COMMENT: The CFA Charter vs. the CAIA Charter - my experience

The CFA exams are coming up. If you pass Level III and get your CFA Charter this year, you might think that's the end of studying. Bad luck! Once you've got the CFA, you might want to go on to the CAIA too.

A lot of people wonder whether to study for a CFA Charter or a CAIA Charter, but take my advice. - Do both. I did, and they're complementary.

More people will have a CFA Charter and a CAIA Charter

It makes a lot of sense to study the CAIA if you're already a CFA Charterholder. - Early last year, CAIA announced the release of their “stackable credential pilot program”, which allows eligible CFA Charterholders to get a waiver for the CAIA level I exam, and therefore to earn the CAIA Charter with a single exam! With this change in place, the CAIA program is likely to grow in popularity, having already seen a significant increase in its member base over the years.

Unfortunately for me, this new pilot program was released too late. - I already passed the CAIA Level I exams in 2018 after achieving my CFA Charter the year before. This year, I sat the second and final CAIA exam.

Completing the full CAIA program without taking advantage of the waiver means I have a holistic view on the similarities and differences between the two qualifications. - And they are very similar. The waiver makes sense because a lot of the CAIA Level I content is covered in all three levels of the CFA exam.  

CFA vs. CAIA pass rates 

The CFA program is infamous for its notoriously low pass rates. The pass rate for Level I normally trends between 42%-44%, while Levels II and III are slightly higher, at 45% and 56% respectively (in 2018).

By contrast, the pass rates for CAIA are significantly higher. For the recent March sitting, for example, 54% of people passed the Level I exam, while the Level II pass rate was a whopping 69%. Yes, this high pass rate may be attributable to an increasing number of CFA Charterholders cutting straight to the Level II exam, but even before the waiver then pass rates for CAIA Level II typically ranged between 60% and 70%. 

CFA vs. CAIA exam difficulty 

These higher pass rates often lead people to assume that the CAIA exams are easy, or a “watered down” version of the CFA program. This isn't the case. There were several parts of the CAIA program which I found difficult. And while Level I CAIA had significant overlaps with the CFA program, Level II was much more challenging.

There were three things which I found particularly difficult on level II of the CAIA program:

1. The ethics portion was NOT in multiple choice format, but rather was in the form of a constructed response. This can trip up even the most skilled of test takers.
2. Half of the exam is in constructed response format, but this doesn’t account for half the marks. Unlike CFA level III, where the written morning paper and multiple choice afternoon paper have the marks allocated equally, the CAIA level II exam has its marks split unequally.  The 2-hour multiple choice morning section accounts for 70% of total marks, while the 2-hour written afternoon section only accounts for 30% of the total marks. Because of this, “revising smart” and “selective revision” are tactics which may not work as effectively, due to the obscure weightings.
3. Some questions can be tested from a different perspective. While the CFA typically tends to test the core concepts, I felt that the CAIA tends to ask questions from different perspectives which meanyou to know the curriculum to a nitty-gritty level of detail. This does not necessarily equate to difficult questions - it just means that it will be impossible to answer a question if you don’t know the content to a high level of detail. For the CFA, if you don’t know an answer, more often than not, logical reasoning can be used to make an educated guess.

CFA vs. CAIA exam format

The CAIA exam is offered twice a year in March and September, in computerised testing facilities. Each of the two levels are 4 hours long, with an optional 30-minute break, offered halfway through. This means that it is possible to obtain the CAIA charter in less than a year.

The CFA exam is offered every June, with the exception of Level I which is offered in December in addition to June. Each level is 6 hours long, broken up by a lunch break.

In terms of format, I found the CAIA program to be much friendlier to candidates. Firstly, as the exam was held at computerised testing facilities, this meant that you could choose a time slot. I chose my exam slot for 11am, which meant I didn’t have to worry about the stresses of sleeping early the night before. By contrast, for each level of the CFA program, I woke up at 5.30am to get to the test centre (around 50 minutes away from home) for 8am. This took its toll in the afternoon paper, where I felt totally shattered and often had mind blanks due to sheer exhaustion. The computer testing facility was also much more relaxed than the hustle and bustle caused by thousands of candidates sitting the same exam on the same day.

Jai Doshi is a Hedge Fund Researcher at Mercer, and is a Chartered Financial Analyst (CFA) Charterholder and a Chartered Alternative Investment Analyst (CAIA) Charterholder.

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