How the CFA UK makes big money from members and exams

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Yesterday was a big day for 26,000 people around the world: sometime shortly after 2pm Greenwich Meantime, they received results from the June sitting of the CFA Level III exam. 12,600 passed and are now free to become full CFA Charterholders. The rest failed and are now free to embark upon endless re-sits and weekends of study.

The past decade has been good to the CFA. The most recent results from CFA Society of the UK - the UK member society of the CFA Institute - issued for the year ending August 2012, show UK membership increasing 120% in the past nine years. The UK Society now has 10,223 members and annual turnover of £3.1m.

Globally, the CFA is a not for profit organization. However, in the UK the CFA Society makes nearly 70% of its revenues from two things: subscriptions and exams. In the 12 months to June 2012, it earned £830k from its 10,000 members – an average of £83 per head. It earned a further £1.3m from exams, which 13,100 people registered to take – an average of £100 per head. Notably, the CFA Society in the UK doesn't actually administer the CFA exams - it only runs exams related to the investment management certificate (IMC).

Clearly, the more people who take these exams and the more exam takers who become CFA members, the more money the CFA Society will make. With exam registrants last year exceeding the entire current CFA membership in the UK, revenues could increase exponentially. Between 2011 and 2012 they were up 24%.

The CFA Society's business model is all the more appealing because its costs are comparatively low. The cost of sales in 2012 was just £855k, leaving a gross margin of 74%. However, the operating margin was a lower 24% when administrative expenses are added in.

Much of these administrative expenses are incurred by the CFA Society’s 16 employees. When pensions and national insurance costs are included, they earned a collective £986k in 2012 – an average of £61k each (although this is obviously unequally distributed). However, the CFA Society seems a big budget for the right people: it added two new hires in 2012 and increased its wage bill by £201k.

The good news is that the CFA Society of the UK (and the CFA Institute Globally) is hiring. If you want to work for a finance-related organization that’s actually growing, fast, and is impressively profitable, now’s the time.