Is a Chartered Financial Analyst (CFA) designation worth the work required to obtain it, and is it better than other professional commitments, such as a Master of Business Administration (MBA) or Certified Public Accountant (CPA) designation?
To determine the value of the CFA designation, you must decide whether your chosen career path will require a position within a company or industry that values the CFA over other possible academic endeavors. Read on to get a better understanding of the careers that attract CFAs, and make sure these are positions you are interested in pursuing.
Key Takeaways
- The CFA Charter is time-consuming, difficult to obtain, and provides tremendous benefits, but only within certain industries and business sectors: it's not for everyone.
- To obtain a CFA, candidates must take on average four years to complete the program, including an estimated 300 hours of study time. Note that study hours may vary from person to person.
- An MBA or Master of Business Administration degree complements the CFA degree; for employees who want to move up the corporate ladder, both credentials might be necessary.
- The most common professions for those who hold the CFA designation are portfolio managers and research analysts, followed by a smaller percentage who work as chief executives and consultants.
- According to the U.S. Bureau of Labor Statistics, the average median pay for a financial analyst is $99,890.
Requirements for a CFA
The commitment to pursue the CFA cannot be understated. According to the CFA Institute, the following is the amount of time needed to obtain the CFA designation:
- Four years, on average, to complete the program
- Six months of preparation for each exam
Very generally speaking, it's estimated to take about 300 hours to study for the CFA exam. Keep in mind that this estimate will vary based on candidate's ability to take tests, and it will vary based on candidate's abilities within the financial industries sector.
Unfortunately, some candidates might never achieve the designation, whether it is due to a lack of academic skill, work or life responsibilities, or other factors. Compare this commitment to the MBA; after being accepted into a programand following the course of study in an average of four semesters, most students receive a diploma.
The CFA program is self–study. As such, there is certainly a lower likelihood of success. However, the decision to pursue either achievement should not be based on the length of timedifficulty, or certainty of completing them, but instead on where they provide the most value, personally or professionally.
CFA vs.MBA
The advent of MBA programs providing coursework to help candidates with the CFA is an indication that the MBA may not provide enough of the specialization necessary to prepare students for an investment career. MBA programs provide students with a broad-based business background, enabling graduates to follow a myriad of different career possibilities within a corporate environment or even in entrepreneurial ventures.
Before the advent of the CFA, the MBA was the de facto requirement for the investment industry, but the specialized curriculum provided by the CFA has changed that. Now, most companies involved in making or managing investments insist that those in senior positions have the CFA and,in some cases, require that employees in senior positions have both academic achievements. Due to the history between the CFA and MBA designations, it is understandable why certain people find that deciding between the two programs is difficult.
The same cannot be said when deciding between the CFA and other specialized business certifications, including the Certified Financial Planner (CFP) and CPA. Because the CPA, a specialization within the accounting industry, is so very different from the CFA, anyone who is challenged with making a decision between them is someone who really hasn't decided what type of career they wish to pursue.
Required Skills for a CFA
The following skills are valued by employers and can be identified by the CFA course of study. A student has to pass three exams before obtaining the CFA charter. Although all three exams focus on different aspects of the course, the main topics are indicated by the CFA Institute, as follows:
- Ethical and Professional Standards
- Quantitative Methods
- Economics
- Financial Statement Analysis
- Corporate Issuers
- Equity Investments
- Fixed Income
- Derivatives
- Alternative Investments
- Portfolio Management and Wealth Planning
Where CFAs Work
According to the CFA Institute, the CFA Institute membership entails more than 160 different societies around the world. It also boasts itself as the "gold standard investment credential".
In 2019, the CFA Institute provides the following breakdown of the most common professions. While the actual distribution of jobs may have changed since then, the main takeaway should be that the CFA license opens up a variety of potential professional opportunities:
- 13%Research Analyst
- 9% Corporate Financial Analyst
- 8% Accountant or Auditor
- 7% Consultant
- 5%Risk Analyst/Manager
- 5% Relationship Manager/Account Manager
- 5%Credit Analyst
- 5% Portfolio Manager
Interest in the CFA is growing and there is a significant benefit in terms of career growth and compensation for those who obtain it; however, the decision to commit to the rigorous study required cannot be taken lightly.
Value of the CFA
One way to determine what industries or companies value CFAs is to look at surveys that compare salaries between CFAs and those with other designations. The CFA Institute conducts compensation surveys that cover many countries; however, these surveys are only available to CFA Institute members.
If you are not a member but are interested in gaining insight into compensation differentials between CFAs and those without CFAs, contact your local analyst society, which can befound on the CFA Institute website. This can help answer your questions about industries and companies that pay premiums for the CFA.
$99,890
The average median pay for a financial analyst, according to the Bureau of Labor Statistics.
The value of the CFA is increasing in areas where membership is growing. Although CFA Institute membership is increasing in the United States, it is growing faster in other countries that are realizing the benefit that comes with hiring CFAs. "That's a sign of growing interest in the certification by employers and the greater availability of training at colleges," said Bob Johnson, former deputy CEO of the CFA Institute.
What Is a CFA, and What Do They Do?
- A CFA, or Chartered Financial Analyst, is a professional designation given by the CFA Institute that signifies expertise in investment management and financial analysis. CFAs typically work in roles such as portfolio management, research analysis, and financial advising, where they analyze financial data, develop investment strategies, and manage client portfolios to help achieve financial goals.
What Are the Requirements to Enroll in the CFA Program?
To enroll in the CFA Program, candidates must meet one of the following criteria: have a bachelor’s degree, be in the final year of their bachelor’s degree program, or have four years of professional work experience. Additionally, candidates must be ready to commit to the rigorous study and ethical standards set by the CFA Institute.
What Are the Costs Associated with the CFA Program?
The costs associated with the CFA Program include enrollment fees, exam fees for each of the three levels, and potential costs for study materials and prep courses. As of 2024, the one-time enrollment fee is $350, and each exam level costs between $940 to $1,250, depending on when you register. Additional costs can arise from purchasing study aids and attending review courses.
The Bottom Line
The question of whether to commit to pursuing a CFA Charter designation requires a lot of introspection and a little bit of research.
If you do decide to become a candidate, make sure your decision is based on a passion for investing and the material to be studied. Simply stated, if your strengths and ambitions lie within the careers and industries that require the CFA designation, it may makesense for you to commit to obtaining one.
