If you have a head for numbers, a passion for business and a knack for helping your clients make money, a career in finance could be right for you. To get the best jobs in investment and portfolio management, you should consider earning the Chartered Financial Analyst (CFA) credential.
What Does a Financial Analyst Do?
A financial analyst works with individuals, government agencies, businesses and not-for-profits to help them get the most from their investments. Financial analysts might work for investment banks, helping both business and consumer clients manage their investment portfolios. They might also work for pension funds, helping local, state and federal government manage large pension funds for public employees. In addition, if a university has a large endowment to invest, then it might hire a financial analyst to diversify its portfolio.
About 45 percent of financial analysts work in the finance and insurance industries. Many financial analysts work in large cities, such as New York and London, which serve as the world’s financial centers.
The best preparation is a college degree with a heavy focus on quantitative concepts. A bachelor’s degree in economics, finance, accounting, statistics, engineering or mathematics could all lead to a job in finance. Top-tier jobs usually require an MBA or other finance degree, such as a Master of Science in Security Analysis and Portfolio Management. To learn more about how investment managers find jobs, read this article published by a university that offers an MSSAPM degree.
How Do You Become a CFA?
Just as every accountant isn’t a CPA, not every financial analyst is a CFA. Those analysts that become CFA charterholders complete three levels of coursework offered by the CFA Institute. After completing each level, students must pass a six-hour exam.
- Level I. Students study the basic information about investment tools.
- Level II. Level II starts students on investment analysis and helps them to learn to value assets.
- Level III. In Level III, students put their knowledge into practice, synthesizing everything they’ve learned for applications in wealth management and portfolio management.
The CFA Institute suggests giving yourself six months to study each level and to prepare for each exam. If you don’t pass the first time, you can re-take the exam until you do pass. The exam is demanding, so be prepared to work hard. Worldwide, the CFA Institute identifies 110,096 practicing CFA professionals; 180,000 students sign up for the exam every year. About one out of five students who signs up for CFA Institute classes actually becomes a charterholder.
In addition to passing their exams, CFAs have to be members of the CFA Institute. They must also abide by a strict code of professional ethics. While preparing for exams, students simultaneously earn the required four years of work experience. Some universities incorporate CFA Institute courses into their degree programs, allowing students to earn academic credit while working toward their CFA charters.
Is Becoming a CFA Worth All of the Hard Work?
The Bureau of Labor Statistics states that financial analyst jobs are expected to grow faster than average for all occupations. Even though growth is rapid, finance remains a competitive field, and there will be more financial analyst job candidates than there are available jobs.
A graduate degree and a CFA charter provide a significant competitive edge for someone seeking a job in finance. Also, according to Thomas Robinson, managing director of the Americas for the CFA Institute, earning a CFA designation, assuming that students pass the exams on the first try, costs less than a single MBA course.
It’s impossible to say that becoming a CFA will guarantee you a job, but more and more job listings are requiring CFA charters or including language that says, “CFA preferred.” Although students can find introductory jobs without a graduate degree and CFA charter, it’s unlikely that they’ll have access to top-tier jobs without the additional education and training.