What does a certified financial analyst do?

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December 10 2018
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One of the most highly regarded certifications in the financial services sector is the certified or chartered financial analyst (CFA) designation. In order to ensure technical expertise, professionals aiming to get a CFA designation have to undergo in-depth training and pass rigorous exams. We've broken down exactly what these professionals do to necessitate such high standards.

What is a CFA and what does a CFA do?

A certified financial analyst is a financial and investment professional who, like other financial professionals, advises their business and/or individual clients on their assets and investments. They analyse investments, stocks and companies in order to give their clients appropriate advice on making investment decisions and implementing strategies.

Although it may seem as if CFAs are on par with other professional designations, CFAs have to go through more rigorous education, training and testing before they could acquire their designation. Though the work that CFAs do may be similar to the work done by other financial professionals, CFAs are generally highly regarded because of their technical expertise and high ethical standards.

What’s so special about the ‘CFA’ designation?

A CFA designation is given to financial service professionals who have completed rigorous training and education, accomplished all requirements set by the CFA Institute, and passed all three CFA examinations in succession. Since it began in 1963, the CFA exams have an overall passing rate of 44 per cent, and each text requires at least 300 hours of study.

The CFA certification also requires its passers to conduct their professional services according to high ethical standards.

Simply put, a financial or investment professional who has a CFA designation has dedicated a large amount of time in gaining in-depth knowledge and passed rigorous testing for the benefit of their clients.

What are the requirements to receive a CFA designation?

To qualify for a CFA designation, every financial services professional is required to acquire a bachelor’s degree related to finance or economics and have professional experience in a related field. If an individual with professional experience holds a bachelor’s degree in a different field, they would still be required to take up a master of business administration degree to fulfil this educational requirement.

Once they have the preliminary requirements above, they are now qualified to enroll in the Certified Financial Analyst (CFA) Program – a self-study graduate-level program composed of three gruelling exam levels that professionals need to pass in succession.

The CFA Institute estimates that a professional looking to acquire the CFA designation would have to invest approximately 300 hours per exam level. However, these exams are so extensive that only a small percentage of professionals can actually pass all three in succession in one take – or fewer than 20 per cent of all candidates.

Once they pass all three exams, they are finally qualified to become a member of the CFA Institute – and this membership is a requirement. In addition, before they are given the CFA designation, professionals must have four years of professional experience in a related field under their belt.

As a member of the CFA Institute, they must also agree to uphold the institute’s Code of Ethics and Standards of Professional Conduct.

Would hiring a CFA give clients better investment returns?

Hiring a CFA wouldn’t necessarily mean getting better investment returns as returns are still dependent on the client’s objectives, portfolio, market conditions and the CFA’s expertise and strategy, among other factors.

Hiring a CFA simply means that a client has a partner with a more extensive knowledge of the financial and investment markets and a high ethical standard – lessening susceptibility to risk and the possibility of loss.

About the author

Louise is a content producer for Momentum Media’s nestegg who likes keeping up-to-date with all the ways people can work towards financial stability in 2019. She also enjoys turning complex information into easy-to-digest, practical tips to help those who want to achieve financial independence.

About the author

Louise is a content producer for Momentum Media’s nestegg who likes keeping up-to-date with all the ways people can work towards financial stability in 2019. She also enjoys turning complex information into easy-to-digest, practical tips to help those who want to achieve financial independence.

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