Chartered Financial Analyst® (CFA) program

Introduction to the Chartered Financial Analyst® (CFA) program:

The CFA program is conducted by the CFA Institute, USA. The CFA is an internationally recognized, well-researched and wholesome financial program that aims to give the examinees an all-round knowledge of financial analysis and portfolio management. This is a highly sought after certification and is quite well known across the financial industry internationally. The CFA syllabus comprises 10 key topics relevant to financial and investment analysis. The certification calls for successfully clearing 3 parts – Levels 1, 2 & 3 over a few years’ time. On clearing all three levels and having completed 48 months of relevant work experience, one can avail of a CFA Charter from the Institute and append the much-coveted ‘CFA’ designation to their names. Charter holders are members of the CFA Institute and have access to several resources that the Institute has to offer including business forums and events, journals, databases, career resources and the chance to network with big names across the global financial industry.
A candidate who has cleared all the 3 levels is viewed as someone proficient in financial topics and the effort is a major signaling factor to companies about his/her interest and capabilities in finance. 

Who should do a CFA?

The CFA program is world class, however it is a tad expensive (please see the fees below) and not everyone maybe able to afford the fees. If you are reasonably sure of pursuing a career in finance, and also have a fair idea of your own abilities to crack the exam, you should give this program a try. If you are unsure, you could take up CFA coaching / mock exams being offered by several training institutes to judge if the exam is something you will be able to crack and if the subject matter makes sense for your general situation.
A CFA is apt for you if :
1)  You are a student and want to strengthen your resume for a career in the financial domain
As mentioned above, pursuing CFA has a strong signaling ability. A candidate who has cleared one or more levels of CFA is seen as more focused and proficient in finance as compared to others. Several students take up this program simultaneously with their regular degrees

2)  You want to switch to the financial domain from any other domain
If you graduated in a technology or non-financial field, this certification will give you a foot in the door to various opportunities in the financial domain, without having to do any conventional academic degree in finance

3)  You want to deepen your knowledge in finance
If you are aiming to work in the financial industry or are already working in it, you can pursue this certification to deepen your knowledge and give your career a boost

4)  You want to move to Investment Analysis, Equity Research, Portfolio Management or related roles
If you want to work in the fields mentioned above, CFA will very often be a required certification rather than just a desired one. Employers in these fields often fund the exam fees to encourage employees.
1)  Above average grasping power: 
The syllabus is vast and requires a lot of practice. It helps if the candidate is a fast reader and has a good grasping ability

2)  Quantitative and analytical ability:
CFA is of course in the end a finance course, so a head for numbers and analytical ability is essential

3)  Multi-tasking: 
Most candidates complete this course along with other studies or while doing a full time job, so they must be able to multi-task and find time for exam preparation

4)  English language skills:
A good command over English will definitely help while answering questions (especially sections like Ethics and essay questions in L3)
The syllabus is vast and can be overwhelming at times. A lot of candidates have benefitted from enrolling in coaching institutes to help them understand tough concepts, manage their study time and practice mock tests. Having regular discussions with a peer group also greatly helps in understanding complex topics

Career opportunities after CFA :

Candidates who have cleared one or more levels of CFA are hired across several types of firms:
•  Investment Management / Wealth Management firms / Portfolio Management firms
•  Investment Banking
•  Equity Research
•  Private Equity
•  Credit Rating / Analysis 
•  Corporate Finance Divisions

Details of the program :

•  The subjects are:
   o  Ethical and Professional Standards
   o  Quantitative Methods (only L1 and L2)
   o  Economics
   o  Financial Reporting and Analysis (only L1 and L2)
   o  Corporate Finance (only L1 and L2)
   o  Equity Investments
   o  Fixed Income
   o  Derivatives
   o  Alternative Investments
   o  Portfolio Management and Wealth Planning
•  Level 1: Focuses on basic concepts in finance. Highest weightage on Ethical and Professional Standards and Financial Reporting and Analysis
•  Level 2: More complex type of analysis, focusing on valuation of different types of assets. Highest weightage on Financial Reporting and Analysis and Equity Investments
•  Level 3: Highest weightage on Portfolio Management and Wealth Planning

Exam format: 
•  Level 1: All multiple choice questions where you have to choose one out of three
•  Level 2: All questions are again multiple choice but they now appear in item sets (usually 6 questions for one item set) instead of singly.
•  Level 3: Item sets and Essay questions. Essay questions should not really be answered by ‘essays’, rather they should be 4-5 sentence subjective answers like the type we answered while we were in school

Exam difficulty level: Generally, the CFA exam is seen as a tough exam and the passing percentage is usually around 40%
•  Of the 3 levels, level 1 is usually seen as the easiest and level 2 the toughest
•  Candidates not making the mark can retake the test in the next season

Registration body
•  The CFA Institute

Fees (do confirm with the CFA Institute website for the latest fee):
•  One-time enrollment fee: ~$450 (only at the time of Level 1)
•  Level 1, 2 and 3 registration: $600- $1200 per level (depending on if you register early or late)

Exam dates:
•  Level 1: Generally conducted twice a year on the 1st Sunday in June and December
•  Level 2 & 3: Generally conducted once a year on the 1st Sunday in June

Exam Duration: All levels are 6 hours long, split into 2 three-hour sessions each
•  Morning session: 9:00am – 12:00pm (Candidates are required to be in the classroom by 8:30am)
•  Afternoon session: 2:00pm – 5:00pm (Candidates are required to be in the classroom by 1:30pm)

Materials to bring to exam:
•  Admission ticket
•  HB pencils (or #2 pencils) and pens
•  Eraser
•  Calculator – only 2 types are allowed:
   o  Texas Instruments BA II Plus (including BA II Plus Professional)
   o  Hewlett Packard 12C (including the HP 12C Platinum, 12C Platinum 25th anniversary edition, 12C 30th anniversary edition, and HP 12C Prestige)
•  Valid Passport (required item, so do get one if you don’t have one yet)
   o  Do make sure the name you have on your passport matches exactly with the name on your CFA admission ticket
•  No type of paper or parchment is allowed inside (even as mundane as the paper lining the base of your pencil box or eraser cover)
•  Smart phones or smart watches are not allowed
•  Food and drinks are not allowed

Interview with Avinash Ghalke, CFA (Equity Research analyst turned entrepreneur), who shares his experience of the CFA exam

Proschool : Why did you take up CFA?
Avinash : This course was more focused on the financial analyst profile. My employer also encouraged me to take up this certification by sponsoring the course (only if I cleared it at first attempt)

Proschool : How tough is it? How many hours of study are required?
Avinash : For a fresher, the initial coursework looks tough. But for an experienced analyst, things are a bit easy since they can relate to the topics at work.

Proschool : What was your study plan?
Avinash : I chose a 1-2 hour daily study schedule for a 3-4 month period. However some people prefer a rigorous 14 hr – 2 week schedule just before the exam.

Proschool : Challenges you faced
Avinash : While studying, many a times you are stuck at some conceptual points that you are unable to understand. In such a case it helps to have a peer group who can help you with such difficulties.

Proschool : How has it helped you?
Avinash : The 3 levels of curriculum are rigorous and take you through different aspects of financial analysis. So from a personal development point of view the course is quite essential and exceedingly helpful. Also a CFA Charter is a feather in the cap.