Cheers Everyone, Short of opening a shop to manage “retail” money, what opportunities exist for an entrepreneur that holds the CFA designation? I worked retail brokerage for 13 years, sold my book, started and sold a couple of unrelated businesses, and now have a business that gives me about 90K in income each year and I work about 20 hours per week. Are there consulting opportunities with the CFA. Thanks and best of luck.
Ok. This is my first time posting here so based on the answer I received I can guess that 1 - the answer is "No’, that there are no opportunities, or 2 - the gene pool in very shallow here. OR, noting the question mark after your answer, you were asking if my current business was in that industry to which I will offer an apology and answer, “No”, it is a bookkeeping business. I manage and market and hire staff to produce.
Depending on your other work experience you could certainly get into budiness/financial consulting. If you were to work for another firm your may not have the flexibility, but if you want to do something on your own the CFA can help you sell yourself. Consulting is generally more about your experience (in my mind) but designations help you either sell yourself vs competitors and/or get a job (if you arent doing it yourself). You could also look into teaching CFA study classes where you could make decent money per hour depending on who you can get signed up (and do private lessons), or just other areas of tutoring.
roibiz, Where do you live?
Not sure about N. FL. I have seen several Entrepreneurs with CFA in SF, LA and NY. They are in one of these categories (mostly) … 1) consultants doing due diligence for HF 2) consultants for IM/PE firms pushing deals and getting a referral fee 3) small time CFP type work 4) business development for tech firms 5) REIT consultancy etc… Then some of them band together and do bigger level things like fund of funds, PE etc. Hope it helps.
What kind of business do you run? Is it just you? 90K on 20 hours of work is great…Is that after taxes?
cfa_mab_caia, Thanks a ton for your information. That’s what I was looking for. There are a few hedge funds, VCs, and angel funds within about 2 - 3 hours from here. For the first time in my life I have some time to do things that I “want” to do and not “have” to do. Best of luck to you.
roibiz, Assuming that your past businesses were generally successful, combining that with CFA would in theory start leading you down a path towards VC and private investing. Bear in mind that both the CFA designation and VC/PE industries require financial experience and even after that, are very difficult to break into. If you’ve had any past dealings with VCs, now might be the time to contact them with the intention of one day jumping over that wall.
What roles would a CFA fill in a VC/PE environment? Would it be centered strictly around valuation? In early stage there are no cash flows to discount. Thanks
CFA introduces various financial instruments to you in order to manage risk in your venture - futures, forward contracts - especially exchange rates, swaps, etc. It also helps you to model these various instruments and identify which one is the most profitable for your business - think fixed income instruments, capital vs. operating leasing, long-term vs. short term loans, fixed vs. float, etc. Also, it gives you a good accounting and corporate finance background to identify whether the venture will provide the returns you require for the level of risk you are going to take. The corporate governance also assist when establishing the board of directors and issues to address before thinking about taking the company public. I’m currently working in venture capital and the only background I have for this industry is my CFA level1 + level2 (currently level 3student, but the material is basically only for portfolio management). Previous background in engineering… And in early stage financing you must go and establish those cash flows you think the business is going to operate on- by being conservative it provides a good indication whether to start with the business. We don’t continue with ventures which provides annual returns on capital < 30% (IRR very important). IBM never looks at a venture that will provide the returns > 2X their minimum requirement…
One more thing In VC the CFA will assist you in the due dilligence part of the process (doing the valuation). If you decide to pursue the venture you may appoint yourself Financial Manager or something. For VC you will also have to do a lot of market research and manage the company during the start-up phase… Not CFA related
CFAFC, Thanks for the info. All of this is a big help. Best of luck to you.
Is there certification that VC types look for, or is it just, “Joe Smith, TBF” (TBF = Trial by Fire).? Not that I want to go get another certification, but I’m curious about that side of the industry.
From what I understand, they look for experience. Most VC firms are very small and very “top heavy”. Some use MBA interns for eyeing business plans and doing some basic valuations. I think the key here is knowing the right person…but isn’t that always the case?