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Assessing the Value of the CFA Charter

Is the Chartered Financial Analyst program a victim of its own success, awarding so many charters that its market value is diluted? In a word, no.

Several eFC readers responded to our past stories about the CFA designation by asserting the charter is no longer viewed as a mark of distinction by finance industry professionals. So, we put the question directly to a number of financial-career professionals. None voiced any reservations about the respect or value a CFA charter confers on a job-seeker.

"Getting through all three levels of the CFA is a great achievement.... I don't hear from any of the business people I work with that it's lost any of its luster," said Barbara Smith, head of campus recruiting in North America for JPMorgan Chase.

"It's looked upon as a badge of honor," added Glenn Buggy, a partner in the asset management and wealth management practice at CTPartners, the worldwide executive search firm formerly known as Christian & Timbers.

Indeed, in conversations with dozens of retainer and contingency recruiters, Wall Street hiring managers, career counselors, and career management authors, we have yet to hear even one say the program's luster has faded.

Most Don't Earn the Charter

To be sure, the CFA is more useful in some financial fields than others. A spot check of 30 recent eFC job postings containing the phrase "portfolio manager" found 13 that mentioned a CFA charter or program participation as preferred or required. However, a similar check using the phrase "investment banker" found just three out of 30 referenced the CFA program.

The number of CFA holders - and the number of people progressing through the three-stage program - has rocketed in the past decade and a half. There are now 78,000 CFA charter holders. In 1990, the number was just 10,000. Some 140,000 candidates registered to take one of the three CFA exams during the year ended June 30, 2007, a 20 percent increase from the previous year.

Only 19 percent of candidates who enter the program end up getting the charter, says Robert R. Johnson, managing director of the CFA Institute's education division.

The charter's value doesn't come through scarcity, says Johnson. Rather, it stems from recognition that those who attain the charter meet a high standard. The worldwide expansion of the program is, in part, a reflection of that growing recognition. For instance, Johnson says the central banks of Korea and Singapore have made CFA participation mandatory for certain positions.

'MBA on Steroids'

Recruiters share that view.

"The CFA is still a really valid credential. It's still as hard as ever to achieve it, and I think it still adds a lot of value," says Sandy Gross, managing partner and founder of Pinetum Partners LLC. She even likens the designation to "an MBA on steroids," due to the program's focus on investment knowledge.

While noting that actual experience is more important than any formal credential, Gross says a CFA charter brings credibility because it signals a job-seeker's commitment. With so many individuals now angling to enter the hedge fund world, her recruiting specialty, she says, "The people that are taking the time or showing the initiative to get the CFA are showing that they're really serious about wanting to go into hedge funds, as opposed to simply saying, 'I want to go into hedge funds.'"

CTPartners' Glenn Buggy calls the charter better than an MBA for the asset management roles he recruits for. "To be able to play in the game now, you have to have the most modern financial tool kit that you can," Buggy says. "It's not diluted at all. You need to have it in order to be able to compete for the best positions."

For junior or entry-level applicants, having the charter improves a candidate's odds of getting an offer from the most desirable employers, Buggy says. That tends to translate into better compensation.

His colleague Dennis Grant calls the designation "a plus" for portfolio manager roles in hedge funds he covers - but not a requirement. "I've never had anybody come to me and say, 'I'm not going to hire this guy because he doesn't have a CFA,'" Grant says.

In a recent presentation to the New York Society of Security Analysts, Vicky Oliver, author of 301 Smart Answers to Tough Interview Questions, placed the absence of a CFA at the top of her list of barriers to getting one's first financial job. "If you possibly can, I would say that you should become a charter holder," Oliver said. "I think if you don't have the CFA, that is a big barrier and you need to be prepared to discuss why you don't have it."

AUTHORJon Jacobs Insider Comment
  • an
    25 September 2014

    The CFA charter and a MBA are two very different things.

    MBA is more general in nature and prepares a person for managerial roles. It doesn't make one a specialist in a specific field such as finance, economics or marketing. There is also a lot of group work involved. Some people might get by through relying on others to do project work they rather not do or might just be lazy. As in most group dynamics not everyone pulls their share load all the time.

    A CFA charter is specific within the finance field. It's a self study program. Although some work in study groups in preparation for the exam, at the end of the period the candidate sits a 6 hour exam which is renown for being quite rigorous and intensive. Fail level 1 and you can sit it again in a few months, but levels 2 and 3 the candidate has to wait almost an entire year. I've known people who have CA or CPA designations and still find the accounting at level 2 challenging. I also know of people who gave up on attaining the charter because they kept repeating one level and decided to do the MBA. They were successful with the MBA, however I believe it's more to do with the ability to work within a group environment that helped them.

    Work experience is still invaluable. I've known charter holders that are stumped by the simplest of practical questions because they might not have ever had to make a decision that didn't involve lots of theory etc. A MBA also does come with practical experience either.

    They are both well recognized however the choice should depend on if one wants to be a specialist in a particular area or more generalist in business. On the other hand one can go for both, and enjoy both worlds.

  • BM
    9 August 2013

    I work for a hedge fund and there are some people here who have it, but most do not. The more senior you are, the less significant it becomes. It sort of falls off your resume like your undergrad achievements, and your Excel "skills."

    Anyone who thinks it makes you an expert in anything doesn't really know. Good guess though...? It touches on key fields...of which you may use ONE in your next job. It simply gives you an idea of what certain fields have to do with.

    Never say: "I think having my CFA designation will help me perform for this open position" in an interview. It will just show the employer that you really have no clue. Anyone with 7+ years experience should not spend the time...even 5+ is pushing it.

  • Ha
    7 August 2013

    Comparing the CFA program to an MBA is the first problem right there, calling a CFA an "MBA on Steriods" is completely wrong and should be stricken from the records... different lines of studying and outcomes. Apples to Oranges so stop trying to compare the two, its impossible.

  • No
    4 March 2013

    This is a common topic, and a saw a number of people wondering what is better. However, I strongly believe that there is no a true answer on the question what is better, or what is better to do first.

    I would say that MBA and CFA are totally different study programmes. CFA makes you an expert in my opinion or it is aimed at future experts, while MBA is for managers and generalists. You will not get managerial knowledge in CFA, but you will get expert's knowledge that will enable you to guide and manage experts. On the other hand, MBA is for middle and top management that are not expected to be involved in specifics, analysis and similar but rather on management and organization.

    It is definitely better to choose the education based on what you would like to become - an expert or a manager. Of course, you can always be a manager of experts and a top manager with specific knowledge as an asset, but you should choose your priorities.

    Red more here:

  • An
    10 February 2013

    I am in the program so I might have a bias. But here is my view on why the program is valuable. On level 1 candidates are so so. About what you would expect from average undergraduates and graduates. On level 2 all "bad" candidates are gone. There are only resonably good people. On level 3 candidates are only top notch people. That is my experience. I have worked in financial services, consulting and industry for over 8 years and the people I have studied with on CFA level 3 are the best professionals I have ever worked with. Not just slighly but a lot better than everyone else. CFA is very difficult to pass considering the fact that candidates already have undergraduate and graduate degrees. In my view CFA is just a lot better than a degree only. I agree it probably wont match the career perspective you have with an ivy league MBA. But there is no way around the fact that ivy league hire ivy league. Its like one big family. I have seen my fair share of people in key positions with very good degrees who didnt make the cut off score at CFA. I also think that is the real reason behing some people (like you here) being opposed to CFA. You just cant handle the fact that you most likely wont be able to get the charter. If I worked in HR I would make CFA a requirement straight away.

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