Bloomberg Bearish on CFA

It’s a professional article, but the tone is somewhat bearish. I’m not sure the CFA spokesperson’s answer was too great either. I’d love to hear more about what the CFAI is doing to promote the charter. I live in DC, so government jobs are bantered about (I don’t work at one nor do I plan to), but in many cases the federal government sets standards for the private sector here (less in finance, but still some appeal).

In government, a University of Phoenix Masters degree in finance will get you farther than the CFA. I get the CFA is not to be construed as a degree or a degree-equivalent, but come on. University of Phoenix is under investigation by the government and their degree-mill paper is higher-quality than the Charter? I think Vince Lombardi put it best.

I think we’d all say this is not true (I’m taking my Masters at a non-target but a respectible school and the CFA’s material is harder, especially considering the once-a-year testing and study-on-your-own curriculum) but it seems nobody is making the argument to OPM (government’s HR bureau, for those outside of DC). On the other hand, a CPA essentially makes you unfireable.

Not saying this is due to the CFA, I think we can all point to nonsensical government policies, but I think a little marketing of the charter and promotion of the charter among employers would cost the Institute little and most likely pay dividends. Recently, the CFP has looked to increase its profile by a series of commercials, it seems the CFAI would benefit by increased marketing (maybe not on mass-market TV, but to recruiters and employers).

i agree with you i think the CFA Institute needs to do more to help increase the perceived value of the charter, most people outside the industry don’t know what it is even though it beats the CFP out of the water. Marketing would definitely help, but on the whole the who’s who of where you want to be in your career in finance is aware of its value and what it takes to earn it. No doubt the bloomberg article is bearish and CFAI may want to release a response or contact bloomberg/another outlet to do a little damage control here. theCFAI definitely needs to be more proactive to stabilize and improve the perceived value and reputation of its product (the charter)

It’s value is well-known to those who matter.

No one knows who wins the field medal.

I wish that I have never started the CFA program. It’s only because I am competitive, and I have to finish it.

Funny how many ethics violations were in that news article, i.e. continuously refering to “CFA’s”. I find that report biased towards the negative, but honestly somewhat in line with my own feelings. The majority of people you will talk to have no clue what a CFA charter is, or what it takes to get; however, the people in the industry and the people who are hiring in financial services definitely understand. I spoke to a CEO who knew the dedication and committment it takes to get and said he thinks very highly of someone who has the designation. Additionally, speaking directly to salary, lets take out all the teachers who are not in it for the money and more focused on the knowledge as a start, then lets open up your 401k and look at how many of the Mutual Fund portfolio managers have the designation. It is clearly valued in the field and if you have a job in buy/sell side research you will be surrounded with other charterholders. At the end of the day the designation will not guarantee you anything in your career, with the exception of a few lost memorial days; however, for those Bloomberg anchors to imply that it may not be worth it to obtain is just silly.

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Don’t think it’s a violation because the writer is not a CFA Candidate or Charterholder, but I get your point it shows a lack of preparedness/fact-checking on part of Bloomberg.

Here’s what I think: The Charter absolutely matters if you’re already in a buy/sell-side firm, especially if they tell you so. I’m less sure it will help you “break into” a finance job, especially if you have a non-finance degree and no contacts. I hope you and Mr. Smart are correct in your belief it matters a great deal, obviously, but it seems your evidence is mostly anecdotal or non-existent.

Bloomberg at least has talked to recruiters and collected data – that doesn’t mean they are right, however, as sample-size, representativeness, and other biases could exist in their data. My larger point, though, is perhaps the CFAI should reinvest a little money into employer education and proving its value. I’ll be happy to be proven wrong.

It’s bound to happen with any certification where the only qualifications are 1) pass exams, 2) get some “relevant” work experience. The entry bar is not that high and although the exam standards may be or may be not getting tougher, there is overall a larger number of candidates passing exams. Growth rate in charterholders is far exceeding growth rate in well-paying finance jobs. That’s dilution.

Also at the end of the day the industry is under immense fee and regulation pressure, especially for banks in the EU and UK. All hedge funds are under assault and they provide some of the highest paid research/analyst positions.

The passing rate of 3 levels = 42%*45%*53%=10.2%

Don’t think there is overall a larger number of candidates passing exams.

120,000 CFA chartholders global wide?

Absolute number yes, 27k candidates passed level 3 last year vs 14k 7 years ago. That’s almost double. Number of well-paying finance jobs has not doubled since then (pre-2008 were the haydays). So people with CFA charters as a proportion of finance jobs is increasing, hence dilution.

Also as number of charterholders/candidates increase, the average salary will converge to the average finance-related salary less a little bit for unemployment.

Where else are you going to learn the breadth and depth of finance without the CFAI curriculum?

Here’s where I disagree with most CFA Candidates and Charterholders. I think the problem is too few Charterholders; not too many. There are 120,000 CFA Charterholders (I believe) in the world. The problem is that’s a really low worldwide amount to form a fraternity. Don’t confuse “more” with “lower quality.”

The problem is you want to balance growing the number of Charterholders with keeping the quality of the education high. Something like offering a large discount (50% -75%) for Bulge-Bracket banks and Hedge Funds if they enroll their employees would most likely help all Charterholders. It’s likely these people will become decision-makers and hiring managers in the future (if they aren’t already). You can (and should) grow the number of Charterholders and you can do while keeping the quality high.

Doesn’t this analysis assume the Charter adds no value?

Totally agreed! My point is I hope employers and hiring managers understand this as well.

Most job postings that mention CFA include it as an acceptable (advanced degree) or preferred and its very rare to have it as a requirement. The Bloomberg article takes a naive survey of job postings and likely includes entry level job postings that merely mention (progess towards CFA/ CFA candidate). No Charterholder in New York City is going to work for 60k, but I hear thats a great salary in India for example…

Very dumb article overall.

And where are you going to use breadth and depth in the asset management process?

In that article, 25% of the charterholder are in compliance and audit industries. I am in this category and I don’t think CFA program helps me in my work field.

I agree with you … there are over 750,000 CPA just in the United States for reference. Where is the article about too many accountants?

The direction is that the CFA is becoming a requirement increasing less important roles.

Out of the 120,000 Charterholders, that includes many which are no longer working in the investment management profession at least on the corporate side… Also consider that not 120k Charterholders are actively looking for a job, so when a job posting goes up you are only competing against other Charteholders whom are actively looking for a job… In a big city that is still significant, but id bet that out of 120k charterholders, only a small percentage are “looking” for a job at any time… If you are hiring, your choices are limited to the resumes that show up on your desk.

In my opinion the CFA should be required for “portfolio management” roles and possibly sell side research positions… If you dont have the mental capacity to pass the CFA exams, you probably should not be mananging other peoples money or giving financial advice… anyone starting a career as a sell side analyst at any of the big investment banks is basically pushed into pursuing the CFA. You know the CFA is important when even people that (already) work at GS pursue the CFA - you would think their careers would already be set.

The only difference here is the CPA has convinced governments to use the designation as a license as well, which provides a barrier to work and will ensure they make above-average money. But as you said, there are 6 times more CPAs than CFAs in the US alone and they are still snapping CPAs up.

I’m not sure the CFA wants to go down a licensing path, but it would be good if they worked with other organizations so the CFA could be a sponsoring organization for people’s Series 7 and Series 66 licenses. Right now if you leave a firm you have two years to join a new one or you lose your license (as I did) or a reciprocity agreement where CFA charterholders earn their Series 7 licenses when they complete all three levels. If you’ve ever taken the Series 7, you know it’s about 75% as hard as Level 1.

These are just thoughts off of the top of my head, but I bet there are a lot of cool ways they can add value to the Charter with very little investment.

Bit lower than that actually: 140,309 193,995 passes at Level III vs 2,222,330 total administered exams ~ 9%

Source data:

Comparing # of accountants to CFA charterholders seems like apples to oranges to me. Virtually every company, public and private, needs an accountant. A large percentage of these firms do not need someone to invest their money in equities, I would guess.

Also, imo, part of the problem is the breadth of the CFA curriculum is not really relevant for many investment roles. A sell side analyst, for example, covering companies in a certain industry, does not need to know about fixed income, derivatives, pensions, etc etc to succeed in his job. I would argue very little of the curriculum would help him, and most of that little quantity he could learn on the job, or as an ER associate to an analyst. I’m not saying it’s not good to know and be familiar with the vast depth of the curriculum, but I can see why many potential employers wouldn’t really care, as a large % of success in the job would not require going through the rigors of the CFA curriculum.