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Why China is the fastest growing region for the CFA

David Xie

David Xie, President of the CFA Society Beijing

Whether this weekend’s CFA exams were a nightmare or surprisingly easy, the fact is that if you sat them in Asia you’re in the majority. Latest figures from the CFA Institute shows that Asia Pacific continues to be the largest source of candidates. And in the region, China had the largest number of exam takers. In total 29,689 candidates in China took the exam this weekend, up 16% a year ago. In fact, China came second in terms of candidate numbers, second just to the United States.

We talked to David Xie, president for the CFA Society in Beijing to find out how he thinks about the rapid growing popularity of CFA in China.

Q: Why has the CFA exam gained so much popularity in China?

A: The CFA candidate numbers in China has actually been growing rapidly in the past ten years. This is simply because of the rapid growth of China’s financial sector. Let’s not forget CFA courses provide a very systematic and holistic way of studying investment-related subjects, and globally there is still no other course better than CFA. Given that China’s growing financial market needs more and more financial professionals, and these professionals are in great demand of such systematic and authoritative training. CFA provides just that. So I don’t think it’s surprising at all.

Q: Many Chinese students face difficult choices between CFA, MBA or a Master in Finance. Do you have any advice for them?

A: I think these are quite different from each other. Both Master in Finance and MBA are degree educations, while CFA is essentially a kind of out-of-school self-study which is very flexible in terms of time. It’s better for those already in work, particularly those young people who have worked for about two or three years and who have some spare time. To go for a degree course like MBA would be a very big decision.

Q: Is it correct that most Chinese candidates take CFA level I rather than levels II and III? If so, why is this?

A: No, that’s not the case. People have this impression probably because they see less people taking level II and III. This is due to the passing rate. There are always less people taking higher levels. That is why. It’s not a unique situation in China alone.

Q: What is the passing rate for Chinese CFA exam takers for level I, II, III respectively? And what about the dropping rate?

A: The CFA Institute will provide the passing rate figure on a global basis, but I don’t seem to recall if that’s broken down to each country. But as far as I know, I think the passing rate for China should be similar to anywhere else in the world, because passing rate depends more on how much time a student spends on studying, rather than on countries and regions.

The same goes with dropping-out rates. Many take the level I exam while still at school, or have just left school. They have relatively more time than when they take level II or level III, when they are much busier or have opted for something else in career. This is very natural.

On the other hand, we do see some very impressive examples that people who are already very senior still go to take level III and pass the exam. We admire them a lot.

Q: In China, which of them place more weight on a CFA qualification and employ more CFA charterholders, the big global banks or the local securities firms?

A: It’s a bit hard to compare like this. If we wind the clock back five or six years, or even ten years, Chinese local firms didn’t know too much about CFA , so it would be the global banks that recognized CFA more. But in recent years, local firms have had a much better understanding of CFA, not only those banks or securities firms, but also some small or mid-sized funds, who are now showing preference to CFA charterholders. So I don’t think there is too much difference now.

Q: Is it necessary to take all levels of the CFA qualification and to become a charterholder if someone really wants to improve their career prospects?

A: I feel this largely depend on one’s career development decisions. Even for those who have passed all three levels, their career paths vary a lot. It’s important to note that each of the three levels cover different topics, which are designed in accordance with the career paths of most financial professionals. If you are an analyst or associate who carries out a lot of foundation works, then you need more level I knowledge; if your work involves investment decisions, then probably you need to know more about level III. However, if you really aim for a investment management position within a financial institution, then I feel it’s important to pass all three levels.

Q: Why do candidates in China fail the CFA level I exam? What advice would you offer someone who fails?

A: I myself have taken the CFA exams, so I can speak from my own experience. I think the biggest single reason is lack of time, which leads to under preparation. After all, it’s very hard for those who have a full-time day job to study for CFA in a systematic way continuously for a few months. There are some supportive firms, but many others are not. Therefore in many cases people simply don’t have enough time to study because they are very busy with their jobs.

And it could be the same with students. Although students have more time, many of them don’t have a clear career goal yet. They tend to take a number of different exams before leaving school, so they end up not giving enough time to CFA.

Overall, I think there is no shortcut in studying CFA. You have to spend enough time on it, and sacrifice a lot of other things. This is the biggest reason I can think of.

Q: Are there any situations in which you would dissuade a Chinese candidate from taking CFA exams?

A: Yes, when a student doesn’t have a clear career goal in mind. Of course I wouldn’t say “don’t take the CFA”, I just want him to think it over carefully what he wants. Some students have a lot of spare time in school, so they just take as many exams as possible, thinking that the more qualifications they have, the more choice they have. I feel this might not bring them really good opportunities in the future, because they themselves don’t know what they want to do. If he joins an IT company upon graduation, then CFA is of little use to him.

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