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“The CFA is just a hazing ritual for young finance professionals”

CFA exam worth it

Is the CFA exam worth it?

Lewis Krell is a former investment analyst turned tech employee and journalist. When his former employer asked him to take CFA Level I, he obliged – to begin with. And then he dropped out and gave up. Now he’s becoming known for voicing his opinion that the CFA exams are a waste of time.

We caught up with Lewis just before he flew from Seattle to NYC last week. This is what he said.

So you’re a journalist now?…

Not exactly. I actually left finance to join a travel technology start-up called Utrip as the director of business development. It’s more or less the exact opposite of my old role and I couldn’t be happier.

As for writing, I’ve always enjoyed it and I now freelance and write about a variety of different topics, almost all of which I’m unqualified to speak about. I’ve written primarily for the Huffington Post and about college basketball for AZ Desert Swarm on SB Nation.

What role were you doing when you were taking the CFA?

I was working as an investment analyst in our global manager research team. That probably sounds more impressive than it was. I really enjoyed my time at my old firm and it was (and is) an outstanding place to work and is filled with bright, motivated, excellent people. I can’t stress this enough, I have issues with the CFA Institute – not with any individuals and especially not with my old company which I greatly respect.

Why do you think your previous employer insisted upon it (the CFA)?

Honestly, I think a big part of it is similar to why doctors in med school work 24-hour shifts even though every study has proven this to be a terrible idea – it’s basically a hazing ritual.

‘If I had to do this, even if it wasn’t that beneficial for me, then so do you’.

Of course, people are always comforted by seeing more letters after a name as well and that becomes a good marketing tool when prospecting for new clients. Lastly, there is no question that getting a CFA proves you are dedicated, persistent and capable.

How close did you come to taking the CFA I exam?

Very close in the sense that I had the books and had begun studying. However, I realized very quickly that I did not want to go through with the process as I lacked the dedication to commit myself to a certification that I didn’t see the value in for me personally. It doesn’t take too much foresight to see that the value of this designation is diminishing every year and I didn’t want to work that hard and spend that much time and money to hold a certificate that I believe is depreciating in value.

I believe that the CFA Insititute has backed itself into a corner by allowing absolutely anyone in the world to take this test, and to take it is as many times as they want. Because of this, an oversupply is coming.

Every year there are a record number of applicants and although you can always make the fail rates higher and higher, the absolute number of people passing every year isn’t changing that much. And there exists a pass rate that is so low that it will discourage people from taking the test altogether. How can you keep something both open to everyone and still prestigious without making the fail rate so high that people will lose motivation? I don’t think you can.

You are now working harder to take a harder test to obtain a certification with less prestige than the people who took the test 10-20 years ago. They have already reaped the benefits and I’m not sure this new generation of test takers will.

That’s easy for you to say, but surely your career change means it doesn’t matter that you dropped the CFA qualification?

I dropped the notion of me ever obtaining the designation well before my career change. Getting educated and learning as much about finance or your given career is of course a good thing but I couldn’t help but notice the CFA was teaching a curriculum designed to give more certainty to the markets and to asset management. I firmly believe that one area that has been proven beyond a doubt is that prognostication is folly in finance. The best thing you can do as a portfolio manager is to admit that you probably don’t know as much as you think you do. The CFA gives you such an amazing amount of content to master that it’s hard to not buy into your own intelligence. If you can pass the CFA you are incredibly smart and incredibly impressive, but I’m not sure that lack of humility is a good thing when you are dealing with other people’s money in a world with absolutely no hard and fast rules.

Do most of your ex-finance colleagues have a CFA pass?

Certainly not most, but a great deal. What I found shocking is the amount of current CFA holders who have agreed partially or fully with my article. Very few people believe they have gotten anything out of the program as the network effect is very minimal and although they memorized a great deal, they didn’t actually learn or retain very much.

What should people be telling themselves if they flunked the exam on Saturday?

They should tell themselves that they are in good company. Over 50,000 other people from all over the world will also fail, so it’s not like you’re an outlier.

They also should really be thinking deeply about if obtaining this designation is really what they want because their large investment of time and money could be going to something much more worthwhile like taking that money and using it as kindling to start a fire.

Comments (6)

Comments
  1. Seems he failed and now cries that the grapes are too green for him…

  2. The CFA program is for Men with balls made of titanium. Boys like you should go do an MBA.. Seems like you failed L1

  3. I don’t understand why Sarah Butcher writes so many negative articles about the CFA. Has she failed level 1? I think the CFA should be compulsory for anyone investing third party money. A requirement that shows to clients that you have basic knowledge and some ethic.

  4. Basically, more people holding the CFA, the better. It sorts out motivated individuals from others, like this person. Do people complain because we have more and more ACCA professionals? It should be compulsory in the profession.

  5. Normally, did not pass and get frustrated with the exam. Weak person.

  6. I completely agree. In fact, I think it now makes less and less sense to get a CFA charter for a young person. Profit margins in the investment management business are being squeezed daily. We have too many asset managers.

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