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A Road Map to Professional Designations

The investment business has spawned an alphabet soup of three-letter and four-letter acronyms. Perhaps the best-known is the venerable and widely held CFA (Chartered Financial Analyst), inaugurated in 1963. However, the CFA is by no means the only professional designation embraced within the corridors of finance. Here's a profile of four other credentials, the functional roles or asset classes they relate to, and how you can attain them.

Hedgies Get Their Own Acronym

The Chartered Alternative Investment Analyst (CAIA) program focuses on "alternative" investment vehicles, such as hedge funds, private equity, commodities, real estate and managed futures. A relative newcomer, the CAIA has grown rapidly, in tandem with the boom in hedge funds and PE. The initial 2003 CAIA class comprised just 43 members. By mid-2007, their cumulative number surpassed 1,000.

The CAIA program is structured much like the CFA. Its core consists of two four-hour exams that cover a broad curriculum in alternative investments. The Level I exam emphasizes quantitative analysis, investment theory, regulatory issues, trading strategies and performance measurement, as applied to various classes of alternative investments. Level II requires putting the skills and knowledge from Level I to higher-level work, such as asset allocation, portfolio oversight, style analysis and attribution, risk management, securitization, indexation and benchmarking.

In addition to the two exams, the CAIA charter requires at least a year of finance industry experience and two professional references.

The program is starting to have an impact, says Tom Kellerhals, senior partner at the Westminster Group, a recruiting firm serving the asset management industry. On the other hand, hedge fund recruiter Sandy Gross says few people have heard of it, and she has yet to see it on a resume. "The CFA is still the designation of choice," says, Gross, managing partner and founder of Pinetum Partners LLC.

CIPM Targets Performance Monitors

A still newer designation is the Certificate in Investment Performance Measurement, or CIPM. Launched in 2006, it's designed for specialists who track and verify the performance of mutual funds and institutional portfolios.

Candidates must pass two online exams that cover methods for computing returns and analyzing and evaluating performance; the Global Investment Performance Standards, a detailed specification of allowable methods to calculate, present and report portfolio performance; and ethical and professional standards. The designation requires at least two years of experience in a performance-related position, continuing education, and complying with a professional conduct program.

The CIPM is awarded by the CFA Institute, the same group that runs the CFA program. But the designation is entirely separate from the CFA. "This performance measurement area is a discipline of its own, it's a profession of its own," says Robert R. Johnson, head of the CFAI's education division.

As of May 2007, there were 99 CIPM certificate holders. Another 640 individuals had taken or were scheduled to take one of the two CIPM exams during the year. Most candidates worked for investment managers, investment consultants or software providers, and their responsibilities revolved around performance analysis, portfolio management, or consulting.

Consultants Group Offers CIMA

A third designation used on the buy-side is the "Certified Investment Management Analyst," CIMA. Awarded by the Investment Management Consultants Association, its curriculum covers asset allocation, manager search and selection, investment policy and performance measurement - the primary duties of investment management consultants.

Unlike the other certifications, the CIMA curriculum requires not just a study program but a specific classroom experience. Level 2 consists of a week-long class at either the University of Pennsylvania's Wharton school or the Haas School of Business at the University of California, Berkeley. These classes are followed by an exam. In addition, there are professional experience and continuing education requirements, as well as a professional conduct code.

The CIMA program began in 1988 and currently has over 3,000 designees. Another 1,000 people hold its predecessor designation, Certified Investment Management Consultant.

CIC Requires CFA Charter and More

The Chartered Investment Counselor (CIC) designation requires a CFA as a prerequisite, plus a minimum five years of experience as a portfolio manager or investment counselor in a fiduciary, fee-based contractual relationship. Eligibility is limited to employees of member firms of the Investment Adviser Association (IAA), which awards the CIC charter. Candidates also must provide work and character references and must endorse the IAA's Standards of Practice.

The IAA association played a major role in the enactment of the Investment Advisers Act of 1940, the federal law regulating the investment adviser industry. Today its 500 member companies collectively manage more than $8 trillion in assets.

AUTHORAnonymous Insider Comment
  • Al
    17 July 2007

    CAIA is definitely a great qualification, but seems to lean more towards investors and asset allocators (includind FoHFs and FoPEFs) than single strategy fund managers. Alternatively it's a very useful qualification for anyone involved in sales and marketing of any of the alternative asset classes...

    Think the programme gives a lot of insight into the investment focus of some of the worlds largest funds, and a routemap for those that are a little behind the curve...

    Would definitely recommend, although would agree that it's not yet as strong with clients, recruiters etc. as the CFA programme.

    Give them time :-)

  • Je
    Jeff Evans
    11 July 2007

    The CFA Institute conducts its compensation survey biannally. The last one was released in 2005. According to information released by the CFA Institute, the 2007 survey responses were collected in May, and results are expected to be released this month (July 2007).

  • He
    5 July 2007

    Can Sandy Gross look more like an idiot in her comments on CAIA? Its beyond me, how someone in the hedge fund recruiting field could make such a ridiculous statement.

  • Jo
    John Galt
    15 June 2007

    Can you please do a survey of CFA Candidate and Charter compensation? The CFA Institute's most recent survey is 3 years old. You should have an ONGOING survey, to track averages over time.

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