How Do You Describe the CFA Program to Non-Industry People?

[former_trader]

@NANA_Hachiko

@bchad

It’s the stock broker licensing exam here in the US. A lot of people here will compare the CFA exam to the series 7, by saying “yeah, I can relate, I had to study intensely for my Series 7”. Series 7 has more requirements for knowledge of regulatory rules, which would make sense, given that you need it to operate in a certain capacity in a regulated industry.

Obviously if it’s someone who wouldn’t know or care about the Series 7, then you don’t use that comparison.

If that person is a stock broker, he/she should at least have HEARD of the CFA program, no?

You’d be surprised.

[Kmelthratter]

I have not found an effective way to explain it, only my close friends understand the difficulty because they got to hear about it. I think the 20-30 year olds are much more aware of it than the older financial professionals, I had 2 professors at Sacramento State that were charterholders and that helps spread the good word. Of people working in the Investment Industry, I would say 1/2 have heard of it, and of them maybe 1/4 of them understand what it is. Many of my peers (I am 26) have in interest in it though, so it seems like it is hitting critical mass.

[Griingo]

I usually find that my facial expression when people ask about the CFAI tells the story.

Or i just crack out one of the (probably bogus) stats that schweser tutors have shared with me:

-less than 7% of people who start the CFA pass all 3 exams 1st time

-The average number of exam sittings to pass 3 levels is 5

-Average number of hours to prepare for 1 exam is 400

[S2000magician]

Piggybacking on the fact that most people know what a CPA is, I tell them that to pass the CPA exams you have to know everything there is to know about accounting. To pass the CFA exams you also have to know everything there is to know about accounting . . . and statistics, and economics, and corporate finance, and stocks, and bonds, and derivatives, and portfolio management, and alternative investments, and ethics.

[AfricaFarmer]

@S2000magician

Piggybacking on the fact that most people know what a CPA is, I tell them that to pass the CPA exams you have to know everything there is to know about accounting. To pass the CFA exams you also have to know everything there is to know about accounting . . . and statistics, and economics, and corporate finance, and stocks, and bonds, and derivatives, and portfolio management, and alternative investments, and ethics.

Pretty depressing when you put it like that…

[Matt_Likes_Analysis]

just say that in the UK the CFA is on the same level as a Master’s degree. should you be questioned about the CPA, CFP and Series 7, just say that they are not on the same level as a Master’s degree.

[Lea124]

@S2000magician

Piggybacking on the fact that most people know what a CPA is, I tell them that to pass the CPA exams you have to know everything there is to know about accounting. To pass the CFA exams you also have to know everything there is to know about accounting . . . and statistics, and economics, and corporate finance, and stocks, and bonds, and derivatives, and portfolio management, and alternative investments, and ethics.

CFA can’t possibly demand the same level of accounting knowledge that CPA does…right? I suppose you are exaggerating for effect. This description does make the exams sound formidable.

I don’t bother explaining to most people, I just say it’s an exam I have to take for work. But all my friends know now because I disappeared for about 4 months last year and they are already saying to me “see you in June”.

[S2000magician]

@Lea124

@S2000magician

Piggybacking on the fact that most people know what a CPA is, I tell them that to pass the CPA exams you have to know everything there is to know about accounting. To pass the CFA exams you also have to know everything there is to know about accounting . . . and statistics, and economics, and corporate finance, and stocks, and bonds, and derivatives, and portfolio management, and alternative investments, and ethics.

CFA can’t possibly demand the same level of accounting knowledge that CPA does…right? I suppose you are exaggerating for effect. This description does make the exams sound formidable.

In fact, the CFA exams do not cover foreign currency translation/restatement, which is a big part of the Level II exam. (I have a friend who is a CPA and took the CFA exams; he said that the Level II FRA was harder than anything on the CPA exams.) I don’t consider it an exaggeration.

[Lea124]

@S2000magician

In fact, the CFA exams do not cover foreign currency translation/restatement, which is a big part of the Level II exam. (I have a friend who is a CPA and took the CFA exams; he said that the Level II FRA was harder than anything on the CPA exams.) I don’t consider it an exaggeration.

I imagine CFA to be more difficult than CPA but I doubt that CFA requires you to know as much about accounting as the CPA does. But I have not completed either so I only speculate.

[S2000magician]

@Lea124

@S2000magician

In fact, the CFA exams do not cover foreign currency translation/restatement, which is a big part of the Level II exam. (I have a friend who is a CPA and took the CFA exams; he said that the Level II FRA was harder than anything on the CPA exams.) I don’t consider it an exaggeration.

I imagine CFA to be more difficult than CPA but I doubt that CFA requires you to know as much about accounting as the CPA does. But I have not completed either so I only speculate.

Nor have I, though I was an accounting major.

[Greenman72]

@Lea124

I imagine CFA to be more difficult than CPA but I doubt that CFA requires you to know as much about accounting as the CPA does.

Having taken both, I would agree with this statement.

EG - A bank CD is not considered “cash” for financial reporting purposes. Rather, it is considered to be an “other current asset”. For the CFA exam, this is really a distinction without a difference, but is important to know for the CPA exam.

Also, the CPA exam has a lot of entity structuring in it (C-Corps vs. S-Corps vs. Partnerships), and goes over all kinds of tax (estate, gift, trust, personal income). It also covers auditing and the different types of opinions (qualified vs. unqualified, etc.).

[geo]

CFA has less tax coverage primarily because it’s an international program. You couldn’t cover all of the tax and corporate structure intricacies in depth for every country globally. That’s why there is just general concepts taught. An S-corp has no meaning in Canada, and the US would have no idea what VAT is outside of a couple states.

I think CFAI has done well to make the program broad enough to make sense globally while still getting into enough depth to understand the importance of the issues, without trying to make everyone on expert on these issues.

[wianek]

@bchad

“Imagine all the studying you did for the Series 7 exam. Now imagine that the exam is 6 hours long and that you’ll need to study like that for two or three months before you have a decent chance of passing it. Then do it two more times in increasing detail before you’re done. That’s the CFA exam.”

Back in my ibanking days, I had to take the series 7. I was fresh out of college with an engineering degree and a few finance classes on the side. My employer threw a book at me and said “you’re scheduled to take the series 7 in 2 weeks, read up.” Now, they did lighten my work load to about 10 hours a day, from the usual 15+, but I was able to pass the exam without difficulty and so did the other analysts. I think that gives you an idea of how the series 7 pales in comparison to the CFA.

[higgmond]

@bchad

It’s hard. I sometimes say that “It’s a bit like the CPA exams, except that it is designed for financial analysis, investment, and portfolio management.”

I generally go this route, saying it’s kind of the CPA for finance instead of accounting.

[higgmond]

@numi

I just tell them it’s the Cat Fanciers’ Association, and pretend like I’m miffed that they could possibly be so ignorant as to have never heard of it.

I’m somewhat ashamed to admit that I am a member of the Philly chapter of the Commercial Finance Association because I mistakenly joined thinking it was CFAI’s Philly chapter. It’s free though and they actually have some good events, so kind of worked out in the end.