CFA Study Guide

The CFA® designation (Chartered Financial Analyst) is an internationally recognized and completely voluntary professional charter given to investment professionals after having at least 4 years experience in the industry and taking three levels of exams, proctored once a year. In order to even sit for the first exam you must first have a bachelor's degree. Because of these experience and time requirements, the program is therefore seen to be somewhat in comparison to having a graduate-level degree, although the study and coursework are completely self-administered. You might think of it as something more familiar to most people like a CPA in regards to professionalism and rigor. But instead of looking backwards at tax and audit information and cleaning up messes, the CFA gets to look forward at budgets and forecasting and make a lot of guesses. (yes i know that rhymes)

The curriculum, and it's corresponding tests are administered by the CFA Institute who tout the program as

...an educational challenge where you build a fundamental knowledge of investment principles that is relevant in every market around the world

The CFAI requires stringent ethical standards and continuing education requirements in order for a charter holder maintain the designation.

The course of study over the three years of testing covers:

1. Ethical and Professional Standards
2. Quantitative Methods
3. Economics
4. Financial Reporting and Analysis
5. Corporate Finance
6. Equity Investments
7. Fixed Income
8. Derivatives
9. Alternative Investments
10. Portfolio Management and Wealth Planning

When you sign up for the CFA Exam you are charged the $1000+ (depending on when you sign up) which includes the complete core curriculum of 5 books which cover the above topics, one sample exam, and one mock exam. The difference being that the "mock" is timed and simulates the constraints you'll be put under on the exam day.

The good thing is that the cost of the course and the curriculum is tax deductible in the US as a Job Expense depending on your state of residence, and there are even some discounts given by the CFAI to people applying for the same level a second time.

The bad thing is that the material is copious and incredibly dry. Most people choose to supplement this material with study aides such as this one, and others provided by professional test prep companies. I've compiled more information on those in the Helpful Links page.

In the 2008 Institute Facts and Statistics Report (.pdf) the members were categorized accordingly...

More than 95,000 investment professionals, including the world’s 82,000 CFA charterholders, in 133 countries and territories:

• 86% are charterholders; 14% are noncharterholders
• 30% work for investment companies/mutual funds
• 5% work for hedge funds/funds of hedge funds
• 6% work for commercial retailor mortgage banks
• 4% work for insurance companies
• 2% work for pensions and foundations
• 9% work as private client wealth managers/advisers
• 16% are employed by investment banks/ broker dealers
• 24% work for other organizations, such as consultancy, government/regulatory, academic or research firms

As is often true, the ebb and flow of obtaining higher education and professional certifications is anti-cyclical. When the market slumps, individuals often seek to re-tool and prepare themselves for a more competitive job market. Bloomberg.com wrote an article in June of 2008 about how applicant numbers to the CFA program have soared in the given circumstances of today's economic environment. Taking the plunge into obtaining a CFA designation is no lighthearted decision. I decided on dedicating myself to the endeavor after exploring the idea of an MBA. I find the time investment of obtaining the CFA technically isn't as intensive as an MBA, but when compounded with having a day job, can be just as draining. In the long run it was the cost comparisons for me. Taking the tests at my pace and not sinking myself further into educational debts is where my logic settled.