Last Updated On July 27th, 2016 at 08:08 pm
The CFA or Charted Financial Analyst program is offered by the CFA Institute. This institute was formerly known as AIMR or the Association for Investment Management and Research. The CFA credential is offered to the financial as well as investment professionals. The ‘CFA charter’ is awarded to those candidates who complete the program successfully. Such candidates are referred to as the CFA charter holders. There are nearly one hundred and twenty thousand members from thirty-five nations. Some of the top companies which hire CFA charter holders internationally include Morgan Stanley, JP Morgan, UBS, Citigroup and Black Rock.
In India, the CFA charter is awarded to those who complete the ICFAI university master in the area of financial and investment analysis. The main focus of the program lies in the application of financial analysis in investment management. There was a dispute between the ICFAI and CFA institute of the US over the usage of the designation of CFA. During the year 2012, it was decided that the candidates who obtained the ICFAI charter will use the CFA (ICFAI) designation. This was done for distinguishing candidates from the charter holders of the CFA Institute.
Eligibility Criteria for CFA Course
Candidates having a graduate degree in any field from an authentic and recognized university can apply for the CFA program. The admission to this course is done on the basis of the candidate’s performance in the admission test. All those taking the final year exam of their graduate degree also have the eligibility for applying to this program. Those who have a work experience of four years can also apply for the CFA course.
The combination of college experience and professional work of the duration of at least four years also grants the eligibility for the CFA program. The important fact to be noted is that work experience from part time jobs is not applicable. The four-year experience must get finished before applying for the enrollment process. Additionally, the candidates must enroll themselves as a CFA member before starting the registration process.
The candidates must have a good knowledge of the English language. In the case of applying for the CFA program in the CFA Institute of US, a candidate must have a valid passport. There are three levels or stages in the CFA program. These levels are designed to provide comprehensive knowledge and foundation needed to excel in making proper decisions regarding the finances and investment management.
Before applying for the enrollment process, it is necessary for the candidates to fulfill the above eligibility requirements. All those who satisfy the requirements are needed to complete the exam registration for CFA’s first exam. All the essential documents and information like the electronic signature of the candidate, statement of professional conduct, education information, etc must be submitted along with the required fees. The enrollment process must be completed within thirty days.
CFA Exam Pattern
As stated above, there are three stages in the CFA program. The pattern of the exam conducted at each stage is described below:
Level 1 Exam:
The first exam that the students need to take is the level 1 exam. During this exam, the main focus is on tools and concepts that are used in the evaluation and management of investment. This exam is taken in 2 sessions. The duration of each session is three hours. Each session consists of one hundred and twenty questions.
Level 2 Exam
After clearing the level 2 exam successfully, the students need to take the level 2 exam. The students are subjected to asset valuation at this level. They should have the knowledge of the application of the tools and concepts that they already learned in the first level. The exam is divided into two sessions, like the level one exam. In total, there are twenty set questions. Each session consists of ten set questions. There are one hundred and twenty questions in total. The time duration of each session is three hours.
Level 3 Exam
For becoming a CFA charter holder, the students need to pass the level 3 exam. The students are subjected to portfolio management at this level. The format of the level 3 exam consists of essay type and set questions. Like the above two levels, the exam is divided into 2 sessions, each session being of three-hour duration. The first session consists of ten to fifteen essay type questions. These questions consist of a hypothetical situation or a case study. The students are needed to either explain the situation or provide a solution or offer measures for handling the situation. The second session consists of ten item sets. In each set, a case statement is provided and is followed by 6 multiple choice questions.
Course Structure of CFA Course
The duration of the CFA course ranges from two to five years. The syllabus of each level is discussed below:
At this level, the students are taught simple analysis by utilizing investment tools. They are introduced to numerous concepts pertaining to the investment and finance world. The topics covered under this level include ethics, analysis of fixed income, economics, wealth planning, portfolio management, alternative investment, derivatives, corporate finance, equity investment, quantitative analysis and financial reporting analysis.
In this level, the students focus more on asset classes, although the weightage of the portfolio and asset valuation still remains high. Thus, the topics are grouped into four main areas, which are wealth planning and portfolio management, investment tools, professional and ethical standards, and asset classes.
This level of CFA covers topics like GIPS or global investment performance standards, investment objectives, return analysis, relative value analysis, behavioral finance, investment policy statement, etc.
Career and Job opportunities after CFA
The job profile of CFA professionals includes portfolio manager, chief executive, corporate financial analyst, relationship managers, and investment banking analyst, accountant, trader, performance measurement specialist, research analyst, consultant, financial advisor, risk manager, strategists, broker and private banker.
There are many benefits of obtaining CFA charter. It helps the individual in obtaining a sound foundation in finance. Additionally, it is updated regularly to include recent events and innovations, thereby making the students aware of the current trends. Another advantage of this course is that the CMA certification can be transferred easily across the markets.