What is a CFA?

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Whether you are currently working in the investment or financial industry or planning to after completing your education, becoming a Chartered Financial Analyst can help advance your career.

Commonly referred to as a CFA, professionals who accomplish this designation are recognized leaders in their field.  They are regarded as competent professionals that are skilled at working through complex financial situations, both ethically and responsibly.  If you are interested in becoming an investment manager, financial planner, or a business analyst, you can separate yourself from the competition by becoming a CFA Charterholder.

The CFA Institute is an internationally-recognized organization that promotes responsible and ethical practices in the investment and financial community.  They offer credentialing programs, such as the CFA, as well as provide educational resources for the investment industry.  If you are considering taking your career to the next level, read on to find out how you can become a Chartered Financial Analyst.

How do you become a CFA?

Becoming a CFA Charterholder requires a significant time commitment on your part.  Depending upon your level of education and work experience, it can take anywhere from two to five years to complete the credentialing process.

Enroll to become a CFA Candidate

Your first step along the path to becoming a Charterholder is to become a CFA candidate.  To do this, you must enroll in the program and sign up for the Level 1 exam once you’ve met one of the three requirements below;

  • Have a Bachelor’s Degree or an equivalent degree
  • Be in the final year of completing your Bachelor’s Degree or equivalent degree
  • Complete a combination of four years of full-time work experience and/or college education.  These years must be sequential and only paid work experience applies

In addition to the above, you must also meet the following to enroll as a CFA candidate;

  • Have an international passport
  • Complete a professional conduct statement
  • Live in a country that participates in the CFA Institute.

Once you’ve met the above criteria, you can enroll to become a CFA Candidate here.

Complete the CFA process

Once you’ve enrolled as a candidate, you must complete the following for a CFA designation;

Pass all 3 levels of the CFA exam in sequential order – Once you’ve passed the Level 1 exam, you must have completed your Bachelor’s Degree before you can register to take the Level 2 exam.

Complete 4 years of professional work experience – This can be done either before, after, or during the time that you are taking the exam.  Your professional experience must be in the investment industry or a related field.  Your work experience will be evaluated to determine if it meets the criteria set by the CFA Institute.  A candidate’s work experience must demonstrate that they have specialized knowledge, advanced skills, and the ability to apply high-level judgment.  Consideration will be given as to professional experience that you have acquired in;

  •  Leadership and professional judgment
    • Analytical skills, problem-solving, and critical thinking
    • Teamwork and adaptability
    • Communication

Professional references – CFA candidates must provide 2 or 3 professional references that speak to their character and work experience.

Apply – Once you have completed the above, you are now ready to apply to become a Charterholder through the CFA Institute.

When you have met all of the requirements above, the last step is to apply to become a Charterholder at the CFA Institute. You can read more about the requirements for becoming a CFA here.

What is on the CFA exam?

According to the CFA Institute, prospective Charterholder candidates must pass the following three exams

  • Level 1 – Knowledge and Comprehension – Topic Focus: Investment Tools
  • Level 2 – Application and Analysis – Topic Focus: Asset Valuation
  • Level 3 – Synthesis and Evaluation – Topic Focus: Portfolio Management

You must pass the exams in sequential order.  If you don’t pass the first time, you will need to retake and pass that exam before you can move on to the next one.  

The Minimum Passing Score (MPS) is no less than 70%.  The MPS is set for each exam as determined by the CFA Institute based on such factors as the test’s difficulty and the competency of the candidates.

CFA exams are difficult to pass and will require a significant time commitment on your part. An estimated 300 hours of study time for each level is recommended.

How much does the CFA cost?

The initial program enrollment fee is $450 and you will also need to pay separately for each of the CFA exams from level 1 to 3. It’s best to register early and save yourself in fees:

  • Early registration: $650 (8-9 months before the exam)
  • Standard registration: $930 (3-4 months before the exam)
  • Late registration: $1,380 (0-3 months before the exam)

It’s also worth factoring in educational costs too. The CFA exams are hard and most students will need to take a CFA review course to make sure they fully understand everything that will be required of them in the exam.

What position does a CFA Charterholder typically hold?

A CFA will typically work in the investment or financial industry. They may work for investment banks, private equity firms, asset management companies, and consulting firms.  A CFA may be employed as a/an;

  • Investment manager
  • A financial planner or a financial advisor
  • Portfolio and wealth manager
  • Research analyst
  • Fund manager
  • Buy-side trader
  • Sell-side analyst
  • Economist
  • Professor

Why become a CFA Charterholder?

There are quite a few benefits to becoming licensed as a CFA.  These include:

Invest in your career

CFA Charterholders are frequently sought out by employers as they are considered to have a high level of expertise and skill.  The designation not only lends credibility to those who hold it, but also to the employers that they work for as it can allow them to attract clients.  A CFA designation can greatly improve your job prospects.

Recognition

The CFA Charterholder designation is one of the most respected credentials in the investment and financial community.  Passing all three rigorous exams gives Charterholders increased credibility.

Stand out from the rest

The CFA credential carries with its prestige and respect.  It can give you an advantage over the competition when you are applying for a job. Recent studies show CFA Charterholders can make up to 39% more those who do not hold the credential. It can also help you to attract clients who recognize the value of CFA Charterhood.

Conclusion

Becoming a CFA Charterholder can do wonders in advancing your career and improving your professional credibility.  It can open up opportunities and drastically bump up your earning potential. While it requires a significant time investment on your end, the prestige that the CFA credential receives can help boost your career.