Aruna, a second year student at a top-tier Business school, was planning to major in Finance. She was interested in capital markets and aspired to take up a role related to capital markets. She reached out to a few alumni, searching them through linkedIn and exchanged emails for guidance. Majority of the seniors she spoke to had completed or were planning to pursue the Chartered Financial Analyst (CFA) curriculum. After an MBA with a major in Finance, she was not sure why anyone would want to pursue the CFA curriculum. She approached Prof. Tripathi, the finance chair, for clarification.
Aruna : Sir, I spoke to a few alumni who are working in the capital markets domain and almost all of them advised me that I should pursue the CFA curriculum. After majoring in finance, do I actually need an additional qualification ?
Prof Tripathi: Well Aruna, before I tell you about the CFA curriculum, can you tell me what all aspects of finance do you cover in your MBA Program?
Aruna: In the first year, we have covered topics across the domains of Finance, Marketing, Operations, Information Technology, Organizational Behavior, etc. In the second year, with my majors in finance, I will cover topics that will cover details on Banking, Capital markets, Commercial Finance, International Finance, etc.
Prof Tripathi: You are right. So, in the context of your MBA course, you complete topics in general management and your majoring subject. CFA curriculum on the other hand is focused purely on financial analysis. The curriculum is quite rigorous and the depth of knowledge tested in the examination is reasonably high. So, anyone who is looking at roles that involve financial analysis should have a sound understanding of the concepts and that is precisely what the CFA curriculum is focused on.
Aruna: But when you talk about financial analysis, doesn’t that cover almost all the roles that finance majors look for?
Prof Tripathi : (Smiling) It indeed covers most of the roles that are offered by capital markets such as research analyst, investment banking analyst, project finance analyst, etc. The CFA curriculum is a professional course designed by professionals for financial analyst professionals. Since financial analyst deal with their clients’ money, they have an important fiduciary responsibility. Hence the key focus of the CFA curriculum is ethical behavior of the professionals. The CFA curriculum is divided in to 3 levels. In all the 3 levels, the study of Ethical business practices plays a key role.
Aruna: Sir, What are these 3 levels of the examination and what do they focus on?
Prof Tripathi : The first level of the examination is focused on building the foundation. The topics covered are essentially an overview of all the aspects covered in your MBA course. The second level is considered the more difficult level and it focuses more on financial statement analysis in detail. This level of details is generally not covered in your MBA course. The third level of the course is focused on the Buy-side or Fund management aspects of the capital markets. Again the depth of information tested at this level is much more than what you will cover in the MBA course. So at the end of such rigorous study, you are ready to take up challenges of the capital markets. In fact with more and more people opting for the CFA curriculum, it is fast emerging as a de-facto requirement for anyone who wants to take up roles in the capital markets.
Aruna: Thank you very much, sir. This was really an eye opener for me. So as someone said, one should never stop learning in life.