CFA 101: What’s a CFA and why do people want it?

If you want to work in investment management, want higher pay, or find an MBA too expensive and time consuming, then the CFA® Program is for you.

First off: What's the CFA® Program?

CFA is short for Chartered Financial Analyst. The Chartered Financial Analyst (CFA) Program is a series of exams and working experience that allows someone to gain the CFA® designation. (This means they can put the words "CFA" after their name, much like Dr or PhD.)

It usually takes between 2 - 5 years to pass all the CFA® Program exams. There are also a few other criteria you need to hit, like having a bachelor’s degree.

Is the CFA® Program the same as an MBA?

The CFA® Program is often compared to taking an MBA, but is not the same.

The CFA® Program curriculum will teach you everything there is to know about finance and investment - topics like economics, financial reporting, investments analysis, and portfolio management. It also trains your analytical skills.

The program is best for someone who wants to go into finance, while the MBA is for someone who wants to move across industries. However, realising that finance and investment skills are important, many MBA programs nowadays are including CFA® Program curriculum in their content as well.

So why do people want to get a CFA® charter?

#1: It’s cheaper than an MBA + needs less time commitment

Typically, the cost of a CFA® charter is somewhere between US$2,500 to US$8,500, depending on how many times you take the exams, what study materials you buy, and if you need extra help like revision classes. This is considered quite cheap for a professional qualification.

Unlike an MBA, you can still work full-time and study for the exams on the weekends/after work, making it achievable for people who can’t just quit their jobs to go back to school. University students can also start studying for the exams in their 3rd or 4th year.

#2: They’re aiming for a job in finance & want to work overseas

The CFA® charter is considered the highest credential in the finance world. For some roles in finance, such as investment management, having the charter is extremely important. These jobs include:

Research analysts
Portfolio managers/ Fund managers/Relationship managers
Private bankers/ Financial advisers

In general, because the knowledge tested in the CFA® Program exams is more specialised than an MBA, companies focusing on “buy side” investments (e.g mutual funds, pension funds, securities) prefer someone with a CFA® charter over someone with an MBA.

And as fintech increasingly starts to take over jobs in finance, the CFA® charter is one way for people to increase their value. Some job postings may even require candidates to have a charter in order to apply.

Also, like the MBA, employers in finance know about the CFA® Program. Unlike some accounting qualifications, which work only in one country (e.g. ACCA for the UK and CPA for the US), a CFA® designation will let you work worldwide, as the exams are the same in every country.

#3: It will give you higher pay

In general, employees who are CFA® charterholder will earn more than those without.

But even people who didn't get the charter but did pass some of the exams also command a higher salary.

According to a survey of 500 candidates by 300hours, those who passed Level III 32% more pay, and those who passed Level II got 20% more. (Passing Level I exam made no difference, though.)

So how do I know if a CFA® charter will benefit me?

It depends. Ask yourself: do you want a career in investment management? If the answer is no, you probably won't find yourself motivated to give up weekends and weekday nights for years just to study for the exams.

However, if you do think it this could be the next step for you, ideally you should sign up and start studying as soon as you are able. This is because the exams require at least 300 hours of slogging through mock papers and readings, and the longer you have left school, the harder this will be for you to adjust to.

The older you are, the heavier the demands of life (especially children) as well, making it difficult for you to find the time and energy to get through the exams.

Still considering if the CFA® Program is for you? More information about the exam is available here.

If you think exam prep courses will be useful for you to pass your exams, check out our classes here.