The test to become a chartered financial analyst is regularly considered to be one of the toughest standardized tests out there. There are three levels of the exam, and a work requirement of four years in the investment industry to become fully recognized by the CFA Institute. The average passing rate for the first level since 2002 has been 39.7%. For the second level, it’s been 44%, and for the third level, it’s been 57%. The average time to complete the program (pass all three levels of the test) is four years. And to pass the exam, the CFA Institute recommends that you take six months to study for at least 250 hours to prepare for each level of the exam.
With the time and effort required to become a Chartered Financial Analyst, one would expect there to be a high payoff. But what does the job field really look like for a CFA? Is it worth your time and energy to spend years of your life going through the exam process? We examine the options for those who pursue certification as a financial analyst below.
Does it Make You Stand Out?
Completing the entire CFA program will certainly make you stand out from your competition. Because of the difficulty of the tests, only a handful people in the entire world are fully recognized chartered financial analysts. There are only 123,000 “members” of the CFA Institute in the entire world.
What Fields Do CFAs Generally Enter?
According to the CFA Institute, 22% of CFAs are portfolio managers. The second most popular position is a research analyst, accounting for 15% of CFAs. The other popular positions include chief-level executive, consultant, risk manager, corporate financial analyst, relationship manager, and financial advisor.
The top ten employers of CFA charter holders are JP Morgan Chase & Co. (JPM) , PricewaterhouseCoopers, HSBC Holdings plc ($HSBC), Bank of America Corp. (BAC) , UBS AG ($OUBSF), Ernst & Young, Royal Bank of Canada (RY) , Citigroup Inc. (C) , Morgan Stanley (MS) , and Wells Fargo & Co. (WFC) . So if you are a CFA, you are most likely to get a job at a bank or a consulting firm.
CFAs, likely because of the work they put in to earn the title, are very well compensated. According to a 2007 study done by the CFA Institute, 72% of individuals who passed their examinations and became CFAs saw an increase in their salary. And median salaries for certain CFA positions are extremely high. For example, portfolio managers in equities had a median salary of $456 thousand!
The Drawbacks of the CFA Program
We have already discussed the enormous time commitment that trying to attain a CFA entails. Pursuing a CFA charter will likely mean sacrificing time with friends and family, as well as time spent pursuing passions and hobbies. Another huge factor to consider is the cost of attaining a CFA. A level I candidate will pay a onetime enrollment fee ($450 for 2015), as well as a registration fee for the test itself. The registration fee is expensive as well. According to the CFA website, the registration fee for December 2015 test is $825. If you want to register after August 19, you will be paying $1,210. The same registration fees will apply for Level’s II and III. On top of that, you need to pay for study books and sometimes study courses. Taken altogether, these costs can add up to several thousand dollars.
It’s true that the payoff for passing the CFA can be very high so the several thousand dollar investment is worth it for individuals that actually pass, but more than half of the people who try to pursue the CFA don’t end up passing.
Attaining a CFA is a long and arduous process, but it certainly isn’t going to hurt you in whatever career you choose. The choice will ultimately come down to how much your particular industry and your particular company value the CFA program. The program is long and costly, and like most valuable things in life, it doesn’t come easy.
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