Should financial advisors pursue CFA?

The title of Chartered Financial Analyst (CFA) is one of the most respected and popular titles in finance and investment circles.

What is the CFA title?

The CFA title is awarded by the CFA Institute to candidates who pass a series of rigorous exams and meet other specific requirements. The program provides candidates and CFA franchisees with a solid foundation of advanced investment analysis and portfolio management skills. The focus is on real-world applications, not academic theories. Many people consider it to be the top investment management title available.

CFA designated courses include 10 main subject areas. In general, candidates need to learn analytical tools, apply tools and concepts to value various investment securities, and integrate the entire course so that they can use it in real-life portfolio management and wealth planning situations. The subject areas are: ethical and professional standards, quantitative methods, economics, financial reporting and analysis, corporate finance, equity investment, fixed income, derivatives, alternative investments, and portfolio management and wealth planning.

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Pass rate and test requirements

To obtain the CFA title, candidates must first pass the three levels of exams in order. The 10-year historical pass rate for the Level 1 exam is 43%, and the 10-year historical pass rate for the Level 2 exam is 45%. The 10-year historical pass rate for Level 3 exams is 56%. When looking at these pass rates, it should be noted that all candidates who took the third-level exam have passed the first and second-level exams. In addition to passing the three exams, candidates must have at least 36 months of qualified work experience, become a member of the CFA Institute and pay an annual fee, and sign the CFA Institute’s ethics and professional conduct standards each year.

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Pros and cons specified by CFA

Obtaining the CFA title will undoubtedly increase the candidate’s investment knowledge. If the financial consultant is employed by a larger organization, such as a bank or other financial institution, obtaining the CFA title can bring career development opportunities because the candidate is more valuable to the organization. Considering that each level requires about 300 hours of study time, and it takes about four years to get the designation, if the hired financial consultant has time to complete the designation, there are almost no shortcomings.The personal investment knowledge of candidates has surged, which will provide their employers with better and more effective solutions.

If the financial adviser is self-employed and conducts business outside the organization, the decision must be more rigorously analyzed. Appointment will definitely increase the consultant’s knowledge, but there is a great opportunity cost in terms of time. This time may be better used to find customers, establish business and improve operational efficiency. In addition, it is important to remember that the CFA designation focuses solely on investment. Successful financial advisors are not only proficient in investing. They are proficient in insurance planning, risk management, investment, tax planning, estate planning, retirement planning and employee benefit planning.

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Although CFA is the best title for investment knowledge, it certainly does not cover all aspects of financial planning. However, generally speaking, the CFA title may help people in the corporate world better than those who start their own financial planning business.

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