The Chartered Financial Analyst® designation is a valuable credential that certifies you as having in-depth knowledge of financial security types and investment vehicles. It also indicates that you are an expert in methodologies for analyzing securities, such as assessing their value and identifying their underlying risks. There are more than 154,000 registered CFA charter holders in more than 165 countries worldwide.
What does a CFA CHarterholder do?
Financial analysts keep track of what’s going on in the economy. They help clients by recommending when to buy and when to sell investments. They stay up-to-date on economic trends, important business news, and company and industry strategy. CFA chartholders write reports that explain their analyses, share their expertise with non-financial experts, and sometimes communicate their findings to the public and financial media.
According to information from the Bureau of Labor Statistics, the largest employers of financial analysts are securities, commodity contracts, and other financial investments firms. However, financial analysts can also work in professional services, management, and insurance, among other areas.
Earning a CFA charter opens many career paths in the financial industry. Here are the most common job functions.
- 22% of CFA charterholders are employed as portfolio managers. Portfolio managers are responsible for a fund or group of funds. They work with analysts, researchers, and clients to stay up-to-date on the markets and important business news. Portfolio managers make decisions to buy and sell assets throughout the day as the markets fluctuate.
- 15% of global CFA charterholders said they were research analysts, responsible for analyzing mathematical processes and qualitative data to analyze something that has already happened and make future predictions.
- 7% of all CFA charterholders have made it to the executive suite. Executives with CFA charters are chief investment officer (COO), chief financial officer (CFO), or chief executive officer (CEO).
- 6% of all CFA charterholders are consultants. Companies hire consultants to provide independent expert perspective to business valuation, provide economic forecasts and analysis, and identify opportunities to grow shareholder value.
- 5% of all CFA charterholders are financial risk managers. Financial risk managers identify and assess potential risks that a company faces or could face in the future.
- 5% of all CFA charterholders are financial advisors. Financial advisors help clients create long-term and short-term financial goals and make decisions about investments, tax laws, and insurance product selection.
- 5% of all CFA charterholders are corporate financial analysts. Corporate financial analysts conduct research and provide advice considering macro and microeconomics concerning corporate investment decisions.
Why Become a CFA Charterholder?
The CFA designation is a prestigious credential that enhances your worth and credibility as a financial professional, increasing your upward mobility.
- Better Job Prospects with top financial firms. While not all financial advisors or investment professionals are CFA charterholders, it’s among the highest standards a financial professional can meet. Many significant employers for senior positions in Securities Research and Investment Management require the CFA designation. Recently, top financial services firms have started using the CFA designation as the ticket to a growing number of financial advisory positions and career paths.
- Career & salary advancement. The CFA charter prepares you for a variety of investment-related jobs, such as portfolio manager, risk manager, and research analyst. Seven percent of CFA charterholders even go on to be chief-level executives. In general, the CFA designation increases salaries by around 15-20%.
- The CFA Charter is Recognized Worldwide. Companies, universities, and certification programs in at least 30 countries recognize the CFA charter.
CFA Salary - How much does a CFA Charterholder Make?
CFA charterholders with 0 to 5 years experience earn from $50,000 to upward of $253,000 a year. Those with lesser experience make on the lower end, while those with two to four years of experience fall in the middle.
The highest paid work for CFA charterholders generally comes as a Senior Portfolio Manager, Investment Banking Officer, or as a Corporate Finance Director.
The chart below shows the total compensation (salary + incentive) for those with a CFA designation working as portfolio managers.
CFA Average Salary & Total Compensation
Data from CFA Institute Compensation Survey
What determines a CFA Charterholders salary?
A chartered financial analyst's salary is based on his or her experience, the nature of the employer and its market value and size, and its sales volume.
A company's size helps determine how much the company will pay its CFA charterholders. Generally speaking, larger companies pay slightly better than smaller companies, although the differences aren't extreme.
CFA charterholders situated in larger metropolises tended to be paid more than the nationwide average: up to approximately $140,000 in New York City and San Francisco, and roughly $120,000 per year in Chicago, Boston, and Philadelphia.
CFA CHarterholder Employment Outlook
The career outlook for chartered financial analyst charterholders is healthy. Financial analysts are expected to be in demand for the near future.
A growing range of complex financial products and the need for in-depth knowledge of industries in many geographic regions are expected to spur strong employment growth. The global diversification of investments, and the increasing complexity of investments will contribute to this job increase. The Bureau of Labor Statistics projects financial analyst employment to grow 11% by 2026, faster than the average for all occupations.
An equity research career is very demanding, with associates and analysts frequently working 70+ hour weeks. Competition for positions is intense. However, compensation is substantial. The opportunities for advancement in equity research are lower than other divisions, with seniority being a function of the quality of research.
A career in investment banking is hugely demanding, with analysts frequently working 100-hour weeks. The competition for positions is intense, compensation is very high, and the work is very high profile.
CFA Designation Requirements
Candidates for the CFA designation must meet one of the following requirements, you must:
- Have a bachelor’s (or equivalent) degree or be in your final year of a bachelor’s program.
- Have accumulated 4000 hours (approximately two years if you work full time) of relevant professional work experience (not required to be investment related).
- Have an international travel passport. It is the only form of identification that is accepted at the exam location.
- Be enrolled in the CFA Program. You can enroll at the CFA Institute web page.
- Be a resident of a country that is not on the Specially Designated Nationals list. See the list at the CFA Institute web page.
- Pass of all three levels of the CFA exam.
The Chartered Financial Analyst Exam
Preparing for the CFA exam is similar to studying for the CPA exam. The exams, CFA Levels I, II, and III, are taken in sequence. You must pass one exam before sitting for the next.
Each test lasts six hours. The exams collectively assess candidates' knowledge of ethics and professional standards, investment tools, asset classes, and portfolio management and wealth planning. Most serious candidates will spend hundreds of hours preparing for the CFA exam. See our guide to the best CFA Study Material to jumpstart your preparation.
The Level I exam consists of 240 multiple-choice questions that are distributed equally over two sessions. Each session is three hours long. The exam covers the following topic areas:
|Ethical and Professional Standards||15%|
|Financial Reporting and Analysis||15%|
The Level II exam is made up of 20 vignettes, each followed by six multiple-choice questions. The exam has two sessions, one in the morning and the other in the afternoon.
|Ethical and Professional Standards||10-15%|
|Financial Reporting and Analysis||10-15%|
|Portfolio Management and Wealth Management||5-10%|
The Level III exam consists of 12 essay questions and ten vignettes, each followed by six multiple-choice questions. The exam has two sessions, one in the morning and the other in the afternoon.
CFA exam pass rates are typically 40-50%. A CFA prep course is an excellent investment if you want to pass on the first attempt.