[CFA vs. the rest of the world]
The second deadline for the CFA Exam in December 2007 is approaching soon. If you want to enroll to this program you shall be fast. The exam fee will rise to 465 if you pay for it after 15th of August.
The CFA Institute is advertising the CFA designation as the most prestigious designation in finance. Is it true? Yes. That is true. All other (strictly investment oriented - so excluding ACCA for example) certificates like PRMIA, FRM, ACI etc. are definitely less prestigious, and less popular. The CFA designation, however, does not give superior money earning power as some people think. In terms of money earning power some credentials seem to be much more interesting.
In order to see which are most powerful credentials on the financial markets I conducted small research. I analysed the job offers on the efinancialcareers website. I was looking for the offers in which employers explicitly stated that they look for certain designations/certificates and education.
Here is what I found when I searched through all offers:
- There were 171 Jobs online in which Employer stated that FSA is an advantage
- There were 167 Jobs online in which Employer stated that ACCA is an advantage
- There were 153 Jobs online in which Employer stated that PhD is an advantage
- There were 144 Jobs online in which Employer stated that MBA is an advantage
- There were 139 Jobs online in which Employer stated that CFA is an advantage
- There were 80 Jobs online in which Employer stated that MSc is an advantage
- There were 3 Jobs online in which Employer stated that PRM is an advantage
- There were 3 Jobs online in which Employer stated that FRM is an advantage
From this data you may see that ACCA and FSA designations generally outperform CFA in terms of the number of job offers.
And what if you are interested in trading for example? (I put the word trading into the search) The result of the analysis is on the chart below:
This chart shows that when you are interested in trading CFA designation is worth less than good MSc education for example. Relatively, the CFA charter is even less rewarding in trading environment than in general. This chart shows also that PhD qualifications are dominating trading now.
The CFA designation, although it is not the most "powerful", has many advantages you shall consider. First, you may work while getting it. Second, it is obviously much cheaper than good MBA (although still expensive). Third, you have growing community - CFA may be even more powerful in the future.
My personally, I am going to get my CFA designation (I hope) although I am studying for PhD right now. I think that combining theoretical side of PhD with practical approach of CFA will make me really interesting asset on the Job market.
11 comments:
I think the analysis reflects the facts. In my investment bank (Goldman Sachs) CFA is not as trendy as for example an MBA from good university. Everyone knows that CFA is just a matter of hard work and not of abilities etc.
I like the approach and it is similar analysis I conducted before doing my MBA and MSc. (where I used 3 newspapers as my source of information). Since I am very active in hiring graduates we now just target the top 5-10 universities and only the top 10% of that class would be interviewed, so we don't advertise and on average we hire on average 100 graduates per year. In summary I am saying that your data set might have a bias and no implication of prestige (hiring company and university), having said that your results do make sense.
currently there is a legal case going on between AICTE and CFA Institute. The next hearing is on 6th sept. lets hope CFAI is allowed to conduct exams in india.. more info is available at http://www.kprofessionals.com/phorum/list.php?8
Theoretical = useless.
What is the ACCA and the FCA?
You should have compared the salary of those jobs as well. See if there may be more job offerings for those other designations but what one was most sought after for the highest paid job.
I wonder how many MBA's, CFA's etc would be shared around those executives responsible for the collapse (or near collapse) of the many institutions we are seeing. Sometimes all those hours in the classroom and being "top 10% of the class" may be better spent leaning some common sense, morality, ethics, humility, and restraint. Perhaps not in an "Ivy League" course content?
Go into Audit, Risk or Compliance, or work for a Regulator. Other things besides "top of class" still seem to count for somehting in these areas.
Trying to decide which certification/degree adds more value. Have 8 years experience in IT(development, technical support) for financial services - including sell side OMS, DMA, market data feed utilities, supported products for:
1. clearing firms
2. backoffice and from them to the buyside
3. order flow to the market place.
4. order flow to dark pools, ECNs,blackbox, algos
4. IOIs and advertised trades.
Am I correct in stating that top banking/ financial services firms (the Goldmans Sachs, the JP Morgan Chases, hedge funds, smaller boutique investment firms, buyside and sellside firms) really value an MBA from a top school- so an $150k investment to go to a Wharton, Columbia or NYU makes a lot of sense even in today's/next few years' economic climate? Also, is it true that a CFA certification is very valuable and worth the investment of time(~3-4 years)?
All this is very good. Could one have a better chance is he has quite of combination of qualifications? My friend has ACCA, CFA, ICSA, BA Accounting and Financial Management, Msc Financial engineering and Mba (Warwick)and he has been working in a top 4 accounting firms.
Well, the demand is approximately the same from the graphs.
Now, let's study the supply of talent and competition. Yearly, approximately 200 people in the United States get a PhD in Finance, 2,000 get CFA and 20,000 get MBA. Roughly speaking. However, to get into a PhD in Finance there are 30 candidates per place. Also, it is an extremely long and hard process, takes 4 to 7 years and depending on the program from 30% to 50% fail to complete it.
Well, the demand is approximately the same from the graphs.
Now, let's study the supply of talent and competition. Yearly, approximately 200 people in the United States get a PhD in Finance, 2,000 get CFA and 20,000 get MBA. Roughly speaking. However, to get into a PhD in Finance there are 30 candidates per place. Also, it is an extremely long and hard process, takes 4 to 7 years and depending on the program from 30% to 50% fail to complete it.
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