Navigating the financial industry can often prove tricky for professionals looking to gain industry qualifications; this is due to the sheer volume of options available.
In this Is the CFA Worth It article, we explore the benefits, costs, and overall value of one of the most prestigious and well-known qualifications in the financial services industry: the chartered financial analyst (CFA) designation.
By the end of this article, you should understand what this designation could mean for you as well as whether it’s the right time for you to take such a significant career step.
CFA Pros and Cons
As you consider obtaining the CFA designation, it’s crucial to understand both the advantages and potential pitfalls. Here’s an overview of the main pros and cons of associated with this certification:
- Global Prestige: Revered worldwide, the CFA credential signals competence and integrity in investment management. Whether a CFA charterholder works in America, Europe, or Asia, they enjoy instant recognition and respect
- Depth of Knowledge: Designed as a progressive journey, the CFA Institute’s CFA Program escalates from broad foundational concepts (Level I) to complex financial analysis (Level II) to portfolio management and wealth planning expertise (Level III). This ensures a well-rounded level of expertise
- Ethical Emphasis: One of the cornerstones of the CFA Program’s curriculum is its focus on ethics and professional standards. This ethical grounding isn’t just theoretical; it’s tested intensively across all levels, underscoring the importance of integrity in finance
- Career Versatility: With its wide-ranging curriculum, the CFA Program is ideal for roles in investment analysis, financial research, portfolio management, and advisory activities. It’s a designation that speaks to many responsibilities within the financial sector
- Time-Intensive Process: Earning the CFA designation isn’t a quick or easy pursuit. With three comprehensive levels that require nearly 300 study hours per level and a focus on real-world application, this journey represents a significant commitment
- Sizable Financial Investment: While the potential return on investment (ROI) for a CFA designation can be impressive, the initial outlay isn’t trivial. Between program enrollment fees, exam fees, and supplementary study materials (e.g., Kaplan’s), the costs can add up quickly
- Challenging Exams: The rigorous nature of the CFA exams — especially the advanced levels — often results in lower pass rates. This might mean you’ll need to retake exams, leading to further time and financial commitments
- Lack of Specialization: While the CFA designation confers a broad spectrum of knowledge, individuals in certain financial services niches may prefer to obtain other credentials that dive deeper into their area of specialization
- No Career-Related Guarantees: Despite its prestige, the CFA designation doesn’t automatically guarantee job offers. The finance sector values experience, networking, and other skills alongside formal qualifications
All in all, the CFA designation is a mark of excellence in the finance industry. Its rigorous curriculum ensures a profound understanding of many investment topics and development of real-world portfolio management skills. However, like any major task, it comes with challenges.
If you’re contemplating this journey, we recommend balancing out the knowledge and career opportunities it offers with the commitment it requires before making a final decision.
Interested in starting your CFA studies? We recommend you check out Kaplan’s in-depth study materials.
If you’re interested in learning more, we recommend having a look at our in-depth What Is a CFA article.
Should I Get a CFA?
The answer to this question will depend on several factors. Before diving into the CFA certification journey, we recommend thinking about your career goals. Will the CFA designation help you achieve them?
Here are some important factors you should consider:
1. Your Career Goals
Are you keen on roles that involve investment analysis, financial research, portfolio management, or advisory services? If your aspirations align with these areas, the CFA designation could be a valuable asset.
This designation not only brings in-depth knowledge, but also signifies your dedication to and competence within the investment world. This makes it crucial to evaluate how this certification aligns with your long-term career objectives.
2. The Required Time Commitment
Pursuing the CFA designation isn’t a short-term task. It’s a difficult program split across three levels — each with its own set of challenges. On average, candidates should plan to dedicate around 300 hours of study for each level. That’s almost 900 hours in total. Given the breadth of the CFA Program’s curriculum, you’ll need to consider if you can balance your current responsibilities with such an intense study commitment.
3. Your Financial Situation
Getting a CFA designation can open doors to better jobs and possibly a bigger paycheck in the future. But, there’s a catch: it requires a significant upfront cost. You’ve got to pay to join the program and take the exams as well as buy any study materials or prep classes you need to help you pass.
Think of it like putting money into a savings account for your future career. Before diving in, you’ll need to assess your budget and decide if your able to make such a substantial investment in yourself (it’s a big step, but it could really pay off later!).
4. Market Recognition
Having a CFA designation is a big deal in finance, helping unlock both job opportunities and promotions. However, some employers may value different qualifications or experience more highly. This makes it essential to check what employers in your desired job area prefer in their applicants before making a final decision.
5. Depth of Curriculum
The CFA Program covers a plethora of finance topics — from the basics to complex investment analysis. If you want to specialize in a wide range of niches, this can make the CFA a great choice for you.
On the other hand, if you prefer to focus on a specific area in finance, other credentials might be more beneficial.
6. Ethical Standards
A notable advantage of the CFA Program is its emphasis on ethics. In a world where people don’t always have immediate trust in financial institutions, holding a designation that rigorously tests and prioritizes ethical behavior is a great way to set yourself apart.
If you value a credential that combines financial acumen with integrity and professionalism, the CFA designation stands out.
7. Networking Opportunities Across a Global Community
Becoming a CFA charterholder also means joining a global community of professionals. The networking opportunities, events, and continuous learning resources offered by the CFA Institute can prove extremely valuable. You also can join a local CFA society to take advantage of even more networking opportunities and further accelerate your career growth.
How to Become a CFA Charterholder
If you believe that becoming a CFA charterholder is the right step for you, you’ll need to complete the following steps.
1. Understand the Requirements
Before you get started, you will need to meet the CFA program’s minimum qualifying requirements. These include:
- A College Degree: If you’ve already earned a college degree, you’re good to go. If you haven’t, you’ll still be eligible as long as you’re in your final year of studies
- Work Experience: Don’t have a degree? No problem. You might still qualify if you’ve been working in the finance sector for a while. Any combination of school and relevant work experience that totals at least four years will suffice.
- A Passport: This might sound odd, but you also need a government-issued passport. It doesn’t matter where you’re from; it’s just a way to verify who you are when you sit for the exams
Once you’ve ensured that you satisfy all of these requirements, you’ll be ready to move on to the next step.
2. Enroll in the CFA Program
If you’re ready to get started with the CFA journey, you should kick things off by completing the following steps:
- Set up your online account. Just like signing up for a new social media platform, you’ll need to start by creating an account. Go to the CFA Institute’s website and follow the steps required to create your personal profile
- Pay the enrollment fee. After you set up your account, you’ll need to pay a one-time fee to join the CFA Program
- Pick your exam date. Next, you’ll get to choose when you want to take your first exam. Just pick the date that works best for you
- Disclose any past issues. If you’ve ever had any issues at work or related to your profession (e.g., if an employer ever let you go from a job or if you ever faced any official complaints) you’ll need to disclose this information on your application
Once you tackle these simple steps, you’ll be on your way to getting a CFA certification
3. Prepare for the Exams
The CFA exams aren’t something you can breeze through. They require dedication and a lot of studying. Here’s a brief overview of each level:
- Level I: Think of this as the foundational level, which covers a broad range of topics. It introduces you to the world of finance. You’ll learn how stocks and bonds work, the basics of accounting, and even some economic principles
- Level II: This level takes you beyond the basics, diving deep into the nitty-gritty details. You’ll look closely at financial reports, learn advanced ways to value companies, and figure out how global economies can impact investments
- Level III: This is the final — and toughest — level. Here, you’ll focus on how to actually manage money for others. This includes learning investment strategies, understanding how to minimize risks, and conducting financial planning for long-term goals like retirement. It’s not only about knowing the theories, but also how to use them in real-life situations
In addition to traditional studying, taking mock exams can be one of the most powerful tools in your arsenal for obtaining your CFA designation.
To learn more about how to use this tool to prepare for these rigorous exams, check out our Mock Exam CFA Level 1 article.
Pass the Exams
The CFA Institute structures its CFA Program in a way that ensures candidates gain a comprehensive understanding of finance and investment.
Here’s a brief overview of each exam:
- Level I:
- Format: Multiple-choice questions
- Focus: The exam for this foundation level tests your knowledge of basic financial concepts. It’s about picking the right answer from the options given based on the situation described
- Level II:
- Format: Item set questions
- Focus: This exam poses questions based on short stories or financial scenarios. It asks you to analyze the data and information more closely
- Level III:
- Format: Item set and constructed response questions
- Focus: The exam for this advanced level tests your expertise in portfolio management and wealth planning. You’ll not only need to analyze situations like you did in the Level II exam, but also write out your answers to show how you’d handle real-world financial situations
Note: We recommend spending a commensurate amount of time in each level. This will ensure that you are holistically covered when it comes to the knowledge you will need to excel as a CFA.
5. Acquire Relevant Work Experience
In addition to passing all the necessary exams, you’ll also need a minimum of four years of relevant, professional work experience to obtain the CFA charter.
Having said that, you should note that this does not need to be four years after your exam(s) have been completed, and can actually be before you begin studying for your exams.
Note: This step is meant to ensure that all charterholders are able to bring both academic prowess and practical expertise to the table.
6. Join the CFA Institute
Once you pass all the exams and meet the work experience requirements, the final step is to become a regular member of the CFA Institute.
Membership is not only a prerequisite towards receiving your CFA designation, but it also gives you access to a wealth of resources, continuous learning tools, and a global networking opportunities.
7. Commit to the Code of Ethics
Becoming a charterholder also involves making a commitment to uphold the high ethical and professional standards of the CFA Institute. You’ll need to sign a Professional Conduct Statement each year and pledge to adhere to the CFA Institute’s Code of Ethics and Standards of Professional Conduct.
All in all, the path to becoming a CFA charterholder requires an intense amount of time and effort. However, the rewards — in terms of knowledge, global recognition, and career opportunities — can be immense.
This can make the CFA designation a worthwhile investment depending on your career aspirations.
Ready to get started? StateRequirement recommends having a look at Kaplan’s study materials and resources.
Is the CFA Worth It FAQ
Is the CFA actually useful?
The CFA designation is globally respected in the finance sector because it showcases deep financial knowledge and a high ethical standard, which can lead to increased career opportunities. Even so, whether it’s useful for you will ultimately depend on your specific career path. For more details, see our What Is a CFA article.
What is the downside of the CFA?
The chartered financial analysts designation can seem daunting due to its intensive time commitment (i.e., 300 hours per level) and high costs (e.g., around $1,000 per level). Refer to our Is the CFA Worth It article for more information.
Is the CFA exam really that hard?
If you’re curious about the exam structure, we recommend checking out our Mock Exam CFA Level 1 article. The CFA exam is tough, testing both your knowledge and the real-world application skills. Even so, the CFA exams are undoubtedly passable with the right study materials.
Is the CFA as valuable as earning an MBA?
When comparing the CFA designation to a master of business administration (MBA) degree, it’s essential to consider your career aspirations. While the CFA designation focuses on asset management, an MBA degree offers a broader business perspective.
Does the CFA exam contain a lot of math?
The CFA exams cover a broad range of financial topics, including sections on math. This means that it’s important that you are somewhat comfortable with maths before taking each exam. We recommend having a look at our CFA Level 2 Mock Exam article for a more in-depth overview.