What Is A Certified Financial Analyst?

"When I graduate, it is my goal to become a financial analyst. I heard that I can get more work/earn more money if I pursue certification. What is a certified financial analyst, and how is it different from a non-certified financial analyst? Also, is it any different from a chartered financial analyst?"

asked by Matt from Providence, RI

Chartered Financial Analyst (CFA) is actually the name of the professional credential which is offered by the CFA Institute (they used to be known as the Association for Investment Management Research). So a Chartered Financial Analyst is the same thing as a certified financial analyst—it is actually the more proper name.

If you are a Chartered Financial Analyst, you are also called “CFA charterholder.” The CFA is not interchangeable with an academic degree. You can earn a degree and not earn the CFA certification, or you can not earn a degree and earn the CFA certification. Best of course is if you do both.

The CFA test is not an easy one. In fact, fewer than 20% of the candidates who apply for it manage to pass all three associated exams on their first try. There are other requirements as well to earn the certification. You must have four years of qualified work experience (education may substitute if the CFA Institute approves it). You must also complete the CFA Program, which is the educational program that teaches you what you need to know to pass the three exams. You also must become a CFA Institute member and apply to a local member society.

The CFA also has a set of ethical guidelines: the CFA Institute Code of Ethics and Standards of Professional Conduct. You must adhere to these guidelines at all times. The program typically takes four years, regardless of whether you are also pursuing a college degree in finance.

Many financial programs at universities are starting to incorporate aspects of the CFA Institute program curriculum into their own educational programs. If you are planning to become a CFA charterholder, you will set yourself up to pass the exams by taking one of these courses in college along with the required CFA coursework.

Should you do both, or simply pick one or the other (CFA or MBA)? That depends on what you want to do. MBA is rather general, whereas CFA is more specific—plus the CFA is now considered the “gold standard” of expertise. As such, outside of management positions, it is generally the more valuable designation in financial analysis.

The CFA is probably more valuable to start with, but the MBA can help you get on track for a management position. If you know you are interested in management, you may want to pursue both the MBA and CFA. If you are not interested in management, the CFA alone may be sufficient. Another option would be to pursue the CFA first, and then go back to school a few years later to earn your MBA.

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