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CFA® Program for Me?

In this article I will address the fundamental question of who should pursue the CFA® designation.  I will also talk about the CFA certification relative to other popular finance and accounting certifications.

Many people wonder how much education is necessary to enter the CFA program and whether a finance background is necessary.  This is addressed on the CFA website:

To enroll in the CFA program and register for your first exam, you must meet the entrance requirements:

·         Have a bachelor's (or equivalent) degree
- or be in the final year of your bachelor's degree program at the time of registration
- or have four years of qualified, professional work experience
- or have a combination of work and college experience that totals at least four years (Note: Summer, part-time, and internship positions do not qualify)

Some of my students have entered the CFA program after completing their B Com degree. From this we can conclude that the CFA Institute implicitly treats B Com as equivalent to the bachelor’s degree.  In terms of whether a finance background is necessary, the simple answer is ‘No’.  The course material does not assume prior knowledge of finance and economics.  Hence engineers, IT professionals and even arts students can enter the CFA program.    

With the eligibility criteria now clear, let us explore the more subjective area of who should enter the CFA program.  The CFA progarm is a logical choice if you are interested in careers which involve investment analysis.  Examples of such occupations include treasury management, pension fund management, equity research and asset management, just to name a few.  The CFA certification also makes sense if you are a non-finance professional at a financial institution, such as a large bank, and want to move to the business side.  For instance, imagine you are an IT consultant implementing a Treasury Management System at a large multinational bank and decide that you want to switch from IT to Treasury.  Pursuing the CFA certification will certainly help with the career change.

While the CFA certification is logical in the above example, this does not mean that it is the only certification for any finance career.  There are several other qualifications such as Financial Risk Management (FRM), Chartered Institute of Management Accountants (CIMA), and Chartered Accountancy (CA).  The certifications and qualifications you pursue should be in line with your interests and career aspirations.  As an example the increasingly popular FRM certification makes sense for people who are committed to an international career in risk management for financial institutions.  I emphasize ‘international career’ because FRM goes into depths of material that is seldom relevant in the Pakistani market.  FRM’s emphasis on credit risk, market risk and operational risk highlights the focus on risk management for financial institutions.  While FRM is growing in popularity it still lags behind the CFA program in terms of global recognition.  In browsing through job postings phrases like ‘CFA  certificiation required’ or ‘CFA certification recommended’ overshadow references to FRM.  To learn more about FRM visit www.garp.org.

If you are interested in climbing the corporate ladder at large non-financial companies (FMCGs, Oil and Gas, etc.) the CFA program is probably not the obvious choice even if you wish to focus on the financial side of such organizations.  Qualifications such as CA and CIMA will be considerably more useful in this case.  The CA is a rigorous, competitive and globally respected finance program.  Personally I find the term ‘Chartered Accountancy’ slightly misleading because there is a lot more to the CA than accountancy.  While training to become a Chartered Accountant one receives a well-rounded education in business, economics, corporate finance, auditing, taxation, management, corporate governance and information systems.  Chartered Accountancy is the logical choice for those who want to build a career at accounting/auditing firms like PwC and E&Y. CAs are also sought after in finance/accounting departments at local and multinational companies.  Many chief financial officers and chief executive officers have a CA background.    

Another certification which has been gaining ground is CIMA. This is the world’s largest professional body of management accountants.  CIMA focuses on the use of finance as a strategic management tool.  Hence if you are interested in the finance track at large multinationals, CIMA is an appropriate choice.  To learn more about CIMA visit www.cimaglobal.com. 

In summary, do not simply enter the CFA program because that is what your friends are doing.  Your decision should be based on your career aspirations.  If your current or future line of work is in the financial services industry and involves some form of investment analysis, the CFA program makes sense.  If not then you should look elsewhere.
 
 “CFA Institute does not endorse, promote or warrant the accuracy or quality of Irfanullah Financial Training. CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.”
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