CFA Requirements

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Chartered Financial Analyst (CFA), a designation granted by the CFA Institute, is one of the most sought after professional credentials in the world of finance. If you’re contemplating taking the CFA exam, knowing the requirements and preparing early on will be an advantage. But first, what exactly does charterholdership mean to you? And how do you expect it to make a difference in your career in the finance industry?

The Prestige of Charterholdership

You probably know that no other professional qualification holds as much value for research analysts and asset managers as a CFA designation. These professionals manage investment portfolios and different types of investment funds, or work in the financial advisory or the banking business. For such professionals, the CFA title is necessary – at least, if they want to achieve significant success in their chosen profession. They may liken performing their roles without a charter as an accountant practicing without a CPA.

On the other hand, if you practice a different profession but work regularly with finance experts, you may also seek charterholdership for the additional knowledge. Of course, that comes without saying that you automatically gain a certain level of superiority among you peers. On top of that, financial firms are recognizing the importance of deploying charterholders for jobs beyond the trading desk. This only shows the dynamism of the designation. Based on CFA Institute data, you can actually work in various capacities as a charterholder. This could include portfolio management, research analysis, financial consultancy, risk management, corporate financial analysis and relationship management.

Finance Knowledge Reinforcement

If you’re keen on pursuing a long-term career in finance, becoming a CFA charterholder is a sure way to bolster your current knowledge and skills. After all, the CFA program is as comprehensive as it gets. You can expect to gain much from it, if not everything you need, as you aim for success as a finance expert.

Licensing Exemption

Remember that the CFA charter is recognized around the world. This means, in many countries, some investing and trading licensing requirements will be waived if you are a charterholder.

Big Ticket Employment

There’s no such thing as assurance when it comes to landing jobs. But with a CFA designation, your chances are statistically and instantly bolstered. There is no doubt that charterholdership will get you right where the big players are. Besides, you’ve proven that you belong among them! And your potential employer options are no less than global investment banks, specifically their asset management and research departments. And of course it includes the Big 4 accounting stalwarts: Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (EY) and KPMG. Not to mention a lot of companies’ investment divisions only accept those who have a CFA designation.

Building Networks

Right now, there are at least 154,000 CFA charterholders 165 countries across the world, and the number is rising more and more rapidly each year. But make no mistake – these CFA’s aren’t only concentrated in the world’s biggest metropolises, but practically everywhere. As of today, over 70 countries have CFA societies of their own. Sounds impressive, judging by the numbers, but looking deeper, you know that this translates to unlimited opportunities for you as part of this unstoppable network.

These CFA societies post job openings at different companies that are looking to hire charterholders, although your chances of landing a job through this route are better if you are taking a more active role in the society . As well, in contrast to accounting qualifications being location-specific, CFA charterholdership is irrevocably global in scope. So whether you’re in Asia or Africa or America or anywhere in the world, the weight carried by your CFA designation never changes.

Lucrative Opportunities

At the end of the day, finance professionals are drawn to charterholdership for the stunningly high salary range they can look forward to in the industry. What else do you expect when you’re hired by the world’s biggest finance institutions? Even if you end up working for a smaller company, you will still be awarded highly remunerative projects as a CFA. Need proof? Just visit the Institute’s website to find some hard and enlightening statistics. According to their last survey, finance professionals can be paid up to 54% more with a CFA designation than without.

Becoming a Certified Financial Analyst

It’s evident that you can have so much going for you as a CFA charterholder, but how do you get on your way to earning this highly and globally esteemed designation? As you might expect, your journey best begins with knowing what makes you eligible.

First off, earning the CFA designation requires passing the CFA exam in three levels. Exams for all levels are only given once a year in June, except for the Level I exam, which may also be taken in December. All three certifications are voluntary, and studying each of the three curricula creates a strong foundation for Wall Street professionals to prove they have the knowledge and skills needed to become invaluable to their employers.

The exams for all three levels are sequential, meaning, the candidates need to pass them in the order required by the Institute. Each of these tests is six hours long and evaluates candidates’ knowledge on five key areas, namely, ethics and professional standards, asset classes, wealth planning, portfolio management and investment tools.

The first two exams are composed of multiple-choice questions, the last one a combination of multiple-choice and essay questions, and each level is more complicated than the one preceding it.

Program Enrollment

Before you can take any of the Institute’s exams and become a Chartered Financial Analyst, you first have to enrol in the CFA Program. While you don’t have to be an American citizen, you need to study the curriculum and take the exams in English, and hold an international passport.

There is an enrollment fee of USD 700 through USD 1450, and the sooner you enrol, the cheaper you pay. There are test centers everywhere in the world except in North Korea, Cuba and Ukraine’s Crimea region (for details, please see section on the OFAC policy below). If you live in any of these countries, you will not be allowed to take the CFA exams.

Also, before you may enrol in the CFA Program, you need to fill out a Professional Conduct Statement form in which you promise to comply with the Institute’s Code of Ethics and Standards of Professional Conduct. The form will also ask you to disclose whether you have been the subject of complaints, investigations, disciplinary action and the like as a result of your past professional conduct.

Timeline

From the time you complete the program, you are given a maximum of four years to take all three exams. After passing all of them in the prescribed order, and working full-time in an investment position for at least four years, you will be granted the Chartered Financial Analyst designation by the Institute.

CFA Exam and Requirements

All three CFA Exams are based on a curriculum developed by the Institute and will each require at least 300 hours of study.

Level I Exam

To register for the CFA Level I exam, you have to be a bachelor’s degree holder or in your final year of college with at least four years of professional full-time work experience. If you have spent at least four years of combined college and professional experience, you will also be eligible to take the test.

The Level I CFA exam assesses your basic understanding of the five key areas mentioned previously. The level of difficulty of each exam is inversely proportional to the prescribed order in which the three exams must be taken, Level I being the hardest as it has the least number of successful examinees each year.

There are 240 questions in this exam, all multiple-choice. Some will ask you to complete a sentence by picking one out of three choices, while others will let you choose the best answer to a question, out of three given options.

The total number of questions will be equally divided into two three-hour sessions, one in the morning and the other in the afternoon. As all questions in this exam are multiple-choice, you will do well to explore different tips and tricks for answering this type of questioning.

Your Level I exam results will come in after 60 days.

Level II Exam

To take the Level II CFA exam, you need to be a bachelor’s degree holder and pass Level I.

This exam revolves around two key topics: ass et valuation and the proper use of investment tools. This exam’s structure is also unique from the first, where the questions are also multiple-choice but come with 20 vignettes, each one followed by six questions.

As with the first exam, there will be one three-hour session in the morning and another in the afternoon. And given  the nature of the test, you will benefit from working with appropriate reading comprehension exercises.

Like your Level I test results, it will take 60 days to know how you fared on the Level II exam.

Level III Exam

There is only one requirement for taking the Level III exam: pass Level II.

Level III examinees must show mastery of all content areas and an ability to apply their knowledge and skills in different real-life portfolio planning and management scenarios.

The morning session includes 8 to 12 essay questions, some of which may be answered freely while the others come with specific instructions. This is then followed by 10 more essay questions requiring unstructured answers.

With most of the exam centered on essay writing, it would be wise for you to review some effective essay-writing techniques and practice answering as many relevant essay questions as you can.

You will usually receive your Level III test results after 90 days.

CFA Exam Registration (Levels I, II and III)

If you decide to pursue CFA charterholdership after reviewing the eligibility requirements and ensuring that you meet them all, you can begin with the registration process, for which you have two options:

Online Registration

This is obviously the fastest and easiest route, with the CFA Institute receiving your application instantly. All you have to do is set up an online user account and sign up for the test. Online registration is also less expensive since it eliminates the usual costs that come with sending your application by snail mail.

Traditional Registration

To register using the traditional method, simply fill out the Registration Form and mail it to the CFA Institute, preferably via courier so you can track the package and hold someone accountable if it gets lost in transit. Take note, however, that global shipping and courier policies may prevent the Institute from delivering print curriculum to certain countries, so do check on this one before ordering.

Will CFA Exam Prep Courses Help?

There are many courses devoted to CFA exam preparation, from weekly classroom programs to purely online classes provided through platforms like Udemy and Coursera, or a combination of both. A lot of local CFA societies also have their own exam review programs.

While you can always study on your own, there are advantages to taking a formal course that primes you for the exams. For one, it forces you to keep to a regular study schedule. A lot of the offered programs also require you to take timed mock exams that help you determine your weak points so you can work on them as soon as possible. Study groups also help spread out study tasks, allowing you and other learners to utilize provided resources more efficiently.

Research Prep Courses

Of course, the secret to maximizing your benefits from a CFA exam prep course is to do your homework. Research different providers before choosing! We all know they’re not the same, but courses offered by your local society will probably be some of the best as they are often taught by no less than CFA charterholders. Sometimes though, while all teachers are experts in the materials they teach, the quality of their teaching may be inconsistent.

In terms of outside providers, make sure you know their student pass rates, ability to predict exam questions, and other information that can help you decide which one is best for you. What’s great about these providers is the requirement for their teachers to take the latest exams so they are always up to date with test design. In most cases, these teachers can provide crucial details regarding the exam’s coverage and the best techniques for passing it.

Besides teaching students necessary concepts and skills to answer questions correctly, information about the structure and design of the exam can go a long way in maintaining good scores among examinees.

When checking out courses, consider how much time they require for you to cover all the topics provided. Of course, you’ll want to be able to tackle everything in the least amount of time, but still never at the expense of quality teaching or materials. Just look for the most efficient course you can find based on what people say in the reviews and perhaps with some insights from friends who have passed the exam.

Interview Current Members

In fact, that’s probably one of the best things you can do as a CFA candidate – to reach out to as many charterholders as possible to get a better grasp of the exam process. You will find many of them in your local society, where you should particularly look for those who are involved in some area of the exam’s development.

Note that all CFA charterholders are invited to participate in the grading process, and while some have limited experience, there are those who do it every year. When they do help with grading, they usually focus on areas of the exam that they are very passionate about or those in which they have specialist knowledge and experience.

Basic CFA Exam Tips

Here are general tips to help you pass your CFA exam from one level to the next:

  • Practice legible writing, especially if you’re taking the Level III exam, which mainly involves essay-writing. Exam graders will be scanning for certain words or groups of words and assign points as they deem fit. If your penmanship is not readable enough, you will lose points, whether or not your answer is correct. When possible, print your essay answers instead.
  • Start answering each essay question with an outline, and then expound on your answer. Many times, a good outline will be all you need to earn all the points for the question, and your grader will even be happy that you made their job simpler.
  • Answer each and every question, even if you don’t really know the answer. At least, put some relevant terms or keywords there. Write about arriving at the correct answer. This will may get you a few points here and there, and eventually help pull up your score.
  • Know your Ethics – and that your performance in this section of the exam can make or or break your chances of passing it. Sometimes, even if your scores are low in the other topics, you could be given a passing mark if you ace this part.

It’s crucial for you to stay in the loop when it comes to new tools and methods introduced in the exam. To have an advantage, you need to seek the most current information instead of relying on what has been there ever since.

All local societies organize regular meetings with speakers on different investment-related topics. Get in touch with your local society and ask for a schedule of such events, as well as how you can sign up for them. Moreover, there are plenty of members who are more than willing to give CFA candidates a hand in passing the exam. After all, they’ve all been there and are fully aware of the importance of being as prepared and competitive as possible.

Before and After Your CFA Exam

The CFA Program is no cheap investment, be it in cost or time. Of course, you’ll want to make sure it goes as smoothly as possible. And it’s not just about knowing what it takes to be eligible for the exam.

There are the so-called invisible requirements of becoming a CFA charterholder, and they all begin with plain and simple obedience to the following rules:

  • Choose a test location that is a budding global hub.
  • Take advantage of all the materials given to you upon registration, such as ebooks and mock exams, and use materials from other sources only if their content is within the CFA curriculum.
  • When planning to take a prep course, choose one from the Institute’s list of approved providers.
  • On exam day, bring only yourself and your valid international travel passport, admission ticket (you’ll receive this about a month prior), approved calculator, writing materials, and other essentials (eyeglasses, erasers, manual pencil sharpeners, etc.); everything else, including your mobile phone and other electronic devices, should be kept out of the exam room.
  • Other essentials, like cough drops, medicine, etc. should stay in your pocket or under your desk.
  • If you’re late for more than half an hour, or if you exit prior to dismissal, you won’t be allowed to take or finish the test. Your fee will not be refunded.

OFAC Compliance Policy

Unfortunately, as mentioned, the CFA Institute is unable to accept applications from three countries that are currently subject to sanctions as per The Office of Foreign Assets Control Policy. This includes Cuba, North Korea or the Crimea region of Ukraine. The Institute is also unable to do business with Specially Designated Nationals, wherever they may be located.

Finally, all registrations coming from the said countries or nationals will be rejected with no payment refunds. Residents of Iran, Syria, and Sudan, however, may enroll in the Institute’s programs.