Why is ev­ery­one tak­ing the CFA exam?

A. 64% B. Kill me now C. Do I even want to be a CFA?

Bloomberg Businessweek (Asia) - - CONTENTS - Jen­nifer Su­rane

▶ A record num­ber of peo­ple signed up to take the CFA exam. Is it worth it? ▶ “It’s not a neg­a­tive. It’s just no­body is ask­ing for it”

If you have a young Wall Streeter in your life, be kind to her this sum­mer. Many have just taken the first level of a three-part exam to be­come a char­tered fi­nan­cial an­a­lyst, and the re­sults are due be­gin­ning in late July. The exam is the ul­ti­mate test of how to put val­ues on as­sets, from stocks and bonds to credit de­riv­a­tives and dis­tressed se­cu­ri­ties. But there’s one ques­tion that’s not on the test: Is be­com­ing a CFA worth it?

The des­ig­na­tion is cheaper than go­ing for an MBA, which can take two years and cost up­ward of $100,000, but the CFA exam is far from easy. Can­di­dates typ­i­cally spend more than 300 hours study­ing for each of the test’s three lev­els and thou­sands of dol­lars on fees and ma­te­ri­als. Four out of five peo­ple who start the process drop out. Typ­i­cally, fewer than half of the can­di­dates who sit for each level of the test end up pass­ing.

De­spite its dif­fi­culty, or per­haps be­cause of it, the CFA is more pop­u­lar than ever. This year a record 172,682 can­di­dates from 183 coun­tries reg­is­tered to take the exam in June. That would be an 88 per­cent in­crease from the al­most 92,000 peo­ple who took it in 2008. Global turnout for the CFA rose af­ter the fi­nan­cial cri­sis, with young fi­nanciers look­ing to bur­nish their ré­sumés as banks slashed jobs. The CFA has grown par­tic­u­larly pop­u­lar in Asia, which now ac­counts for al­most half of all test tak­ers.

The Char­lottesville, Va.-based CFA In­sti­tute, which ad­min­is­ters the exam, says it’s tried to keep the test rig­or­ous over the years to main­tain its value.

For those who do end up pass­ing, the re­ward can be a top job on Wall Street. The world’s big­gest banks dom­i­nate a list of places where CFA char­ter hold­ers are em­ployed. JPMor­gan Chase is at the top, with more than 1,500 on staff. Al­most a quar­ter of all CFAs work as port­fo­lio man­agers. About 16 per­cent take jobs as re­search an­a­lysts. Roughly 7 per­cent are ex­ec­u­tives at the chief level.

While there are plenty of uber-rich CFAs, in­clud­ing noted bond guru Bill Gross of Janus Cap­i­tal Man­age­ment, the odds of a big im­me­di­ate pay­off are pretty low. About 73 per­cent of job post­ings that spec­i­fied com­pen­sa­tion and in­cluded a ref­er­ence to the CFA des­ig­na­tion of­fered a salary below $100,000, ac­cord­ing to re­search by re­cruit­ing com­pany Phaidon In­ter­na­tional.

Six re­cruiters say a CFA des­ig­na­tion can lead to a raise or help some­one land a job, but it’s rarely seen as a musthave qual­i­fi­ca­tion. “It’s not a neg­a­tive,” says Robin Jud­son, who runs her own in­vest­ment re­cruit­ing firm in New York. “It’s just no­body is ask­ing for it.”

The CFA does ap­pear to have more value than other fi­nan­cial cer­ti­fi­ca­tions. A study done by In­vest­ment-News and the con­sult­ing firm Moss Adams found that lead fi­nan­cial ad­vis­ers with CFA cre­den­tials earned about 24 per­cent more than cer­ti­fied fi­nan­cial plan­ners and 23 per­cent more than ad­vis­ers who are cer­ti­fied pub­lic ac­coun­tants.

Stan­dard reg­is­tra­tion fees for each level of the CFA range from $825 to $860, which cov­ers the cur­ricu­lum, a study plan­ner, and prac­tice tests. The real cost is the time spent study­ing, says Steve Horan, man­ag­ing di­rec­tor for cre­den­tial­ing at the CFA In­sti­tute. That com­mit­ment, he says, is ev­i­dence of a strong work ethic and a will­ing­ness to in­vest time and ef­fort that speaks to em­ploy­ers. “It does have a mild sig­nal­ing ef­fect to me that says this one’s a hard worker and is dis­ci­plined,” says Adam Zoia, chief ex­ec­u­tive of­fi­cer of fi­nan­cial-ser­vices re­cruiter Glo­cap Search. “I don’t read it as mean­ing that they are go­ing to be a bet­ter in­vestor.”

The bot­tom line The record 172,000 peo­ple who signed up to take the CFA exam last month would be an 88 per­cent in­crease from 2008.

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