How to Become a CFA

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Finance professionals that develop aspirations to become a Chartered Financial Analyst (CFA) do so for a variety of reasons. Some hope to glean educational benefits, while others do so for their reputation. In certain situations, a CFA can result in salary bumps, and provide a competitive edge in a pool of searching job applicants.

The CFA is a designation given out by the CFA Institute, which was formerly known as AIMR. This institute uses the designation as a measure of the integrity and competence of financial analysts, and the prestige of this title has made this charter in high demand. This professional designation is garnered through a grueling process. Choosing to earn your CFA charter means committing to difficult exams, hours of experience, and money spent on enrollment and preparation fees.

Be Sure it’s the Right Designation

Before you commit to the time requirements and monetary costs, be sure that a CFA is the right credential for your career goals. Most financial professionals must choose between pursuing a CPA or CFA. If you’re looking to advance in accounting or auditing, a CPA is probably the better bet. This is a legal requirement for anyone seeking to perform public accounting services, and can be used in both the private and public sector. Those seeking a CFA are generally focused on investment management. Achieving and maintaining this distinction often requires more time, with a longer exam, and annual membership renewals. If you’re looking to advance in investment banking at a company like Goldman Sachs, you’ll need a CFA. There are other distinctions to consider as well, including FRMs, CFPs, and ACCAs, so be sure to do your research before making the decision.

The CFA Process

There are several prerequisites that those hoping to become a CFA must complete before enrolling. Before you can become a CFA charter holder, you’re required to have at least four years of financial and investment career experience, and you must hold a bachelor’s degree.

To begin the process, you must meet four requirements:

  • 48 Months of Experience: You’ll need to provide proof of at least 48 months of designated professional work experience in the financial field, with an emphasis on investment decision making.
  • Pass Three Levels of the CFA Program Exam: There are three different exams you’ll need to pass before receiving your charter.

Level One – The Level One Exam is only administered twice a year, in June and December. This test covers 10 topic areas included in the Candidate Body of Knowledge, and may cover areas including financial reporting and analysis, equity investing, fixed income, portfolio management, corporate finance, and wealth planning.

Level Two Exam – The Level Two Exam is only administered one time per year, in June. It covers application of investment tools using contextualization. It also focuses on valuating assets.

Level Three Exam – The level three exam is administered once per year in June. It tests individuals on portfolio management and wealth planning in a cumulative manner.

The pass rates for these exams vary, but in combination, the probability of passing all three levels in a row comes in at around 9 percent. Many find they need to invest in prep courses that teach best practices on how to pass the CFA exam, and a significant portion of test takers find they must take different portions of the test multiple times before passing. In general, it takes the average candidate four years to earn their charter.

  • Become a Member of the CFA Institute: You’ll be required to sign the CFA Institute’s Member’s Agreement and Professional Conduct Statement, then pay your first dues.
  • Annual Signoffs: Maintaining your charter means adhering to the OFAC Compliance policy, paying annual dues, and participating in annual signoffs.

While becoming a CFA charter holder can require many years, plenty of toil, and a sizable investment, this professional credential can provide you with better job prospects and increase your professional credibility in one fell swoop. If you’re considering taking the next step in your financial career, keep these aspects in mind and determine if becoming a CFA is the right option for you.

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