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What Is the CFA® Charter?

By: Kaplan Schweser
December 22, 2020
Woman sitting at desk studying for the CFA Exam
The CFA® (Chartered Financial Analyst®) charter is a postgraduate professional designation that certifies the competence and ethics of financial analysts. According to CFA Institute, which offers the charter, it is the most respected and recognized investment management designation in the world. The process of earning the CFA charter will give you deep knowledge in the areas of investment analysis, asset management, and ethics.

Many of the top financial firms employ CFA charterholders because they are seen as having attained the “gold standard” of the industry. Holding the CFA charter demonstrates mastery of a broad range of practical portfolio management and advanced investment analysis skills.

CFA charterholders provide guidance to businesses and individuals who are making investment decisions. Assessing the performance of stocks, bonds, and other types of investments, they work in banks, pension funds, insurance companies, and other businesses. Some of the most common roles for CFA charterholders include:

  • Portfolio manager: Portfolio managers are in charge of a fund or group of funds, working with analysts, researchers, and clients to stay current on the markets.
  • Research analyst: Research analysts review data and market movements to make future predictions.
  • Risk manager: Risk managers help their company anticipate changes and avoid potential financial pitfalls.
  • Financial advisor: Financial advisors typically help clients with investments, tax laws, and insurance product selection decisions.

What is a CFA Charterholder?

CFA Institute has a global network of over 135,000 investment professionals and numerous societies around the world. The CFA charter is recognized by regulators, universities, and certification programs in at least 30 countries and territories. You’ll gain unmatched career resources and relationships by holding the charter and joining a CFA Society, as well as access to jobs around the world that require a CFA charter or candidacy.

The requirements for becoming a CFA charterholder are as follows: 

  • Achieve the required work and/or educational experience. Before registering for Level I of the CFA exam, you need to have completed a bachelor’s degree, be in your final year of a bachelor’s degree, or have 4,000 hours years of combined work experience and/or undergraduate education.
  • Take the exams. Although passing even just Level I of the CFA exam is an impressive addition to your resume, you need to pass all three in order to become a CFA charterholder.
  • Submit reference letters. Submit two to three professional reference letters (two if one is an active member of the local CFA society to which you’re applying, three if not).
  • Have a valid international passport and live in a participating country.
  • Complete your application to become a CFA charterholder. The CFA charterholder application requires that you have qualifying work experience in addition to your professional references. 


Considering the CFA charter? Download this free Before You Decide to Sit for the CFA Exam eBook.

What is the CFA Exam?

The CFA exam is made up of three levels, each designed to test your knowledge of different investment tools and skills. You should expect to spend approximately 300 hours studying for each level. Candidates typically take between 4 and 5 years to pass all three levels of the CFA exam.

CFA Exam Topics

The Learning Outcome Statements (LOS) and core concepts on the CFA exams are built from the Candidate Body of Knowledge, which is developed by CFA Institute. While the curriculum is updated every exam cycle, all three levels of the CFA exam focus on the same 10 topic areas. Exam weights vary by level and can change slightly from year-to-year. The following topic areas are covered:

  • Ethics
  • Quantitative Methods
  • Economics
  • Financial Reporting and Analysis
  • Corporate Issuers
  • Equity Investments
  • Fixed Income
  • Derivatives
  • Alternative Investments
  • Portfolio Management

What is the CFA Level I exam?

The CFA Level I exam is a computer-based, multiple-choice test that will take you approximately 4.5 hours to complete (broken into two 2.25-hour sections with an optional break in between). There are 180 total questions, all of which are free-standing. There is no penalty for incorrect answers, so try to answer as many questions as you can. 

Keep in mind that you must meet certain qualifications in order to take the CFA Level I exam.

What is the CFA Level II exam?

The CFA Level II exam is similar to Level I in administration method and timing, but the 88 multiple-choice questions on this exam are vignette-based, not free-standing. You’ll be given case items to read, each followed by 46 related multiple-choice questions. 

You can register for Level II of the CFA exam once you pass Level I. Learn more about the differences between Levels I and II of the CFA exam. 

What is the CFA Level III exam?

The CFA Level III exam is also a computer-based, 4.5-hour exam, but the format is significantly different from Levels I and II. You’ll begin Level III by answering 811 essay questions, the prompts for which will all be based on vignettes. Section 2 of the Level III exam consists of 44 vignette-based, multiple-choice questions. Learn more about the differences between Levels II and III of the CFA exam. 

Free CFA Level III Study Resources »

CFA Exam Pass Rates and Exam Results

Everyone who takes a CFA exam is provided with a “pass” or “did not pass” exam result and a summary of performance in each topic area. Level I and II results are released within 60 days of the exam date and Level III within 90 days.

The CFA exams are notorious for their difficulty. The latest exam pass rates for the CFA exam are:

  • 44% for Level I (February 2021)
  • 55% for Level II (December 2020)
  • 56% for Level III (December 2020)

To pass, a candidate needs to meet the minimum passing score (MPS), which is never given and varies year-to-year. Candidates will receive an indicator of the score range for each topic area instead (<50%, 5170%, >70%), along with their final result. Level III candidates are provided with only two topic area summaries: one reflecting the essay portion and one reflecting the item set portion.

Individuals who do not pass the exam are also given more information about their performance relative to all other candidates who did not pass. All candidates who did not pass are divided into 10 equal score bands, which shows how well an individual score compares with the overall scores of others who did not pass.


Charter vs. Certification

In the finance industry, there are a number of certifications, such as Certified Public Accountant (CPA), CERTIFIED FINANCIAL PLANNER (CFP® ), and the Financial Risk Manager (FRM®) certification. The difference between charter and certification, especially in the US, is not very distinct. In forum discussions, the consensus is that a charter gives its holder the right to do something, such as use a mark to demonstrate proficiency. A certification is simply proof that you have the skills or have completed specific education to do a specific task.

Free eBook: Before You Decide to Sit for the CFA® Program Exam

Free eBook: CFA® Program Fundamentals, 2nd Edition

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