10/21/2009. The CFA Program: For the professional designation of Chartered Financial Analyst. CFA Institute Mission

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1 The CFA Program: For the professional designation of Chartered Financial Analyst CFA Society of Atlanta So you want to be a CFA Charterholder? Tuesday October 20 th, 2009 By Charles E. Appeadu, Ph.D., CFA, FRM Director, Sample Exam Development CFA Institute is the global, not-for-profit association of investment professionals. The association awards the CFA and CIPM designations; publishes research; conducts professional development programs, and sets voluntary ethics-based professional and performance reporting standards for the investment management industry. The CFA Program 2 CFA Institute Mission To lead the investment profession globally by setting the highest standards of ethics, education, and professional excellence. Professional Excellence Administrator of the CFA Program the global standard for investment professionals and the CIPM Program Committed to lifelong learning; working to provide value after the designation has been earned Professional Excellence CFA Institute CFA Institute Education Ethics Education Ethics The CFA Program 3 The CFA Program 4 1

2 A leading voice on issues of fairness, efficiency, and investor protection for global capital markets through the CFA Institute Centre for Financial Market Integrity Professional Excellence A member organization with nearly 100,000 member investment professionals in over 130 countries Administrator of the CFA Institute Code of Ethics and Standards of Professional Conduct Professional Excellence CFA Institute CFA Institute Education Ethics Education Ethics The CFA Program 5 The CFA Program 6 CFA Institute Members & Candidates CFA Institute Members: Careers/Job Functions Portfolio Manager 21% Research Analyst The Americas Members: 65,800 Candidates:75,200 40% Consultant Corporate Financial Analyst Europe, Middle East & Africa Members:16,100 Candidates: 44,300 Global Members: 95,500 Candidates: 199,900 Asia Pacific Members: 13,600 Candidates: 80,400 As of 15 April % 5% 5% 6% 18% Investment Banking Analyst Risk Manager Other The CFA Program 7 The CFA Program 8 2

3 Job Ads Around the World CFA is a plus Pensions and Investments Online Job Ads Shown in One Day The Chartered Financial Analyst (CFA) designation required The Chartered Financial Analyst (CFA) designation strongly preferred The CFA Program 9 The CFA Program 10 Though the finance industry absorbs many with Masters degrees in Business Administration and finance degrees, the Chartered Financial Analyst qualification, pursued part-timetime by those already hired, has become the industry s benchmark. Whereas there are tens of thousands of finance degrees available around the world, ranging from the excellent to the worthless, there is only one CFA explosive growth has made it, in effect, global currency. -The Economist, 2005 Financial Times, 2009 The CFA Program 11 The CFA Program 12 3

4 What is the CFA Program? A self-study curriculum with three levels of examinations Practical, relevant education based on a practitioner-driven global body of investment knowledge Pass Level I, II, and III exams Complete at least four years of professional work experience Provide professional references (Level III) Initial CFA Charter Requirements Ethical and professional standards emphasized at every level Submit professional conduct statement Exam locations worldwide Apply for CFA Institute & local society membership The CFA Program 13 The CFA Program 14 Candidate Body of Knowledge Ten CBOK Topic Domains 1. Ethical and Professional Standards 2. Quantitative Methods 3. Economics 4. Financial Reporting and Analysis 5. Corporate Finance 6. Equity Investments 7. Fixed Income 8. Derivatives 9. Alternative Investments 10. Portfolio Management and Wealth Planning Investment Tools Asset Classes Portfolio Management The CFA Program 15 The CFA Program 16 Page 16 4

5 CFA Custom Curriculum Each level consists of 18 study sessions delivered in CFA Institute produced custom curriculum. Six volumes at each level Accompanied by Study Guides for each Level. Reading are sequenced in accordance with Study Guide. Learning Outcome Statements before each reading Comprehensive index and glossary Examinations Each exam is 6 hours in length; Level I offered June and December, Levels II and III offered only in June. Level Format Typical Number of Questions I Multiple Choice 240 Questions (120 in AM and 120 in PM) for 360 points (1 point = 1 minute). 1 question = 1 ½ minutes II Item Sets 20 Item Sets (10 in AM and 10 in PM); each item set has 6 questions for a total of 120 questions at 3 points/ minutes each for 360 points III Constructed Response (Essay) and Item Sets Variable number of constructed response questions in AM, usually questions for 180 points; 10 Item Sets in PM for 180 points The CFA Program 17 Page 17 The CFA Program 18 Page 18 Examinations Recent Changes Multiple choice: stand alone individual multiple choice questions (since 1968) All Multiple Choice and Item Set questions have 3 answer choices The fourth choice was often ineffective Item Set: 1-2 page cases or vignettes with 6 related multiple choice questions (since 2000) Constructed Response or Essay: discussion-type and problem solving questions (since 1963) Exams are adequate samples of CBOK The primary objective is to determine mastery of the targeted KSA s; time management should not be the dominant factor in exam success The Standard Setting process evaluates exam difficulty over time The CFA Program 19 Page 19 The CFA Program 20 Page 20 5

6 New Candidate Enrollment 2009 CFA Candidates by Region The CFA Program 21 Page 21 The CFA Program 22 June 2009 Exam Results 128,506 registered candidates from 163 countries; 104,116 sat for the exam The CFA Program is a Rigorous Undertaking 182 exam sites worldwide in 89 countries 19% no-show rate (10-year average of 25%) Overall pass rates (weighted average 45%) 46% at Level I (44% average from ) 41% at Level II (49% average from ) 49% at Level III (64% average from ) The CFA Program 23 Page 23 The CFA Program 24 6

7 Candidate Comments I ve taken more than my share of tests in my life, and these three exams have been the three hardest. The CFA Institute recommends a minimum of 250 hours to study for each exam. They are not joking. I studied around 300 hours for each exam. The CFA Program is an incredible amount of work, but you can get a lot more out of it than just better pay or job prospects. It has made me a better analyst. And having missed the last three, I ll appreciate Spring more for years to come. Recognition Strong international network of local societies (130+) and members (over 95,000) Lifelong learning opportunities through publications, conferences, and local society events Benefits of Earning the CFA Charter The CFA Program 25 Page 25 The CFA Program 26 Certificate in Investment Performance Measurement (CIPM ) Program Three Major CIPM Topic Areas A specialty credentialing program administered by CFA Institute Develops and recognizes the performance evaluation and presentation expertise of investment professionals Two three-hour examinations Practice-based curriculum Professional ethics Performance measurement, attribution, and appraisal The Global Investment Performance Standards (GIPS ) For more information about the CIPM program visit: The CFA Program 27 The CFA Program 28 7

8 Visit our website for program costs, deadlines, and information The CFA Program 29 8