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Career after CFA

August 27, 2014,
Career after CFA

CFA Charter is globally recognized and CFA is one of the routes you can take to make a successful career in finance and investments.  Although CFA is not a mandatory to begin your career in fields like investment banking, Corporate Finance or in Private equity but if you are planning for asset management, equity research or hedge funds then it will be really good to have CFA. With CFA you will earn skills needed for investment analysis and decision making.

It is not very easy to get the Charter of CFA. There are three levels of exams and like many other competitive exams the pass percentage is very low. According to the CFA Institute, the current program is best described as a self-study, distance-learning program that takes a generalist approach to investment analysis, valuation and portfolio management, and emphasizes the highest ethical and professional standards.

To add CFA to your name you need to complete the CFA program, pledge to adhere to CFA institutes code of ethics and standards, have 4 years of qualified investment work experience and become a regular member of CFA institute.

Benefits to your Career after CFA

If you are already in the finance field and want to improve your prospects CFA will be good. CFA charter is globally recognized and gives you a solid foundation in investment analysis and portfolio management.

And compared to the cost of doing MBA from the Top management institutes …the cost of CFA is much less and the added advantage is that it is a self study course. In fact the curriculum of CFA has been incorporated in the course programs of reputed universities like University of Oxford’s Saiid Business School, New York University, INSEAD, Peking University and Nanyang Technological University.

Another big advantage is that you get connected to the right people and to the likeminded people. And the ladder to the top, to say the least, is  “well connected. “

What career options are there after CFA

After completing CFA charter you can work as Portfolio Manager, Research Analyst, Corporate Financial Analyst, Financial Advisor, Investment Banking Analyst / Investment Banker etc.

More about the CFA Program

The CFA program consists of three exams: CFA Level I, Level II and Level III. You need to be a graduate to take the exam. One can register in final year of graduation but one has to complete graduation before you register for level 2 exam. There is no limit to the number of times you can take each exam.

Exam Structure

The exam material is extensive and one needs to study a lot to grasp it. Typically keep 6 months to study for each level. The exam is a six-hour exam, broken into a morning and afternoon session, each being three hours long.  Level 1 has multiple choice type questions, level 2 item set questions and Level 3 consists of both set questions and essay questions.

As of December 2012, the passing rate for the Level I exam was 37%. So it may take 3-4 years to pass all the levels.

Exam Curriculum

The exam focuses on basic knowledge and comprehension of tools and concepts of investment valuation and portfolio management. The curriculum consists of 10 topics that are grouped into four areas, specifically: ethical and professional standards, investment tools, asset classes, and portfolio management and wealth planning. Ethics and Professional standards is a very important section and the Institute itself takes this section very seriously. If you score low or close to the minimum passing score on all other topics, then your score on ethics could determine whether you pass or fail. One advantage with studying ethics well is that it also helps with your Level II and III exam preparation.

Here are the various Topics that one needs to clear in various Levels.

Level I exam- Tools

•             Tools and concepts that apply to investment valuation and portfolio management

•             Basic concepts regarding asset classes, securities, and markets

•             CFA Institute Code of Ethics and Standards of Professional Conduct

LEVEL II –ASSET VALUATION

•             Application of tools and concepts of investment valuation

•             Industry and company analysis

•             Analysis of investment vehicles and instruments

•             CFA Institute Code of Ethics and Standards of Professional Conduct

LEVEL III –PORTFOLIO MANAGEMENT

•             Management of institutional and individual portfolios

•             Management of specific asset class portfolios

•             CFA Institute Code of Ethics and Standards of Professional Conduct

Topics Covered in the Curriculum

ETHICAL AND PROFESSIONAL STANDARDS

Professional Standards of Practice Ethical Practices

QUANTITATIVE METHODS

Time Value of Money, Probability, Probability Distributions and Descriptive Statistics, Sampling and Estimation, Hypothesis Testing, Correlation Analysis and Regression, Time Series Analysis, Simulation Analysis, Technical Analysis

ECONOMICS

Market Forces of Supply and Demand, The Firm and Industry Organization, Measuring National Income and Growth, Business Cycles, The Monetary System, Inflation, International Trade and Capital Flows, Currency Exchange Rates, Monetary and Fiscal Policy, Economic Growth and Development, Effects of Government Regulation, Impact of Economic Factors on Investment Markets

FINANCIAL REPORTING AND ANALYSIS

Financial Reporting System (IFRS and GAAP), Principal Financial Statements, Financial Reporting Quality, Analysis of Inventories, Analysis of Long-Lived Assets, Analysis of Taxes, Analysis of Debt, Analysis of Off-Balance-Sheet Assets and Liabilities, Analysis of Pensions, Stock Compensation, and Other Employee Benefits, Analysis of Inter-Corporate Investments, Analysis of Business Combinations, Analysis of Global Operations, Ratio and Financial Analysis

CORPORATE FINANCE

Corporate Governance, Dividend Policy, Capital Investment Decisions, Business and Financial Risk, Long-Term Financial Policy, Short-Term Financial Policy. Mergers and Acquisitions and Corporate Restructuring              

 Clearly the Road to CFA Charter is not easy and but there are many advantages that one can draw for one’s career after CFA. 

 

 

 

 

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