How CFA Candidate Eligibility Rules Evolved

The CFA Institute clarifies eligibility requirements as part of our discussion on the relative value of MBAs and CFAs.

Our April 18 story, "CFA or MBA: Which Is Right for You?", generated much debate among our readers. While a handful contend the CFA has lost its shine in recent years, one anonymous poster was much more specific in his criticism, asserting that the quality of candidates entering the program has dropped significantly, due to what he said were relaxed entrance requirements. "I feel the CFA designation is not as important as it used to be ever since the CFA Institute eased the requirements to sit" for the required three exams, he wrote.

We relayed his comment to the CFA Institute. Their response, which is run in its entirety below, indicates that while conditions for becoming a candidate were indeed relaxed after the program's inception during the 1960s, the key change - eliminating the requirement that candidates already be employed in the industry before they can take any of the exams - occurred before 1990, or more than 17 years ago.

In fact, the most recent change toughened the requirements for becoming a CFA charter holder. Starting in 2005, the minimum amount of qualifying work experience was bumped up to four years from three. The definition of qualifying work was tightened as well.

The CFA exams themselves, and the program's underlying curriculum, have been updated at regular intervals to reflect changing industry practice.

According to the CFA Institute, here is how the requirements for candidates have evolved:

In the beginning, a candidate was required to submit three references at the time of application and:

HAVE ACCRUED 36 months of eligible work experience at the time of application. This ensured that all candidates were eligible for the award of the charter at the time they passed Level III.

This was changed to:

ACCRUING eligible work experience at the time of application. This pretty much ensured that all candidates were eligible for the award of the charter at the time they passed Level III, unless they experienced a break in service.

This was changed to:

Work experience accrual was not required at the time of application but had to be met before the award of the charter. We found that many candidates wanted to make themselves marketable to employers of charterholders by demonstrating participation in the CFA Program, thus increasing the likelihood that they could get jobs that would allow them to accrue experience.

The next change was:

References are required and eligibility is reviewed as part of the Level III application process (this happened in the 1990s). We found we were spending a lot of time processing references reviewing eligibility for candidates who did not progress past Level I. It was a resource management initiative.

In 2003 the sponsor and work experience requirements changed (two sponsors, 48 months of eligibility). Both are now collected as part of the membership application process, not part of the candidacy process. They can occur at any time after a candidate passes Level I.

So, registration in the CFA Program and membership with CFA Institute have changed over time as one might expect. The exam has grown exponentially not only in terms of the number of candidates but also with regards to its recognition and value around the world. These changes are reflective of CFA candidates' needs to participate in the program and become charter holders, the increasing demand to employ CFA charter holders, and the organization's needs to manage resources.

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