a non-technical background, I don’t see a bright future, neither in the role I am playing, nor in the industry (for myself). I am a B.Com with Finance specialization, hence I know I have a flair for Finance and if I work hard, I can do well in it. Hence I thought of doing CFA to switch career from project management to Financial analyst or the like. But passing CFA exams may take time, and till then I dont want to continue in a software firm, doing project management. I want to get into a finance job. Pls suggest what shall I do.
Hi Tina, it’s hard to say because it depends on region to region. Generally speaking though, CFA is a fairly saturated designation so you need to ask yourself why do you want to become a “financial analyst”? If you know about the industry and you know you have a passion for it, then go for it because you will enjoy the journey.
However if you are only looking for a career change because you don’t like your current job, then I would strongly advise against taking it because it’s an industry that generally has a more glamourous appearance than is really the case.
My suggestion is to watch or read the financial news and see if you have an interest first. It would be a horrible waste to commit yourself to taking the CFA to find out it’s not what you want, especially when career prospects aren’t what they used to be.
I know a lot of successful investment bankers, traders, and portfolio managers. More than 80% of the highly successful ones do not hold CFA – they have mathematics, physics, or engineering education.
Great read – also enjoyed your other articles relating to the CFA Charter experience.
In your opinion: When applying for an MBA program, does having the CFA Charter hold significant weight? Can it augment/overlap a pedestrian undergraduate finance GPA (graduated in 2010)?
Thanks, Andy
For me you failed to address a very important distinction between the CFA exams and University exams – CFA allows an unlimited number of retakes whereas a university would not. This for me reduces the value of the CFA as a differentiator between two candidates and also shows that the CFA institute is all about generating income as opposed to maintaining a high quality of charter holders.
Except you yourself, John, forgot to mention that you are allowed formula sheets during exams, random assignments including the occasional easy quiz, extra credit, etc etc at college… The CFA exam is all memorization of those damn equations and topics and I never had to memorize equations in any of my schooling like that and I went to a top 25 school… and you get one shot per year and that is it on the CFA exam. You don’t get multiple opportunities to fix your situation like test on chapters 6-10 to compensate for chapters 1-6 you messed up on in your corporate finance class . And for most candidates they are also killing themselves at their real big boy job in the finance world on the off time, not having the college experience. At University its in their best interests to ensure you graduate to achieve a high graduation rate to look better. You ever seen a guy with an MBA with a GPA below 3.0? probably slim. Hell Wharton doesn’t even have grades, because they want all their MBAs to look equally good. Kinda like sounds similar to a lot of the CFA criticism.
I’m very thankful I came across this article. Great article, wonderful writing, full of insight and enriching. Thank you!
I don’t think there is a yes or no answer to the question “Is it a worth-while process to obtain the charter.”
I completed my charter in 2008 (easy year to remember) and sadly never formally used it for the traditional investment banking hedge-fund world.
It’s definitely a show of commitment and discipline as it’s a rather challenging course with a wide breadth of material. Exam 2 wasn’t hard as much as it was vast. While I am aware that the pass rate for the CFA is far lower than the CPA, I believe a large part of that is due to the lack of structure in the CFA’s framework. I’m not overly intelligent and the CFA was achievable. It is more time consuming and time-management intensive rather than a measure of true mental horsepower.
As for if it’s a worthwhile process, it depends. A participant will definitely learn a lot about finance. The validity of that knowledge will depend on where life takes you thereafter.
The investment industry itself is in structural decline with more educated candidates competing for such jobs. Most of the better jobs now are employing AI and mathematicians, a skill set that seemingly does require Asperger’s and ultra high IQ.
A CFA looks great on a resume. Unlike an MBA or degree that could be from a top tier school or a local college, the CFA comes from one recognizable source and that does hold weight.
As I do not formally use my charter, it’s easy for me to be dismissive about it. I also have 15 years of experience since my completion in a very focused area of finance that has likely skewed my real world application of it.
The bottom line is that the CFA won’t close any doors and at worst, will function as a key to open at least a few. Maybe it won’t be the “thing” you do but it will open the door and get you the experience you need to have to do the thing you want to do.
If you’re having a life in finance, it’s a good idea to have a fundamental base in some discipline be it the CPA/CFA. MBA is a personal preference however I think it’s a course better suited to those without a finance related degree and is a better addition to someone with a undergrad in another industry.
I could be flippant and say the CFA was a total waste of time for me but that’s in hindsight. While I likely would have been as financially successful as I am now without the charter, at the very least it gave me solid footing in my 20s and exposed me to a lot of foundational knowledge. Had things not had worked out as well with my own business, it would have given me something to fall back on as I would have out shined applicants without it.