Who needs a CFA? The industry is divided on finance’s toughest test



For those who pass the grueling test, the Chartered Financial Analyst designation is a badge of honor.

Less than half pass, but they hope the months of study needed to earn the CFA qualification will open the door to a lucrative career, while some companies are even footing the bill for staff to pass the exams to earn their stripes.

Then came the pandemic. The CFA Institute, founded in 1947 with a mission to bring professional standards to the investment management industry, has been rocked by fewer people taking the test during the shutdowns. It has also been criticized for cutting 120 of its staff and delaying exams last year.

Now a Financial news Demand for the financial industry’s toughest test may have peaked, polling shows, with many worried about the waning impact a CFA designation can have on their careers.

The FN A poll of 343 people – 79% of whom have the CFA charter or are studying for the exams – found that more than a third (34%) believe fewer people will achieve the qualification five years from now. However, the same proportion said they thought more people would take the exam over the same period.

While 55% of survey respondents said the qualification was useful in their current job, it is far from a prerequisite for a role in finance. More than 57% said less than 20% of their colleagues had a CFA, while 57% also said they would always or usually hire someone without a qualification. Meanwhile, only 14% said the lack of a CFA qualification would prevent them from taking on a potential candidate.

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The CFA has long been seen as a route to employment in asset management and equity research, and to a lesser extent, investment banking.

After the pandemic-induced drop in the number of people taking CFA exams, the numbers rebounded. In the year ending in August, 262,364 people served at the three levels of the CFA, an increase of 22% over the previous year. However, this is still down from the peak of 352,088 people who took the exams in 2019.

Chris Wiese, Managing Director, CFA Institute Accredited, said FN that the demand for qualification has “recovered” from a pandemic lull and that the number of people “experienced cancellations or requesting deferrals” “was rapidly decreasing”.

August test enrollments are up 20% from 2021, he added, and the institute has opened 20 more test centers in Asia-Pacific and Europe, the Middle East and Africa. .

“The charter continues to be highly valued by employers, many of whom pay for their employees to enroll in the CFA program,” Wiese said. “In a scenario where there is a tie-break between the candidates, the CFA charter can tip the scales.”

While some respondents to FN the survey described the qualification as ‘the gold standard’ and something that gave them ‘bragging rights’ over their colleagues, others said it needed to be modernized, embrace the digital age and becoming more relevant in Western markets as well as in sectors such as investment banking and fintech. Others said it should provide ongoing professional development.

“There is no advanced follow-up training based on specific industries or real life situations,” one respondent said. “The CFA is just fundamental knowledge that teaches you how to think, but does not help you do a specific job or do it better than average.”

“With the increasing number of applicants, the program will lose its prestige,” added another. “It won’t be seen as specialist and gradually employers will start to take it for granted – I can see that already.”

The pass rate at the first level of the CFA has always been low, but since the introduction of online assessments last year, it has fallen further. In July last year, only 22% of candidates passed the first level, down from 44% five months earlier and a pass rate that has hovered around 40% over the past decade. This year, however, the pass rate has improved — to 38% for those who took the exam in June.

There are now a record 190,000 charter holders worldwide, Wiese said.

While candidates returned en masse to the CFA, respondents to the FN survey said the biggest problem they had with the qualification was not the difficulty of the exams or its lack of exclusivity. Instead, the largest proportion – 29% – said it did not equip them with the skills or knowledge to use in their daily work.

To contact the author of this story with comments or news, email Paul Clarke

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