CFA Pass Rate Fell For First Exam

CFA Pass Rate Fell For First Exam, Institute Reports
2009-01-28 17:46:13.929 GMT


By Ian Katz
Jan. 28 (Bloomberg) -- A smaller percentage of candidates passed the first test of the Chartered Financial Analyst exam, a three-step process aimed at gaining a hiring edge as job losses accelerate in the financial-services industry.

Thirty-five percent passed the initial test, down from 39 percent last year, the CFA Institute said in a statement today. Almost 50,000 people worldwide took the first stage in December, a 25 percent increase from a year earlier, the Charlottesville, Virginia-based institute said.
"The number of hours candidates spent studying the material" is the main reason the percentage of people who pass varies, Bob Johnson, the institute's deputy chief executive officer, said in an e-mail.

Candidates take the exam betting the certification can become a path to better jobs, higher salaries and a deeper understanding of finance. The not-for-profit CFA Institute recommends candidates spend at least 250 hours studying for each test phase. It costs about $2,500 to
complete all three levels. Demand for the certification rose as job losses mounted in the
financial-services industry. Employment in New York City's securities industry fell 10 percent to 168,600 in December from 187,800 in October 2007, the New York state comptroller said in a report today. The state will have lost as many as 225,000 jobs and $6.5 billion in securities industry-related tax revenue by Oct. 31, the state has said.

Test Topics

To qualify for CFA designation, a person must be employed in a financial job, such as a broker or an analyst, and have four years of relevant experience. Topics range from ethical standards and securities valuation to financial statement analysis and portfolio management. About 20 percent of candidates who begin the test process will become charter holders, a designation now held by 86,968 people, according to the CFA. About two-thirds who take Level III successfully complete the process.

The CFA program started in 1963 and stems in part from proposals by Benjamin Graham, a pioneer of value investing who mentored Warren Buffett, for a rating system for financial analysts.

For Related News and Information:
News securities firms: NI SCR
Top financial stories: FTOP
Stories about job cuts: NI JOBCUTS
Stories about financial services: NI FIN

--With reporting by Henry Goldman in New York. Editors: Steve Geimann,
Alec D.B. McCabe

To contact the reporter on this story:
Ian Katz in Washington at +1-202-624-1827 or ikatz2@bloomberg.net

To contact the editor responsible for this story:
Alec McCabe at +1-212-617-4175 or
amccabe@bloomberg.net

CPA vs CFA vs MBA

CPA, CFA or MBA?

It’s not a question of which one is better. It’s a question of which one is better for you. Traditionally, the CPA would lead to a career as a CFO; a CFA was on the path to become a portfolio manager; and a MBA would eventually become a corporate executive. This notion still holds today, however, achieving one of these certifications no way guarantees success.

Deciding which certification to pursue is usually made subconsciously. In our daily lives we read, talk and listen to friends, family and colleagues. Based on these interactions, we develop a superficial understanding on which certification to pursue. After much career and soul searching, I've come to realize that the most important question to ask before choosing a path is “what do I want to do?”

Do I want to be a CFO of a hedge fund?

Do I want to be a portfolio manager at a hedge fund?

Do I want to be a managing director at a private equity firm?

Do I want to be VP of business development at a corporation?

Now this might seem easy, but in reality it’s difficult. It’s difficult to verbalize why you want to pursue a particular career. My advice is follow the work, not the money. Regardless of the risks or the sunk costs, pursue your passion.

CPA

The Certified Public Accountant certification is a benchmark credential. It carries stature, significance and job security. In economic booms or busts, accountants are always needed. The more personable and diligent you are, the more success you will achieve.

Accounting is the basis of business. And being an expert in accounting gives you a unique business perspective that your other friends might not possess. However, the thing I have come to realize is that once you’re labeled an accountant, you may be an accountant the rest of your life. It’s incredibly difficult to make the switch into a different career path within the business world (when I say business world I mean hedge fund analyst, private equity associate, business development).

My opinion on the matter might be affected by the economic environment in which I recruited. It is difficult to switch careers in a bear market. Ultimately though, my conclusion is drawn from the countless interactions with professionals throughout my recruitment process. Every time I would talk with headhunters, recruiters, HR and interviewers, it would become apparent that they just wanted a two year analyst from an I-bank or consulting firm. My two years at PwC didn’t mean a thing to anybody. They would always tell me of a great job in the middle or back office and convince me that was the best role for me.

CFA

I am not a Chartered Financial Analyst charter holder. So I cannot express the opportunities that have or have not presented themselves as a result of the CFA. However, as a Level III candidate, no unique opportunities have appeared. No special career doors have opened. When I was recruiting, it was thought more of a differentiation than a value added credential. I am interested to know what the future holds if I successfully pass the third part, complete the work experience, and receive the designation.

MBA

After talking with many people and seeing it first hand, I am convinced the only sure way to change career paths and make it to the top echelon of finance, without a background in investment banking or strategy consulting, is to attend a top 10 MBA school. Of course, you can get great finance jobs through other methods (that’s what I’m hoping to do) but this way seems most certain.

So if you want to work in private equity or at a hedge fund and are not an investment banker or strategy consultant, I highly recommend crushing the GMAT (above 700) and going to a top 10 MBA school.

I have merely outlined my insight based on experience, which I hope can help you better decide which certification path to follow. Remember though that no path is certain or on a straight line.