The CFA Level 3 Curriculum is BS

The CFA charter is a widely respected designation for most any position in the financial services industry. Level 1 and Level 2 are birds eye view approaches to the different aspects of finance, covering everything from derivatives to alternative investments to small busines valuation. The curriculum rounds out financial knowledge, and is applicable to any financial services professional.

The Level 3 curriculum is misguided. It forces candidates to cover portfolio management in detail, which is not applicable to many candidates. I work in corporate development where the CFA charter is still respected, but nothing in this level’s curriculum has anything remote to do with my position.

The CFA institute should make the Level 3 curriculum a “concentration,” where the candidate chooses which path he wishes to pursue. There could be plenty of different concetrations: Portfolio Management/Wealth Planning, Trading, Investment Banking/Corporate Development, Real Estate, Equity Analysis. This would give the CFA program wider respect among the different sectors in financial services. Thoughts?

would you like ohai to call the wah-mbulance ?

I think you misunderstood the intention of the post which was to generate discussion.

That’s cool until you remember that CFA means Chartered Financial Analyst, and your entire argument is that you think the CFA curriculum shouldn’t focus on financial analysis…

So portfolio management is the only profession that does financial analysis?

Short answer: yes.

If you don’t like the curriculum, or you think it’s not relevant to your field, you probably shouldn’t do it. How could you possibly feel justified demanding that an entire organization dedicated to investment management change their focus to something you like better?

Well, a lot of the L3 syllabus does seem like “filler” content. Take the “PnL attribution” chapter for instance. Wtf is that crap?

However, from a bird’s eye view, I think the entire CFA syllabus is pretty well balanced. Lots of CFA people are FA/RIA/AM types, so it makes sense to have a significant section devoted to investment management. Sure, they could have spread it out across three levels instead of having it dominate L3. But maybe they thought that they should cover the more fundamental stuff (FSA, economics, etc.) in earlier levels.

Having multiple mini-CFA concentrations is an interesting concept, but it’s not appropriate for such a shallow program. Most people would agree that the CFA program’s purpose is to give you a cursory understanding of a wide range of finance topics. If the program were to focus more on specific sections, it would have to become less holistic, thus changing its purpose. Furthermore, many people would focus on the topic that they are already familiar with. So, the program would be less beneficial, as people would be exposed to less new knowledge.

I hate Level 3. I agree with everything he said. This is so worthless and boring, and every moment I spend with it is wasted. I could be you know getting better at investing, but here I’m learning random shit.

Gahh I’m pissed.

Actually, if you work at a fund-of-funds, it’s used quite frequently on a regular basis…

But to many other professions… I agree. it’s useless dung

Speaking of which, how well if CFA respected/recognized say in corporate finance?

^Often times, the level or degree of respect the charter garners from employers is directly linked to those persons in decision making or hiring roles also being charterholders. Or even better, if someone who is a superior has tried and failed to complete the program. I think a safe rule of thumb is if your manager is a charterholder, if can only benefit you to become one as well.

PnL attribution is filler content? It’s what I do at work…

CFA is for investment management. I like that, it’s not an MBA, it’s a strictly investment management curriculum. LIII is not bull, PM and portfolio analysis are pretty central to investment management. Don’t sign up for an investment management progam then get pissed when it covers PM extensively and doesn’t act like an MBA. I’m glad they don’t have variations, it’s standardized, that’s nice, and it’s consistent. People don’t have to ask “what was your concentration”. Also, the logistics would be a nightmare. Frankly, I think it’s a pretty dumb complaint.

A lot of the CFA curriculum doesn’t apply to my job (business valuation), but a lot of it does. That doesn’t mean the parts that don’t apply are BS.

I don’t think the attitude, if you don’t like it, you shouldn’t do it is the proper response. Obviously, if the guy is studying for level 3, he’s made a substantial commitment already.

I thought the Level 3 curriculum was tough, like the kitchen sink was thrown in. However, I don’t think it should be replaced. It made me think about things I hadn’t thought of before.

Alternately, it would make more sense to offer supplemental exams (rather than replacement exams) that would allow people to specialize. I would doubt people already with CFAs would pursue these specialization, but I don’t think it’s a terrible idea.

The L3 stuff has come up with me a lot. Attribution got thrown at me at one point in my work. GIPS gets thrown at me (yuck). Trading issues get thrown at me to answer. Optimization work is pretty common, although I don’t usually do a full optimization at my shop, it’s still important to understand and field questions about when to use it and what some of the limitations are.

I like jmh’s idea that, once one has completed the CFA, one can then do specialization work. To some extent, they are doing that with CAIA and CIPM, though by making them alternate examination routes entirely.

If only L1 and L2 is relevant to your work, and you don’t think you’d ever do more than analyze a stock or a company, then it’s not necessary for you to do L3, and you are perfectly justified in not taking that exam. The extra letters won’t help you much anyway if that is all you are going to do for the rest of your career, probably.

I say this is the perfect opportunity for the CFAI to establish L4, yeah baby!

Oh god no… don’t even joke about that…

Hey IEV, go f#$& yourself.

Seriously though, I think the CFAI should allow people to take L3 only if they have their experience approved, or at least say 24 months. Nobody benefits from the random tech dude finishing all three levels if he’s as far of actually having a relevant role managing money as I am of being drafted by the Steelers this year.