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Morning Coffee: Is it worth burning out over the CFA? Credit Suisse wants to be the number one investment bank

CFA exams

Back in the day, CFA charterholder status was an exclusive club. Up until the early-noughties, the numbers taking CFA level III were low, and the pass rate regularly hit 70% plus. This year, as the biggest ever cohort of people earned their charterholder stripes, it’s more of a badge of honour for a long and hard struggle.

15,606 people passed level III in June, nearly 1,000 more people than last year and the biggest ever number. 2006 was a bit of a last hurrah – 16,283 people showed up and 76% passed. Since then, as the number of test takers has grown, pass rates have barely broken 50%. This year, 54% of candidates made it through and there are now 209,561 charterholders.

The CFA Institute says it’s all about “professional knowledge and ethics” among finance professionals and wants as many people as possible to take the exams. It also recommends 1,000 hours of study for all three levels across four years. The reality is that it’s more likely to take 400 hours plus per exam (in between a full-time job and regular life pressures), could take up to eight attempts and trying to do it quickly can be very bad for your health. Those on the other side of all this should be asking what impact it will have on their career and whether the whole thing is really worth it.

In case you’re wondering what opportunities will open up, you are far more likely to work in portfolio management than anything else, or failing that equity research.

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While asset management has held up well compared to other financial services sector since the 2008 financial crisis, the rise of ETFs and other index-trackers together with ongoing consolidation hardly screams an industry in its hey day. Meanwhile, equity research headcount has been decimated since the financial crisis – headcount has halved since 2007 – and even senior analysts have gone from earning millions pre-crisis to around $700k tops. Yes, the buy-side has taken up the slack somewhat, but it’s still a decidedly less lucrative and stable career.

The CFA member directory also suggests that there are just 226 charterholders working at Blackrock globally and 28 at Pimco. The biggest employer, at least in 2014, was UBS which had 420 charterholders.

The CFA still holds a lot of weight, of course, and will undoubtedly open up both a broad network of other charterholders and career opportunities, as countless people will testify. But financial services is smaller world, the competition for places is as great as ever and the number of people holding the qualification gets ever-bigger, its value is undoubtedly diluted.

Separately, as much as Tidjane Thiam, Credit Suisse’s CEO, mentioned the need to cut costs in order to boost profitability and how he ‘reengineered’ the markets business in just eight weeks during a long Q&A with Bloomberg, he needs a strong investment bank really.

This is essentially the reiterating the theme of providing investment banking services to very rich individuals in order to bolster its wealth management unit. But Thiam wants to be the best.

“For these billionaires, much of their wealth is in physical assets. What you do as a banker is monetize those assets,” he said. “Moving them out of that position takes a lot of investment banking skill. We can only be successful in the long term if we are best in class at investment banking. These clients don’t want to deal with the second best or third best.”

Meanwhile:

Bankers in London sending out “exploratory nibbles” to schools on the Continent in case they have to move out of the UK (WSJ)

VTB Capital has quietly trimmed 115 people – or 22% of its headcount – from London over the past year (Intellinews)

Nomura has shifted its head of north Asian rates trading to lead its European emerging market macro desk (Financial News)

J.P. Morgan has no problems with its IPO pipeline (Business Insider)

Wall Street firms step up efforts to stop regulators clamping down on compensation (WSJ)

Hedge funds are too big individually to move fast and are all crowding around the same investments (Bloomberg)

10% of people quit their jobs dramatically. Employers don’t like these ‘bridge-burners’ (NYMag)

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