Is the CFA Worth It?

Introduction

“Is the CFA (Chartered Financial Analyst) worth it?”

In recent years, I have been frequently asked this question by my colleagues, juniors, interns, and friends.

As someone who holds multiple certifications including CFA, FRM, and CAIA, as well as a Master’s degree in a finance-related subject from a globally top-ranked university, I believe I can offer more comprehensive insights than others.

Although we will cover what the CFA is and how to prepare for it later on, this article’s primary focus is to answer the key question from various perspectives.

Is the CFA worth it?

The answer is not a simple yes or no and depends on your background and career aspirations. I have summarized my answers below. For a more detailed explanation, please refer to the respective section.

YES if:

1. Your undergraduate degree is not in finance/economics/accounting, but you want to break into the financial industry.

2. Your academic performance in undergraduate studies is not solid, but you are aiming for qualification-focused positions.

3. You are planning to pursue a Master of Finance degree at a top university and want to showcase your passion for finance during the application process.

NO if:

1. You are not interested in qualification-focused positions, but those emphasize hands-on experience.

2. You have already earned a Master of Finance degree from a reputable business school.

3. You’re seeking public or private funding for your projects or startups, a PhD or a Master’s degree from a well-regarded university may hold more value than the CFA designation.

CFA is becoming more common

Before delving deeper into the topic, it’s important to acknowledge the fact that the CFA designation is becoming increasingly prevalent. More and more individuals are obtaining the CFA credential every year. According to data as of November 2022, there are at least 190,000 CFA charter-holders globally, which has grown at an annual rate of 6% since 2012.

While the CFA designation is still highly respected, it may not hold the same level of prestige it once did, particularly as it becomes more commonplace. This is a far cry from the 20–30 years ago, when the CFA was a more exclusive and rare designation.

The CFA is worth it.

1. Your undergraduate degree is not in finance / economics / accounting, but you want to break into the financial industry.

• The CFA program offers a well-structured curriculum that covers a broad range of finance-related topics. In fact, Level 1 and Level 2 combined cover more material than the core courses of a traditional finance bachelor’s degree. Additionally, the program includes some accounting and economics topics, providing a comprehensive understanding of finance.

• More importantly, the CFA exam is a testament to your passion and commitment to the finance industry. It also provides a compelling reason for interviewers to consider candidates without a finance background. By taking the CFA exam, you can prepare for finance-related interview questions, and it demonstrates your willingness to learn and acquire new skills.

• Pursuing a part-time Master’s degree while working full-time can be challenging, and the admission requirements may also be restrictive. On the other hand, the CFA program has fewer requirements, making it a viable option for working professionals.

2. Your academic performance in undergraduate studies is not solid, but you are aiming for qualification-focused positions.

• Certain jobs, such as strategist and economist, prioritize qualifications, and a CFA designation is a requirement for passing initial screenings. In these cases, obtaining the CFA is unavoidable.

• At times, it is not solely about the knowledge that the CFA can provide, but rather the credibility and image it offers. In fact, pursuing the CFA may not significantly enhance your knowledge, but it can boost your credibility in the eyes of individuals who possess limited knowledge about finance but perceive you as credible.

• This logic applies not just to analytical roles but also to relationship managers and bankers who frequently interact with clients.

3. You are planning to pursue a Master of Finance degree at a top university and want to showcase your passion for finance during the application process.

• Admission to top business schools is highly competitive, and many applicants have achieved first-class honors in their undergraduate degree. As a result, schools consider other criteria such as work experience, qualifications, reference letters, and personal statements to make their decision.

• In this case, pursuing the CFA can be a valuable option. Obtaining the designation can help you craft a compelling story for your personal statement, showcasing your passion and commitment to this field.

The CFA is not worth it.

1. You are not interested in qualification-focused positions, but those emphasize hands-on experience.

• If your career aspirations don’t require a CFA designation, such as in the case of traders, then focusing on hands-on experience is more beneficial. In these positions, having a proven track record of generating consistent returns is more valuable than any qualifications.

• There are many finance professionals who have excelled in their careers without obtaining any professional qualifications. This doesn’t imply a lack of passion or the inability to pass the CFA exam. In fact, it simply means that they have specialized their knowledge in a specific area that may not be covered by the CFA curriculum.

2. You have already earned a Master of Finance degree from a reputable business school.

• Many Master of Finance programs explicitly state that their core curriculum overlaps with that of the CFA, and some even offer sponsorship to take the CFA exams. It is important to determine the sequence of taking the CFA exams and completing a Master of Finance degree.

• In my opinion, a Master of Finance degree from a reputable university is more highly regarded than the CFA designation. So if you have already completed a master’s degree, it is not necessary to pursue the CFA.

• I personally completed all three levels of the CFA exams before obtaining my Master’s degree, mainly to increase my chances of being accepted into the program. However, if you are confident in your work experience and resume, it may not be necessary to pursue the CFA exams. There is significant overlap in the knowledge covered, and in my experience, the first few months of my Master’s program were largely a review of CFA materials.

3. You’re seeking public or private funding for your projects or startups.

• A crucial factor in the success of a startup is the formation of its team, and having someone responsible for the startup’s finance is vital. However, obtaining a CFA designation may not be particularly advantageous when seeking funding, even for a financial technology startup.

• This is because investors prioritize the assessment of the startup’s technology and market potential over the financial analysis skills of the team. You are developing a new product or business model. Therefore, a PhD or a master’s degree from a prestigious university may hold more value in this context.

Conclusion

It’s difficult to give a straightforward answer to the question of whether pursuing a CFA designation is worthwhile. The decision depends on various factors such as your career objectives, background, and the amount of time and effort you can devote to it.

I hope this article will help you make a smart decision. Time is a valuable resource, and it’s essential to spend it wisely. The most important is to consider your long-term goals and evaluate whether pursuing a CFA designation aligns with those goals.