Introduction to the CFA designation

The Chartered Financial Analyst (CFA) designation is considered by most to be the key certification for investment professionals, especially in the areas of research and portfolio management. However, it is just one of many designations in use today. This can cause some confusion as investors and professionals alike figure out what each designation means and which one is the best. This article will take an in-depth look at the CFA designation. If you are a professional considering CFA, we have provided the information you need to begin weighing the costs and benefits of this decision.

Key takeaways

  • The CFA designation is awarded to investment professionals who have successfully completed the requirements set forth by the CFA Institute.
  • Professionals with the designation stand out to employers and may receive higher salaries than those without it.
  • Candidates must pass three levels of examinations to become letter holders.
  • CFA charter holders often work in institutional investment firms, stock brokers, insurance companies, pension funds, banks, and universities.

What is the CFA designation?

The CFA designation is awarded to investment professionals who have successfully completed the requirements set forth by the world-renowned CFA Institute, formerly the Association for Investment Management and Research (AIMR). To be eligible for the CFA designation, candidates:

  1. You must pass three rigorous 4.5-hour exams over several years.
  2. You must have “4,000 hours of work experience and / or higher education that was acquired during a minimum of three consecutive years.” Although the CFA institute allows for a fairly broad interpretation here, the experience generally has to be financial in nature.
  3. You must join the CFA Institute by committing to the CFA Institute’s Code of Ethics and Standards of Professional Conduct.

Candidates do not necessarily need to have a college degree to qualify for the CFA.

Due to its focus on analysis, investment knowledge, and ethics, the CFA designation is widely recognized around the world and is the leading credential among financial professionals.

The CFA designation is widely recognized around the world due to its focus on analysis, investment knowledge, and ethics.

All letter holders are listed in the CFA Institute membership directory with their contact details. This makes it easier for individuals, institutions, and corporations to locate holders, members, or financial advisors. The directory also indicates whether members are up to date with the institute.


Being a CFA holder provides the member with both distinction and benefits. The designation is recognized as a benchmark, making the charter holders attractive to potential employers. Due to the time, discipline, and dedication it takes to pass exams and become a member, charter holders often stand out. Earning the designation becomes even more critical as the workforce becomes more competitive.

There are also financial benefits to becoming a member of the CFA Institute. Members’ salaries can often be higher compared to people without the designation.

What is the CFA Institute?

The CFA Institute is a global, non-profit professional organization of more than 170,000 charter holders, portfolio managers, and other financial professionals in more than 160 different global markets. The stated mission of the institute is to promote and develop a high level of educational, ethical and professional standards in the investment industry.

The designation was first created in 1962, after societies of financial analysts in four different American cities – New York, Boston, Chicago, and Pennsylvania – came together and created a code of conduct. The first exam was conducted in 1963 with 284 candidates. The group awarded 268 letters that year. The group’s name was changed from AIMR to CFA Institute in 2004.

CFA member societies are located throughout the world. The locations with the most members include:

  • UK
  • New York
  • Toronto
  • Hong Kong
  • Boston

CFA exams

Most people considering the CFA designation tend to worry about one thing: the exams. The exams are divided into three levels and all are taken by computer. Level I is written four times a year, in February, May, August and November. It tests candidates’ knowledge of investment theory, ethics, financial accounting, and portfolio management.

The Level II and Level III exams are held twice a year, in February and August for Level II and in May and November for Level III. These are not easy tests. The CFA institute estimates that it takes more than 300 hours of study to pass each exam. Professionals trying to study while still working in their field may find this to be a daunting task. However, many candidates feel that concentrated study required a better education than graduate school due to its total focus on investment management and practice.

CFA pass fees

This course of study was formed in 1962 and is constantly updated to ensure that the curriculum meets the demands of the global investment industry. This graduate-level curriculum generally involves six months of study prior to the date of each exam. Pass rates have varied from year to year since the first exam was taken in 1963.

According to the institute, the pass rates for late 2020 / early 2021 were:

  • Level I: 44%
  • Level II: 55%
  • Level III: 56%

Less than 20% of candidates pass all three tests in the first three attempts, so it is important that candidates do not get discouraged.

CFA careers

Holders of CFA statutes can be found in different areas of the financial services industry, while others continue to work for governments on regulation and public policy. They often seek careers at institutional investment firms, such as hedge funds or mutual funds, stock brokers, insurance companies, pension funds, banks, and universities. CFA members can be found at some of the largest institutions in the world, including Goldman Sachs, JP Morgan, Morgan Stanley, and UBS.

CFA Appointments and Investors

Investors dealing with CFA contract holders can make some basic assumptions. A CFA is generally committed to getting better at their craft, be it security analysis, portfolio management, business reporting, or some other service. In addition, the individual has agreed to maintain a higher level of integrity by following the Code of Ethics and the Standards of Professional Conduct of the CFA Institute.

In other words, investment professionals with a CFA designation have invested a significant amount of time and effort to improve their skills and knowledge on behalf of their clients. This will be a great comfort to most investors, especially if they rely primarily on professional advice to manage their financial affairs.

Limitations of the CFA

Although the CFA exams require some mastery when it comes to financial concepts and markets, having the CFA designation does not automatically make you a better stock picker or a more successful investor. Stock selection is a practical skill that must be developed through experience. The knowledge gained by studying for the CFA exam will not hurt, but certification alone will not make every letter holder an expert in the market.

With that said, there are some well-known investment professionals who have CFA status. Gary Brinson and Sir John Marks Templeton are two famous examples.

The bottom line

The CFA designation distinguishes the letter holder from other professionals in the eyes of professionals and investors. A successful CFA holder has demonstrated the ability to complete rigorous tests, has demonstrated the ability to learn, and is seriously committed to conducting his or her professional life in accordance with high ethical standards.

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Mark Holland

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