What Does a CFA Do

Written by: Nik Ventouris

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What Does a CFA Do

In the ever-changing landscape of finance, investment professionals with the Chartered Financial Analyst (CFA) designation are highly sought after.

In this What Does a CFA Do article, we delve into the intricate roles, responsibilities, and competencies that set CFAs apart from the rest of the financial industry.

By the end of this article, you should understand their unique contributions to organizations, as well as how they shape the financial landscape.

What is a CFA 

A CFA is a globally-recognized professional designation given by the CFA Institute which certifies the competency and integrity of chartered financial analysts. Earning the CFA designation requires passing three levels of exams, which cover areas such as investment management, financial analysis, ethics, and financial professional standards.

The CFA designation is often considered the gold standard in the investment management field due to the rigorous CFA exam process and stringent ethical guidelines it entails. A CFA is trained to provide clear and thoughtful financial guidance, considering both the micro and macroeconomic factors affecting investments.

A person with the CFA designation is also expected to adhere to a strict code of ethics and standards, always ensuring that their professional conduct is aligned with the best interest of clients and the public.

If you are interested in careers related to investment analysis, portfolio management, or investment strategy, pursuing the CFA charter might be a great way to boost your qualifications and open up exciting opportunities in the world of finance.

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Interested in commencing your CFA studies? We recommend having a look at Kaplan’s in-depth study materials.

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What Does a CFA Do?

A CFA charterholder operates within the finance & wealth management niches, and — on a day-to-day basis — can help commercial companies and/or individuals with:

  • Financial planning: Think of CFAs as financial architects. Just as architects design buildings, CFAs design plans for how people or companies should manage and spend their money, helping to lay out a roadmap for financial success
  • Investment choices: Imagine having a pile of money and multiple options on where to invest in – stocks, bonds, or maybe real estate. A CFA is an expert in sifting through these options and advising where your money might grow best
  • Crafting strategies: It’s not just about picking the right investments. CFAs also create broader strategies. Like a chess player thinking several moves ahead, CFAs strategize to ensure money is working efficiently and is prepared for future market changes
  • Collaborating with experts: CFAs don’t work in isolation — they often team up with accountants and other investment management professionals and combine their unique skills to offer a comprehensive financial solution
  • Ethical decision making: Integrity is crucial in the finance world. CFAs follow a set of ethical guidelines, ensuring that they’re always acting in the best interest of those they’re advising, much like a trusted coach

For more information, have a look at our in-depth What is a CFA overview.

How to Become a CFA

In order to become a CFA charterholder, you will need to complete the following steps:

Step 1: Understand the Entry Requirements

Firstly, you will need to ensure you meet the necessary prerequisites. These entry requirements create a strong foundational understanding that prepares you for the CFA Program.

The CFA Institute necessitates that you either have a bachelor’s degree or are in your final year of the degree program. The flexibility of the CFA program means it doesn’t discriminate against any specific degree background. In other words, your bachelor’s degree could be in any field, from finance and economics to arts or science. This inclusivity makes the CFA an accessible goal for a wide range of individuals.

However, even if you don’t hold a bachelor’s degree, the CFA Institute offers an alternative entry point through a blend of professional work and academic experience that totals four years. Keep in mind that this experience doesn’t have to be strictly in the finance or investment field.

Step 2: Enroll in the CFA Program

Once you’ve ascertained that you meet the entry requirements, the next step is enrolling in the CFA Program. The Program entails three distinct levels:

  • Level 1: Level I focuses on developing a strong foundation in ethical and professional standards while introducing you to investment tools. It’s the first of your significant strides in becoming a CFA
  • Level 2: Level II takes you further into the world of finance, providing a deeper understanding of asset classes, valuation, and risk management
  • Level 3: Level III rounds off the program by exploring portfolio management and wealth planning in depth. It’s the final academic hurdle you have to clear to qualify as a CFA

Note: Each level requires you to pass an exam before you can register for the subsequent level, so you will need to prioritize your studies accordingly.

Ready to get started? StateRequirement recommends having a look at Kaplan’s study materials and resources.

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Step 3: Prepare for the Exams

Now comes the challenging part — the CFA exams. 

On average, CFA candidates spend around 300 study hours preparing for each level of the exam. While this may sound overwhelming, remember that these hours are spread over several months. A disciplined and consistent approach to study can make the task manageable.

We recommend employing a diverse range of study materials to aid your preparation. The official CFA Program curriculum, study guides, practice exams, and additional resources available online or from various publishers can be incredibly beneficial.

Additionally, you should consider joining a study group or finding a mentor. Such collaborative efforts can not only offer motivation but also provide unique insights that enhance your understanding of complex concepts.

Mock exams are another great tool when preparing for these rigorous exams. For more information, be sure to check out our Mock Exam CFA Level 1 article.

Step 4: Pass the Exams

Each level of the CFA Program culminates in a demanding six-hour exam split between morning and afternoon sessions. These exams test your knowledge, application skills, and analytical prowess, making them a formidable barrier to cross.

Pass rates for each level typically fall between 40-50%. Having said that, you should keep in mind that perseverance is often key in becoming a CFA charterholder, and you can always retake an exam if you do not pass on the first attempt.

Step 5: Acquire Relevant Work Experience

Earning the CFA charter isn’t just about passing exams. You also need to accumulate four years of professional work experience in a role related to investment decision-making. 

The flexibility here is that you can gain this experience before, during, or after your engagement with the CFA Program. 

Step 6: Apply for the CFA Charter

With the exams behind you and the necessary work experience under your belt, you’ll be on the home stretch. You will then be able to apply for the CFA charter by following these two steps: 

  • Submitting an application to become a regular member of the CFA Institute. This process includes providing references from colleagues or supervisors who can testify to your professional competence and integrity.
  • Complying with the CFA Institute’s Code of Ethics and Standards of Professional Conduct. As a CFA charterholder, you are expected to uphold the highest standards of ethical conduct.

Ready to get started? StateRequirement recommends having a look at Kaplan’s study materials and resources.

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What Does a CFA Do FAQ

What can someone do with a CFA?

With a CFA, you can pursue careers in corporate finance, such as those that relate to investment analysis, portfolio management, and investment strategy. As a globally recognized designation, a CFA can also go a long way in helping you pursue your finance-related career goals. For more information, check out our What Does a CFA Do page.

Do CFA charterholders make good money?

Yes, CFA charterholders generally earn well. Even though salaries can vary widely depending on the position, industry, and region, a CFA charterholder can expect to earn between $70,000 and $150,000 per annum on average. For financial advisors occupying higher level positions (e.g., portfolio managers, etc.), this can be significantly higher. For more information on what a CFA is and how it can boost your career, we recommend having a look at our What is a CFA article.

Is CFA harder than CPA?

The CFA and CPA exams are both difficult and both charters hold significance in the finance industry. However, the CFA is often considered more challenging due to its extensive focus on investment analysis, portfolio management, and lower pass rates in its exams (e.g., CFA Level 2 exam, etc.). For more information, have a look at our CFA Mock Exam Level 2 page.

Is having a CFA worth it?

Getting a CFA can be worth it depending on your professional aspirations. The globally recognized designation opens doors to exciting career opportunities in corporate finance, investment analysis, and portfolio management. If you’re considering the CFA, you can use our Mock Exam CFA Level 1 article to help you assess your readiness and prepare accordingly.

What is a CFA salary?

CFAs generally earn competitive salaries, depending on experience, job role, and location. The current average salary for a CFA is $88,398. Having said that, this can vary significantly depending on a variety of factors, such as location, experience, and exact occupation.

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For all related articles, have a look at our Financial Advisor Resources page.