Is CFA worth it?

Anything to do with the traditional world of get a degree, get a job as well as its alternatives
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fiby41
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Is CFA worth it?

Post by fiby41 »

I am having trouble wrapping my head around who is it really for, who is CFA company's target market, and what type of jobs are available for those who give these exams. In the reading room I used to frequent I remember 3-4 people who were studying for CFA as opposed to CA for almost everyone else of the 30 odd Commerce crowd. Of all the members here I recall 2 journals mention they are a CFA. It'll cost me 20-22 months of expenses if I go down this road so I would appreciate your wisdom on this matter.

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Re: Is CFA worth it?

Post by jacob »

It's a [globally valid] professional certification for financial [stock] analysts: The people who write the S&P reports or similar or work as analysts for mutual funds, hedgefunds, etc. IIRC, after you pass it, you have to work for 1 year at a financial company and then have someone sponsor you before you get to call yourself a CFA. It corresponds to about a bachelor degree in business and finance and some students do them concurrently.

Add: In my opinion, it's worth it if you want to work in the financial field as an analyst. Otherwise, not. I started studying for it back in 2008 but after learning more about what the work entailed, I decided it was not for me.

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GandK
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Re: Is CFA worth it?

Post by GandK »

+1

My mom was a CPA, before retiring. CFA was another (much easier) feather, so she added it. It gave her the ability to give another flavor of advice to her existing clients.

Dave
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Re: Is CFA worth it?

Post by Dave »

At one point I looked pretty seriously into the CFA and came to the same conclusions as Jacob. I was a CPA for a living and was about to leave accounting to manage my own money, and was considering whether the CFA would be valuable in helping me do so. I decided it was not and just did self-education instead, but definitely agree that it is a pretty broad/complete training program for those who want to be employed financial analysts. It is highly regarded.

For what it's worth, I think GandK is confusing the CFA (Chartered Financial Analyst) with either the CFP (Certified Financial Planner, someone who helps individuals with personal financial planning) or the PFS (Personal Financial Specialist) add-on certificate to the CPA. The CFA is meaningfully harder than both the CPA and CFP and I don't think anyone would consider it an easy add-on. The CFA is a real commitment, especially for those with a full-time job or a family.

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GandK
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Re: Is CFA worth it?

Post by GandK »

Ugh! You're right, iDave. CFP. I meant CFP. :oops: Sorry...

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Re: Is CFA worth it?

Post by jacob »

Also, the CFA is a way to transfer into finance from another field w/o having to get another degree. That's why I initially went for it. However, the kind of financial work that the CFA is relevant for is limited to analyst jobs. For other areas, like quant work, it's more of an "oh, that's nice" but not relevant to this job kind of thing.

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unemployable
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Re: Is CFA worth it?

Post by unemployable »

I try to leave this place and y'all keep drawing me back.

I have a CFA. Or rather, as the CFA Institute prefers we say, I am a CFA charterholder. And I still pay my dues, although I'm no longer sure why.

The program is basically designed to keep people from getting it.

There are three 'levels' of exams; Level 1 is given in December and June, but 2 and 3 only in June, so if you fail you're waiting a whole year for another chance. That's one thing that makes it not easy, the stress of getting one shot. For the June exams you want to start studying within the next couple weeks. If you start too early you forget stuff. Pass rate for each level is in the 40-50% range and that DOESN'T count no-shows. The curriculum at each level is broad, rather than deep. The math required is high-school level, although calculus helps with understanding general concepts, and taking a couple college-level stats courses definitely helps.

Level 1 and part of 2 is accounting and basic econ, 2 and part of 3 is security analysis and the rest of 3 is portfolio management. Then they sprinkle stats and ethics in at each level. At least that's what I remember when I took it (2000-01-02; yes I passed each level on the first try, which is rare).

My understanding and experience is that CFA is roughly equivalent to an MBA concentrating in finance, and on overall difficulty bracketed below the actuarial exams and above CPA/CFP and way above things such as Series 6/7/63. CFA exempts you from one of the two CFP exams and part of the CPA I believe, and from a good deal of less prominent certifications such as CAIA. As implied above, it doesn't help anyone that all these certifications have similar names and cover the same field, although CFA does a fair amount of marketing to try to distinguish itself.

What it basically does is teach you the language analysts and asset managers speak and the framework they use. Keeps you from getting into petty arguments over say what the risk-free rate is, as might happen on some internet forum.

As far as whether you should take it, if you work around other CFAs or want to go into a career that employs lots of CFAs, do it. Depending on what kind of prep courses you take it's $5-10K over (you hope) three years and you get to keep working, much cheaper than MBA. Some PM-level positions require MBAs though, so it's not a pure substitute. You probably want to be working somewhere that reimburses tuition, as with the MBA. If you want to be a quant, get a grad degree in math/econ/similar STEM.

I'd check out analystforum and the /r/cfa/ subreddit. I'm underselling how big a commitment it is here.

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Re: Is CFA worth it?

Post by benrickert »

Did you decide if you are starting the CFA program?

In my opinion:
You need to be sure financial analysis is what you want to do and that the firm you want to work for (if you want to work for other people) highly values the CFA certficate (typically at large investment firms in the US and London). You (or your company) will be paying a relatively high fee for the rest of your life in order to keep that designation (a great business model if you are on the other side). You would want to check out if there is a well-run local CFA society in the area you will be working/living as this could add to your network and provide security in finding new jobs.

Learning wise, time will be much better spent reading material specific to what you want to do in your job and start applying it if possible. E.g. if you want to be working for a value investing firm, you will learn much faster by reading and starting to apply the messages in ‘the intelligent investor’, ‘Buffett’s letters to shareholders’, Klarman’s ‘margin of safety’ etc. Then use those principles to research companies and to invest the money you would have spent getting your CFA designation and the annual fees to make money. If you on top of that start a blog where you write about the ideas you research, you clarify your thoughts by writing, can make money off the blog, and show potential employers your ideas and knowledge.

Also, the certificate is becoming more common, so it will not appear as something unique on your resume (although it will show that you have put in a serious effort towards learning terms and concepts in the investment/finance profession).

Br,
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Re: Is CFA worth it?

Post by guitarplayer »

Also, what @unemployable hinted at, there is an overlap between CFA and actuarial exams and a CFA charter holder may be exempt from up to 8 actuarial exams within the UK Institute and Faculty for Actuaries.

For comparison (since you are India based), doing a BSc in Actuarial Science and Quantitative Finance at University of Mumbai exempts one from six of such actuarial exams.

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Re: Is CFA worth it?

Post by WFJ »

OP: Target market is career changers and those who want to start their careers as analysts. I know several people who have all ___ designations. CFA is great for those who were in one field, let's say Biology, who have topped out and want to change careers. Anyone with a Biology degree and a CFA will find all kinds of opportunities as an analyst for all kinds of companies. Early career professionals almost have to have or be at some point in the CFA process to get a job as any kind of stock analyst as this is an easy objective screening tool. For those in foreign countries, it is usually required for employment in multi-nationals as Business degrees, even from top Universities in respective countries, can be viewed as dubious.

In general, if you are young and find someone who will pay you to take it, do it. I was sitting for Exam 1 as an employer was paying, but stopped when I left that employer. I attended several CFA presentations over the years with CFA friends, network is pretty good and can result in many positive externalities if there is a large CFA population in your area.

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fiby41
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Re: Is CFA worth it?

Post by fiby41 »

benrickert wrote:
Mon Apr 27, 2020 11:07 am
Did you decide if you are starting the CFA program?
I got a job so I haven't gone through with CFA.

Thanks for the personalized information guitarplayer.

I found this channel by a Polish teacher who solves CFA problems https://www.youtube.com/@letmeexplaincfa

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Re: Is CFA worth it?

Post by guitarplayer »

Thanks, very mindful of you - at first I was going to say that the delivery of this is very much not in line with my learning style. But actually having spent some time looking at a couple of videos at 1.5/1.75 speed, it is not too bad! I see the channel is only 10 months old so I expect further videos for Level 2 and Level 3 CFA exams.

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fiby41
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Re: Is CFA worth it?

Post by fiby41 »

One observation I made at the workplace- everyone worked their way up the corporate ladder after being hired as freshers out of college, except the CEO. She became a Company Secratary and got appointed.

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