What is CFA®?
CFA® is one of the leading and highest-rated finance courses in the world. It has produced more than 178,000 charterholders over the time span of 70 years. CFAs are highly respected finance professionals and prioritized by top firms in the world.
CFA® is a global body regulated by the CFA Institute of the USA. It is a Gold Standard in the field of investment analysis and provides different other career options to its charterholders including portfolio and risk management.
CFA® Eligibility Criteria
- You must have a Bachelor’s Degree or be a final year student to be eligible for the CFA program OR, have full-time work experience of 4 years, not necessarily in the investment sector. You can also apply if you have work experience (full time only) and enrollment in a degree, the total of which equals 48 months.
Simply put, You must have a degree or equivalence certificate or you must be in the final year of your qualification. No Degree? Your work experience counts in CFA and you will be accepted if you have a full-time work experience of 4 years in any field.
You are also eligible if you have a combination of full-time work experience and enrollment in bachelor’s totaling 48 months. Note that part-time work experience does not count in the CFA program.
- You must have a valid international Travel Passport.
- You can meet the professional conduct admission criteria.
- You are ready to take the exams in English.
If you meet the above criteria, you can start your CFA journey right away.
CFA® Levels | Papers
There are 3 Levels in the CFA program covering 10 subjects in total. You have to complete ALL 3 levels and the required work experience (4 years) to become a CFA Charterholder.
The following Subjects are covered in the CFA program:
- Ethics & Professional Standards
- Quantitative Methods
- Economics
- Financial Reporting & Analysis
- Corporate Finance
- Portfolio Management
- Equity Instruments
- Fixed Income Instruments
- Derivatives
- Alternative Investments
All of the subjects are related to the knowledge and comprehension of investment tools and on every CFA level, you can expect questions from these in the following.
| Subject | % in Level I | % in Level II | % in Level III |
|---|---|---|---|
| Ethics & Professional Standards | 15-20 | 10-15 | 10-15 |
| Quantitative Methods | 8-12 | 5-10 | 0 |
| Economics | 8-12 | 5-10 | 0 |
| Financial Reporting & Analysis | 13-17 | 10-15 | 0 |
| Corporate Finance | 8-12 | 5-10 | 0 |
| Portfolio Management | 5-8 | 5-15 | 40-45 |
| Equity Instruments | 10-12 | 10-15 | 10-15 |
| Fixed Income Instruments | 10-12 | 10-15 | 10-15 |
| Derivatives | 5-8 | 5-10 | 5-10 |
| Alternative Investments | 5-8 | 5-10 | 5-10 |
Level I
4 Exams in a year conducted in Feb, May, Aug, and Nov. In an exam sitting, there are 2 sessions each 2 hours and 15 minutes. In each session, you will be asked 90 MCQs or Fill in the Blanks, hence a total of 180 questions asked in CFA Level I.
Level II
2 Exam sittings each year conducted in May and Aug. In the year 2022 and onwards, the exams will be conducted in May and Nov. There are 2 exam sessions of 2 hours 15 minutes each and 60 questions asked in a session (total 120). Just like Level I, the questions are purely objective and no essay type questions asked.
Level III
2 Exam sittings each year conducted in May and November. The paper is divided into 2 sessions of 2 hours 15 minutes each. The first session is objective, comprised of 45 MCQs and Fill in the Blanks. The second session contains essay type responsive questions and lasts 2 hours and 15 minutes. That being said, Level III is 50% objective and 50% subjective.
Minimum Passing Score & Checking Procedure
CFA® has complicated passing criteria and a strict checking procedure. Surprisingly, it does not have a predetermined fixed minimum passing score but is set after the examinations are held. So, how does it work?
The Minimum Passing Score (MPS) is the minimum score you have to make in order to pass your CFA exam. It shouldn’t be confused with the Passing Rate, which is the percentage of candidates who successfully pass their CFA Exam.
As mentioned above, CFA does not publish the MPS and you wouldn’t have any idea about how much to score to pass your CFA exam. To set the MPS, after the examinations are held, the CFA institute conducts workshops for all 3 levels and presents the paper to the participants. The participants go through the paper individually and analyze the difficulty level of each and every question.
After analyzing the questions several times, the workshop participants independently suggest what they consider a “Competent Attainable Score” and submit their analysis.
The CFA institute then uses the reports as the basis for setting up the Minimum Passing Score for each level. The process takes six weeks for Level I & II and seven weeks for Level III. The MPS, however, is never published!
The CFA Exam Checking Procedure is amazingly fair, and automated, for the most part. The objective parts in Level I, II, and III are checked by a computer and the essay type questions in Level III by CFA Charterholders.
The markers team up and each team is assigned to mark a specific question of all candidates using guidelines provided by the CFA Institute. The questions are then shuffled across the teams and rechecked to ensure the marking is fair. If the marks do not match, a third round of marking is done by a different team.
In addition, the “just about to break even” papers are rechecked to ensure they get another chance. The markers don’t know who the paper belongs to and the entire process takes about 2 weeks.
Career Options
A CFA Charterholder is a complete Finance package and highly Valued & Prioritized by employers. Top firms like JP Morgan Chase and Bank of America have abundantly increased their CFA hirings. The best thing about being a CFA is that you have so many career options available. Some major options are:
- Portfolio Management: Responsible for creating and managing investments for private clients. Portfolio Managers are one of the highest-paid professionals in the field of finance.
- Financial Research Analysts: Work for banks and businesses that focus on investing money. Financial Research Analysts estimate risks of investments and manage funds.
- Chief Financial Officer: Plays a key role in a company and is primarily responsible for the planning and implementation of Financial Activities.
- And a lot more.
There are over 25,000 firms that hire CFAs and more and more firms are opening positions for CFAs to meet the evolving needs. Unlike most of the finance qualifications, the CFA job market is not saturated and you will be able to find your desired placement.
Below is the list of some reputed companies that hire CFAs:
- Northern Trust
- JP Morgan Chase
- Deutsche Bank
- HSBC
- Citigroup
- Morgan Stanley
- Smith Barney
- Goldman Sachs
- Credit Suisse
CFA® Average Salary in Major Markets
Generally, in companies, the bigger the responsibility of personnel, the higher the compensation. CFAs hold major positions in companies and the compensations are much higher as compared to other Finance Professionals. But, it doesn’t necessarily mean all CFAs earn good money!
Besides completing the program, you have to have a few years of experience and a skill set to be able to make more money. Decisions made by CFOs, portfolio managers, and other CFAs have a direct impact on the company’s/client’s finances and can earn some good bonuses!
However, I have compiled some figures from different sources that give a general idea about how much a CFA earns in different parts of the world.
These figures reflect the total compensation paid to CFAs. Total compensation includes Basic Salary, Cash Bonuses, and other motivational schemes like Equity Rewards.
| Country | Average CFA Salary |
|---|---|
| United Kingdom | 102,500 GBP |
| United States | 300,000 USD |
| Germany | 58,773 EUR |
| China | 281,898 CNY |
| Dubai | 197,852 AED |
| Canada | 71,668 CAD |
| India | 951,665 INR |
| Pakistan | 1,800,000 PKR |
The above Salaries are paid to CFA Charterholders with at least 5 years of job experience. However, there’s no guarantee you will attain these figures. It also means you can earn ten folds!
