CFA demystified

It is arguably the most respected financial certifications recognized across all countries. It is simply the gold standard for careers in Investment Management. The CFA curriculum encompasses almost all subject areas required for a career in investments, much like a MS Finace course. However, personally I feel,the concentration areas of the CFA charter are financial statement analysis, asset valuation and portfolio management. Although corporate finance is also touched upon, it is not covered in much detail.Hence it is not apt for a typical career in corp. finance in an i-bank.For other areas such as research and asset management, it is the simply the best.

Exam Pattern: Exams are conducted at three leves, Level 1 , Level 2 , Level 3.

Level 1: This exam is organized twice a year, first week of June and December in all countries. Candidates successful in passing this level can proceed to appear for Level 2.

Level 2 : Held once a year in June.

Level 3 : Held once a year in June.

Exam Fees:

Level 1 fees now cost around Rs 45,000 (Charge for study materials is included in it)

Level 2 and 3 cost somewhere around Rs 28,000 each along with the study materials.

Any one who passes all three levels and has four years of relevant experience are awarded the CFA charter.

Preparation:

1. CFA Institute Material: This is supplied by the CFA Institute once you register for the exam. Its costs are included in the enrollment fees. However, the material is voluminous in nature and its difficult for working people to study the entire material.
2. Schweser notes: They are condensed notes sold by Kaplan and are very exam-specific. The material is costly, but most people in India manage to get a pirated version at cheap dirt prices.

Career Paths: Ideal careers for CFA's are Equity research divisions in Investment banks, investment management firms, third-party research firms. Good opportunities in India open-up only after completing Level 2. However, entry-level jobs are also available after CFA level 1 at investment research divisions of KPOs. CFA charter holders generally earn more than MBAs in the US (but remember CFA are only employed in the Financial service industry unlike the versatile MBA)

FAQs:

1. I am an engineer, have no background in finance. Am I capable of qualifying the CFA levels?

Ans: Of course. Many of the CFA charterholders have had no background in finance.CFA levels are tough to crack because people appera for the exams while working and are unable to devote sufficient time to preparation.

2. I work as a software engineer. Will the CFA enable me to switch my career from IT to financial services industry?

Ans. Generally No. CFA can rarelt act as a career changer, for that you would rather do an MBA.However, in someway it can transition your career. For example, in an IT firm, you could be promoted to the position of a business analyst early on in your career. The main role of a BA is to act as an interface between clients and the programmers.
That is because you understand both the business and the technical side of the project.You may choose to work in an IT firm whose client base consists of I-banks, Hedge funds,and the likes.

3. I plan to do my MBA in future. Will it make sense to get a CFA before MBA?

Ans. Depends. If you want to work in finance even after ur MBA, yes it makes lot of sense.If you wud rather get into marketing or operations, no ways will CFA help.

4.I have been working as an engineer in the Chemicals/Power/Oil and Gas/Construction industry for the last 5 years. How will the CFA help me ?

Ans: It might help you to get a break in Equity Research. Equity research has two broad facets, (i) knowing the industry you track.
(ii) knowing how to interpret finacials.

In a typical ER job, you track companies operating in a specific sector, e.g, Chemicals/Power/Construction. If you have a decent amount of experience in the industry, (i) holds gud for you. CFA will give you (ii).This is more predominant in niche/ specialised industrries such as technology, semi-conductors, Biotechnology, pharma, telecom, etc

5. MBA vs CFA.


These are two different degrees. MBA is a foot deep and a mile wide, whereas CFA is a foot wide and a mile deep.MBA is getting a broad understanding of all aspects of running a business, operations, finance, IT, HR, S&M. CFA is all about investments only.


If you are already working in the Financial service industry and are sure that you want to work in research or investment management for your entire life, go for CFA.

If you are a prospective career changer, you want to leave your field completely or arent sure whether u want to be in HR or finance or S&M, go for MBA.

Many go for both. MBA gives them breadth, CFA the depth.(provided you work in fin.services)