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What is a Chartered Financial Analyst?

The Chartered Financial Analyst (CFA) designation refers to financial professionals who have passed the CFA Institute’s rigorous exam. The professional CFA exam measures the competence of financial and investment analysts. Exam candidates are required to pass three exams that become progressively more challenging. The exam covers areas such as ethics, economics, accounting, security analysis and money management. The CFA credential is one of the most respected designations in the worlds of finance and investment analysis.

CFA Exam Requirements

Anyone who wants to apply for the CFA exam must have at least four years of direct and recent investment or financial experience. Exam candidates will need to hold at least a bachelor’s degree. Some students choose to first earn a master’s degree in finance in order to help them naturally prepare for the exams. Exam candidates must consecutively pass all three levels of the CFA program in proper order.

Each exam lasts six hours long. Those who pass must become a member of the CFA Institute, pay annual dues and pursue continuing professional development. Finally, they must annually sign the CFA Institute’s Code of Ethics and Standards of Professional Conduct agreement. Those who fail to adhere to the ethics and standards may lose their CFA designation or be banned for life from the CFA Institute.

The Three Exams

The level one exam is only administered twice per year in June and December. This exam focuses on financial analysis using the basic tools of the 10 major topic areas found in the Candidate Body of Knowledge. These areas include economics, ethical practices, financial reporting, professional standards, quantitative methods and corporate finance. The exam may include questions on derivatives, fixed income, wealth planning, portfolio management and equity and alternative investments.

The level two exam is only offered once per year in June. This exam focuses on the valuation of various assets, concepts in contextual situations and the application of investment tools. Approximately 40 percent of test takers pass the first and second exam on their first try. The level three exam is also only offered once per year in June. It focuses on portfolio management and effective wealth planning. Around 50 percent of test takers pass the third exam on their first attempt.

Job Duties

CFAs prepare various recommendations regarding investment strategies, portfolio policies, new investment opportunities and trading best practices. They participate in the review, selection and retention of financial or investment plans. They monitor capital markets, economic forecasts, market analyses, professional reports and global economic situations through the media. They implement investment actions and strategies in accordance with established goals and guidelines.

They work with clients to make wise financial and investment decisions. They maintain conformance to client requests, but are expected to submit consultations and recommendations for alternative actions. CFAs recommends appropriate investment procedures, ensure proper due diligence reviews and submit appropriate documentation for all investment actions. Senior CFAs may also maintain operational procedures and internal standards to ensure smooth business functions and top notch customer service.

A Chartered Financial Analyst will need experience evaluating, recommending and implementing strategies for specific investments, such as equity, stocks, retirement and real estate. They should have experience evaluating performance reports, account reconciliations, attribution analysis and risk management reviews.

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