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Edited by Michael Kyrou, CFA
Vice President
CFAÂ Society of
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Successful investors recognize the importance of education and knowledge when it comes to managing financial assets. But while they may spend countless hours learning about markets, securities, and associated risks, investors often overlook the qualifications of the professionals whom they hire to manage their money.
If you work with investment advisors, they will have access to the personal details of your finances, so their credentials should matter to you. There are a number of reputable and applicable credentials that financial professionals in different disciplines may hold, but none is as rigorously focused on investment knowledge as the Chartered Financial Analyst (CFA) designation. Understanding the significance of the CFA charter — and what is required of investment professionals in order to hold it — can be useful information when choosing an investment advisor.
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Global Relevance
With CFA charterholders in more than 120 countries and the increasing demand worldwide for the CFA Program, the CFA charter has become the global professional investment credential. The CFA charter is often referred to as a professional global “passport,” providing the knowledge and expertise that allows CFA charterholders to practice across international boundaries. Others have referred to it as the gold standard of the industry.
Each June and December, tens of thousands of candidates sit for the CFA examination at more than 180 sites around the world. In 2006, CFA Institute will see more than 110,000 candidates from almost 150 countries enrol to take one of the three-level CFA exams. Since 1998, some of the most significant growth in candidate numbers has occurred in Europe and Asia, particularly
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Knowledge and Experience
To become a CFA charterholder, a candidate must pass a series of three six-hour examinations, taken in sequence. Average completion time is four years. Core elements of the CFA curriculum include investment tools (economics, financial statement analysis, quantitative analysis, and corporate finance), asset valuation (analysis of debt investments, equity investments, derivatives, and alternative investments), and portfolio management (both institutional and individual, including performance measurement).
Importantly, each examination includes a section that thoroughly tests knowledge and application of ethical and professional standards. To ensure that the CFA Program stays current with the ever changing dynamics of professional investment practice throughout the world, CFA Institute member volunteers and professional staff annually develop and update the curriculum and construct the examinations.
Achieving passing scores on all three exams is no small feat. Each of the six-hour examinations takes, on average, a minimum of approximately 250 hours of intensive self-study and preparation.
The combined pass rate (aggregated over all three exam levels) for the June and December exams since 1963 is 52%.
As rigorous as the curriculum and examinations are, the CFA Program requires more than academic preparation. Before they earn the right to use the CFA designation, candidates must have three to four years of professional experience in the investment decision-making process. Additionally, they must fulfil the CFA Institute membership requirements and commit to uphold the stringent CFA Institute Code of Ethics and Standards of Professional Conduct.
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Ethics
The integrity of investment advisors is of the utmost importance. Their skills and advice directly impact the financial well-being of their clients. That is why every CFA charterholder, CFA Institute member, and CFA candidate is required to sign an annual statement declaring his/her adherence to the CFA Institute Code of Ethics and Standards
of Professional Conduct.
The Code and Standards require members and candidates to act with integrity, practice in a professional and ethical manner, exercise independent professional judgment, maintain and improve their professional competence, and put client interests before their own. The 160-page CFA Institute Standards of Practice Handbook — an “instruction manual” for ethical guidance within the investment community — interprets and expands upon the requirements of the Code and Standards.
CFA Institute investigates all allegations of violations of the Code and Standards, whether self-disclosed by the CFA charterholder or raised by an investor, fellow investment professional, or the media. Those who are found to have violated the Code and Standards, or who fail to divulge formal complaints as required in the annual CFA Institute Professional Conduct Statement, are subject to disciplinary sanctions from CFA Institute. Sanctions can range from private censure up to revoking membership in CFA Institute and the right to use the CFA designation.
Recognition A relevant and evolving curriculum, rigorous examinations, and a stringent application of the CFA Institute Code of Ethics and Standards of Professional Conduct have been hallmarks of the CFA Program throughout its history. Recognition of the CFA Program’s globally relevant Candidate Body of Knowledge and the professional standards embodied in the program makes the CFA designation the mark of distinction for investment professionals worldwide. It is a global distinction recognized and rewarded by employers, respected by regulators and investment institutions, and demanded by private investors.
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The CFA Society of Cyprus is a member society of CFA Institute, an international, nonprofit member organization of more than 82,000 investment practitioners and educators in 124 countries. The CFA Institute awards the Chartered Financial Analyst (CFA) professional qualification, the designation of professional excellence within the global investment community. For more information on the CFA designation, visit www.cfainstitute.org or the CFA Society of Cyprus web page on www.cfacyprus.com .
