On 17th August 2021, Bloomberg published an opinion piece titled “Wall Street’s CFA Program Is a Colossal Waste of Time ” and this post is a response to that article. The CFA Charter has very often been regarded as the gold standard when it comes to qualifications in the financial industry and this article has undoubtedly ignited some discussions, with subreddit threads such as this one being just one of the few examples. Calling the CFA program a “Colossal Waste of Time” seems to be a pretty bold statement and given that in the article the author (Jared Dillian) mentions that he passed level I but never completed the qualification, a lot of readers were quick to dismiss his opinion. The author also expressed his view that he favours MBAs over the CFA program which caused a slight digression towards the comparison of the two qualifications. However, some readers were eager to identify elements of truth in the article as they possibly mull over their options following the decrease in pass rates for the latest sittings.
Having completed the CFA program, an MSc in Finance and an MBA in Finance, I felt compelled to share my thoughts on this article as I truly believe that calling the CFA program a “Colossal Waste of Time” is not only misleading, but could also deprive current and potential candidates of good career opportunities. Out of all the qualifications that I have completed as a professional, the CFA Charter is the one that undoubtedly added the most value for me in the following areas:
– new career opportunities
– career progression
– salary rise
– new skills
– networking opportunities
The CFA Charter vs an MBA
This is a comparison that gets done very often and putting aside the differences between the two programs, my opinion is that the CFA program will always be better than an MBA from a random university. There are so many MBAs out there with very high price tags which are not worth the paper that they are printed on. Given the predatory marketing tactics adopted by business schools, I can’t help but think that these degrees are nothing more than cash cows for these institutions. This limits the options to tier 1 business schools which end up being elitist and out of the reach for a lot of people. For those who are faced with the decision of quitting their job to pursue a full-time MBA, there’s that element of uncertainty whether the post MBA salary will be able to cover: tuition fees and 12-18 months of forgone income. The Bloomberg article presents the CFA program as a waste of 3-5 years but since candidates can prepare for exams whilst being employed, unlike a full-time MBA, they are able to preserve their main source of income. Yes, I do believe candidates can still have a social life whilst studying for exams if they approach the exam in the correct manner and with the right resources. The overall costs are different, CFA program $5-10K vs MBA $100K+ which makes the CFA program more accessible to a wide range of candidates from a wide range of backgrounds and in my opinion more fair and meritocratic.
There are jobs where the CFA charter is not needed
This is a point that is mentioned in the article and one that I believe is valid. Although the CFA program covers a wide range of topics, in my opinion the curriculum provides a broad foundation of the core areas within the financial industry rather than teaching candidates how to do a specific job. In the article, the author mentions that the CFA program does not make you a better investor which I agree with to an extent. What will make you a better investor is acquiring years of experience as an investor. I am a firm believer that nothing beats experience. Nevertheless, I do believe that the CFA qualification gives candidates the necessary tools for embarking on a wide range of roles in the industry. To be more specific, the qualification will not tell an equity analyst how to generate alpha, but it will give the analyst at a minimum an appreciation of the concepts that market participants will already be aware of. The value added part comes from the years of experience and the ability for the analyst to adapt his/her views to market conditions in making the most rational predictions given the available information.
One of the most valuable lessons that the three exams taught me was the harsh reality of taking an exam and being “benchmarked” against other ambitious test takers. I still remember the exams that I failed where I kept telling myself that I had studied very hard and felt that I was entitled to a pass. The sad reality was that out of the 100K+ test takers, so many had done much better than me and that my efforts were not worthy of a pass. My good enough was just not good enough. Attaining this qualification made me think of how badly I wanted to do better than the average candidate and it inspired me to be more resourceful and to be strategic in achieving my goal. This mindset has helped me a lot as a professional; perseverance has taught me that almost any “colossal” obstacle can be overcome with the right mindset and discipline. I understand that there has been a lot of criticism about the low pass rates but I do believe that this is justified by CFAI’s need to maintain a certain standard.
Hiring and Job Opportunities
The program still has a very strong brand image amongst employers and there are a lot of jobs out there which list the CFA charter as plus . I am also aware of a lot of recruiters who just look at keywords when sifting through CVs and the CFA designation is one of those words; so I could foresee cases where having those three letters after your name could help you get that interview, especially for competitive roles. Having been a hiring manager myself and having spoken to applicants who either had the charter or were pursuing it, I at least had some understanding/awareness of what level of knowledge the individual in front of me had. This made it more efficient in testing the candidate’s theoretical knowledge as we had both studied from the same curriculum(s).
There are more points that I could list in support of the CFA program but these are the main ones that I wanted to share. The Bloomberg piece does have some valid points, and indeed the the CFA curriculum is not a licensure exam but I personally think that it can help a wide range of individuals in the financial industry. I do believe that the author’s view is skewed towards his perception or definition of a successful career. There are so many roles out there both front office and not front office which represent good career opportunities. The qualification might not help you transform into Gordon Gekko but it will still continue to exist as a very well respected program in the industry.