The CFA program is surely the most challenging finance program especially considering the context of most candidates. While some start the program while they are in school or before starting to work full time, the reality is that the vast majority of candidates work full time. You would probably agree that while working full time, our most valuable resource by far is time. This post is to help you decide if investing a few hundred hours over the next 2-3 or more years is worth it.
The #1 question of course is why do you want to take the CFA exam? In almost all cases you aspire or already work in finance and hope that this will give you a competitive advantage right? That is true of course as those exams will help you get interviews that you would not otherwise have had the chance to get .
But what type of jobs would CFA charter holders generally get and how big of an advantage is it? First off, the average salary of CFA chartholders is well over $100,000 per year, as you can imagine. There are tons of possible jobs that would make sense with the title but none more than Portfolio Manager in my opinion. CFA’s curriculum is very broad and covers ethics, asset and debt valuation, portfolio management and much more. Portfolio Manager usually requires a broad knowledge of the economy, specific assets, being able to read and understand financial statements, etc.
You could also aspire to any of the more specialized related jobs. For example, a research analyst would do the part of researching companies, their statements, etc. Economists will take general knowledge and relate it to economic trends, and be able to get a clear vision of the future big trends. Traders would also be helped by the CFA through knowledge of markets, securities, ethics and more. Accountants with good financial knowledge are rare and very valuable. There is no doubt that a CPA combined with a CFA will be very attractive to potential employers. As you can see, the possibilities are extensive because the title has gained such a good reputation over the years.
Motivation and Dedication
How did the CFA get such a great reputation? It graduated very strong candidates. The downside of course is that no one can get through the program without high motivation and dedication. I would say that there is no point in even trying if you are not fully dedicated. Since there are 3 exams involved and because of the format, you cannot succeed through luck, you will also need hard work for the few months before the exam.
Next week I will go through a few different plans that you can use as a template but you do need to know that if you are going to give a half effort, for any reason (family, other projects or any other), there is no point in trying and you can stop reading now. I do not know of anyone who passed this exam without putting in the hours.
Because of the way the program is built, the minimum amount of time you could be studying is a few months before December (level 1), then the next two months of June (level 2 & 3). So you are looking at close to 2 years filled with sacrifices on week nights and weekends, especially when the weather starts improving in May (always was the biggest challenge for me). Before signing up for it, be convinced that you are ready for it but also your family if you have one. It’s not a project you can do without their help and support.
The financial investment while not negligible is not huge either. You are looking at $1,000-$2,000 per exam depending on what kind of resources you use to help you out. Some courses, practice exams and notes will set you back a bit but personally I’ve always felt like a few hundred dollars will be well worth it if they improved my chances even by a little. Time is a much bigger sacrifice however…
This is the big cost of the exam. Because of the way the material is structured, you are looking at close to 100 hours of reading material depending on your reading speed. Add to that learning important notions, practice questions, practice exams and more. Each individual is different but the CFA Institute often mentions 200-250 hours per exam. I personally put less because of the way I studied but you will not get away with a couple of weekends at the library.
You are also probably going to take some of your annual vacations when studying. Not to say that they are wasted but it’s probably not going to be the most exciting news for your loved one either.
So are you ready?
If you are still reading, then that is good news and you might be a few years away from writing three letters next to your name that will have a big impact on your career and ultimately your life. Stay tuned and I’m glad that you are joining the adventure