FundFire on CFA Designation - Is CFA Given Too Much Clout?

From Fund Fire 8-29-2008 YourQ&A: Is CFA Given Too Much Clout? YourQ&A published on Aug 29, 2008 Discuss this YourQ&A Question Is the CFA as a credential given too much weight today in the investment management industry? Senior Executive, Service Provider, Mid-Atlantic Answer I. Mark Cohen, JD, LLM, CFP is chairman of Navigator Wealth Management and the founding partner of the Cohen & Burnett law firm. I believe the chartered financial analyst designation deserves the high esteem it receives in the financial services industry. The CFA program encompasses a broad body of knowledge grounded in financial analysis. It utilizes a generalist approach, emphasizing concepts that are relevant in every market. The curriculum is extremely broad and challenging, and it is tested over a three-year period. Furthermore, the difficulty level and preparation time for all three levels of the CFA are unparalleled in the financial services industry. In fact, among individuals holding both the CFA and CFP designations, one study by Andrew Terry and Ashvin Vibhakar at the University of Arkansas found that 97% of respondents rated the CFA curriculum and exam “extremely challenging.” The respondents said it required an average of 845 hours and 42 months to complete. Meanwhile, only 13.5% of this same group rated the CFP curriculum as “extremely challenging.” They attained the CFP credential in an average of 21 months with 266 average hours of study. In other words, people that hold both credentials rate the CFA as twice as challenging as the CFP! Lastly, the CFA credential deserves the high status it’s accorded because it represents industry “best practices” in the area of global investment performance standards (GIPS). These guidelines provide for standardized performance calculation and presentation across investment managers, enabling investors to objectively compare manager return histories and clearly evaluate performance. Answer Michael Rosen is principal & chief investment officer at Angeles Investment Advisors, LLC. The answer is a resounding no. I consider the chartered financial analyst designation to be the most important single accreditation that one can have in this industry. Professionals with that designation demonstrate the commitment required to complete the certification process as well as the effort needed to do so. Remember the majority of the candidates don’t complete it either because it takes too long or requires too much of a personal commitment (according to the CFA Institute, the historical pass rate from 1963 to 2008 of all three levels of the CFA is a combined 50%). By holding a CFA designation, a professional conveys both a level of seriousness as well as a level of aptitude, which is a direct reflection of their ability to finish rigorous examinations. Overall, I don’t think an investment professional gets hired on the basis of holding a CFA. But there’s no denying that with it, there’s a presumption that a person more substantive and better able to address specifics of the investment process. Answer Allan Starkie, Ph.D is a partner at Knightsbridge Advisors, Inc., an executive recruitment firm specializing in wealth management. The CFA deserves sanctity. There are a large number of certifications floating around the wealth management world, but the CFA is the one that requires the most effort to achieve and earns the highest degree of respect. If professionals are even just CFA candidates (preferably levels II or III), their resumes are given greater consideration due to the commitment to the industry symbolized by the effort. And although not a primary designation for sales professionals, the CFA gives them more credibility in the eyes of their clients and peers.

Yeah, come on!

Nice. The more I read about the CFA the more impressed I am with the credential.