CFA skills becoming obsolete?

Anyone else feeling that with the decline in active management the skills gained from the CFA are becoming obsolete? Seems like it’s all about data analytics.

What exactly do you mean by “CFA skills”? The curriculum contains data analytics and makes it pretty clear that full blown active management is for the birds.

What’s active management for you ? Other way round what’s passive management for you ? Can you explain “Data Analytics” ?

CFA skills to me include learning how to manipulate financial statements, knowing which model to use to value a company, how to analyze an industry etc. But mainly it gives critical thinking tools. Don’t get me wrong I think that great. But these skills are mainly prized in an industry shrinking at an alarming rate. (Does Vanguard employ many CFA charterholders?)

As for the data analytics even the CFAI doesn’t value these skills as much as it should. I point to the low weighting in Quant as evidence. 5-10 in L1 and L2 (with a high prob of being only 5%) and non-existent in L3. And how does the CFA prepare you to use these limited theoretical quant skills by applying them in programming languages such as R or Matlab? It doesn’t.

I’m not bashing the CFA. I didn’t know anything about asset valuation before I enrolled. I plan on taking L3 next year. Industry trends just have me nervous especially after all the time I put into this thing.

Well, yes, there is more focus on quantitative skills. However, it’s not like you can run a quantitative portfolio without investment knowledge. Ideally, you should have both “CFA skills” (which frankly is not much, if we are defining this as just the syllabus), and strong quantitative skills, or get left behind by the increasingly common people with this full skill set.

Good points Ohai. What about major trends in the industry making the CFA less appealing? Mainly, the shift from active mgt to passive. I don’t think companies like Vanguard employ too many CFA charterholders correct? I don’t see the active mgt industry going completely away but it will continue to shrink having large implications for the employment prospects of the CFA

Yes, I should be more specific. It’s pretty clear that active management has become less appealing than before. Just look at the hedge fund outflows this year, for instance. Customers are paying more attention to costs and performance than before. This is clearly systemic and not just cyclical. I have a lot of thoughts about this, but it is not worth discussing here. In summary though, yes, there are fewer jobs, and those jobs are generally not as rewarding as before.

This does not mean that is is unappealing to work in active management. If DE Shaw or Citadel gives you a job offer, that is still better than any of Google, Facebook or anywhere else. The same generally can be said for less known companies - less appealing, but still appealing, and in many cases, still the most financially rewarding of almost all industries.

There’s a higher cutoff now than before for any level of rewards, if that answers your question. I would not say it is unappealing to work in finance though.

If you have a lot of thoughts about this but its not worth discussing here perhaps we can trade email addresses?

Did you just commit an Ethics violation?



umm not sure? I asked that to make a point but if I did will you explain it to me? My point was that the active mgt industry is shrinking going towards more passive companies like vanguard where they may not employ many CFAs

Hey I’m all ears perhaps I missed that in the Ethics section so help me out.

ahhh you mean using CFA as a noun?

By the way, here’s what Vanguard thinks of CFA charterholders:

Ok I think I corrected it. Any thoughts on the post there Magic?


For shame.

thx that’s somewhat reassuring. Looks like I’ll be moving to Malvern

I corrected it thank you.

I recorrected them. (“Charterholder” is one word, not two.)

Take a look at the link I posted: Vanguard job openings that specifically mention the CFA program.

You beat me to the punch. But, I would add, let’s also take a look at who they’ve already hired:

I dunno. Looks like they hire themselves plenty of CFA charterholders. I’ll also say, having been on-site in Malvern for several meetings with folks there over the years, I scarcely remember getting a business card for an investment person that did not have CFA on it.

I’m sorry, S2000, all of this proving this guy wrong got me so distracted…what was his original point again?