A Chartered Financial Analyst (CFA) is a globally recognized certification that is issued by the CFA Institute. The only countries that it is not recognized in are Cuba, North Korea, Syria, Crimea in the Ukraine. Iranians must enroll with a special license. A CFA certification places more emphasis on finance and investments than accountancy.
What does a CFA do?
A CFA can either be self-employed working for individual clients or as part of an organization or firm. They will analyze their clients’ finances to advise them on investment strategy and money management. They will help to manage their clients’ portfolios and to help analyses and manage their investment risks. The exams are considered far more intensive than those of the CPA.
Some of the tasks they perform include:
- Analyze financial markets
- Conduct research
- Risk analysis and management
- Advising clients on their investment portfolios
- Managing their client’ investment portfolios
What can’t CFA do?
A CFA cannot work in public accountancy, meaning that they cannot present their clients before the IRS or sign tax forms or audit statements.
Why become a Chartered Financial Analyst?
A CFA is a globally recognized designation, which means that in many cases there will be no need to apply for license reciprocity, as would be the case with a CPA license. It also demonstrates that the holder has gone the extra mile by acquiring acquired further knowledge and skills, and that you have the focus and self-discipline to complete the course and pass the exams. Since many people feel that the CFA exam is harder than the CPA exam, this accomplishment is all the more impressive. It also proves that the charter holder is proficient in the areas covered in the CFA exams, including investment strategy, portfolio management and asset evaluation, among other skillsets. If you plan on pursuing a career in investment, it is also a good way to ensure that you truly understand the field and will give your credentials a boost.
How to become a Chartered Financial Analyst
The first step to applying for CFA certification is to enroll in the CFA program. You will need to pass all three parts of the CFA exam. You will also require 4,000 hours of work completed within a minimum of 36 months, and a bachelor’s degree or equivalent. Experience earned through full-time, part-time, or remote work arrangements The higher learning must be acquired over a minimum of three sequential years. The experience does not need to be investment related but should be relevant to finance and accounting. In additional to meeting the work experience requirements, you will also need to provide 2-3 professional reference letters with your CFA application.
The full requirements can be found here.
Taking the CFA Exam
The CFA exam is divided into three parts, called Level I, Level II and Level III. Each level needs to be taken in order, with each level getting progressively harder. While level one can be taken while you are completing your degree, to qualify for Level II of the CFA exam you will require to be within 11 months of completing your bachelor’s degree or equivalent program. Each exam is 270 minutes long, with an optional 30-minute break halfway through. Each exam comprises of 180 multiple choice questions. They had a 41-54% pass rate as of October 2022.
Although the exam is available in over 400 countries, it is only available in English. Additionally, every CFA Program candidate must have a valid international travel passport. Those without a passport will not be permitted to register or sit for exams.
When you can take the CFA exam:
- Level I – February, May, August, and November
- Level II – February, August, and November
- Level III – May and August
CFA Exam Structure
The CFA exam is complex, and attempts to test not only the extent of your knowledge, but also your ability to apply it to real-world scenarios. Each level of the CFA exam is structured differently:
- Level I – 180 multiple choice questions, split between two 135-minute sessions
- Level II – 22 item sets comprised of vignettes with 88 accompanying multiple-choice questions. The exam is 4 hours and 24 minutes long, split into two equal sessions of 2 hours and 12 minutes each
- Level III – Vignette-supported essay questions and vignette-supported multiple-choice questions. Altogether, there will be 11 essay sets and 11 item sets, for 12 points each
How long should you study for the CFA exam?
Since there is a lot more material to cover in the CFA exam, the recommended number of hours to study for each level of the exam is between 300-400 hours.
What are the fees for CFA certification?
- There is a one-time enrollment fee of $350 USD when you register for the CFA program and Level I exam.
- There is an early registration fee of $900 USD per level of the exam, and a standard registration fee of $1,200 USD for the exam.
- There is a Rescheduling fee of $250.00 USD, as long as it is rescheduled within the current exam window.
How much does a Chartered Financial Analyst earn?
According to Indeed.com, the average annual salary of a CFA is $81,340 USD.