What is CFA?

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A chartered financial analyst (CFA) is a globally-recognized professional designation given by the CFA Institute, (formerly the AIMR (Association for Investment Management and Research)), that measures and certifies the competence and integrity of financial analysts. Candidates are required to pass three levels of exams covering areas, such as accounting, economics, ethics, money management, and security analysis.From 1963 to the first half of 2022, more than two million candidates have sat for the Level I exam, with 291,500 candidates ultimately going on to pass the Level III exam, representing a weighted average completion rate of around 11%. In the last 10 years, the completion rate was slightly lower at 9.6%.

Definition

The Chartered Financial Analyst (CFA) is a globally recognized professional credential awarded by the CFA Institute. It is used to measure and certify the competence and integrity of financial analysts. Candidates must pass three levels of exams covering areas such as accounting, economics, ethics, financial management, and securities analysis.

Origin

The CFA credential was initially introduced by the Association for Investment Management and Research (AIMR) in 1963, which later became the CFA Institute. Since its inception, the CFA credential has become the gold standard in the field of financial analysis worldwide.

Categories and Features

The CFA exams are divided into three levels, each testing different knowledge and skills. Level I focuses on basic knowledge, Level II emphasizes asset valuation, and Level III concentrates on portfolio management and wealth planning. The CFA credential is characterized by its rigorous exam standards and high emphasis on ethics.

Case Studies

For instance, many analysts at JPMorgan hold the CFA credential, which aids them in conducting in-depth analysis and decision-making in complex financial markets. Another example is portfolio managers at Goldman Sachs, who utilize the skills learned from the CFA to optimize client portfolios.

Common Issues

Investors often misunderstand that the CFA credential is only applicable to investment banking. In reality, CFA charterholders can work in various financial fields, including asset management, risk management, and consulting. Another common issue is the difficulty of the exams, with many candidates underestimating the time and effort required for preparation.

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