(Last Updated On: September 25, 2020)

Have you heard of CFA, one of the fastest growing financial certification across the globe? If yes, great! If not, we’ll walk you through the process of becoming a Chartered Financial Analyst and building your career in the said field. You’ll probably get an idea about the CFA program, course details, exam, eligibility requirements, scope and much more to learn on this global professional certification.

CFA: A Glimpse

Among others, the finance industry probably offers the widest range of career options for individuals interested in adding value to society, individuals, businesses or other organizations and help them achieve their goals and targets. CFA is one such professional course that can open up such avenues for students and professionals looking to pivot their career path alike. The basic job description entails financial analysis and modelling to help individuals and businesses with their financial and investment goals.

Whether you’re a student new to the field of finance, or a finance professional looking to expand knowledge in terms of both theoretical and vocational practice, and subsequently gain new working opportunities, with higher salaries of course, CFA might be the thing for you. Of course, no life altering decision can be taken with so little information, so let’s look for quick answers to these crucial queries: What is CFA?How to become a CFA Charter holder? What’s its scope and what sort of skills the course focuses on? Is CFA Worth It? A lot of information to dig into!

What is a CFA? Full Form & Meaning

CFA stands for Chartered Financial Analyst, a title earned after obtaining certification from the CFA Institute, which is sort of this global non-profit organization whose mission statement is basically promoting investment as a profession global while maintaining the highest levels of ethics and benefiting the society. Noble stuff.

Anyway, this basically means CFA is this global degree valid throughout planet Earth, so far (and will probably be valid on moon and whatever planet we go to next, so that’s a plus!) This might not sound like much but this eliminates a lot of possibilities of future regrets, take this for instance, making a plan to go abroad after doing CA in India, because then you have to give those tests again according to destination country’s laws and stuff. A globally recognized degree eliminates that.

Getting to the institutional aspect of it, think of CFA as a membership in a club. All the people who have worked and obtained the certification are part of the directory, called the CFA charter, which also has your professional contact details like your work phone number, which facilitates for businesses and institutions to have this sort of one stop directory in case they have such analytical needs and such professionals.

So this basically works in favour of those who’re part of the club, in terms of employment opportunities. Along with this, a Chartered Financial Analyst has comparatively better prospects at getting a good white collar job in the industry and a higher potential earnings, when compared to peers of similar age in the same occupation.

CFA: Scope

The first and probably the most obvious fact is that getting a CFA provides a huge advantage specially if you’re an entrant in the job market in investment and finance industry, because of the reliance of the degree in the market. Because it is so widely accepted, the career possibilities expand and vary over a huge array of sectors like banking, mutual funds and other pooling of funds like hedge funds, investment and insurance, etc. Obviously, chances are that in the same field, among people among the same age, the ones who hold CFA certification have higher remuneration.

Also, because this is a global degree, career opportunities are not limited only to one single country, but it is one degree that provides opportunities across countries like USA, Europe, Australia, etc. To give an idea of how widely accepted this certification is, CFA members work at some of the largest financial and investment institutions like JP Morgan, Goldman Sachs, UBS and Morgan Stanley.

According to data by CFA society, average salary of a CFA in U.S. is around $180,000, not accounting for other forms of remuneration like cash bonuses and equity and profit sharing. Whereas, a normal financial analyst earns around $69,271 per year.

Before reading the CFA Program details, here’s a small quiz to test your knowledge:

CFA Level I Practice Exam (Quantitative Methods)

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CFA Level I Quantitative Methods

Questions relating to Quantitative Methods

1 / 10

Efficiency of an unbiased estimator is measured by its:

2 / 10

Intergenerational data mining involves using:

3 / 10

A discrete probability distribution is the same as

4 / 10

A numerical descriptive measure of a population, usually unknown is known as

5 / 10

You can best summarize a large mass of data pictorially by means of

6 / 10

If the Mean, Median and Mode of a distribution are 3.5, 3.8 and 4 respectively, the distribution is said to be:

7 / 10

As the degrees of freedom increases and the t-statistic approaches towards the z-statistic, the tails of the distribution most likely become:

8 / 10

Given the Probabilities as:

P(A) = 35%

P(B) = 65%

P(B | A) = 65%

What is the probability that Event A and Event B occur?

9 / 10

In a positively skewed distribution:

10 / 10

A property and potential benefit of using arithmetic mean is its ability to:

Your score is

The average score is 47%

0%

Note: We’ll be adding more Professional Financial Exam Quizzes on our site to make you learn and practice the various terminologies and concepts.

CFA Exam Details: Become Chartered Financial Analyst

The process of enrolling and becoming a CFA is really simple, specially when compared to the contemplation one would to go through to decide this is what you want to do. Here are the basic steps.

1. Enroll in CFA program

Obviously, to eventually give the exam and obtain certification, the first step would be to start the process and enroll in a CFA program. This can be done through registering for Level I. (There are 3 levels, explained below.) These are the requirements, sort of pre-requisites of enrolling.

You should either have :

  1. A bachelor’s degree from a recognized institute or
  2. You’re in the final year of your graduation.
  3. A combined 4 years of training which includes higher education and work experience.

Along with this, some more obvious pre-requisites include possession of an international travel passport, ability to appear for exams in English, and ability to maintain professional conduct along with willingness to live in one of the participating countries.

You may also like to explore: Top 10 Universities for Accounting and Finance in the World

2. Clear the CFA Exams

CFA tests are designed to focus on both investment and finance, as well as logical reasoning aptitudes. The subjects and topics include ethical and professional standards, economics, equity investments, fixed income and portfolio management, with each exam focusing on different aptitudes. There are three levels:

CFA Level I:

This is primarily focused on investment methods and tools, as well as tests your knowledge of ethical and professional standards. CFA level I basically checks your knowledge and comprehension.

To grab additional information do have a look at CFA Level 1 Exam Course Fees, Eligibility, Program Registration Details

CFA Level II:

Focused on asset valuation techniques, along with testing your ability to apply standards to situations, a sort of combination of theory and real life application, which is basically an analyst’s job. CFA Level two is more of application and analysis based.

CFA Level III:

Focused on portfolio management methods. This exam also tests your ability to apply standards and make evaluations. So, a bit more tougher than the previous levels.

Clearing these CFA program levels are a basic requirement for obtaining the CFA charter. Needless to say, these tests can be difficult, and require a lot of practice as well as a significant time investment. There are two ways you can about these though.

First, what some professionals do is study for the exams while working in the field. Second, you can put concentrated efforts, which a lot of people also find to be a more successful strategy. On average, the CFA Institute estimates, a candidate is likely to spend 322 hours preparing for each exam—304 average hours for Level I, 329 hours for Level II and 334 hours for Level III.

Remember, the hours to be devoted are solely based on an individual’s learning and grasping skills. An average of 300+ hours is generally required for preparing for a particular Chartered Financial Analyst level exam. Rest, it’s upto you and your ability to understand the topics.

3. Get Qualified Work Experience

Furthermore,  the next step towards becoming a CFA Charter holder is acquiring 48 months of “acceptable work experience”. This is mandated by the CFA Institute, who considers acceptable work experience to among a broad range of financial and investment professions like trading, economic and corporate finance.

Another requirement of this is that at least 50% of this work experience should be directly involved in the investment decision-making process or in the production of a product that impacts this process. The good news is that this can be obtained before applying, while studying or even after clearing the exams.

4. Prepare & Submit Reference Letters

After the aforementioned steps, i.e. clearing the three levels and obtaining necessary work experience, the next step is collection of reference letters to submit to the CFA Institute. Basically, these references letters attest to your abilities in the field, as well as your professional character along with a possible explanation of why you should be rewarded a charter. Here, you should always prefer references of your Supervisors or current CFA charter holders, because that will be more impactful than others.

5. Apply to Become a Charter-Holder

After all this process is finished comes the final part. Once you have completed all of the above mentioned processes and requirements, you apply to become a CFA Charter Holder. There also has to be a payment made along with your application and prerequisites for review. The Institute might take up to 10 business days to review the applications in case of regular applications, and up to 4 weeks for affiliate membership applications.

Usually, candidates receive an email once their application has been reviewed, and then congrats! You’re a Charter Holder!

Now, these are some important details about the CFA Certification program. Of course, becoming a Chartered Financial Analyst isn’t a cakewalk. You need to have a strong determination and put in consistent hard work to set yourself apart in the robust financial industry. A good and reliable course like CFA can lay a strong foundation in shaping your career and gain global recognition.