A CFA can only be good for your career – right? After all, it’s not easy: only 20% of people make it through all three levels, and as few as 34% of people pass the CFA Level 1.
However, even though a CFA is often a good career move, in some situations it simply isn’t. Which situations? Well…
1) When you really want to work in trading
The CFA is particularly geared to people who want to work in fund management and equity research.
Even the CFA Institute admits as much: “Money managers and equity researchers are our primary market,” says UK spokesman Steve Wellard. “We’re also increasingly seeing uptake for our exams by people who work in high net worth wealth management.”
Although Wellard says the CFA can be useful for people who want to work in trading (“The strength of the programme is that it’s a generalist qualification”), would-be traders who come touting CFA qualifications may be seen as slightly misinformed.
“A CFA is most relevant if you are investing in public markets,” says Jim Nairn, a director at Cornell Partnership. “It’s a lot less relevant if you’re a trader.”
2) When you really want to work in private equity
Just as touting a CFA may make you look a little ill-informed if you want to move into trading, it could appear out of place if you want to work in private equity.
“Top private equity funds are much more interested in whether you’ve been a top ranked analyst at Goldman Sachs than whether you’ve done a CFA or not,” says David Howell, managing director of private equity recruiters EM Financial. “A CFA really won’t make much difference.”
3) When you don’t have the time to spend 15-20 hours a week reading (potentially dull) study materials
The CFA itself estimates that studying for each of its three exams will take 15-20 hours a week over 18 weeks, and that candidates spend an average of 300 hours preparing for each exam.
This is a significant portion of time, particularly given that the study materials don’t appear particularly engaging. “In my opinion, it’s brain-damagingly boring,” says one senior ex-trader who’s currently studying for Level 1. “I’m supposed to be doing it now, but am finding it very difficult to get started.”
Before committing to studying the CFA, it’s therefore worth considering the opportunity costs. A CFA may be mandatory if you want to get a role in investment management or equity research, but in other areas it’s a merely a nice to have. Is spending 15-20 hours a week on extra study really the best use of your time?
4) When you’re out of the market and trying vainly to get back in
A CFA shows commitment to working in financial services, but if you’ve already got financial services experience and no one will take you up on it, do you really need to demonstrate how committed you are?
Instead of spending all that time studying (see point 3), you might want to spend your time networking with recruiters and contacts still working in the industry. They’re more likely to increase your chances of getting back in than a CFA – particularly if it’s just a CFA Level 1.
Equally, a CFA won’t make much difference if you’re out of the market and want to get back in to a totally different area (particularly if that area happens to be the front office and your experience is in the back/middle office). “Some people take the CFA in the hope that it will get them into an area of financial services they wouldn’t otherwise have access to,” says Nairn. “Clearly that’s a gamble. More often than not, it won’t pay off.”
5) When you repeatedly fail level 1
66% of people failed the CFA Level 1 exam last December. There are no limits on how many times you can take the exams, but Wellard says most people give up after two or three attempts.
If you can’t pass CFA Level 1, and your employer, or potential employer becomes aware of this, it will not look good – you’re better off not trying at all.
6) When you put time aside to complete level 1, but have no intention of completing levels 2 or 3
Since the CFA’s conception, only 117,831 people globally have passed CFA Level 3, a process which takes three to four years (and at least 900 hours of study).
By comparison, 20,000 or more people pass CFA Level 1 every year. Therefore, if you really want the CFA to make a difference to your career, you’ll need to become a full charterholder and complete all three levels. Only having Level 1 could be construed as a lack of commitment.