For those who pass the gruelling test, the chartered financial analyst designation is a badge of honour.
Less than half make it through, but they hope the months of studying needed to earn the CFA qualification will open the door to a lucrative career, while some companies even foot the bill for staff to sit the exams as a way of earning their stripes.
Then came the pandemic. The CFA Institute, which was founded in 1947 with a mission to bring professional standards to the investment management industry, was rocked by a dwindling number of people taking the test during lockdowns. It was also under fire for cutting 120 of its staff and delaying examinations last year.
Now, a Financial News survey shows demand for the finance sector’s toughest test may have peaked, and many are concerned about the diminishing impact a CFA designation can have on their careers.
The FN poll of 343 people — 79% of whom have the CFA charter or are studying for the exams — found that more than a third (34%) believe that fewer will take the qualification in five years’ time. However, the same proportion said they think more people will take the exam over the same period.
While 55% of respondents to the survey said the qualification was useful to their current job, it is far from a prerequisite for a role in finance. More than 57% said that fewer than 20% of their colleagues had a CFA, while 57% also said that they would always or usually hire someone without the qualification. Meanwhile, just 14% said that a lack of a CFA qualification would stop them taking on a potential candidate.
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The CFA has long been seen as a pathway to a job in asset management and equity research, and to a lesser extent, investment banking.
After the pandemic-induced tumble in people taking the CFA exams, numbers have bounced back. In the year to August, 262,364 people sat all three levels of the CFA, a rise of 22% on the previous year. However, this is still down from the high of 352,088 people who took the exams in 2019.
Chris Wiese, managing director, credentialing at the CFA Institute, told FN that demand for the qualification has “picked up again” since a pandemic lull and that the number of people “experiencing cancellations or requesting deferrals” was “rapidly diminishing”.
Registrations for tests in August are up by 20% on 2021, he added, and the institute has opened an additional 20 test centres in Asia Pacific and Europe, the Middle East and Africa.
“The charter continues to be highly valued by employers, many of whom pay for their employees to enrol in the CFA Programme,” Wiese said. “In a scenario where there is a tie-break between candidates, the CFA charter can tip the balance.”
While some respondents to FN’s survey described the qualification as the “gold standard” and something that gave them “bragging rights” over their colleagues, others said that it needed to modernise, embrace the digital age and become more relevant in Western markets as well as sectors such as investment banking and fintech. Others said that it should offer ongoing professional development.
“There is no advanced follow-on training based on specific industries or real life situations,” said one respondent. “The CFA is just foundational knowledge that teaches you how to think, but does not help you do a specific job or do it better than average.”
“With the increasing number of candidates, the programme will lose its prestige,” added another. “It won’t be viewed as specialised and gradually, employers will start taking it for granted – I’m already seeing that.”
The pass rate for the first level of the CFA has always been low, but since online assessments were introduced last year, it has fallen even further. In July last year, just 22% of candidates made it through level one, down from 44% five months earlier and a pass rate that has hovered around 40% for the last decade. This year, however, the pass rate has improved — to 38% for those who took the exam in June.
There are now a record 190,000 charterholders globally, Wiese said.
While candidates have flocked back to the CFA, respondents to the FN survey said that the biggest problem they had with the qualification was not how hard the exams are, or its lack of exclusivity. Instead, the largest proportion — 29% — said it did not equip them with the skills or knowledge to use in their day-to-day jobs.
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