This is probably the most often asked question on here and I have gone through the archives but my background doesn’t seem to be all that common. I am considering taking this but I’m already in my late 20s and already have years of experience trading fixed income.
A little about me:
ivy league undergrad, solid gpa
4 years trading very specific/niche fixed income product at a hf
1 yr/currently at a bank in the investment portoflio group, doing broader fixed income work
not looking for a career or job change
Between the hf gig and my current job i was unemployed for an extended amount of time, the difficulty in getting a new job surprised me, though that may have been due to the product I was experienced in. I did see a number of buyside jobs that said “MBA/CFA preferred”, neither of which I had, but I can’t say how much help it would have been if I did. That got the idea of getting a CFA on my radar.
At my current job, none of my bosses have a CFA and they have differing opinions on how useful it is. It ranges from “it’s always a good thing to learn” to “there is no value in that”. I have gone from a trading role to more of an asset management role and could see my career potentially continuing down this path. If I go back to a trading type of role in the future I am sure the CFA would not help me. The firm is willing to pay for my exams, so there’s no economic cost to me, though the time cost seems to be huge. Here’s how I’ve been breaking it down in my head.
Pros:
I’m single, have free time
it can’t hurt, could potentially be useful if I end up at an asset management firm down the road and could open this career path for the future
no economic cost, though the economic cost doesn’t seem to be huge
Cons:
could have no value to me, especially if I continue working with the one product most familiar to me in fixed income
I’m not particularly young, so time cost is still time cost
from what I could tell, the fixed income section is not all that comprehensive
I already do plenty of self-study that is likely more useful, this would take time from that
Anyone want to offer some advice and help me think through this? Thanks for reading all that.
First, let me give you my opinion on your pros/cons:
“Single and have free time.” So was I, when I started. Now I’ve got a wife, a kid, and another one on the way. Where will you be in four years?
“Can’t hurt, might help.” It most certainly CAN hurt. It will hurt you with the time and stress involved. You’re probably underestimating exactly how much is required for this test. Even with an Ivy League degree, you’ll have to put in trememdous amounts of study time–on top of what you’re doing now.
“No economic cost.” See above about the time/stress costs. The registration and study materials are piddly compared to the time I’ve spent away from my daughter and advancing my current job.
“Could have no value.” Hard to beleive that it will have absolutely no value. No TANGIBLE value, maybe. But I think most people do it for the intangible values.
“I’m not young.” Yes you are. Late 20’s is young. You’ll probably work for another 35-40 years.
“Fixed income section is not comprehensive.” The test is not designed to be comprehensive about anything. It’s designed to give you a bird’s-eye view of all of finance. If you want comprehensive, look for a “peripheral” designation, or work experience.
“I already do plenty of self study.” But you can’t prove it. I have no idea of know whether you’re telling the truth, if you studied it intensely or just browsed it, or if what you’ve “studied” is of any real value. If you take the CFA exam, I know exactly what you’ve studed, how well you’ve studied it, and what value it holds (remember–value is in the eye of the beholder).
I think that being a Charterholder is always better than being a non-Charterholder, ceterus paribus. It’s hard for me to believe that in the next 30 years that I plan to work, I will derive absolutely no benefit from this. Even if I don’t use it in my current job, I have no idea where the next 30 years will take me.
Ultimately, I think you said it yourself–not useful if you continue on the path you’re on, but if you want to change, it will be useful. If I had an Ivy League undergrad, and had the option of taking the exam, I’d take it, because I think you will benefit from it in the end. You’ll get considered for more jobs, and your employer is likely to pay you more for having the Charter. It’s just like your Ivy League degree–200k and four years is a lot of economic benefits foregone, for absolutely no guarantee whatsoever. But the future benefits are far greater.
ddrobinett makes some good points. I have a couple to add on:
Beware of sample bias, obviously people on a CFA forum are going to think doing a CFA is a good idea
Understand that passing the CFA is possibly more dependant on time put it than on intelligence. The concepts aren’t very hard, there is just huge amounts of information! You may think it’ll only take 3 years, but add in a couple of fails and it’s 5 years. I’ve only done L1 so I may be mistaken, but i’ve talked to a lot of charterholders who have told me that while it gets harder, it’s still more about learning information than grasping difficult concepts.
If I were in your shoes, I’d consider where you are now and whether the CFA is a necessary certification for the job you hope to get in the future. Remember that even though the firm will sponsor you, it will demand a significant amount of time from you, not to mention that it could be a distraction from your immediate job. From what I’ve seen in my work experience (and NOT being a charterholder myself), I feel like you’d be best off investing your time in your job and doing other habit-forming things in your spare time, unless you really think you’d have the appetite for more studying outside of work.
Just so you know where I’m coming from–I didn’t go to an Ivy League school, or even a top 100 school. I never had a chance to go to a “good” school, because of socioeconomic conditions. I went to junior college, then joined the military. I finished a Bachelor’s in Spanish while I was in the military.
For my MBA, I went to the local big state university where I lived. It taught me how to discount cash flows, and that debits go on the left and credits go on the right. Kids in Harvard learn the exact same thing–but they get a lot more notoriety. (I’m not commenting on the fairness of the system–just the facts.)
The only way for me to get my ticket to the dance was to distinguish myself by earning the Charter. If you have an Ivy League degree, you’ve already distinguished yourself, and you’re already in the dance.
You have given an excellent analysis to your potential conclusion. Frankly there are a lot of people out there that pursue MBA &/or CFA simply because they think they will get job offers galore. The fact of the matter is, CFA is useless compared to experience and networking and if your employer hasn’t explecitly stated you need a MBA or CFA to advance, than I would focus on networking or moving up in your company.
CFA has become a default for people who don’t want to go back to school (MBA) and early 20-somethings who like finance. If you truly just want to bang out this test and get the letters than more power to you but in your current situation CFA is more for asset management and equity research.
I have an MBA but what matters more for my current role (equity analyst at hedge fund) is my work experience. Just to give you a taste of how diluted the CFA charter seems to have become, I’ve been to two NYSSA happy hours in the last year and did not meet a single person in asset management/hedge funds, and only a couple folks from sell-side research. Most of the people there were job-seekers from middle office or back office. Granted, there may be some selection bias in that people with stronger networks may be less likely to attend these things, but these numbers are really low when you cnosider that 40-50 people typically turn out to these events.
I agree with the above posts regarding experience, and I’ve recently found it to be true. (Little background-undergrad from an OK school with unexceptional grades, no MBA, and will sit for L3 in June.) I hit the five year mark as a fixed income analyst in the fall of 2012 and suddenly started hearing from recruiters in the past couple of months. I’ve casually sent my resume here and there over the years without a single request for an interview and have never heard from a recruiter before. Five years must be the magic number. CFA program has only come up once in the three interviews I’ve had recently. The attention has been focused on my experience and the research I’ve done.
OP - For you, I bet your Ivy League education will trump someone with their charter especially with a solid GPA. However, depending on the type of degree you have, the body of knowledge in the program might be useful. Correct me if I’m wrong but I believe Ivy League universities do not have business undgrad degrees. I personally had zero experience in accounting, so that part of the material has been great for me. But the program is a joke for fixed income.
And BTW, YOU’RE STILL YOUNG!!! Late 20s and “I’m not particularly young…” LOL. Anyway, the opportunity costs will only get higher from here so keep that in mind. And you might see some hot young talent at your local college library if you decide to start studying for the exams. I’m married with two kids and a dog but it’s been nice eye candy.
I am taking L3 in June and will be glad once it is all over. However, I know there’s no doubt someone with an ug from an ivy will beat me out for most potential jobs. I sometimes think I should have spent all this time studying the GMAT instead. Oh well it is what it is and I’m determined to finish now. If I were you I would still do it. Just be prepared to give up a month or so of your life for each level.
If you have to ask “to CFA or not” – you’re in jeopardy (in my opinion) of partial completion. While this thread can be informative - only begin the program if these comments leave you with ZERO doubt in your mind that you need to accomplish the CFA Program. The only way you’ll get yourself through the burnout candidates experience every March thru May will be 100% knowing to yourself that this is EXACTLY what you want to do. If you are on the fence there is no way you will be able to push yourself over the hill in a self-study program.
As for the validity – you wouldn’t have specified “Ivy” league and “Solid” GPA if you didn’t believe that there was some merit/prestige/differentiation associated with those terms. Similarly, the CFA can help provide you with the differentiation from a pool of candidates – and along the way you’ll learn some stuff you use. However at the end of the day realize that your name, “CFA” and name of your school only account for about 1/20th of the content on your resume and that most importantly a resume means nothing (esp. in this environment) without a QUALITY network and a serious list of quantifiable achievements. If obtaining the Charter puts any of this in serious jeopardy – you might want to hold off.
I didn’t read the responses but would like to make several points:
I think your post shows a good level of thought and research on the topic. Normally we get these questions from people who just seem to be shooting int he dark with no idea where they’re going. This is refreshing.
You’re doing fine where you are and don’t need a CFA, you’re correct to step back and analyze the commitment.
If you’re moving more towards positions requiring fundamental analysis such asset management roles you mentioned, it could become useful. You will always get a range of responses on CFA and MBA value as mentioned. Having a CFA won’t be a magic ticket, but in some cases it really will help land you a job and differentiate you. Since you only need to land one job at a time as opposed to all of them, I view it as very worth while endeavor.
An ivy league MBA has more benefit, but also costs a ton, takes more time commitment, and may be overkill. I’d really make sure you feel the need for one before going that route.
Summary:
As you’ve stated, I think the CFA could help you, but it is also a large time investment just as you’ve said. I wouldn’t encourage you to jump into it blindly, but it is also very good to be looking forward and analyzing these things. I really can’t tell you to do it or not do it because there are definitely pros and cons in your case and it will definitely come down to your own individual path. Good luck!
For the next job and next promotion, it sounds like CFA may not be what you need. An MBA might do more. If you went to a no-name school (which you didn’t, of course), then the CFA would be an inexpensive way to try to demonstrate you know something about finance outside of the specific product you’ve worked in.
Since you are an Ivy League graduate, you probably didn’t major in finance (or even business), since Ivy League schools don’t tend to have those majors for undergrads (Penn is an exception). If you didn’t do finance as an undergrad, and aren’t doing an MBA, then the CFA can fill that gap if you need it. However, my guess is that you will probably end up doing an MBA at some point.
So it really comes down to whether you want to stick with the product that you’ve been working in, or branch out into other kinds of investment styles and analysis. Given that hedge funds are under regulatory attack now, it may make sense to diversify your knowledge base a bit. However, you could do that with a CFA or an MBA. An MBA would probably make you more marketable outside of the financial world too.
So it sounds like the CFA is not really essential to your career, but still could be a good thing if you are really interested in getting a bigger picture of how investmetnts work and making yourself marketable to a larger range of firms. Otherwise, you’re going to go the apprenticeship method of financial knowledge - which isn’t a bad way to learn things, but tends to be a bit riskier if you have too narrow a skill set/vision.
I actually think that CFA will help here. I interviewed at 2-3 places last year and they specifically said that they like CFA or “progress towards CFA”. Some of these were big shot places… you know, like the kind of place where you would think the CFA is beneath them. But apparently not! I was pretty surprised, and my impression of CFA has changed because of this.
I also don’t think that the CFA will be as much work for you as most people would have you believe. Many people put in much less than 200 hours for each level. Given your background, I suspect that the exams will not be too difficult for you.
Don’t MBAs have part time programmes? For example Booth does.
I’d go for that… the killer about CFA, I suspect is the whole ‘I’m learning on my own, I’ve got a full time job’. The part time MBA is taught by professors and are in a group environments which often provokes decent thought discussions that can make you learn the material easier and actually build up working knowledge… ie shit that you won’t forget in 3 weeks.
Not to mention, if you went to Booth/other big time PT programme, chances are the guy/girl standing in front the class actually knows what he/she is talking about and can be a wealth of knowledge.
Maybe i am an outlier but i found both CFA exams and part-time MBA (top school) not challenging. If you really want to hit it big, you must go full-time MBA, no question asked.
BUT
Given that you are already on right career path and progression speed, you might as well take CFA/MBA (NOT BOTH) to solidify that position. No reason to spend time in school/books learning what exogenous growth is and how to trade bull spreads. You already know what you need to succeede, all you are missing is some credentials, so no one would ever question your qualifications… but frankly, if you are a super star and known in the inudustry, no on will ever question your eduction. Ever