What is CFA (Chartered Financial Analyst)?

A CFA (Chartered Financial Analyst) is a globally recognized professional designation awarded by the CFA Institute (formerly the Association for Investment Management and Research – AIMR), which measures and certifies the competence and integrity of financial analysts. Candidates are required to pass three levels of exams covering areas such as accounting, economics, ethics, money management and security analysis.

From 1963 to the first half of 2016, 1,348,103 candidates have taken the Level I exam, and 209,561 candidates have finally passed the Level III exam, representing a weighted average completion rate of 15.5% .

Important: Historically, the pass rate for each exam has been less than 50%, making this series of exams one of the most difficult sets of financial certifications; A minimum of 300 hours of study is recommended for each exam.

What is CFA (Chartered Financial Analyst)?

What is CFA (Chartered Financial Analyst)?

  • The CFA letter is one of the most respected designations in the field of finance and is widely regarded as the gold standard in the field of investment analysis.
  • To be a cardholder, candidates must pass three difficult examshold a bachelor’s degree and have at least four years of relevant professional experience. Passing the CFA Program exams requires strong discipline and a great deal of study..
  • As of January 2019, there are more than 154,000 registered CFA letter holders worldwide in more than 165 countries and regions.
  • The designation is delivered by the CFA Institutewhich has eight offices around the world and there are 151 local members.

Become a CFA (Chartered Financial Analyst)

The designation is granted by the CFA Institute, which is a worldwide professional non-profit organization made up of more than 164,000 letter of rights holders, portfolio managers and other financial professionals in more than 140 countries.

Requirements

Before becoming a CFA charter holder, the candidate must meet one of the following educational requirements: must have four years of professional work experience, a bachelor’s degree or be in the final year of the bachelor’s program, or a combination of professional work experience and education totaling four years. For undergraduate qualification, the bachelor’s program must be completed before registering for the Level II exam. In addition to the educational requirement, the candidate must have an international passport, complete the assessment in English, meet the professional conduct admission criteria, and live in a participating country.

After meeting the registration requirements, the candidate must pass all three levels of the CFA program in sequential order. He then becomes a member of the CFA Institute and begins paying annual dues. Finally, will carry out the confirmation signature every year according to which it indicates that it is following the code of ethics and standards of professional conduct of the CFA Institute. Failure to adhere to ethics and standards is grounds for possible lifetime revocation of the CFA charter.

Difficulty of exams

Passing the CFA program exams requires strong discipline and a great deal of study. All three exams can be taken once a year in June, with the exception of Level I, which can also be taken in December. In 2019, the Level I, II, and III exams were held on June 19. Level I was also held on December 9 of the same year.

Although the exams can be taken as many times as necessary, each exam typically requires candidates to study more than 300 hours. Given the considerable amount of time that must be devoted to study, many candidates are discouraged from continuing with the CFA Program after failing one of the levels. To receive a letter, each candidate must pass all three exams and have four years of qualified work experience in making investment decisions.

The exams are difficult. Only 43% passed the level exam in June 2018, which is similar to previous years. Having the right plan and the discipline to follow the plan are essential skills to pass all three exams. In particular, 2018 saw a record number of test takers, according to the CFA Institute. The Institute said more than 77,000 people sat for its Level I exam in December, a 13% increase from 2017.1 The increase in test takers came mainly from Asia. The Institute now has testing centers in 43 countries around the world.

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CFA (Chartered Financial Analyst): Level I exam

The CFA Level I exam is given twice a year, in June and December. It focuses on analysis, using the tools of the 10 subject areas of the Candidate Body of Knowledge. These areas are: Ethical and Professional Standards, Quantitative Methods, Economics, Financial Reporting and Analysis, Corporate Finance, Equity Investing, Fixed Income, Derivatives, Alternative Investments, and Portfolio Management and Wealth Planning. The exam format is 240 multiple-choice questions that must be completed within six hours. The level I exam pass rate in June 2018 was 43%.

as data: The 10-year weighted average CFA pass rate for Tier I is 40%.

Study area
Ethics and professional standards (total) fifteen
Investment tools (total) fifty
corporate finance 8
Economy 10
Financial report and analysis twenty
Quantitative methods 12
Asset classes (total) 30
Alternative investments 3
derivatives 5
capital investment 10
Fixed rent 12
Portfolio management and wealth management (total) 5
Total 100

CFA (Chartered Financial Analyst): Level II Exam

The Level II exam is only offered once a year, in June. It focuses on the valuation of various assets and emphasizes the application of investment tools and concepts in contextual situations. Exam questions related to financial reporting and analysis are typically based on International Financial Reporting Standards (IFRS). The exam format is 20 question sets (mini-case studies) with six multiple-choice questions for each set (120 questions total). The level II exam pass rate in June 2018 was 45%.

as data: The 10-year weighted average of the CFA Level II pass rate is 43%.

Study area
Ethics and professional standards (total) 10
Investment tools (total) 30-60
corporate finance 5-15
Economy 5-10
Financial report and analysis 15-25
Quantitative methods 5-10
Asset classes (total) 35-75
Alternative investments 5-15
derivatives 5-15
capital investment 20-30
Fixed rent 5-15
Portfolio management and wealth management (total) 5-15
Total 100

CFA (Chartered Financial Analyst): Level III Exam

The level 3 exam is only offered once a year in June. It focuses on effective wealth planning and portfolio management, requiring the candidate to synthesize all concepts and analytical methods from the entire curriculum. The exam format consists of eight to twelve essay questions structured in multiple parts and ten multiple-choice questions that must be completed within six hours.. Handwritten responses are scored by hand. The level III exam pass rate in June 2018 was 56%.

as data: The weighted 10-year passing rate for Tier III is the highest, at 51%.

Study area
Ethics and professional standards (total) 10
Investment tools (total) 0
corporate finance 0
Economy 0
Financial report and analysis 0
Quantitative methods 0
Asset classes (total) 35-45
Alternative investments 5-15
derivatives 5-15
capital investment 5-15
Fixed rent 10-20
Portfolio management and wealth management (total) 45-55
Total 100

Successful candidates take an average of four years to earn the designation. The weighting of the topics in each of the exams in the 10 areas of knowledge range from 0 to 55%, depending on the level. The most current weights are available at www.cfainstitute.org.

CFA (Chartered Financial Analyst): its limitations

The CFA charter is widely respected, recognized globally and obtaining it is a difficult task. However, it is not a guaranteed path to wealth and glory. Before taking the leap, he carefully considers several drawbacks. The CFA is not a quick fix so do not take it as a sick career. If you’re joining the program to jumpstart a stalled career, perhaps you should first look at other reasons why your career isn’t moving forward. Before investing an inordinate amount of time and a substantial amount of money in building your prestige, you could choose to improve your soft skills, such as work ethic and political adaptability.

the time spent

Becoming a CFA holder requires a huge investment of time – a minimum of 300 hours a year for three years is recommended – or more if you fail and decide to retake an exam. You are likely to sacrifice time with your family and friends and the pursuit of hobbies you enjoy. Keep in mind that after committing all that time, there’s no guarantee that you’ll get the card.

The cost

Although the cost factor is not an important consideration, it is worth considering. A Level I candidate will pay a one-time program registration fee, plus an exam registration fee. Level II and III candidates will also pay a registration fee. There is also the cost of the books and study programs that you will have to buy. Total, you will have to spend several thousand dollars each time you try to take the CFA (Chartered Financial Analyst) exams.

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