Good evening all,
It has been awhile since I have last posted – I try to regulate the free-time I spend online, and, to the detriment of this website, most of my online time has been consumed by a webdesign project I’ve been doing.
Hopefully, that project will be up and running by mid-september, and when it’s up, i’ll be sure to post a fat link to it.
In other news, many of you know that I’m a CFA (Chartered Financial Analyst) candidate – well, last week I got my results, and I was fortunate enought to pass. I’m now 1/3rd of the way through the program.
Many people have asked me about the charter, and I’ll take this chance to give my impressions.
First off, here is the opening paragraph of the letter that came:
Congratulations! You have passed the 2004 CFAÂ® Level I examination. The CFA Institute Board of Governors recognizes the challenge you have met and congratulates you on your achievement. Your success at Level I is an important step toward becoming a CFA charterholder. This June 34% of Level I candidates passed the examination.
Yes, that is right – there was a 34% pass rate. Ouch. Fortunately, most of the people I know who took the exam ended up passing. I’ve heard a couple theories as to why the pass rate has been continually dropping, but I feel that two factors are to blame:
- Global Interest in the Program – There are an increasing number of candidates from outside of North America – this means that fewer candidates are comfortable with the langauge of the exam: English. The program is difficult enough with a solid English background, and it must be incrediblely challenging with limited english skills.
- Increased Recognition of the Charter – The increased popularity of the program means that more people outside the core functions of finance are attracted to the program. Many people attempt to take the exam as a career booster or means to an industry shift. This inturn leads to people who sign up for the exam without knowing the commitment that it entails
To demonstrate the second point, there was an accountant sitting next to me during the exam (He was from one of the big 4) who said that even if he passed the exam, he wouldn’t sign up for level II. He had no idea how much work the program would be. Supporting this theory, the number of LI candidates who succesfully complete the program has fallen to 10% from what was once 30% (sorry, I coulnd’t find a link to support the numbers though). CFAI (CFA Institute) sent out a letter stating that they believed the reason for falling marks was due to the increased use of study guides in the place of recommended texts. I don’t buy their reasoning. The major study guides (Stalla, Schweser) are excellent, and do a great job of getting you ready for the exam.
The following is from an Email I wrote to a fellow SFU Finance major:
The CFA exam is a big commitment, but the material is honestly not that difficult for someone who went through SFU’s finance program. Most of the people I know who write it, pass pretty easily. In terms of study hours, CFAI recommends over 200, or even 250 hours.
The fortunate thing for us is that almost none of the material (at least in level I) is new – it’s like a six hour exam that covers all the topics we’ve done in school. The hard part is being able to retain so much information; there are no formula sheets. Level II and III are apparently a different story though, and there are very few people who feel comfortable after writing those exams.
While I do indicate that the material is not difficult for a finance major, I would feel sorry for any exam takers that didn’t major in finance. There is just so much material, that it can be overwhelming. The study guides may not be enought for those that do not have a strong finance background.
In case you are wondering what the program covers, here are the main topics:
- Financial Statement Analysis
- Alternative Assets- Real Estate, Venture Capital, etc.
- Equity Analysis
- Ethical & Professional Stnds.
- Fixed Income Analysis
- General Portfolio Management
- Quantitative Analysis – Statistics
The weighting varies, but Level I seems to focus more heavily on the accounting and ethics sections.
For all the Canadian bankers, brokers, and PFR’s out there that would like to use the CSC (Canadian Securities Course) as a measure, I assure you that the CSC pales in comparison both in terms of both depth and breadth of material covered. I did the CSC about a month before the CFA exam, so it was fresh in my mind. The CSC exam is probably 1/20th the difficulty of the CFA exam.
Now the big picture question: What does the CFA do for you?
The first thing to establish is that the charter alone is not a ticket for success. It alone will not open doors and get you to the top. What I feel it does do is give others a sense of security what you know – because it is standardized, it is recognized the world over – something that very few collegiate institutions can offer.
My reasons for taking the exam include career advancement, but I’m also taking it because I want to continue the learning process I started in University, to become secure in the knowledge I’ve gained through work and school. Am I an education junky? maybe, but a credentials whore I am not .
If you find the material enjoyable, I definately recommend the program. If you are only looking for career advancement, and find it difficult to stay focussed on studying – the program is going to be one tough experience. You’ll have to have a ton of discipline to maintain the commitment necessary to pass the program.
That’s it for now – I banged this post together quite quickly, so there may be some holes in what I wrote. If you’ve got any questions, feel free to ask, and if there is more interest, I’ll gladly write more on the subject.
To find more information, try the following sources:
- CFAI – The organization behind it all
- Analyst Forums – Many of the people active in the forum are idiots, but there is some great discussion as well
- Stalla - Study Program
- Schweser - More study material