Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Chartered financial analyst is a designation offered to investment and financial professionals after completing a series of exams through the CFA Institute. Candidates must pass three levels of exams in sequential order, all of which have a high failure rate. If someone holds a CFA charter, they can put those three letters after their name to show they’ve built a strong foundation in advanced investment analysis and portfolio management.
A chartered financial analyst is someone who holds a CFA charter through the CFA Institute. That means they’ve passed all three levels of the CFA exams. Additionally, CFAs are required to either complete a bachelor’s degree or have at least 4,000 hours of relevant work experience within 36 months.
The CFA exams are designed for candidates to demonstrate mastery of ethical standards, corporate finance, financial reporting, quantitative analysis, economics, portfolio management, and an understanding of several asset classes. That sets them up for success in many corporate finance jobs, such as research analyst, corporate financial analyst, risk analyst, credit analyst, or portfolio manager.
The CFA Institute recommends candidates study at least 300 hours for each level exam, with each exam covering different topics in different formats. Each exam costs $1,200, although early enrollees can get a discount of $300. Candidates must also pay a one-time enrollment fee of $350.
The Level I exam is offered four times per year. Levels II and III are offered twice yearly.
The Level I exam is a 180-question multiple-choice test that covers the entire CFA curriculum. The exam focuses more heavily on ethical standards and analytical tools than Levels II and III. 41% of candidates passed the exam in the last 10 years.
The Level II exam consists of 22 item sets composed of vignettes with 88 multiple-choice questions. The questions are fairly evenly distributed across the curriculum. 45% of candidates who made it to Level II passed the exam in the last 10 years.
The Level III exam includes 11 essays and 11 item sets with accompanying multiple-choice questions. The exam is much more heavily weighted toward portfolio management and wealth planning than the other exams. Of candidates who made it to Level III, 52% passed the exam in the last 10 years.
A chartered financial analyst may pursue any number of career paths after acquiring the designation. When the CFA Institute conducted a survey of its candidates in 2019, it found the most common careers were:
While a CFA isn’t necessary for those positions, it can certainly help secure the job and potentially increase compensation.
These professionals are trained to help people with their financial lives. Could one help you?
The financial sector is made up of more than just banks.
This advisory service is geared toward wealthy individuals and their financial needs.
For long-term success with money, planning is essential.
If you’re interested in becoming a CFA charter holder, you should consider what you stand to gain versus what you could lose: the pros and cons.
Pros
Cons
If you think the risk is worth it to advance your career, you can bet on yourself and start toward the first CFA exam.
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