Before you set out on the journey to achieve the CFA Charter you probably have a few questions. Most importantly, is spending 900+ hours of your life to gain the CFA letters after your name worth it? I’ll address that question and a few more of the most frequently asked questions related to the CFA Program in this article.
What is the CFA Program?
The CFA Program is a graduate level investment analysis and portfolio management program required to be completed in order to receive the Chartered Financial Analyst (CFA) credential.
There are 3 levels within the curriculum and a test must be passed at each level in order to move on to the next level. Level 1 is offered in June or Decemeber. Level 2 and 3 are only offered in June. The topics covered within the curriculum include:
- Ethics and Professional Standards
- Quantitative Methods
- Accounting (Financial Reporting and Analysis)
- Fixed Income
- Corporate Finance
- Alternative Investments
- Portfolio Management and Wealth Planning
The program is self-study. When you sign-up for the program as a candidate and pay the initial fees, the CFA curriculum books will be included. There are providers of prep-courses which can be helpful in directing your attention on the key topics to study for the exams.
In addition, the CFA candidate must have four years of investment related work experience to receive a charter.
How much does the CFA Program cost?
There is an initial program enrollment fee of $450. An exam registration fee is also charged for each level.
The fee schedule for the June exam is below. Registration is now closed for the June exam.
Early Registration: $650 US
Standard Registration: $930 US
Late Registration: $1,380
For Level 1, registration is currently open for the December exam.
Standard Registration: $930 US (ends August 16, 2017)
Late Registration: $1,380 US (ends September 13, 2017)
As indicated on the CFA Institute website, the registration covers the cost of the following:
- The eBook (contains the complete curriculum you need to study)*
- An interactive study planner to guide and track your exam preparation
- Topic-based practice tests
- Mock exams
Source: CFA Institute
You can save a considerable amount of money by registering as early as possible to avoid the higher fees. If you were to take advantage of the early registration fees you could complete the program for about $2,400.
Paying for a third-party prep course could cost an additional $500-1,500 depending on which program you choose.
Is the CFA Exam hard?
There is no doubt that the CFA exams are difficult. Each level of the CFA program has a varying level of difficulty within the curriculum. For this reason, difficulty is also subjective based upon the strengths and weaknesses of the individual. If you are able to formulate your thoughts in writing quickly then Level 3 might be easier for you than Level 2 (a portion of the Level 3 exam is written).
Is the CFA Exam the hardest in the world? That is debatable but it is certainly the hardest exam “on Wall Street”. I was able to pass each level consecutively after failing Level 1 on my first attempt. Although I’ve never had an IQ test to disprove myself I know I’m not a genius. I am also an alum of the education system of Louisiana which is one of the lowest ranked in the country. I use this self-deprecation to point out that your background doesn’t have to be a limiting factor when it comes to passing these exams.
According to this list, the CFA Exam is the third most difficult test in the world. I am fine letting the Court of Master Sommeliers claim the top spot. Tasting wine to determine the year and the type of grape sounds fun, but it’s not something I think would be very easy. Calculating bond duration and convexity on the other hand sounds complicated but once you learn the formula it becomes routine.
Another popular question regarding CFA Exam difficulty is if the CFA Exam is harder than the CPA Exam. I have not taken the CPA Exam but I have read comments from people have taken both. The generally consensus is that the CFA Exam is more difficult. This could be, in part, due to the fact that CFA Level 1 is offered two times a year and CFA Level 2 and 3 are only offered in June. The CPA Exams have a bit more flexibility with the timing and exam schedule which allows some room for error if you fail to pass one of the exams.
Is the CFA Program worth it?
If you are reading my article you’ve probably already read this article from Bloomberg that addresses this question. Bloomberg addresses the question from a couple perspectives.
First, will the CFA charter help you find a job?
The recruiter Bloomberg interviewed said no one is asking for a charterholder.
“Nobody ever says that they want to hire someone that’s a CFA — never,” said Robin Judson, president of Robin Judson Partners, which helps alternative-investment firms with recruiting. “Nobody says, ‘I don’t want to see them if they have a CFA.’ It’s not a negative. It’s just nobody is asking for it.”
Source: Bloomberg Article
First of all that first sentence is a double negative. Nobody – never? And she used “CFA” as a noun. Ewww. This lady’s claim is ABSURD and she must not use Indeed or LinkedIn as there are clearly companies asking for it. Just searching by “CFA” in the United States there are 16,194 jobs listed on Indeed.
It’s clear employers want charterholders so much so that they are willing to sponsor or help potential employees finish the program if hired. Trying to determine if employers are paying a premium for a CFA charterholder is next issue the article addresses.
Do CFA charterholders make more money?
The article points out an interesting fact that the CFA Institute no longer polls members for salary information. The article showed a chart indicating that 73% of jobs posted on LinkedIn with “CFA” paid between $60,000 and $100,000. This data was based on 702 jobs posted in the U.S. but only 516 included salary information.
Salary data is tricky because employers prefer not to share it openly on job posts and polling employees can be skewed based on bonuses and other compensation.
The article goes on to point out some studies provided by local CFA Societies that indicated CFA chartholders earned up to $70,000 more than non-CFA charterholders who have at least a bachelor’s degree.
This table is several years old but shows salary comparisons between those who have obtained the CFA charter and/or an MBA. Notice that after 10 years experience all of these scenarios are at six figures.
If you expect to get an immediate raise from earning the charter, that may or may not happen and is going to be based on your employer. It seems that most employers value work experience much more than your designation as a charterholder. The four years of on-the-job work experience required to receive the charter is going to be invaluable in making you a better analyst.
The “Brand Recognition” Problem
One of the problems I had when I told people I was studying for the CFA Exam was “brand recognition”. I live in an area that has very few CFA charterholders but it’s safe to say that the general population is not as familiar with the CFA designation as they are with the CPA or MBA designations. I think my parents might have been telling family members I was studying for the CPA Exam at one point.
People also incorrectly assume the CFA letters stand for “Certified Financial Analyst”. It can be frustrating. Especially when you spend so much time working on it. Hopefully your boss recognizes your accomplishment!
The good news is if you are working as an investment professional then peers in the industry do recognize the hard work and dedication it takes to successfully earn the charter.
Have other questions?
Since I’m a CFA charterholder I have been through this process and am here to answer any questions you might have about the CFA program or how to prepare for it. Feel free to reach out to me in the comments section below.