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CFA® Charterholder Career Information

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What Does an Investment Banker Do?

Investment bankers are basically financial advisors that work for large and small firms to raise money for their clients. Their job descriptions often have broad responsibilities and require highly specific skills. Investment bankers are highly valued by their clients, and successful ones are extremely hard working and dedicated to thriving in the face-paced and demanding work environment of investment banking.

TABLE OF CONTENTS

What Is Investment Banking?

An investment bank is not the same as a bank where you set up your checking and savings accounts—those are called retail banks. In the simplest terms, investment banks help corporations raise money. When a corporation wants to buy or sell something, they work with an investment banker to figure out how to invest or attain the funds they need to get it done.

What is an Investment Banker?

Investment bankers help their corporate clients secure funds in the capital markets, act as financial advisors, and occasionally help companies navigate mergers and acquisitions. Investment banker positions vary from entry-level to high-level executive. 

Investment bankers are highly valued in the corporate world. Without them, it would be very difficult for companies to get the money they need to serve their customers and clients, or develop a solid competitive position in their market.


Is Being an Investment Banker Difficult?

Being an investment banker can be hard because the day-to-day operations are long and stressful. Getting enough sleep and reducing stress can be a challenge for investment bankers, especially at the beginning of their careers. Investment bankers who make it through the adjustment period early in their job will often have long and financially rewarding careers in the industry. 

Investment Banker Responsibilities

Investment bankers are ultimately responsible for the success of their clients. In some roles, they take on many responsibilities while others specialize in one or two specific areas. All positions are responsible for raising money for their clients primarily through issuing debt and selling equity in capital markets. 

Debt Capital Markets

When a company wants to raise capital by issuing debt in the form of bonds, it often has a hard time finding qualified investors with enough money to invest. Investment bankers will help these companies find qualified investors within their large network and structure how the bonds get issued.

Equity Capital Markets

When a company plans to hold an initial public offering (IPO) to sell stock to the public, investment bankers will help that company find large investors to ensure their IPOs are purchased for the highest price possible.

Mergers and Acquisitions

Investment bankers also help broker mergers and acquisitions. The process often involves them lending their expertise to make sure things go smoothly. Investment bankers will advise their clients by presenting their research with recommendations about the best opportunities.

Investment Banker Skills

Investment bankers need many skills to be successful in the investment banking industry. Learning how to make financial forecasts and develop relationships on both sides of the transaction is key to advancing throughout your career. 

Financial Modeling

Investment bankers often develop various types of financial models to value debt and equity for mergers, acquisitions, and capital-raising transactions. The process often involves using Excel or other software programs to make smarter investment decisions in an efficient manner.

Accelerate your career with Kaplan Schweser’s Financial Modeling Course 

Relationship Management

Knowing how to develop and maintain working relationships with clients is an important skill for investment bankers.  It’s common for investment bankers to work long hours and be available to their clients as needed when large deals are in process. Ultimately, investment bankers have a responsibility to expand their firm's book of business and meet the needs of their investors. 

How To Get Started in Investment Banking

Getting started as an investment banker should begin with having realistic expectations. The career is challenging, often demanding analysts or associates work over 80 hours per week. Most investment bankers are very ambitious and competitive because the jobs are prestigious and earnings have the potential to be enormous. 

It’s common for investment bankers to possess undergraduate and MBA degrees from competitive universities such as the  Wharton School of the University of Pennsylvania. Internships and entry-level positions are also fiercely competitive within investment banks, which often recruit individuals directly from school for analyst positions.

The interview process for entry-level investment banker positions usually goes quick and requires you to be prepared to answer common questions like “Why do you want to work in investment banking?” and demonstrate your technical skills like financial modeling

How Long Does It Take To Become an Investment Banker?

It can take 4-6 years to become an investment banker.  If you are currently pursuing a relevant undergraduate or graduate degree from a prestigious university you may be able to become an investment banker after graduation by being recruited. 

How To Become an Investment Banking Analyst >>

Top Investment Banking Companies

Top-rated firms that hire investment bankers to provide financial services around the world often pay them high salaries and expose them to global markets. Currently, there are over 100,000 investment bankers employed in the US however the amounts each year fluctuate based on market conditions. 

Investment Banker Salary Ranges

Investment banking positions are highly competitive in part because of their high salaries and bonus potential. The bonus is a large part of an investment banker’s total compensation package. Yearly bonuses have the potential to be over double that of the investment banker’s base salary and continue to rise with more responsibilities.

 

Investment Banking Role

Salary Range

Bonus Range

Total

Analyst$85,000 - $100,000$50,000 - $100,000$135,000 - $200,000
Associate$100,000 - $120,000$80,000 - $130,000$180,000 - $250,000
Vice President$120,000 - $150,000$100,000 - $250,000$220,000 - $400,000
Managing Director$300,000 - $1,000,000$200,000 - $10,000,000$500,000 - $11,000,000

 

Benefits of Becoming a CFA 

Investment bankers who pursue earning the CFA designation will gain in-depth, specialized knowledge, skills, and abilities in financial analysis and investment management. Other benefits of earning the CFA include

  • The CFA designation is recognized globally.
  • Some job descriptions for investment positions say “prefer CFA” or “CFA required.”
  • You become a member of a global organization and can optionally join a local CFA Society for networking and further learning opportunities.
  • CFA Institute and local CFA Societies Compensation surveys have found that CFA Charterholders have higher median compensation than non-CFA Charterholders.

How To Become a CFA Charterholder >>

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Posted by Kaplan Schweser - September 26, 2022
What Does an Investment Banker Do

CFA® vs. MS in Financial Analysis: Everything You Need To Decide

Both the CFA Program and an MS in Financial Analysis provide deep specialty knowledge in investment analysis and management. The MBA, on the other hand, typically offers broad exposure to business topics required to manage companies. If you are interested in starting a career as an investment analyst or manager, you will need specialty knowledge such as that provided by the CFA and/or MS in Financial Analysis programs.

“The most frequent question I would hear when I was on the leadership teams of the CFA Institute and AACSB was, “Should I get a CFA or MBA if I want to be an investment manager?” My answer was always that it depends and that the decision is a little more complex. Another viable option that has become very popular in the past decade is a specialized Master’s in Finance, such as an MS in Financial Analysis (MSFA).” - Tom Robinson, PhD, CFA, CAIA, CFA

 

TABLE OF CONTENTS

 

CFA Charter Overview 

The Chartered Financial Analyst (CFA) program is a professional certification program for those working in or interested in working in the investment industry. Most holders of the CFA designation work as financial analysts or portfolio managers. The core topics covered by the CFA Program are:

  • Ethical and Professional Standards
  • Quantitative Methods
  • Economics
  • Financial Reporting and Analysis
  • Corporate Finance
  • Equity Investments
  • Fixed Income
  • Derivatives
  • Alternative Investments
  • Portfolio Management and Wealth Planning

 

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

CFA Levels

The CFA program is designed to be self-study with a digital curriculum and a series of three examinations (Level I, Level II, and Level III). There are no faculty or instructors in the CFA program. However, many candidates seek to take additional classes, either graduate classes or CFA exam prep classes, to help them prepare for the exams rather than study on their own. 

The level I examination focuses on investment tools such as ethics, quantitative methods, economics, financial reporting and analysis, and corporate finance. This level is primarily testing knowledge and comprehension. The level II examination focuses on asset valuation and your ability to apply knowledge and analyze securities. The level III examination focuses primarily on portfolio management and your ability to synthesize knowledge, evaluate investments, and build appropriate investment portfolios for individual or institutional clients.

Requirements to Enter the CFA Program

Because the CFA is a certification program rather than a degree program, the requirements to enter the program are fairly basic. The screening of CFA charter candidates occurs throughout the 3-4 years of examinations rather than in the entry requirements. 

The requirements to enter the CFA Program are as follows: 

  • You must have completed a bachelor’s program or equivalent from a college or university.
  • OR be an undergraduate bachelor’s program student with 11 months or fewer before graduation (you must complete the bachelor’s program before you are permitted to sit for the Level II examination).
  • OR have a combination of 4,000 hours of paid work experience and/or higher education. This must have been acquired over a minimum of three sequential years. The work experience does not need to be in investments to begin the program, but relevant work experience will be required to be able to use the CFA designation.

You must also have a valid international passport (the only acceptable form of identification for CFA candidates), be willing to take the examinations in English, attest to having no professional conduct issues (ethical breaches), and live in a participating country (all but four countries/territories globally).

Requirements to Earn the CFA Charter

Once enrolled in the program, there are specific requirements to earn the CFA charter. You must complete each level in order. You must pass the Level I examination before progressing to Level II and must pass Level II before progressing to Level III. To use the CFA® designation after your name you must pass all three levels, have the required number of years of relevant experience, adhere to the Code of Ethics and Standards of Professional Conduct of CFA Institute and become and remain a member of CFA Institute. 

CFA exam pass rates for each level vary Since you must pass them in order, the cumulative pass rate is less than 10% if you did not retake any exams. Many people who fail a particular level choose to try again, so about 20% of those who start the program complete all three levels and earn the CFA designation. On average, this takes over 1,000 hours of study and about 3-4 years. 

The work experience required to use the CFA designation is at least four years of full-time work experience, where at least 50% of the work involves the investment decision-making process.

Read Next: How to Become a CFA Charterholder

Benefits of Becoming a CFA Charterholder 

There are several benefits of becoming a CFA Charterholder. The student gains in-depth, specialized knowledge, skills, and abilities in financial analysis and investment management. Other benefits of earning the CFA include:

  • The CFA designation is recognized globally.
  • Some hiring announcements for investment positions say “prefer CFA” or “CFA required.”
  • You become a member of a global organization and can optionally join a local CFA Society for networking and further learning opportunities.
  • CFA Institute and local CFA Societies Compensation surveys have found that CFA Charterholders have higher median compensation than non-CFA Charterholders.

Continue Reading: Is the CFA Worth It?

MS in Financial Analysis Overview

A Master of Science (MS) in Finance, a Master of Science (MS) in Financial Analysis, and other similar specialized programs, are graduate degree programs offered by colleges and universities. Typically, an MS in Financial Analysis program provides advanced study in financial analysis and investment management, preparing students for careers as financial analysts or portfolio managers. These programs typically include ten  graduate courses (30 graduate semester hours).

The Master of Science in Financial Analysis (MSFA) program at the College for Financial Planning®—a Kaplan Company is an online format program. In this program students will learn:

  • Economic analysis utilized in investment decision making
  • Financial statement analysis
  • Quantitative methods and analysis beneficial to financial analysis
  • The investment environment, including financial markets, institutions, and the investing process
  • Corporate finance
  • Security analysis and valuation
  • Alternative investments, derivatives, and risk management
  • Advanced portfolio management
  • Professional standards and ethics in the investments industry

These topics are covered in the MSFA program’s ten required courses:

  • FINA515 – The Financial System, Markets and Instruments
  • FINA525 – Quantitative Methods
  • ECON535 – Economics for Financial Analysis
  • ACCT545 – Financial Statement Analysis
  • ACCT550 – Advanced Financial Statement Analysis
  • FINA565 – Security Analysis and Valuation
  • FINA575 – Corporate Finance
  • FINA585 – Derivatives and Alternative Investments
  • FINA595 – Portfolio Management
  • FINA650 – Financial Analysis Capstone

Each course is led by highly qualified faculty who support the students throughout the course. The College for Financial Planning’s MSFA program can be completed in under two years on a part-time basis. The courses include ample opportunities for experiential learning with weekly discussion questions and frequent case studies. The first nine courses provide in-depth content in specific areas of knowledge needed to practice financial analysis and investment management. 

The Financial Analysis Capstone course brings all of this together in a project-based format where you apply the knowledge, skills, and abilities acquired in the first nine courses to solve real life cases. You’ll perform economic and industry analysis, analyze companies, value companies, and make an investment recommendation. This course also covers the ethical issues involved in all these areas using the CFA Institute’s Code of Ethics and Standards of Professional Conduct.

Requirements to Earn an MS in Financial Analysis

Selectivity in a graduate degree program occurs at the entry level when you apply for the program and within each of the ten courses. To be accepted into the MSFA program at the College for Financial Planning, you must meet one of the following requirements:

  • Have a  bachelor’s degree in any major from an institution accredited by one of six accrediting agencies such as the Higher Learning Commission with a grade point average (GPA) of 3.00 or higher.
  • Have a bachelor’s degree in accounting, economics, engineering, finance, mathematics, or statistics from an accredited institution with a GPA of 2.5 or higher.
  • Have a graduate degree in major from an accredited institution.
  • Have a  bachelor’s degree in any major from an accredited institution and a GRE or GMAT score at or above the 50th percentile

Additionally, if your native language is not English, you must demonstrate English language proficiency with a minimum score of 85 on the TOEFL exam.

Once admitted to the program, you must complete all ten courses to earn the degree with a grade in each of “C” or higher. Some courses require other courses in the program as prerequisites, with the Financial Analysis Capstone being the final class. Students who have previously completed graduate-level coursework elsewhere may be able to apply some of those credits to the MSFA program.

Benefits of Earning an MS in Financial Analysis

There are several benefits to a graduate degree program such as the MSFA:

  • The student gains in-depth, specialized knowledge, skills, and abilities in financial analysis and investment management.
  • Graduate degrees from accredited institutions are recognized by employers and other educational institutions.
  • Some hiring/job position posting for investment positions require a graduate degree.
  • Compensation studies show higher median earnings for graduate degrees relative to undergraduate degrees.
  • Once you have earned a degree, it is yours to keep. It does not need to be renewed each year through continued future membership and/or dues payments.
  • Interactive classes provide networking with students with similar interests.

CFA Charter vs. MS in Financial Analysis: How They Compare

Both the CFA designation and an MS in Financial Analysis provide in-depth specialist knowledge in financial analysis and investment management. Which one is right for you, or should you consider both? Here’s what you need to know about the CFA vs. MSFA.

CFA vs. MSFA: Program Costs

The cost of the CFA Program can vary depending on how many times you take each exam, when you enroll and which CFA prep courses you use. Including CFA prep, you’re looking at a range of 6,000 - $10,000 for passing all three exams. Passing the examinations does not confer the CFA charter. You must become and remain a member of the CFA Institute. 

CFA Institute also has annual dues to remain a member. If you live in an area with a local CFA society, you may have additional local society dues. 

Another potential cost is continuing education. CFA Institute recommends –  but does not require – 20 hours of continuing education per year, some of which is provided by CFA Institute and local societies (some free and some for a fee).

For the MSFA Program at the College for Financial Planning, the following costs are incurred by a typical learner:

 

Initial Application Fee$35
Tuition of $1,725 per course$17,250
Books & Materials estimated at $150 per course$1,500
Total Expected Fees$18,785

 

There are no ongoing costs after graduation. Once you earn a degree, it is yours to keep with no required membership dues or continuing education fees.

CFA vs. MSFA: Program Durations 

The CFA examinations are now offered more frequently than in the past, and it is possible to pass all three exams in as little as 18 months. The average time reported by CFA Institute, however, is four years. Each exam requires about 300 hours of study, and if you retake at least one exam, you should expect to invest about 1,200 hours over three to four years to complete your exams. If you do not have the required four years of work experience, it may take longer to be able to use the CFA designation after your name.

The MSFA program is offered in five eight-week terms each year. If you take one course each term, it would take just under two years to complete the program. Typical study time for graduate courses varies by both course and the individual and is likely to be 10 to 20 hours per week in an eight-week term. Assuming a 15-hour per week average this, for ten courses, you are looking at approximately 1,200 hours of study, about the same as the CFA program. The degree would be conferred upon successful completion of the ten required courses.

Is the CFA Equivalent to a Master’s Degree?

Since both the CFA Program and an MSFA require an undergraduate degree in most cases and require about the same total amount of study, the CFA is generally considered to be equivalent to a master’s degree. The CFA Institute has had independent benchmarking performed and finds the CFA designation is comparable to a master’s degree in the US, UK, Canada, Brazil, India, Singapore, Australia, Japan, China, South Africa, and France.

CFA vs. MSFA: Career Prospects 

Career prospects are strong for both the CFA Designation and MSFA degree holders. According to the U.S. Bureau of Labor Statistics:

  • The 2021 median pay of Financial Analysts was $81,410 per year with at least a Bachelor’s degree. The growth in the number of financial analyst jobs from 2020 to 2030 is expected to be about 6%.
  • The 2021 median pay for Personal Financial Advisors was $94,170 per year, with about 5% growth in the number of jobs through 2030.
  • The 2021 median pay for Financial Managers was $131,710 per year, with 17% expected growth through 2030. According to the  BLS definition, “Financial managers create financial reports, direct investment activities, and develop plans for the long-term financial goals of their organization.”

The CFA Institute periodically performs salary surveys of members as well as other reports on the investment industry. Recent reports found:

  • The average base salary for CFA Charterholders serving as portfolio managers was $126,000 with total compensation of $177,000 (USD). Note this is not a starting salary but an average over members surveyed (2019 Compensation Survey).
  • 55% of investment leaders expect globalization to offer new opportunities for investment professionals (2017 Future State of Investment Profession study).

CFA Salaries For Common Careers >>

According to the Graduate Management Admission Council 2022 Corporate Recruiter Survey:

  • 61% of corporate recruiters viewed candidates with a graduate business degree as more competitive than  learners with micro-credentials (short education courses). Only 7% favored micro-credentials.
  • 63% of recruiters globally expect an increase in the demand for business school talent in the next five years, and 35% expect demand to be stable.
  • 84% of global corporate recruiters plan to hire Master of Finance Students in 2022 (up from 73% the prior year). The highest demand is in Asia and the Middle East. In the U.S., 55% expect to hire Master of Finance graduates versus 50% the prior year.

Is the CFA or a Master's in Financial Analysis Better? 

This is a personal choice that depends on your circumstances and preferences. Some factors to consider are your desired career. First, look at career position announcements for the career (and geography) you would like to have and see what they require – CFA or graduate degree. Some general considerations:

  • If you are primarily interested in managing wealth for individuals, you should give serious consideration to the credentials most recognized by individuals. These are the Certified Financial Planner (CFP®)or CFA (with the CFP the most recognized).
  • If you are primarily interested in managing wealth for institutions or in an institution such as a mutual fund, then the CFA and/or a Master’s are the most recognized.
  • If you are primarily interested in working for a company as a financial analyst, financial manager or in a similar role then a Masters is a good choice. Some companies may also consider a CFA or CPA for these roles.

Also consider your investment in time and dollars. When would you like to complete the program, and which program best matches your goals and how much are you willing to spend?

If you are currently employed, you should look at which types of programs your company supports. Will they support you in a degree program and/or a certification program? Does one or the other lead to promotion?

Should You Do Both the CFA and an MSFA?

This is worthy of consideration. The CFA Program is designed to be a self-study, distance learning program. There is no requirement to pursue a specific degree program or take specific courses. However, many people who pursue the CFA take prep courses or degree program courses so that they have support and instruction along the way. These programs provide the ability to engage with well-qualified faculty, a study plan, and curriculum to help you prepare. Additionally, they allow you to double-dip – to earn a degree at the same time you are earning a professional designation.

Does a Master's in Financial Analysis Help with CFA? 

Yes, a Master’s in Financial Analysis can help with earning the CFA charter. This is especially true if the master’s curriculum is mapped closely to the CFA Program, such as the one described above for the MSFA at the College for Financial Planning.

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Posted by Kaplan Schweser - September 6, 2022
CFA vs MSFA

What is Financial Modeling?

Financial modeling is a widely used technique to forecast financial performance into the future. A financial model is one of the tools used to aid decisions, analyze essential business functions with financial metrics, and more accurately evaluate and understand potential investments. Commonly such models are built in a spreadsheet such as Excel, although more specialized software may be used.

TABLE OF CONTENTS:

The Application of Financial Models

Financial models, when used appropriately, can be invaluable tools that can help executives, investors, and analysts with decisions relating to:

  • Accounting
  • Acquisitions and investments
  • Business growth
  • Forecasts and budgets
  • Asset disposals
  • Valuations
  • Analysis of financial statements

Financial Modeling Careers

Many different types of financial models exist for forecasting the financial performance of an organization. Investment banking analysts may use multiple types of models to gain insights and formulate recommendations about investment portfolios for an investment banking team or their clients.

How To Become An Investment Banking Analyst >>

Types of Financial Models

Many different types of financial models exist for forecasting the financial performance of an organization. Investment banking analysts may use multiple types of models to prepare insights and recommendations about investment portfolios for an investment banking team or clients. 

What Do Investment Bankers Do? >>

Three Statement Model

Also known as an integrated financial statement model, 3 statement models are typically built in a spreadsheet as a single worksheet that links together income statements, balance sheets, and cash flow statements. The model is then manipulated – varying the inputs to understand how different operating, financing, and investing assumptions impact the forecast.

For example, a 3 statement model might be used to investigate the impact of varying assumptions such as:

  • Cost of goods sold
  • Interest rates
  • Inventory levels
  • Salaries and benefits
  • Revenue growth

Discounted Cash Flow Model

A discounted cash flow (DCF) model uses the Net Present Value (NPV) of projected cash flows (a more sophisticated version of profit, that takes account of the fact that cash flows in the future have less value than cash flows now) as the basis for valuing a business entity. Most likely the inputs to the DCF valuation will derive from a three-statement model and aim to capture the total value of a potential investment opportunity.

Sum of the Parts Model

The sum of the parts model takes the DCF model one step further by combining multiple DCF models together to determine the Net Asset Value of a group of assets/entities. Such a method could be used to determine the fair value of the shares in a mutual fund or exchange-traded funds.

Merger Model

The merger (M&A) model is an advanced financial model used to evaluate the quality of a proposed merger or acquisition deal. Accretion/dilution analysis plays a key role in M&A models – determining whether earnings post-transactions on single shares have increased or decreased. 

Budget Model

The budget model is a financial model to determine a future budget. Budget models give finance professionals a repeatable starting point to figure out how to allocate funds in the future and monitor performance throughout the year.

Financial Modeling Skills

In order to successfully create forecasting tools, individuals should possess certain skills, some of which can be unique to financial modeling. 

Accelerate your career with Kaplan Schweser’s Financial Modeling Course

Accounting Fundamentals

It is important that the builder of a financial model has a good grasp of accounting fundamentals. Concepts such as:

  • Accruals and prepayments (the matching principle)
  • Amortization and depreciation
  • Revenue recognition

play an important role in understanding how to read, dissect and build financial statements. 

Linking Financial Statements

Linking financial statements together is critical for multiple financial models and is the foundation for calculating critical financial metrics. For example, analysts will need multiple values from multiple financial statements to calculate the weighted average cost of capital (WACC).

Forecasting

Forecasting is a skill that takes time and experience to master. Developing accurate data-driven strategies to answer questions about the future is difficult. Soft skills like critical thinking and thoroughness help analysts balance assumptions about the future, all the while including historical data to make accurate predictions.

How To Become A Financial Analyst >>

Communication

Communication is an important skill to have when building and maintaining financial models. Analysts will need to process large amounts of data into an understandable format so everyone involved can decide on the best course for the future. 

Design

Design is crucial to developing a financial model that is easy to understand. A good financial model is formatted in a logical and attractive way. The layout should highlight important trends and provide users with an interface that is visually appealing.

Financial Modeling Software

What software to use when building a financial model is a common question and the answer depends on a few factors.

  • Time
  • Cost
  • Expertise

Before dedicated financial modeling software tools existed, analysts relied on spreadsheets such as Excel or Google Sheets. Understanding Excel is a great starting point – it can be fully customized to meet any layout, structure, calculations, or format desired, and often is the only tool needed.

Software designed for financial modeling can be expensive, especially when customized to accommodate specific business needs. They also offer analysts quick and easy generated reports and extra error prevention.

Learning the fundamentals of how a financial model works gives analysts the opportunity to really understand the inner workings of the ultimate business decision.

Excel

Given that Microsoft Excel is widely used to construct financial models, knowing how to work efficiently in Excel is critical for building and maintaining financial models. To become a successful financial analyst, you’ll need to understand how financial models are created using Excel.

Benefits of Learning Financial Modeling

There are many benefits to learning how to build and maintain financial models. From a career development perspective, having this skill will give you an in-depth understanding of the business being evaluated, which can lead to promotions and salary increases. 

Equipping yourself with financial modeling skills can enhance your career and give you a distinct competitive advantage when striving to outperform the competition.

Financial Analyst Career Paths >>

How is a Financial Modeling Course Beneficial for a CFA Charterholder?

The ability to create strong financial models is a critical skill for successful CFA charterholders. To be successful as a financial professional, you need to understand basic financial modeling in Excel. And if you’re looking to thrive in a career in institutional investment management, learning this skill will help you make smarter investment decisions in an efficient manner.

Online Financial Modeling Courses

Kaplan Schweser has partnered with The Marquee Group, to offer an industry-leading financial modeling course for anyone looking to move their financial career forward. 

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Posted by Kaplan Schweser - August 16, 2022
What is Financial Modeling

CFA® Charter vs. FINRA Series 7: Everything You Need to Decide

If you are exploring a career in finance related to advising clients on investment strategy, you’ve probably heard about the CFA® charter and the FINRA Series 7 license. So, how do you know which one to earn? In this article comparing the CFA charter to the FINRA Series 7 license, we give you everything you need to decide.

What do CFA® Charter and FINRA Series 7 Mean?

The Chartered Financial Analyst® (CFA) charter is the professional credential offered internationally by CFA Institute to investment and financial professionals. The program covers a broad range of topics relating to investment and portfolio management, financial analysis, stocks, bonds, and derivatives, and provides a generalist knowledge of other areas of finance. Industry professionals worldwide recognize the CFA charter as the “gold standard” of all financial analyst designations.

Also known as the General Securities Registered Representative license, the Series 7 license is administered by the Financial Industry Regulatory Authority (FINRA), a regulatory body that regulates member brokerage firms and exchange markets. If you hold this license, you can sell corporate stocks and bonds, municipal bonds, mutual funds, variable annuities, options, direct participation program partnerships, collateralized mortgage obligations, and more.

It is possible to hold both credentials. Many CFA charterholders who take staff positions in the research departments of brokerages will go on to earn their Series 7 licenses. For Series 7 license holders who become investment advisor representatives or set up registered investment advisor firms, holding the CFA charter is beneficial to their business and clients.

CFA Charter vs. Series 7: Similarities

Both are finance industry credentials, and both are earned by passing a set of exams. The CFA exam has three levels. The Series 7 exam is a corequisite of another exam called the Securities Industry Essentials (SIE), and you must pass both exams to earn your license. The Series 7 exam is sometimes referred to as a “top off” exam because the SIE is a corequisite of several FINRA exams, and earning the Series 7 license requires specific knowledge on top of security industry basics.

CFA Charter vs. Series 7: Differences

Earning the CFA charter requires knowledge and expertise in a broad range of financial analysis topics, such as portfolio management, economics, reporting, quantitative analysis, and more. Its three levels of exams are intense, and each requires an average of at least 300 hours of study to pass. However, because it is a charter, it is not a requirement. You can be employed as a financial analyst, for example, without a CFA charter.

Recent CFA Exam Pass Rates »

The Series 7 is a license, comparable to those you have to earn to sell real estate or insurance. Anyone who is a stockbroker must hold the Series 7 license. While also intense, this exam is generally believed to be significantly less difficult than the CFA. Its focus is also much narrower; it tests you on your knowledge of the concepts and functions of a registered representative.

CFA Charter vs. Series 7: Requirements

To become a CFA charterholder, you need to do the following:

  • Have a bachelor’s degree (or equivalent) or be in the final year of your bachelor’s degree program. If you have 4,000 hours of relevant work experience or a combination of professional work and university experience that totals 4,000 hours, you are also eligible for the CFA Program.
  • Take and pass Level I, Level II, and Level III of the CFA exam.
  • Become a member of CFA Institute (which costs $275 and includes agreeing to abide by its code of ethics).
  • Provide CFA Institute with proof that you’ve been working full-time for 4,000 hours in a role that either involves investment decision-making or with a product that contributes to that process. This can include any work experience you had before passing the exam, as well as after.

To earn the Series 7 license, you need to do the following:

  • Take and pass the SIE exam. There are no degree or work requirements for taking this exam, although most candidates are either earning a college degree in a finance-related field or already have one.
  • Secure a sponsorship with a FINRA-member firm. You need to work for them for 4 months; after that, they can file a special application called a Form U4 that registers you for the exam.
  • Take and pass the FINRA Series 7 license exam. Like the SIE, there are no degree or work requirements, but most candidates have a college degree in a finance-related field.

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

CFA Charter vs. FINRA Series 7: Exam Topics, Formats, Fees, and Pass Rates

In a discussion about CFA versus Series 7, people are most likely to be concerned about the exams. Here’s what you need to know.

CFA Program Topics

  • Ethical and Professional Standards
  • Quantitative Methods
  • Economics
  • Financial Statement Analysis
  • Corporate Issuers
  • Equity Investments
  • Alternative Investments
  • Fixed Income
  • Derivatives
  • Portfolio Management and Wealth Planning

In 2022, the CFA Level I exam will be offered four times a year. Level II will be offered three times a year and Level III will be offered twice.

Latest CFA Exam Dates »

All levels are computer-based and the format of the first two levels is multiple-choice. Level III has a written portion called constructed response and a multiple-choice portion. When you register for the Level I CFA® exam, you will pay a one-time enrollment fee of $350.

Because the CFA® exam has three levels, you will pay separate registration fees for each level. The fees for each level are $900 for early registration and $1,200 for standard registration.

CFA Program Cost >>

    One thing that the CFA exam has in common with the Series 7 exam is that beginning all levels will all be administered by computer at a Prometric testing center. Prometric also administers the Series 7 exam.

    Series 7 Exam Topics

    • Investment Risk
    • Taxation
    • Equity and Debt Instruments
    • Packaged Securities
    • Options
    • Retirement Plans
    • Interactions With Clients

    Series 7 exams are administered throughout the year. After your sponsor submits the Form U4 application, FINRA opens up a 120-day window, and you can take the exam on the days it is offered within that window. The pass rate for the exam as of March 31, 2019, was 71%.

    CFA Exam vs. FINRA Series 7 Exam: Preparation

    Another similarity between the two credentials is that the exams are nearly impossible to pass if all the candidate does is last-minute cramming. So, whether it’s the CFA exam or the FINRA Series 7 exam, you should start studying early.

    To prepare for the CFA exam, CFA Institute advises a minimum of 300 hours of study for each level. You should focus on the Learning Outcome Statements (LOS) from CFA Institute because they detail exactly what you are expected to do on exam day.  CFA exam preparation classes can really help, as will immersing yourself in practice questions. In addition, you should plan to take as many mock exams as you can to get used to the whole exam process.

    To prepare for the FINRA Series 7 exam, plan to spend 80–100 hours studying if you have a finance background and about 150 if you don’t. The questions are detailed and related to the day-to-day activities, responsibilities, and job functions of representatives. Therefore, you should expect it to be challenging. Series 7 exam preparation classes are recommended as part of the preparation process, along with making a study plan, focusing on learning concepts, using practice questions, and taking practice exams.

    CFA Charter vs. FINRA Series 7: How to Choose

    Deciding which designation to pursue really depends on what you want to do in your career. With a CFA charter, you have a  number of career opportunities, such as portfolio manager, research analyst, consultant, risk manager, corporate financial analyst, financial adviser, and the C-suite. If you want a career selling stocks in a brokerage, investment firm, or bank, then not only is the FINRA Series 7 right for you, but it is required.

    Of course, you don’t have to choose at all. Having both designations opens more doors in your career, especially if stocks and other securities investment products are your passion. No matter which path you choose, there is a wealth of information out there that can help you earn the credential or credentials you need. You can get started here and here.

    Read Article
    Posted by Kaplan Schweser - August 8, 2022
    CFA vs FINRA Series 7

    CFA® Charter vs. CAIA® Charter: Everything You Need to Know

    In the finance world, there seems to be a sea (or is that a C?) of financial designations. Two of the most frequently mentioned are the CFA® charter and the CAIA® charter. If you’re thinking about becoming a financial analyst, these are two designations that can advance your career. So, what’s the difference and which is right for you? Let’s take a look at CFA versus CAIA.

    CAIA® vs. CFA® Charter: What Does Each Mean?

    The Chartered Financial Analyst® (CFA) charter is the professional credential offered internationally by CFA Institute to investment and financial professionals. The program covers a broad range of topics relating to investment and portfolio management, financial analysis, stocks, bonds, and derivatives, and provides a generalist knowledge of other areas of finance. Industry professionals worldwide recognize the CFA charter as the “gold standard” of all financial analyst designations.

    The Chartered Alternative Investment AnalystSM (CAIA) charter is offered by the CAIA Association. It is recognized globally as the benchmark for analysis, application, and standards of practice in the alternative investments arena. Alternative investments include real assets (e.g., real estate, infrastructure, natural resources, commodities, intangible assets), hedge funds, private equity, and structured products (e.g., collateralized debt obligations, credit derivatives). In other words, alternative investments are not stocks, bonds, and cash.

    Similarities

    Both are credentials for financial analysts, and both are earned by passing a set of exams called levels—you have to pass each level before taking the next. The exams require a great deal of study, practice, and commitment to learning and analysis, and all have a section on ethics and professional standards. To pass the CFA exams and the CAIA exams, you have to demonstrate knowledge of alternative investments.

    It is possible to hold both charters. In fact, CAIA Association is currently running a CAIA stackable credential pilot program that enables up to 500 CFA charterholders in good standing with CFA Institute to skip Level I of the CAIA exam.

    Differences

    The CFA charter requires knowledge and expertise in a much broader range of financial analysis topics, such as portfolio management, economics, reporting, quantitative analysis, and more. The CAIA charter is more specialized—its only focus is the world of real assets, hedge funds, private equity, CDOs, credit derivatives, and other structured products. Another difference is exam structure. The CFA exam has three levels, and the CAIA exam has two.

    CFA Charter and CAIA® Charter Requirements

    To become a CFA charterholder, you need to:

    • Have a bachelor’s degree (or equivalent) or be in the final year of your bachelor’s degree program. If you have 4,000 hours of relevant work experience or a combination of professional work and university experience that totals 4,000 hours, you are also eligible to start the CFA Program.
    • Take and pass Level I, Level II, and Level III of the CFA exam.
    • Become a member of CFA Institute (which costs $275 and includes agreeing to abide by its code of ethics).
    • Provide CFA Institute with proof that you’ve been working full-time for 4,000 hours in a role that either involves investment decision-making or with a product that contributes to that process. This can include any work experience you had before passing the exam, as well as after.

    To earn your CAIA Charter, you need to:

    • Take and pass the CAIA exams. There are no degree or work requirements for taking the exams.
    • Earn or finish earning a bachelor’s degree or equivalent and have at least 1 year of professional experience or complete a minimum of 4 years of professional experience without a degree.
    • Join the CAIA Association (which costs $350 and requires you to abide by their terms and conditions).
    • Submit two professional references to the CAIA Association.

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

    Exam Topics, Formats, Fees, and Pass Rates

    In a discussion about CFA versus CAIA, people are most likely to be concerned about the exams. Here’s what you need to know.

    The topics of the CFA exams are as follows:

    • Ethics
    • Quantitative methods
    • Economics
    • Financial reporting and analysis
    • Corporate issuers
    • Equity investments
    • Fixed income
    • Derivatives
    • Alternative investments
    • Portfolio management

    In 2022, Level I of the CFA will be offered four times a year. Level II will be offered three times a year and Level III will be offered twice. View specific CFA exam date options.

    Each CFA exam costs $900 to $1200 to take, depending on when you register.

    Recent CFA Pass Rates »

    By contrast, the topics of the CAIA exams are as follows:

    • Professional standards and ethics
    • Introduction to alternative investments
    • Real assets including commodities
    • Hedge funds
    • Private equity
    • Structured products
    • Risk management and portfolio management

    Both levels of the CAIA exam are given in March and September. Level I is multiple-choice. Level II has a multiple-choice portion and a constructed response portion. There is a one-time enrollment fee of $400. The fee for each level ranges from $1,150 to $1,250 based on the exam registration period. If you want to retake the exam, the fee is $450.

    The pass rate for the Level I September 2021 CAIA exam was 51% and 58% for Level II.

    Preparing for the Exams

    Another similarity between the two charters is that the exams are nearly impossible to pass if all the candidate does is last-minute cramming. So, whether it’s the CFA Program or the CAIA exam, you should start studying early.

    To prepare for the CFA exam, CFA Institute advises a minimum of 300 hours of study for each level. You should focus on the Learning Outcome Statements (LOS) from CFA Institute because they detail exactly what you are expected to do on exam day. CFA study materials can really help, as will immersing yourself in practice questions. In addition, you should plan to take as many mock exams as you can to get used to the whole exam process.

    To prepare for the CAIA exams, the CAIA Association recommends more than 200 hours of study for each level. The Level I exam tests your knowledge of alternative investment concepts and tools. Level II evaluates your ability to apply those tools to analysis and investment. To pass both CAIA levels, exam technique is as important as understanding the curriculum concepts and topics. Therefore, it’s a good idea to enroll in CAIA prep classes, but you should also practice answering questions by taking mock exams.

    CFA Charter vs. CAIA® Charter: How to Choose

    Deciding which designation to pursue really depends on what you want to do as a financial analyst. If you’re interested in becoming a portfolio manager, research analyst, consultant, risk manager, corporate financial analyst, financial adviser, or moving into the C-suite, then the CFA charter will be a better fit. If you’re more interested in specializing in unconventional investments such as hedge funds or private equity, then the CAIA charter is right for you.

    Of course, you don’t have to choose at all. As we mentioned at the beginning of this article, you can hold both charters if you’re willing to put in the work. Today’s investors are becoming more interested in having conventional and unconventional investments in their portfolios, and with both credentials, you will be well-rounded enough to meet their needs. It’s more common for someone with a CFA charter to decide to sit for the CAIA exam, and with the new program that enables select CFA charterholders to skip Level I and take Level II, there’s no added incentive. But, earning the CAIA charter first has worked well for some investment analysts as well.

    No matter which path you choose, there is a wealth of information out there that can help you earn the credential or credentials you need. You can get started here.

    Read Article
    Posted by Kaplan Schweser - August 8, 2022
    CFA vs CAIA

    What is Environmental, Social, and Governance (ESG) Investing?

    ESG investing is a framework to help investment firms better understand risks and opportunities associated with a particular company or fund. The framework consists of many ESG factors and uses multiple strategies to make financial projections and assist institutional investment decisions.

    TABLE OF CONTENTS

    ESG Investing Factors

    New ESG factors will continue to emerge over time. Currently, many factors are used in ESG investing, but they all get categorized into three groups. 

    Environmental Factors

    Many environmental factors will sound familiar, for instance, climate change. For example, an ESG analyst could use ESG rating reports along with carbon emission trends to determine if a stock in the energy market is a good investment.

    More environmental ESG factors used in ESG investing and analysis include:

    • Deforestation
    • Pollution
    • Green Energy
    • Waste Management
    • Water Usage

    Social Factors

    Social factors in ESG investing are about the people involved with the organization, either as employees, board members, or customers. For example, ESG analysts could use employee engagement metrics and labor standards in their ESG rating analysis.

    More social ESG factors used in ESG investing and analysis include:

    • Employee gender and diversity
    • Data privacy and security
    • Community relations
    • Company sexual harassment policies
    • Workers’ rights

    Governance Factors

    Governance factors in ESG investing will help investors determine how a company is led and managed. ESG analysts can try to understand how executive incentives are aligned to stakeholder expectations or what types of internal policies exist to encourage transparency and accountability.

    More governance factors used in ESG investing and analysis include:

    • Board composition 
    • Corruption
    • Political activities
    • Executive pay
    • Lawsuits
    • Lobbying

    Types of ESG Investments

    The most commonly used types of ESG investments are stocks and mutual funds; however, ESG investments can be more narrow in scope to support specific causes or technologies. 

    ESG Stocks

    ESG stocks are simply stocks with strong ESG factors which make them preferable over other stocks. It is the goal of ESG analysis to seek stocks that have high ratings in ESG factors. ESG analysts can use metrics like executive compensation and new data privacy policies to determine if buying the stock is a good investment. 

    Investors interested in stocks with strong ESG ratings can check for impact reports from companies. These impact reports may include recent initiatives or future forecasts regarding specific ESG factors which can be used to help make decisions. 

    ESG Mutual Funds

    ESG mutual funds are investment programs funded by shareholders of companies that focus on ESG factors and have high ESG ratings. Some funds focus on specific ESG issues like renewable energy or human rights. 

    Investors interested in ESG mutual funds can find information regarding which companies are invested in a specific fund by examining the mutual fund’s prospectus. A mutual fund prospectus is free of charge and sent upon request to interested investors. 

    How ESG Investing Works

    ESG investing is the practice of including environmental, social, and governance factors when determining an investment's financial returns and overall impact. 

    What are ESG Scores 

    An investment's ESG score represents efforts made towards and actual results of specific environmental, social, and governance factors. There are many methodologies and rating systems used across the industry for ESG analysis. 

    For example, the largest ESG data provider (MSCI), rates ESG investments on a scale of AAA-CCC, with AAA being the highest rating. Sustainalytics, another ESG data provider, rates ESG investments on a scale of 0-100, with ESG scores above 70 considered “excellent.”

    How ESG Scores are Calculated

    ESG scores are calculated using various analytical methods all the while using data derived from a company’s publicly available information. ESG rating agencies will use specific ESG metrics like lobbying activities or energy efficiencies. The metrics used can vary depending on who is doing the rating, what market the company or fund is in, and how that company or fund is performing compared to its competitors.

    What are ESG Companies?

    ESG companies hold strong environmental, social, and governance values while trying to accomplish positive shareholder returns. They can operate in industries such as:

    • Consumer Goods
    • Alternative Energy 
    • Financials
    • Retail
    • Healthcare
    • Technology
    • Transportation

    Impact Investing

    Impact investing refers to seeking investments that have a positive effect on environmental, social, or governance issues. Investors expect positive outcomes and substantial results when trying to help a business or organization achieve specific goals that benefit the environment or society.

    ESG Investing Trends

    The importance of environmental, social, and governance issues continues to become a major focus for investment firms. Growth is expected in both using ESG factors to make investment decisions and having data and talent to make solid ESG investment decisions.

    ESG issues in new legislation, employment practices, data privacy, environmental implications of technology, and cryptocurrency operations continue to fuel these trends. 

    Sustainable,  Responsible, and Impact Investing (SRI) vs. Environmental, Social, and Governance (ESG) Investing

    Socially responsible investing (SRI) is the oldest form of ESG analysis, dating back to the 18th Century. In recent years, the acronym has evolved and SRI is now recognized to stand for sustainable, responsible, and impact investing. Both SRI investing and ESG investing involves building sustainable and responsible portfolios, but there are some differences between them.

    ESG is noted as the criteria upon which an SRI strategy is developed. An SRI strategy can be defined in many ways, but in general, there are four main types of SRI strategies:

    • Inclusionary
    • Exclusionary
    • Sustainability-themed
    • ESG integration

    ESG investing is sometimes referred to as ESG integration, and this is the most commonly used SRI strategy in the United States and other parts of the world. This strategy does not exclude any investments from ESG analysis; it provides a lens to evaluate all companies. ESG typically provides an additional layer of risk analysis, and ethical and impact issues are considered positive benefits. 

    Becoming Certified in Sustainable Investing

    Becoming educated and certified in sustainable investing is a great way for advisors who wish to specialize in sustainable and responsible investments for their clients. 

    What is the CSRIC™ Designation? >>

    ESG Investing vs. Impact Investing

    Both ESG and impact investing require investors to evaluate similar factors such as pollution or political contributions. Their initial intentions and long-term goals are where they begin to differ. 

    ESG investing is the process of including ESG factors and ESG scores to make informed decisions, usually performed by large institutions, about potential profits and new investment opportunities.

    Impact investing is the process of investing in companies or funds that align with an investor's or organization's principles with the intention of making a positive contribution to society and or the environment.  

    ESG Investing Jobs

    There are many jobs that incorporate the use of ESG strategies into their investment decisions. Jobs are prevalent throughout various industries including finance, government, risk management, and energy. 

    Individuals can hold job titles such as:

    • ESG Analyst
    • ESG Advisor or Associate
    • Sustainability/ESG Director
    • Director Sustainable Finance
    • ESG Sales & Delivery Manager
    • ESG Program Manager

    Certificate in ESG Investing

    An ESG certificate can benefit anyone who works in operations, strategy, or management within the institutional investment field. 

    An ESG certification can be especially useful for CFA Charterholders, CAIA Charterholders, and Certified FRMs who would like to move into a more senior position and accelerate their careers. Even sales and distribution, wealth managers, product developers, financial advisors, consultants, or risk managers can benefit from improving their understanding of ESG issues.  

    Undergraduate and graduate students who are interested in pursuing a career in the investment industry may also benefit from earning an ESG certificate. 

    ESG Certificate Guide >>

    ESG Investing Course Prep

    If you decide to pursue CFA Institute’s ESG Certificate exam, consider making a Kaplan Schweser ESG Certificate prep package—complete with on-demand videos, study tools, and mock exams—the centerpiece of your mission to earn a passing score.

    Read Article
    Posted by Kaplan Schweser - August 8, 2022
    What is Environmental Social and Governance ESG Investing

    ESG Certification Guide

    An ESG certification is a credential individuals can gain to demonstrate their knowledge of and use of environmental, social, and governance factors in institutional investment analysis. This type of analysis is important to companies who want to understand the overall value and sustainability of an organization or investment.

    TABLE OF CONTENTS

    Is an ESG Certificate Worth It?

    If you are a financial professional that helps investors or companies make investment decisions, gaining an ESG certificate is worth it. ESG investing is a rapidly growing practice within the institutional investment field and investors are looking for individuals with a good understanding of the different approaches to responsible investment.

    Who Should Have an ESG Certificate?

    Broadly speaking an ESG certificate can benefit anyone who works in operations, strategy, or management within the institutional investment field. 

    An ESG certification can be especially useful for CFA Charterholders, CAIA Charterholders, and Certified FRMs who would like to move into a more senior position and accelerate their careers. Even sales and distribution, wealth managers, product developers, financial advisors, consultants, or risk managers can benefit from improving their understanding of ESG issues.  

    Undergraduate and graduate students who are interested in pursuing a career in the investment industry may also benefit from earning an ESG certificate. 

    How an ESG Certificate is Beneficial for a CFA Charterholder

    An ESG certificate is beneficial for a CFA Charterholder because it provides the opportunity to demonstrate their commitment to being up-to-date on current ESG investing practices and knowledge of ESG issues. 

    An ESG certificate can help CFA Charterholders differentiate themselves and improve their investment analysis skills with environmental, social, and governance factors in their financial models, ratio analyses, and risk assessments. 

    When To Get an ESG Certificate

    Since an ESG Certificate would be beneficial to virtually any financial professional's career, a good time to get an ESG certificate would be when someone has the time to pursue the credential. Since an ESG certificate broadly covers ESG investment factors and issues, if someone has the time to dedicate to studying and they have an interest in accelerating their career, now is a good time to get an ESG certificate.

    Best ESG Certificates

    There are a few providers of certificates that incorporate ESG topics into their curriculum.

    Provider

    Certificate

    Best Fit

    CFA Institute

    Certificate in ESG Investing

    • Investment professionals who want to understand ESG issues and incorporate ESG factors into the investment process.
    • Students or any professional who want to pursue a career in institutional investment.

    College For Financial Planning

    Chartered SRI Counselor℠ (CSRIC ®)

    • Financial advisors and investment professionals with a foundational knowledge of the history, definitions, trends, portfolio construction principles, fiduciary responsibilities, and best practices for sustainable, responsible, and impact (SRI) investments.

    European Federation of Financial Analysts Societies

    Certified ESG Analyst® (CESGA)

    • Financial analysts and portfolio managers who want to integrate ESG data in their capital allocation processes.

    Global Association of Risk Professionals

    Sustainability and Climate Risk Certificate (SCR)

    • Risk managers who want to understand the effect of climate change on organizations and how to manage that risk.
    • Students who want to pursue a career in risk management.

    Sustainability Accounting Standards Board

    Fundamentals of Sustainability Accounting (FSA) Credential

    • Professionals in corporate finance, investor relations, and corporate accounting who want to better understand the link between financially material sustainability information and a company’s ability to drive enterprise value.


    How To Become ESG Certified

    To become ESG certified an individual must complete an official program that provides a certificate in ESG topics. There are a few providers and each will have its own enrollment requirements and post-exam requirements but in general, to become ESG certified, they will need to

    • Meet enrollment requirements
    • Enroll in the program
    • Begin preparing for the exam(s)
    • Register for the exam(s)
    • Pass the exam(s)

    How Long Does It Take to Earn an ESG Certificate? 

    Most ESG certification programs take about one year to complete. Each program has its own steps to earn an ESG certificate, which will dictate exactly how long it takes to earn the certificate. Especially if more than one exam is required or the candidate doesn’t pass the exam the first time. Both factors determine how long it will take to earn an ESG certificate.

    What is the CFA ESG Certificate?

    The CFA ESG Certificate is a professional certification program offered by the CFA Institute. It is designed to meet the investment industries' increasing demand for more instruction and standards in environmental, social, and governance investing.

    The Certificate in ESG Investing program was originally offered only in the United Kingdom but now is offered globally to anyone interested. The program is open to investment professionals or students with a foundational knowledge of the investment process.

    How to Study for the CFA ESG Certificate Exam?

    To study for the CFA ESG certificate exam, candidates with no professional experience in ESG investing should expect to study around 130 hours. Candidates with professional experience in the curriculum topics should anticipate studying around 100 hours.

    Once a candidate decides which category they belong in, they should begin to review the ESG curriculum and read through the program syllabus. The syllabus will tell candidates what skills and knowledge they are expected to have. 

    After becoming familiar with curriculum topics and learning expectations, candidates should begin preparing for the ESG certificate exam. During this prep time, registered candidates will receive access from the CFA Institute to self-assessment questions and a mock exam that should be used strategically. 

    Once a candidate has their ESG prep materials and study plan, their success will be determined by how committed they stay to following their study plan and remembering to register to sit for the exam within one year of registering. 

    How To Register for the CFA ESG Certificate Exam?

    Registering for the CFA ESG certificate exam is straightforward. Simply create an account with the CFA Institute, and look for a link to register for the certificate in ESG Investing program via email. Once candidates register for the program, they will have up to one full year to schedule the exam. 

    Expert Tip: It is recommended that candidates begin studying before actually scheduling a date to sit for the exam.

    CFA ESG Certificate Exam Information

    Learn important details for the Certificate in ESG Investing from the CFA Institute.

    CFA ESG Certificate Exam Topics and Weights

    Notice the weight given to topics such as “ESG Analysis, Valuation, and Integration” and “ESG Integrated Portfolio Construction and Management.” These two topics make up a significant portion of the curriculum and will certainly test candidates' ability to apply a range of approaches to ESG analysis and integration across a range of asset classes.

    Curriculum Topic

    Topic Weight

    Introduction to ESG4-8%
    The ESG Market4-8%
    Environmental Factors6-12%
    Social Factors6-12%
    Governance Factors6-12%
    Engagement and Stewardship6-10%
    ESG Analysis, Valuation, and Integration20-32%
    ESG Integrated Portfolio Construction and Management8-14%
    Investment Mandates, Portfolio Analytics, and Client Reporting4-8%

     

    CFA ESG Certificate Exam Costs and Fees

    The Certificate in ESG Investing program from the CFA Institute costs $675 USD to enroll in. If candidates want a hard copy of the syllabus they can purchase one for an additional $135 USD. If a candidate does not sit for the exam within one year of registering, their registration will expire and no refunds will be issued. Candidates will need to re-register again and pay the same $675 USD to enroll back into the program. 

    CFA ESG Certificate Exam Dates

    Technically there are no specific exam dates for the Certificate in ESG Investing exam. CFA ESG certificate candidates just need to schedule to sit for the exam within one year of registering into the program at selected Prometic sites worldwide or in select areas online. 

    Expert Tip: Candidates will not be able to sit for the exam on holidays or weekends. 

    CFA ESG Certificate Exam Pass Rates

    The pass rates for the CFA ESG certificate have been historically high. As of the end of January 2022, the average pass rate for the Certificate in ESG Investing exam was 81%. The certificate will have lifetime validity once a candidate has passed the exam. 

    CFA ESG Certificate Exam Format and Duration

    The CFA ESG certificate exam format contains standard multiple-choice questions and item set questions. Item set questions consist of a vignette (a long question) which after reading, candidates will be asked to answer 4-6 multiple choice questions from that vignette. 

    CFA ESG certificate candidates will have 2 hours and 20 minutes to complete the exam, which includes a survey at the end. 

    CFA ESG Certificate Exam Grading Process

    The grading process for the CFA ESG Certification exam is pass or fail. 

    Job Opportunities After Becoming ESG Certified

    There are lots of career paths available to individuals who become ESG certified. Jobs are prevalent throughout various industries including finance, government, risk management, and energy. 

    Individuals who earn ESG certificates hold job titles such as

    • ESG Analyst
    • ESG Advisor or Associate
    • Sustainability/ESG Director
    • Director Sustainable Finance
    • ESG Sales & Delivery Manager
    • ESG Program Manager

    Ready To Start Preparing for the CFA ESG Certificate?

    As you get ready for the CFA ESG Certificate exam, consider making a Kaplan Schweser ESG Certificate prep package—complete with classes, study tools, and mock exams—the centerpiece of your mission to earn a passing score.

    Read Article
    Posted by Kaplan Schweser - August 8, 2022
    ESG CFA Certification Guide

    CFA® Charter vs MBA: Which Direction is Right for You?

    Deciding between the CFA program and an MBA program is a very personal decision. There are many variables that dictate which one might be the better option for you. And the truth is, many finance professionals choose to pursue both at some point in their career.

    TABLE OF CONTENTS:

    Career Considerations

    Your plans after becoming a CFA or MBA graduate can dictate which program is the right choice for you now. 

    If You Want To Move Up in Finance

    It’s been said that the CFA exam is a foot wide and a mile deep. The CFA Program is intensely focused on one thing: making you an investment expert. You will come out with a specialized skill set for asset management.

    Is The CFA Worth It? >>

    Curriculum topics that CFA charterholders become experts in include:

    • Ethical and Professional Standards
    • Quantitative Methods
    • Economics
    • Financial Statement Analysis
    • Corporate Issuers
    • Equity Investments
    • Fixed Income
    • Derivatives
    • Alternative Investments
    • Portfolio Management and Wealth Planning

    The CFA Program is a great fit for financial analysts who are looking to move up into a new position like portfolio management or investment management.

    If You Are Unsure

    The MBA, on the other hand, is a broader approach better defined as a mile wide and a foot deep. The skills you attain in business school are not focused on a single industry. Instead, you get some exposure to all facets of business operation. 

    Curriculum topics MBA students get exposed to include:

    • Accounting
    • Business Accountability and Ethics
    • Communication
    • Finance
    • Leadership
    • Marketing
    • Microeconomics
    • Statistics

    If you are still a little undecided about what industry you want to work in and feel like you need more practical exposure to a variety of business practices, the MBA path is probably the better choice for you.

    If You Want To Switch Careers 

    This is where it can get tricky to make a decision. Especially if you are looking to switch careers and move into a brand new industry like finance. If you know you want to be a corporate financial analyst or a stock analyst, you would probably be wise to choose the CFA Program.

    If you are an engineer and interested in working in finance but not sure exactly what you want to do, an MBA program will give you the opportunity to get exposed to the financial world and help you pick a specialty like:

    • Investment Banker
    • Actuary
    • Portfolio Manager
    • Securities Trader
    • Financial Planner
    • Financial Analyst
    • Economic Analyst

    Financial Analyst Career Paths >>

    Enrollment Requirements

    To enroll in the CFA Program, you must one of the CFA Institute’s qualifying criteria:

    • Have a bachelor’s (or equivalent) degree
    • Be in the final year of a bachelor’s degree program
    • Have 4,000 hours of professional work experience, or
    • Have a combination of professional work and university experience that totals at least 4,000 hours

    CFA Charter Requirements >>

    Business school requirements vary from school to school. You’ll want to make sure you meet the specific requirements of the school or schools to which you want to apply. Generally speaking, each school will require that you:

    • Have a bachelor’s degree
    • Complete the GRE or GMAT exam with a satisfactory score
    • Have professional work experience (varies by school)
    • Complete additional program prerequisites (varies by school)

    Will Becoming a CFA Help You Get Into an MBA Program?

    It may be less common for a CFA charterholder to enroll in an MBA program but it certainly can’t hurt to have a CFA designation when applying to an MBA program.  

    Is It Better To Pursue a CFA after Earning an MBA?

    If you are young, have little to no experience as a finance professional, and can afford an MBA program, earning an MBA before you pursue the CFA charter can benefit you in a few ways.

    There will be some overlapping curriculum material between an MBA Program and the CFA Program. You will also learn how to study for a finance exam while enrolled in an MBA Program. An MBA graduate will also probably go into the CFA Program with better expectations of what will be required to pass each exam. 

    If you already have 4 years of professional work experience and looking to specialize in asset management, the CFA Program may be all you need to rise above others in your field. 

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

    Can You Pursue an MBA and CFA Together?

    Yes, technically you can be enrolled in an MBA Program and the CFA Program at the same time but we would not recommend pursuing them both at the same time. Especially while working a job because both options will require a lot of your time.

    Time Commitment

    If you dedicate yourself to being a full-time student, you can complete your MBA program in two years or less. Technically, if everything went perfectly, you could complete the CFA Program in 18 months, not including the time you spent studying for the Level I exam. But that would be a very intense 18 months of studying. 

    It’s recommended that you spend 300 hours studying for each level of the CFA exam, but you can take a year off in between levels if you need to without jeopardizing your chance of completion or significantly adding to the cost. On average, successful candidates take four years to earn their CFA charter, according to CFA Institute.

    Nearly all CFA charter candidates hold jobs while they prepare for and take the exams because they need to meet a work experience requirement before they can become a charterholder. The CFA exam is what it is…three levels, 300 hours each, and intense preparation. 

    Tips For Passing CFA Exam While Working Full Time >>

    There is no shortcut. Whereas the option does exist to complete an MBA program part-time if you choose. It takes a little longer, but the option is available.

    For the most part, completing the CFA Program is something you do on your own, while an MBA program is typically a more socially communal experience, with an emphasis on networking and team projects.

    Cost Breakdown

    While your career plans should be the primary consideration, the cost is often a factor when deciding between an MBA and the CFA charter. There are costs associated with both. The CFA charter is relatively affordable when compared to an MBA, especially if you’re planning to attend a well-known business school. 

    All told, you can complete the CFA Program with CFA premium exam prep materials for under $12,000. Business school tuition can cost $80,000 or more. That said, it really comes down to what you want to do with your career. You can’t put a price on job satisfaction.

    CFA Program Cost >>

    Salary Differences 

    Financial compensation is obviously a factor in your decision to pursue further education. But it shouldn’t be the most significant factor in deciding between the CFA Program and an MBA. 

    The median compensation for a CFA charterholder with 0–5 years of experience is $72,900. The median compensation for a business school graduate with 0–5 years of experience is $57,700. Business professionals with 0–5 years of experience who have completed both programs have a median salary of $87,200.

    You are standing at a crossroads where countless others have stood. As you’re likely learning, there isn’t a single right or wrong choice that works for every individual. 

    What you might see as a positive might be a negative to the next person in line. Consider all the factors, make your decision confident, and don’t look back. Either way, you’re headed toward a brighter future in a finance career.

    CFA Charterholder Salaries >>

    Alternatives

    There are alternatives to earning the CFA designation or becoming a business school graduate. Designations like CAIA and CFP are more specialized designations than a CFA whereas some give you more flexibility to work in multiple industries like CPA.

    Masters of Science Degree in Financial Analysis

    Sometimes, candidates looking to pursue the CFA Charter also may pursue a Masters of Science Degree in Financial Analysis (MSFA). Certain graduate programs are aligned to the learning outcomes of the CFA Institute’s CFA Program, which allows students to earn an MSFA while simultaneously preparing for the CFA exam.  

    The College for Financial Planning's Masters of Science in Financial Analysis program includes access to Kaplan Schweser’s CFA Essential Study Package to prepare for the CFA exam.

    Read Article
    Posted by Kaplan Schweser - August 3, 2022
    CFA vs MBA

    CPA vs. CFA® Designation

    Becoming either a CFA (Chartered Financial Analyst) charterholder or a CPA (Certified Public Accountant) is a big step in your career. Both designations are impressive additions to your resume and great career boosters. If you’re considering acquiring one of these certifications, it’s important to understand the differences between the two. Although they’re both related to finance, they can take your career in very different directions.

    TABLE OF CONTENTS:

    CFA Charterholder vs. CPA: What Is the Difference?

    CFA charterholders and CPAs both work with financial records, consult with clients, and assess the viability of different businesses and organizations; however, the outcome of these tasks is different depending on which credential you hold. CFA charterholders focus on understanding market conditions, assessing businesses, and determining the best way for businesses or individual clients to invest their money. They use investments to produce revenue for their clients, and some charterholders buy or sell securities, funds, and more on behalf of their clients. CFA charterholders are likely to be investment analysts, financial advisors, and portfolio managers, Some even go on to become chief financial officers (CFOs).

    By contrast, CPAs produce financial records. They may calculate taxes owed or assess business practices to identify ways to save money. They must also ensure that applicable financial regulations are followed. Some CPAs use their accounting skills to identify evidence of fraud or other crimes. 

    Is Becoming a CPA Worth It?

    If becoming a CPA appeals to you, you’ll need to weigh the pros and cons of preparing for and taking the CPA exam.

    Pros of Becoming a CPA

    • Potential salary increases will make up for the cost of preparing for and taking the exam itself. 
    • Preparing for the exam will teach you skills and knowledge that will help you become a better accountant.
    • Becoming a CPA signals that you’re dedicated to your profession, which can give you more opportunities and flexibility in your career.

    Cons of Becoming a CPA

    • It’s expensive. The cost of the CPA exam itself varies by state, but expect to spend around $1,000 for registration and testing fees, plus several thousand dollars for a review course (which we highly recommend). Some firms reimburse their employees for CPA exam-related costs, so check with your employer to see if you qualify. 
    • It takes lots of time. It’s recommended that you spend 300–400 hours preparing for the CPA exam, in addition to the time it takes to actually take the test (~16 hours total). 
    Keep in mind that while the monetary and time expenses you’ll inevitably need to invest in order to become a CPA may seem daunting, becoming a CPA will allow you more job opportunities and financial stability. 

    CPA vs CFA Curriculum Differences

    Unlike the CFA exam, which focuses on investment tools, valuing assets, and portfolio management and wealth planning, the CPA exam is designed to test your knowledge of auditing procedures and standards, taxation, and accounting and reporting standards for a variety of organizations. 

    CPA Exam Topics

    The CPA exam is divided into four testlets, each approximately 4 hours long. You must pass all four testlets within an 18-month period in order to become a CPA. The four testlets are as follows:

    • Auditing and Attestation (AUD)
    • Business Environment and Concepts (BEC)
    • Financial Accounting and Reporting (FAR)
    • Regulation (REG)

    You’ll be tested on the following topics on the CPA exam:

    • Auditing procedures and professional auditing standards
    • Standards related to attest, assurance, accounting, and review engagements
    • Corporate governance
    • Economics
    • Information technology
    • Financial management, strategic planning, and operations management
    • Accounting and reporting standards applicable to not-for-profit organizations and government entities
    • Federal taxation, ethics, professional and legal responsibilities, and business law

    CFA Exam Topics

    The CFA Program curriculum will test candidates' knowledge in 10 topic areas:

    • Ethical and Professional Standards
    • Quantitative Methods
    • Economics
    • Financial Statement Analysis
    • Corporate Issuers
    • Equity Investments
    • Fixed Income
    • Derivatives
    • Alternative Investments
    • Portfolio Management and Wealth Planning

    CFA Exams Explained >>

    CPA vs CFA Career Paths

    The major difference between a CPA and CFA career path is the industry they work in. Typically CFA charterholders work in the investment management industry whereas you may find CPAs in multiple industries. 

    CPA Career Paths

    There are many directions you can take in your career after becoming a CPA. Deciding the industry in which you’d like to work is the first decision you’ll need to make. Your options include: 

    • Public accounting: Public accounting firms provide a variety of clients with accounting services, such as financial planning, bookkeeping, and audit preparation. It’s common to work in public accounting for a few years before transitioning to private accounting or another more specialized type of accounting.
    • Government accounting: Government accountants perform audits, assess the efficiency and effectiveness of various government units, oversee public funds, and investigate white-collar crime for the FBI.
    • Private accounting: Private accountants work for a single company’s internal accounting department. They manage the company’s financial records, prepare financial reports, and assess the company’s fiscal performance.
    • Nonprofit accounting: Nonprofit organizations require accountants who can complete specialized tasks. These include evaluating donor-restricted assets, which can only be used for specific purposes, accounting for different types of services and programs, and fundraising.
    • Academia: Accounting professors not only teach students about accounting and research accounting theory, but they often also serve as accounting consultants to companies, firms, and in legal proceedings.

    CFA Career Paths

    There are multiple directions CFA charterholders can take after earning the CFA designation, including using it to advance their current career or look for a new career as a:

    • Financial Analyst
    • Risk Analyst
    • Ratings Analyst
    • Portfolio Manager
    • C-Level Executive

    Financial Analyst Career Paths >>

    CFA Charterholder vs. CPA Salary

    Salaries can vary widely for both CFAs and CPAs based on location, experience level, and company size. That being said, the average salary for both CFAs and CPAs is significantly higher than that of financial professionals and accountants without these certifications.

    CFA Charterholder Salary

    According to Payscale, CFA charterholders in the United States can earn anywhere from $60,000 to well over $200,000 annually. Payscale also estimates the average CFA charterholder salary to be $92,947 a year. The broad range is a reflection of all you can do with the charter. Bonuses and years of experience make a difference, too.

    Here are the average salaries of some of the most common positions for CFA charterholders:

    • Research analyst: CFA charterholders who are research analysts earn, on average, $77,000 a year, according to Payscale.
    • Financial advisor: Financial advisors with the CFA charter earn an average salary of $83,000 annually.
    • Investment analyst: Investment analysts with the CFA charter earn an average salary of $78,000 annually.
    • Portfolio manager: The average salary for a portfolio manager with the CFA charter is $102,000.
    • C-level executive: Payscale says that chief financial officers with CFA charters have a median annual base salary of $173,000.

    Considering the CFA charter? Before you choose your CFA exam date, download this free, Before You Decide to Sit for the CFA Exam, eBook.

    CPA Salary

    Payscale says the average salary for CPAs is $86,979. At a minimum, CPAs have completed certification requirements after earning a bachelor’s degree in accounting and are qualified for better positions than regular accountants. If a CPA has a master’s degree, the median annual income increases to $91,000, according to accounting.com.

    Here are the average salaries for some of the most common positions for CPAs:

    • Accountant and auditor: Accountants and auditors who are CPAs earn a median annual salary of $69,000.
    • Financial controller: Financial controllers oversee and direct a company’s accounting functions. The average annual salary for CPAs in this position is $98,000.
    • Corporate controller: CPAs in the executive role of the corporate controller can expect an average salary of $114,000 a year.
    • Chief Financial Officer: The average annual salary for CPAs who are CFOs is $151,000.

    CFA vs. CPA Difficulty

    Acquiring either the CFA charter or CPA certification is a long process that requires a degree, several years of experience (in most states), and a passing score on a long, difficult exam. This table breaks down the requirements to become a CFA and CPA: 

     

     CFACPA
    EducationBachelor’s degreeBachelor’s degree; 150 hours of pre-licensure education (inclusive of Bachelor’s degree)
    Experience4 years of professional experience2 years professional experience (in most states)
    ExamPass Levels I, II, and III of CFA ExamPass all four CPA exam portions: AUD, BEC, FAR, and REG within 18 months

     

    Pass rates for both the CFA and CPA exams are updated with each testing administration. Learn more about CFA exam pass rates and CPA exam pass rates.  

    Which credential is more difficult to acquire depends on your individual circumstances and strengths. Make your decision based on which will help your career progress the most, not on which you believe will be easier to obtain. In the long run, the hard work will pay off no matter which certification you choose. 

     

    CFA vs. CPA Infographic

    CFA vs CPA Designation Infographic

    Read Article
    Posted by Kaplan Schweser - July 19, 2022
    CFA designation vs CPA designation

    Is the CFA®Worth It?

    You might be asking yourself if the CFA charter is worth it because you heard the CFA Program is expensive and it takes a long time to become a CFA charterholder.  Or perhaps you’re considering switching careers and looking for information about what you’d be getting yourself into.   

    In this article, we provide the necessary context to help you decide if the CFA is right for you.  Our goal is to help you set expectations about the outcomes for CFA charterholders and provide you with options in case you decide that the CFA charter is not right for you at this time.  

    TABLE OF CONTENTS:

    Factors To Consider If The CFA Is Worth It

    Typically, the CFA Program is finished by people with backgrounds in finance, accounting, economics, or business. Having a financial background is not necessary to pursue the CFA charter; however, you will need 4,000 hours of “professional work experience” completed in a minimum of 36 months in areas like trading, corporate finance, and economics to become a CFA Charterholder. 

    Each person will have their own set of personal factors to consider when deciding if the CFA charter is right for them. Information about those factors usually requires more context than what is provided in CFA FAQs

    Career Goals

    Upfront, you should understand that the CFA charter can indeed help you in your career, but it’s not the silver bullet for success. You are the secret to your success, and the CFA charter is just one part of that.

    In our research and conversations with CFA charterholders over the years, we’ve learned an important fact: Charterholders who landed new finance jobs or moved up in their organizations applied passion, dedication, determination, and other common CFA traits to their job search or upward career move. In other words, they didn’t stop working hard after they passed the CFA exams. They also did not set the bar too high in their job search or in their desire for a better position. Instead, they did their homework on the types of jobs where a CFA charter is more likely to be respected and designed a long-term plan for working hard and moving into management.

    For example, if you are a student you could use your journey through the CFA Program to get an internship or an entry-level position to start gaining the experience needed to officially become a CFA charterholder.

    If you’re already working in the financial industry, we’ve seen success come to those who applied for positions or promotions where the charter is seen as advantageous. According to CFA Institute, 22% of CFA charterholders are employed as portfolio managers.

    Again, you are the secret to your success. Other things you can do to help your career are: 

    • Leveraging personal contacts
    • Joining a CFA society
    • Network on social media
    • Attend events related to your career aspirations to meet possible employers
    • Sharpen your presentation skills
    • Practice interviewing
    • Try not to get discouraged along the way

    Join Kaplan Schweser’s Expert CFA Instructors for a Series of Free Webinars Discussing the Career Benefits of the CFA Program

    Finding the Time to Pursue the CFA

    Honestly thinking about how much free time you have to dedicate to the CFA Program should be a priority for you. Some important information to consider if you don’t have lots of free time should be:

    • CFA Level I exams are usually only offered four times per year
    • You can only take an exam twice per calendar year
    • You can’t fail the Level I exam and then re-enroll into the next immediate exam window
    • Average CFA candidates can spend more than 300 hours studying for each CFA exam
    • You should expect to spend three to four years completing the CFA program.

    Salary Expectations

    Determining how much money you can expect to earn after passing all three CFA exams is difficult to determine. If you earn the CFA designation as a mid-level analyst, it's fair to expect a 15-20% increase in salary. In reality, the CFA designation seems to provide more experienced analysts and managers with a larger salary increase. Again there are many factors that determine salary increases but one thing for sure is that the CFA designation is seen as valuable, especially for candidates in senior roles like risk, investment, and portfolio managers.   

    For example, if your end goal is to become a portfolio manager at a top firm, the CFA Institute determined in a 2019 compensation study that US$177,000 was a typical total compensation amount.

    According to the U.S Bureau of Labor Statistics, the annual median pay for financial analysts in the U.S is 83,660 USD or ₹570,063 in the Bangalore, India Area according to Glassdoor.

    Average salary range for common CFA charterholder jobs »

    Total Cost to Pursue the CFA

    The CFA Program is not free and there are multiple components that determine the total cost to pursue the CFA such as:

    Depending on when you register for each exam and how much you pay for CFA prep, expect to need 3-6,000 USD to pursue the CFA charter.

    Total CFA exam fees » 

    Is the CFA Right for You?

    Try our short quiz to see if the CFA charter is right for you at this time.

    What CFA Candidates Learn

    The CFA Program is a three-part exam that tests the fundamentals of investment tools, valuing assets, portfolio management, and wealth planning.

    CFA candidates learn more than just the CFA Insitute’s Candidate Body of Knowledge (CBOK) which covers topics like the effects of geopolitics on economies and investment markets, or environmental and social risk factors for corporate issuers.  

    You will also learn about the financial community in your area and the impact your local CFA Society is having on the future of financial professionals like the global CFA Institute Research Challenge.

    What a CFA Does

    A CFA is a chartered financial analyst who provides investment guidance and portfolio management for individuals, businesses, and other organizations. These professionals can work at institutional investment firms, broker-dealers, insurance companies, pension funds, banks, and universities.

    The CFA designation is only given to investment professionals who have completed the requirements set by the CFA Institute. CFA members can be found at some of the world's largest investment institutions, including JPMorgan Chase, Morgan Stanley Wealth Management, Royal Bank of Canada, BofA Securities, UBS Group, HSBC Holdings, Wells Fargo and Company, PricewaterhouseCoopers, BlackRock, and TD Bank Financial Group.

    Using the CFA To Switch Careers

    It is possible to use your pursuit and ultimate completion of the CFA Program as a way to switch careers.  If you set realistic expectations about how long the transition will take and how much effort and dedication it takes to switch careers, the CFA Program is a great way to transition into a finance professional.  Especially if your focus is narrow and you are considering positions like:

    Reasons People Decide To Become a CFA »

    If you don’t have any experience in the finance industry, you could look for an entry-level position after passing the level I exam while gaining experience during the rest of your time in the CFA Program.  This will help you meet the 4,000 hours of relevant work experience needed for your CFA membership.

    CFA Alternatives

    Some CFA alternatives we commonly see people consider are:

    Advice From CFA Charterholders

    We checked numerous forums and blogs, and those who said the CFA charter was worth it outnumbered the naysayers about 8:1.

    One CFA charterholder wrote this in a LinkedIn blog post: “I went from zero to hero in terms of finance knowledge education, moved to Canada, and am now employed as a research analyst in a macro-boutique firm. How much of this is attributed to my status as CFA candidate? A fair portion, I would say. Would I be in the equivalent or better position without doing the CFA Program? In my thinking, it is unlikely to be the case.”

    In a Life on the Buy-Side article, Mike Moran, CFA, said, “Successfully completing the program and earning your charter is a worthwhile endeavor. You never know what future the markets might hold for you, so the CFA Program offers a good base of knowledge to get you on your way.”

    The general consensus of most CFA charterholders is that it has paid off in terms of career, knowledge, satisfaction, and end results. For example, when we were preparing our eBook, Before You Decide to Sit for the CFA Exam, we interviewed several CFA charterholders, including Jason A. Smith, CFA. He said, “If you are willing to pay the cost, the rewards will wait for you at the end.”

    Ready to Tackle the CFA Charter?

    If you’re excited about what the future could hold for you as a CFA charterholder, get started today and explore our CFA Level I study materials.

    Read Article
    Posted by Kaplan Schweser - March 22, 2022
    Is The CFA Charter Worth It

    How to Become a Financial Analyst

    If analyzing data trends and the performance of stocks and bonds to help businesses or individuals make investment decisions are appealing to you, a career as a financial analyst may be your calling. 

    TABLE OF CONTENTS:

    What is a Financial Analyst?

    A financial analyst is someone who interprets financial data and uses the results from their analysis to help businesses or organizations make decisions about investments.  Those investments can be in many different areas such as:

    • Stocks
    • Bonds
    • Real Estate
    • Business Operations
    • Franchise Performance

    In their research, they usually combine multiple data sets to make predictions. For example, a financial analyst at an investment firm may combine economic variables like the unemployment rate and a company's growth potential to make predictions about buying or selling company stock.

    Required Skills to Become a Financial Analyst

    The skills required to become a financial analyst are broad and can depend on the industry your employer is in and the specific job duties for the role.  Common skills needed to become a financial analyst include:

    • Analysis skills
    • Communication skills
    • Financial modeling skills
    • Knowledge of enterprise resource planning software like SAP
    • Multitasking skills
    • Understanding of financial law like the Sarbanes-Oxley Act

    Financial Analyst Education

    Financial analysts usually have a bachelor’s degree in accounting, finance, statistics, economics, business administration, or other related fields such as math, biology, or engineering. Some high-profile positions may require a master's degree.

    Masters of Science Degree in Financial Analysis

    Sometimes, financial analysts want to distinguish themselves with an advanced degree while pursuing the CFA charter.  The College of Financial Planning has an Online Masters of Science in Financial Analysis program that is aligned to the learning outcomes of the CFA Institute’s CFA Program, which allows for students to earn an MSFA while simultaneously preparing for the CFA exam.

    Certifications for Financial Analysts

    If you don’t have the typical educational background of a financial analyst you could consider getting a certification to help demonstrate your knowledge and eagerness to work as a financial analyst. 

    The most common credential financial analysts pursue is the CFA designation.  The CFA designation is one of the highest distinctions in the investment management profession.  It is given to those that finish the CFA Program and meet the work experience requirements.  

    How to become a CFA Charerholder »

    Other common certifications amongst financial analysts include:

    Financial Analyst Career Paths

    There are a few different directions you can take in a financial analyst career, including a buy-side analyst or a sell-side analyst. 

    Buy-side analysts work for hedge funds or insurance companies to help businesses with their investment strategies. Sell-side analysts advise financial service sales agents who sell stocks, bonds, and other investments.

    Financial analysts may also work for local and regional banks, real estate investment brokerages, and tech companies.

    Obtaining a master’s of business administration (MBA) with a finance emphasis is another common route for financial analysts. You may find that many finance employers require a master’s degree for permanent and advanced positions. Getting your MBA will make you more attractive to employers and allow you more mobility in your career.

    Sell-Side vs Buy-Side: Key Differences To Know »

    Alternative Career Paths For Those Interested in Becoming a Financial Analyst

    For those that are interested in learning about other roles in the financial industry that use similar skills consider investigating stock equity analysts and investment banking analysts. 

    Stock Equity Analyst

    Stock analysts (often referred to as equity analysts) work in both buy-side and sell-side firms producing research reports, projections, and recommendations about stocks and companies.

    How to become a stock equity analyst »

    Investment Banking Analysts

    An investment banking analyst evaluates and researches investment opportunities with the aim of finding the investment that best meets the goals of their corporate clients. Investment banking analysts assess opportunities and recommend investments based on client needs and goals. They are usually part of an investment team and are likely to report to an investment banker who will ultimately guide clients to their final decision.

    How to become an investment banking analyst »

    US Financial Analyst Salary Ranges

    The median salary for a financial analyst in the US is $83,660 USD annually, which is $40.22 per hour. The highest-paid financial analysts can earn $112,460 while the lowest-paid financial analysts can earn $63,670 annually according to the U.S. Bureau of Labor Statistics. 

    Financial Analyst Job Outlook in the US

    The job outlook for financial analysts in the US is positive. According to the U.S. Bureau of Labor Statistics, the number of individuals employed as financial analysts is projected to grow 6 percent from 2020 to 2030 (492,100 vs 523,400 positions).  

    Over 40,000 new positions are projected to open up each year on average.  It is expected that these open positions will be created to support new financial products from big data and tech companies.  They will also help companies conduct analyses on new investment opportunities from emerging markets. 

    Why Become a Financial Analyst?

    Becoming a financial analyst can give you a high-paying salary with the ability to earn bonuses and share-based compensation. Financial analysts have a median annual salary of $83,660, far above the median annual salary of a full-time worker in the US which is just over $50,000 according to the U.S. Bureau of Labor Statistics. 

    The position is also popular with people interested in big data and seeing a direct business impact from their decisions. 

    Steps to Becoming a Financial Analyst

    Here are the four big steps we recommend you take to successfully become a financial analyst.

    Step 1: Earn a Bachelor’s Degree

    If you are currently enrolled in college and working toward your bachelor’s degree, you are already on your way to a financial analyst career. Most practicing financial analysts pursued a finance-related major like accounting, statistics, or economics; however, that is not necessarily a prerequisite. 

    Other math-heavy fields like engineering and physics are not uncommon backgrounds among financial analysts. It is recommended that you take courses in business, economics, accounting, and math in your undergraduate program, as they will be necessary for this career.

    Step 2: Complete an Internship

    While this is not mandatory, it is strongly encouraged that you pursue a financial analyst internship. This is especially true if you decide to pursue a credential like the CFA. An internship that qualifies as relevant work experience will count towards the 4,000-hour work experience requirement for the CFA charter. 

    Completing an internship in the finance industry will help you get a realistic picture of the career and understand the type of work you can expect on a day-to-day basis in this field. Internships also give you an opportunity to network with existing financial analysts and potentially find a mentor. Some of the relationships you form as an intern will help you throughout your career. 

    An internship will also help you build your resume and provide experiences you can draw on for job interviews. Most employers prefer to hire people with experience, even for entry-level jobs. An internship also allows you to demonstrate your active interest in becoming a financial analyst and build experience.

    Step 3: Find a Job

    Once you graduate with a bachelor’s degree in a relevant field, you can pursue job openings for titles like a junior financial analyst or entry-level financial analyst. Positions like these are often under the guidance of a senior analyst who will help show you the ropes of the industry. 

    In these roles, you will encounter tasks like analyzing income statements, maintaining files, processing financial statements for clients, and analyzing plans and forecasts. While junior analysts could potentially advance, progression often requires either a certification or a master’s degree eventually.

    Step 4: Get Certified/Licensed

    If you want to stay in the financial analyst field, many employers will require you to get the CFA charter for senior-level positions. The CFA charter is the most prestigious designation a financial analyst can obtain. The charter program requires you to pass three rigorous exams:

    1. CFA Level I
    2. CFA Level II 
    3. CFA Level III

    It is recommended that you study at least 300 hours for each of the exams, so pursuing the CFA charter is not something to be taken lightly. However, it will qualify you for many advanced financial analyst roles. 

    In addition to passing the exams, you will also need 4,000 hours of relevant experience for earning the charter. Getting experience prior to beginning the CFA Program will ensure you meet the experience requirement by the time you pass Level III.

    What Kind of Job Can You Get After Passing the Level I CFA Exam? »

    Depending on your role, some employers may also require you to get licensing from the Financial Industry Regulatory Authority (FINRA). This type of licensure generally requires sponsorship from your employer, so it is best to start a job first and find out what they require.
    Read Article
    Posted by Kaplan Schweser - March 22, 2022
    How to become a financial analyst

    What Kind of Job Can You Get After Passing the Level I CFA® Exam?

    After months of studying, reviewing, hard work, and probably some nervousness, you’ve passed Level I of the CFA® exam. Now that you’ve conquered this first milestone, you might be wondering if it can help you in your career. If you’re in the final year of earning your bachelor’s degree, perhaps you’re wondering if passing Level I can open doors for you in your job search. Or, if you’re already working in finance, maybe you think it could help you get a better role. This article has the answers for you.

    Jobs Commonly Held by Those Who Passed Level I of the CFA® Exam

    In 2016, an online job search company, eFinancialCareers, analyzed the resumes in their database to see what job roles candidates who had passed the different levels of the CFA exam held. Despite the fact that 37% of the resumes were not specific enough to make a determination of the role, they were able to identify ten roles. Here are their top five findings:

    • Asset management: 15%
    • Accounting and finance: 13%
    • Equities: 8%
    • Risk management: 6%
    • Interns at finance firms: 6%

    Based on these numbers, if you’ve passed Level I, the job roles most likely available to you are intern, accountant or assistant accounting manager, investment administrator, fund analyst, investment product analyst, and junior equity research analyst (which is often the first step toward getting into asset management as a career).

    What Is the Salary For a CFA Level I Completed Candidate?

    The salary you earn after passing Level I of the CFA exam is dependent on your current job responsibilities and employer.  You do not automatically qualify for a salary increase by passing the CFA level I exam unless that was agreed upon between you and your employer. 

    CFA Charterholder Salary »

    Do People Get Jobs After Passing Level I of the CFA?

    Before you start envisioning your new career as an asset manager or risk manager because of your Level I credentials, there are a few things you should keep in mind. Yes, those job prospects look good, especially if you don’t have one yet. But the problem with them is that there is no information in the statistics that shows whether passing Level 1 of the CFA exam made any impact during the hiring. And if you search forums like analystforum.com, Quora, and Reddit to learn whether passing Level I helped anyone get a job, you’ll get a mixed bag of responses.

    Some will declare that passing Level I won’t help you at all. Others say passing Level I  can help you get a good finance job with a competitive salary in some parts of the world, but not everywhere. And, there are still others who say it absolutely helped them in their careers in one of two ways:

    • Passing Level I was a deciding factor when they were competing with someone who was equally qualified for the position but hadn’t passed.
    • They had already held careers in finance when they passed Level I.

    Why are there so many different opinions? The answer to that question depends on how the forum posters approached job hunting after they passed. Quite a few job candidates think that passing Level I should be enough to get them their dream job. They’re looking for a shortcut on a career journey that is competitive and requires hard work. They are the ones who will tell you that passing the exam didn’t help. If you take the same approach, you are likely to be disappointed.

    Those who say they were able to get a good job at a finance firm after passing Level I had a different view of how to leverage this accomplishment.

    How Passing Level I of the CFA® Exam Can Help in Your Career Search

    Those who have successfully found employment in a finance capacity after passing Level I applied the same determination to their job search as they did to studying and passing. They parlayed the techniques they used to create a CFA study plan, stick to that plan, learn the material, and stay calm on exam day to finding a job.

    They networked, used personal contacts, joined a CFA society, spent hours on social media, and attended career fairs. They honed their presentation skills, worked on portraying a specific image or showcasing a specialized skill, and didn’t let themselves get discouraged. With concerted effort, this could be you. You can also use the fact that you passed as a confidence builder when going into an interview. After all, passing Level I means you have a good grasp of basic financial concepts, and that is something for which you can be proud.

    Interested in more advice from CFA® charterholders? Download this free Before You Decide to Sit for the CFA Exam eBook.

    Career Opportunities for CFA Level I Completed Candidates

    The general consensus is that you can only get so far in a finance career if you don’t continue pursuing the CFA charter. In the eFinancialCareers research, the odds of moving up the ladder in asset management firms and corporate banks increased with each level passed, culminating in good prospects for CFA charterholders.

    Those who found good entry-level jobs or gained a better position after passing Level I all said that it helped them even more if they showed they were willing to continue pursuing the charter. Some even said that it was better to put that you were a Level II candidate on your resume than to say you passed Level I. They told stories about how firms viewed the fact that they were registered for Level II very positively.

    Although being a CFA charterholder doesn’t guarantee you a job, you are much more likely to advance in your career or find the perfect finance job if you’ve earned your charter.

    Ready to Tackle Level II of the CFA® Exam?

    If you’re excited about demonstrating your commitment to earning the CFA charter to a potential or current employer, why not get started today? Find answers to frequently asked questions about the CFA exam, or explore our CFA Level II study package options.

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    Posted by Kaplan Schweser - February 21, 2022
    What kind of job can you get after passing the Level I CFA exam

    How to Show CFA® Designation on Your Resume

    Earning the CFA designation is a great accomplishment and is an indication of your hard work and dedication to advance your career as a financial professional. You should be proud of yourself, and understand the rules and guidelines set by the CFA Institute when communicating your Chartered Financial Analyst® status on resumes, in social media profiles, and in other types of written communications.

    TABLE OF CONTENTS:

    Resume Rules for CFA Marks

    Deciding if you should use CFA® or Chartered Financial Analyst® or knowing when to use the ® symbol can be confusing, especially if you recently earned your CFA designation and want to add this information to your resume.   

    Choosing to use CFA® or Chartered Financial Analyst® is up to you.  If you have room for it, go for Chartered Financial Analyst®.  If you don’t have room for an extra three words or prefer a shortened version use CFA®.

    The first and most prominent use of CFA or Chartered Financial Analyst in text material should include the registered trademark symbol ®. It is not necessary to use the ® symbol when the marks directly follow the name of a specific individual but for resumes and cover letters you should use ® after CFA or Chartered Financial Analyst because your name is usually the most prominent text on a resume or cover letter. 

    If you add CFA® or Chartered Financial Analyst® to the education or certification sections of your resume or a detail section in your cover letter, they should be used as an adjective instead of a noun.  One way to remember this is the sentence should still make sense if you remove CFA or Chartered Financial Analyst.

    Resume Rules for Active CFA Charterholders

    If you are an active CFA charterholder in good standing with the CFA Institute, the guidelines for including your CFA designation in your resume are pretty straightforward.  

    • You can include the CFA designation after your name on your resume. For example: “ John Smith, CFA” excluding the ® symbol.
    • You can include your CFA designation in the certification or education sections of your resume and must include the ® symbol.  For example: “CFA® charterholder, CFA Institute.”
    • You may also include the date you earned your CFA designation in the certification or education sections of your resume.

    Resume Rules for Lapsed CFA Charterholders

    If you are no longer a CFA charterholder but still in the job market and want to show that you were once a CFA charterholder on your resume, you can.   The CFA Institute will only allow you to keep the CFA designation in the certification section of your resume as long as you specify the dates you were an active CFA charterholder in your resume and include the ® symbol.  For example: “CFA® charterholder, 20XX - 20XX.”  

    Resume Rules for CFA Program Candidates

    Are you currently a candidate in the CFA program and want your resume to reflect your initial commitment to earning the CFA designation? If so, the CFA Institute has a few guidelines for you to follow.  Remember that Ethics and Professional Standards are an important aspect of your career as a CFA charterholder so be transparent about where you are at in the process.  

    • You can insert information about your involvement in the CFA Program in the education section of your resume only and you must include the ® symbol.  For example: “CFA® Program participant, CFA Institute.”
    • In the education section of your resume, you can also include which level you can complete and the date of completion.  For example: “Completed Level II in 20XX.” 
    • You may only use the term “candidate” if you are actively registered for an upcoming CFA exam. 

    Can you write attempted CFA Level I on your resume?

    If you attempted the CFA Level I exam and failed, you should not include that information on your resume.  Most CFA candidates fail at least one exam during their CFA charterholder journey.  We suggest you try again and consider a Kaplan Schweser Level I exam prep package to help you study for the Level I CFA exam.

    Can you share CFA designation on social media?

    Yes, you can share your CFA designation on social media but the CFA Institute has set different guidelines for various platforms.  If you plan to advertise that you are a CFA charterholder on social media make sure you continue to meet the membership requirements set by the CFA Institute.  It is also important to remember that you should not try to falsify any information and be transparent about your status whether that is a candidate or a CFA charterholder. 

    How to share on LinkedIn for CFA Charterholders

    If you are a CFA Charterholder with an active membership with the CFA Institute you may advertise your CFA designation on LinkedIn. 

    To add your CFA designation on LinkedIn follow these steps:

    1. Log in to LinkedIn and select view profile
    2. In the license & certification section of your profile click the + button to add a new certification
      1. Name= “Chartered Financial Analyst® (CFA) Charterholder”
      2. Issuing organization= “CFA Institute”
      3. Select “This credential does not expire” if your membership is active
      4. Enter the month and year you received your charter into the Issue date field
      5. If you have claimed your digital badge, you may enter your digital badge URL into the Credential URL field
      6. Press save

    How to share on LinkedIn for CFA Program Candidates

    If you are a candidate in the CFA Program, you may advertise your candidate status on LinkedIn if you have passed an exam. 

    To add your CFA Program Candidacy on LinkedIn follow these steps:

    1. Using a desktop, log in to LinkedIn and select view profile
    2. In the accomplishments section of your profile click the + button to add a new test score
      1. Test Name=Enter Level I, II, or III CFA exam
      2. Score=Enter “passed”
      3. Test Date=Enter the month and year you passed the exam
      4. Description=Enter the level you have completed.  For example “Passed Level II of the CFA Program.”
      5. Press save

    To reference your CFA Program Candidacy for an upcoming exam on LinkedIn follow these steps:

    1. Using a desktop, log in to LinkedIn and select view profile
    2. In the accomplishments section of your profile click the + button to add a course
      1. Course Name=Enter Level I, II, or III CFA exam candidate
      2. Leave all other fields blank
      3. Press save

    How to share CFA designation on Twitter

    You can only include “CFA” after your name if your membership with the CFA Institute is active and in good standing.  

    • CFA should not be included in your Twitter handle.  For example, @JohnSmithCFA is not allowed.
    • CFA or Chartered Financial Analyst should only appear in your name field. 
    • If you are going to put CFA next to your name on Twitter, your name should be your legal name.
    • No aliases are allowed to be used as a name if planning to use the CFA designation.

    How to share CFA designation on Facebook

    You can only include “CFA” after your last name if your membership with the CFA Institute is active and in good standing.

    • CFA or Chartered Financial Analyst should only appear in your last name field.  For example, John Smith, CFA 
    • If you are going to put CFA next to your name on Facebook, your name should be your legal name.
    • No aliases are allowed to be used as a name if planning to use the CFA designation.

    Why do CFA charterholders pay to remain a CFA member?

    CFA charterholders pay to remain a CFA member with the CFA Institute to keep their CFA status active.  CFA charterholders must maintain ethical and professional standards set by the CFA Institute as well as participate in annual professional development requirements.  Failure to do so could result in disciplinary action or removal from CFA membership.

    Can you get a job after passing CFA Level I?

    Yes, it is possible that you could get a job after passing the Level I CFA exam. However, there is no publicly available information that shows whether passing the Level 1 CFA exam made any impact during the hiring.  What is clear is that passing all three CFA exams and becoming a CFA charterholder is likely to have a significant, positive impact on your career path.

    Is taking the CFA worth it?

    There are a lot of personal and industry factors to consider when deciding if taking the CFA is worth it for you.  Most financial analysts ask themselves this question at some point in their careers, which is why we have developed an entire article to help you decide if the CFA is really worth it for you.

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    Posted by Kaplan Schweser - December 1, 2021
    How to show CFA designation on resume and social media

    Is Being an Investment Manager a Good Career Option?

    If you would like to help others discover the best ways to get substantial returns on their investments, are intrigued by analyzing risk, or are interested in helping businesses buy other businesses, consider a career in investment management. Contrary to popular film and fiction, this career does not limit you to pin-striped suits and high-pressure deals on the floor of a noisy, crammed trading room. You have plenty of opportunities to avoid stock exchanges (unless that’s where you want to be). 

    How to Become an Investment Manager

    Investment managers provide advice and direction to their clients so they meet their goals and get returns on their financial assets. If you want to become an investment manager, you’ll most likely need a fair amount of education, experience, and dedication.

    What Education Do You Need to Become an Investment Manager?

    You will need a bachelor’s degree in a field such as financial management or economics to start off.  To help get you closer to obtaining the Investment Manager job title, popular options include:

    What Skills Do You Need to Become an Investment Manager?

    You will need to be able to cope with stress and thrive in a competitive work environment to become an investment manager.  It is expected that you are passionate about the field and the needs of your clients.  You will succeed if you are goal-oriented, enjoy mathematics, are proficient in data analysis, and love to solve problems.

    Should You Become an Investment Manager?

    Here are 7 reasons why being an investment manager is a good career option to pursue:

    Investment Managers Have Lots of  Career Options

    There are many jobs available to investment managers. The U.S Bureau of Labor Statistics (BLS) estimates there are over 650,00 financial manager jobs in the US in 2020.  jobs in banks, brokerage firms, credit unions, and insurance companies. You can be a financial analyst, fund manager, portfolio manager, risk manager, hedge fund manager, alternative investment analyst, stockbroker, risk analyst, ratings analyst, private equity associate, and more. You can choose to manage the investments of individuals or businesses. With the right education and knowledge, there is also the opportunity to join well-known financial institutions like Vanguard, JP Morgan Chase, Goldman Sachs, Citigroup, HSBC, and Merrill Lynch, just to name a few. There are also ways you can work for yourself if you’re dedicated, realistic, and have enough experience with a finance employer first.

    Investment Management Is Fascinating

    Investment managers give people and companies advice on what to do with their money. This involves a kind of detective work that will be different each time you do it as you match investments with your clients. One day you might be helping a fashion designer, and the next day, it’s a company that built an app to help disaster victims find relief and shelter. Every day is different. And, since investments can be affected by global events, extreme weather, and unpredictable things like human emotions, there is no time to be bored. You have to keep coming up with new and different investment strategies and ways to direct funds on behalf of clients.

    Investment Management Can Be a Lucrative Career

    The investment management profession offers some of the highest starting salaries in finance. For those who are talented and ambitious, there’s also a great deal of room for that salary to grow quickly. In the United States, Glassdoor reports that the annual salaries for investment managers range from $51,000 to just under $172,000. The U.S. Bureau of Labor Statistics (BLS) puts investment managers in both the financial analyst and financial manager categories and reports that the median annual salary was between $83,664 and $134,180 for both positions in 2020.

    The Investment Manager Job Outlook Is Bright

    With so many different financial products and a growing need for people with in-depth knowledge of geographic regions, it’s no surprise that most industry analysts expect strong employment growth in the investment management field midway into the next decade. According to the BLS, employment in investment management is expected to grow 17 percent from 2020 to 2030. This job's outlook is much brighter than the average for all occupations, especially if you happen to be tech-savvy. The competition will be fierce, but with the right education, you should be able to land a good entry-level investment position.

    Investment Managers  Don’t Have to Spend Years in Additional Schooling

    Are you in the process of earning, or do you already have, a bachelor of science (BS) in business administration, a BS in finance, or a related degree? If so, we have good news. Any of these degrees are all you need to get started in an investment management career. Also, earning a voluntary certification or charter such as the Chartered Financial Analyst® (CFA) charter, the Chartered Alternative Investment AnalystSM (CAIA) charter, or the Financial Risk Manager (FRM) designation is a great way to augment your degree without going to graduate school.

    If you’re curious about the differences between these designations, you can learn more in these articles about the CFA charter vs. the CAIA charter, the CAIA charter vs. FRM certification, and the FRM certification vs. the CFA charter.

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

    Investment Managers Can Be Creative and Innovative 

    There’s a tendency to think that anyone who chooses to invest for individuals or businesses as a living is a numbers-cruncher. Numbers are involved, but your main focus is investment portfolios, not equations and calculations. These portfolios should be as diverse as possible—comprising lots of different businesses, projects, and sectors. Moreover, as we mentioned in reason #2, you have to tailor these portfolios to the needs, passions, and beliefs of your clients. In other words, investment management offers you remarkably rewarding opportunities to develop and innovate, delivering solutions that make a true difference in individuals’ lives or in the way business and capital move forward.

    Investment Management Is Satisfying

    A great deal of what investment managers do involves solving problems. With each resolution and discovery, there’s satisfaction. Think of how it would feel to know that you recommended something that made money for one of your clients. Not only is there the knowledge that they benefited from your decision, but there’s the joy of knowing that after a lot of research and detective work, you picked a winner. Now imagine how it would feel to do that consistently over time. Of course, you won’t get it right every time. But even then, being wrong in investment management brings experience and expertise. If you think about it, that’s another type of satisfaction—having learned a lesson well.

    Are you ready to learn more about this fascinating and satisfying career? If you think that a career in investment management is right for you, check out these resources that can help you get started.

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    Posted by Kaplan Schweser - October 7, 2021
    Is Being an Investment Manager a Good Career Path

    Become a Hedge Fund Manager

    Hedge funds are low-risk, high-return funds characterized by a high level of investment diversity. They are managed by hedge managers, whose job is to develop investment and risk management strategies for their portfolios in order to gain the highest possible return on investments while maintaining a low level of risk.

    Hedge fund management careers can be highly rewarding and lucrative, but they are also extremely demanding and competitive. Read on to learn more about hedge funds, what it’s like to be a hedge fund manager, and how to become a hedge fund manager.

    What Is a Hedge Fund?

    Hedging means reducing risk. A hedge fund is an investment vehicle that utilizes a variety of investment and asset management techniques to maximize potential return while maintaining a comfortable level of risk for the client. Hedge funds are pooled funds, meaning that they consist of investments from many different individual investors for the purpose of a larger investment portfolio with more diversifying potential. 

    Hedge funds require a large initial investment, limiting investors to high-net-worth individuals and institutions. To ensure that investors can handle the potential risks that accompany any kind of large investment, the Securities and Exchange Commission requires investors to be accredited before investing. Some general basic requirements are that investors have a net worth of over $1 million (excluding primary residence) and an annual income of $200,000.  


    What Is a Hedge Fund Manager?

    A hedge fund manager is essentially a consultant for hedge funds. Hedge fund managers work closely with clients to develop investment strategies and manage portfolio trading activities based on the client’s goals and desired risk-reward ratio. Fund managers ensure that assets are managed as cost-efficiently and profitably as possible, which includes making decisions to buy, sell, or hold assets. A fund manager pays close attention to cost and risk associated with capitalizing on cash flow opportunities to ensure proper liquidity of funds.

    Fund management is a marriage between hard financial and accounting skills and consulting and research skills. Fund managers regularly research companies, read financial briefings, and stay up-to-date on current events and global economies. They meet with investment analysts and company managers to better understand pertinent financial information. They also likely have a team of financial analysts who use the latest software to do more in-depth analyses on firms, markets, and economic variables. This helps them make recommendations and predictions about future prices and trends.


    How to Become a Hedge Fund Manager

    Hedge fund manager is rarely an entry-level position. You should expect to devote several years to secure a fund manager job. These are the steps that can get you there.

    Complete your education.

    First, earn a bachelor’s degree. Majors such as finance, accounting, economics, or business administration provide a solid background for a career as a fund manager. However, majoring in something unrelated to finance (such as a foreign language, hard science, or humanities major) will set you apart, as long as you’re able to defend your reasons for choosing such a major and explain how the skills you learned will translate to a job in finance.

    Second, consider getting an MBA or a master’s in finance. You won’t need a graduate degree for an entry-level position in finance, but it may be required as you get closer to becoming a fund manager. Make a plan to get your master’s early in your career. Although graduate schools often like to see that you’ve had several years of work experience before you apply, creating a timeline for yourself early will help you take the required admissions tests and gather your application materials on time.

    Complete a financial internship. 

    An internship is a critical step in the process of starting a career in finance and eventually becoming a hedge fund manager. Having at least one internship on your resume can help you find employment after you leave school, potentially at the firm where you interned. Research the firms in your area that are offering finance internships, and keep applying until you get an offer.

    Internships teach you about the investment industry and introduce you to the day-to-day tasks associated with being a fund manager. You will be able to learn about potential future roles, including hedge manager, ask questions, and gain real-world experience in finance while honing your decision-making and communication skills. Internships are also invaluable networking opportunities. You can develop relationships with employees and other interns who can act as references when you begin looking for jobs.
     

    Get an entry-level position in finance.

    Start by identifying a company or firm you want to work for and look for entry-level financial analyst positions. These positions are popular and competitive, so you need to set yourself apart. Be sure your resume reflects the qualities you’ll bring to the table and demonstrates some of the skills that make you an exceptional potential employee. Emphasize what you learned as an intern, and keep in mind that most people applying for the position will have an academic background similar to yours, so make sure your resume includes many other experiences, too.

    If you’re invited to interview, prepare in advance. Determine the three or four things that differentiate you from other candidates and what you want the interviewer to know about you by the time the interview is over. In the interview, keep these things top of mind, and you’ll be prepared to frame your answers in a way that reflects them.

    Presenting yourself as the ideal employee doesn’t end when you get hired. To move into a fund manager position, you need to consider each day a part of your next interview. Simply put, companies promote successful, exceptional employees. The quickest way to move up the ranks is to stay on top of the industry and your firm, making the most of every opportunity to demonstrate your value.

    Choose a niche.

    By learning and observing the work in your firm, you will soon see that each fund manager handles a different kind of fund (from a long list) and has a different investment philosophy and style. A few examples are small-cap, midcap, large-cap funds, funds for emerging markets, balanced funds, sectoral funds, and pure equity funds. Choose one or two that appeal to you (or that you feel are most likely to enable you to move up), and learn all you can about them.
    Having fund management knowledge that is specialized adds to your confidence. More importantly, it can give you an edge over others as you start vying for a more senior role on your way to becoming a fund manager. 

    Earn your CFA charter. 

    An effective way to accelerate your learning and demonstrate your commitment to your employer (or other potential employers) is to earn your CFA® charter.

    The CFA exam is a three-level examination offered by CFA Institute. Charterholders estimate they spent an average of 300 hours of study per level. It’s a challenging exam, but passing it can make you one of just 150,000 CFA charterholders worldwide.

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

    What Is It like to Work at a Hedge Fund?

    The hours you work depend on where your hedge fund is located. If you’re on the east coast of the U.S., the hours will typically be from 7:00 am to 7:00 pm. If you are on the west coast of the U.S., the typical hours are from 5:30 am to 5:00 pm. Because your attention will be riveted on the markets when they’re open, the majority of your research needs to be done before and after market hours.


    On Quora, an anonymous hedge fund investment professional wrote that, although there is no typical day in a hedge fund, there was a certain rhythm. “I review my to-do list for the day and make adjustments if necessary. If a stock I’ve been following moves materially, I’ll make it a priority to look at what’s going on. I’ll also check in with the portfolio manager to see if there’s anything he’d like me to work on or to get feedback on an analysis I’m working on. Beyond that, it’s a lot of reading and analysis. Public filings, transcripts, company presentations, data analysis, forecasts, etc.”

    Other descriptions of working at a hedge fund are similar. One hedge fund manager at a small firm that manages assets valued at $1 billion likened the work environment to a “pressure cooker,” but she still enjoys it. Another hedge fund manager says that “it is never boring” because you have a chance to innovate every day. Overall, most professionals emphasize that if you’re willing to put in the work and the hours and are a creative go-getter, you will enjoy the work and the rewards.


    Hedge Fund Manager Salary

    Hedge fund manager jobs can be extremely lucrative, and the best fund managers can make over $1 billion a year. That being said, your salary is dependent on the size of your fund and the success of your investments, so most fund managers, while still earning a large salary, make considerably less than this.

    Hedge fund manager salaries are based on the Two and Twenty model. “Two” means 2% of the total market value of investments managed by the hedge fund manager, and “twenty” means 20% of the profits made by the fund above a set threshold (or minimum rate of return).
    Read Article
    Posted by Kaplan Schweser - December 22, 2020
    How to Become a Fund Manager

    Become an Investment Banking Analyst

    Investment banking careers, although demanding, are some of the most rewarding financial career opportunities available. For one, you have a hand in real-time financial markets and help companies, government organizations, and other clients succeed financially. You also have great opportunities for future career growth and satisfaction; investment banking is an incredible stepping stone to more prominent careers in finance. Read on to learn more about investment banking, investment banking careers, and how to become an investment banking analyst. 

    What Is Investment Banking?

    Investment banks serve as intermediaries between companies and the financial markets. Investment banks help their clients become publicly traded, facilitate mergers and acquisitions, provide financial advice, trade stocks, and research market trends to help clients make lucrative financial decisions. 

    About Investment Banking Analyst Jobs

    An investment banking analyst evaluates and researches investment opportunities with the aim of finding the investment that best meets the goals of their corporate clients. Investment banking analysts assess opportunities and recommend investments based on client needs and goals. They are usually part of an investment team and are likely to report to an investment banker who will ultimately guide clients to their final decision.

    The corporate clients can be new investors, existing investors, or even the analyst’s own company. If the clients are new, the analyst gathers and processes data, investigates opportunities, and presents the findings to the team and sometimes the client. For existing clients, the analyst evaluates their investments based on performance and makes recommendations for keeping or replacing them. If the client is their company, analysts assess business assets, earnings reports, industry trends, and more to make investment recommendations for their institution.

    Other investment banking analyst responsibilities include the following:

    • Reviewing and analyzing data for investment portfolios, including the performance of stocks and bonds, credit trends, and other transactions
    • Presenting the results of their research and investigation to the investment banking team, an investment banker, or even clients
    • Handling administrative tasks such as arranging meetings, generating reports and other materials, and making sure the team operates smoothly

    What’s the Difference Between an Investment Banker and an Investment Banking Analyst? 

    Most investment bankers start out as investment banking analysts and hold that position for 2–3 years before moving on to an associate position. If you have just graduated with a degree in finance and want to work in an investment bank, your most likely entry point will be as a financial banking analyst.

    Investment bankers are critical to corporations and communities who want to raise money to fund their activities. Investment bankers underwrite securities and help corporations navigate through some of the most difficult business processes, such as mergers and acquisitions and initial public offerings. They act as intermediaries between their banks and their corporate clients, assisting in complex financial transactions and issuing securities as a way of raising money. They also use sophisticated financial modeling to determine cost estimates of financial instruments and identify potential risks, project possible earnings and prepare documentation on behalf of their clients.

    How to Get Investment Banking Analyst Jobs

    Investment banking analyst jobs are highly competitive, but if you get an offer and do well, you’ll have a highly rewarding job with upward mobility. Follow these steps to increase your chances of landing an investment banking analyst job. 

    Earn Your Bachelor’s Degree

    The first step toward becoming an analyst in investment banking is completing your undergraduate degree. Common majors for future analysts include accounting, finance, and math. That being said, some successful investment banking analysts majored in something totally unrelated, such as a foreign language or science. No matter what you major in, make sure you can market the skills you developed in your undergrad in your interviews for investment banking analyst jobs.

    Complete an Investment Banking Internship

    Internships have several advantages. First, internships provide you with real-world practical experience. Immersion is truly the best way to learn and become acclimated to the life of an investment banking analyst. Secondly, the experience and skills you gain in an internship will make you more attractive to potential future employers. Think of your internship like a long-form job interview; investment banking interns often earn the opportunity to be considered for a position as an analyst after graduation, based on the great work they did during their internship. Finally, internships provide a valuable environment to make connections and build your network. It may lead to future opportunities in the firm where you’re interning, or it could lead elsewhere, as the people you work within your internship move on to other banks.

    Register With FINRA and Pass Applicable Securities Exams

    In order to operate as an investment banking analyst, you are required to register as a representative of your bank with the Financial Industry Regulatory Authority (commonly called FINRA). In addition, depending on the type of work you will be doing, you need to prepare for and pass any applicable securities (series) licensing exams to qualify for registration.

    Stand out With the CFA® Charter

    While not required, prospective investment banking analysts often start their CFA exam prep while they are still in their undergrad or soon after they graduate. The CFA charter is globally recognized as the most respected investment management designation you can earn. The program focuses heavily on investment valuation, company analysis, and portfolio management. 

    Earning the CFA charter requires you to pass three levels of exams. This process typically takes several years. Candidates study an average of 300 hours per level. In order to earn the charter, you must also demonstrate that you’ve logged 4,000 hours of applicable investment work experience. But you don’t need any experience to start, so it’s common for individuals to complete the examinations while earning their required experience.

    A major benefit of earning the CFA charter is that it can help you build your network through CFA Institute and local CFA Societies.

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

    Investment Banking Analyst Salary

    What could you make as an investment banking analyst? How much you earn as an investment banking analyst depends on where you live, how long you’ve been working, and what company you work for. As of 2020, the average investment banking analyst salary in the United States is $86,643, but that can vary widely. 

    In addition to an annual salary, investment banking analysts receive an annual bonus based on their personal performance and the performance of their employer. You can expect this bonus to exceed $50,000, and it can even exceed your annual salary in some cases. Keep in mind, though, that although investment banking analysts can earn a huge amount of money right out of college, they are also working incredibly long hours. It’s not uncommon to work 90–100 hour work weeks

    Why Investment Banking?

    People often go into investment banking for the wrong reasons. If you’re drawn primarily by the prestige and earning potential, you won’t find satisfaction in your work and might even burn out quickly. Below are some reasons why investment banking might be a good fit for you:

    • You’re interested in the skills you’ll gain as an investment banking analyst, such as Excel, and financial modeling
    • You want to learn more about high-profile transactions, financial markets, and how a company makes financial decisions.
    • You thrive in a fast-paced environment with long hours.
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    Posted by Kaplan Schweser - December 22, 2020
    How to Become an Investment Banking Analyst

    Is the CFA® Charter Useful for Corporate Finance?

    The CFA® charter can be useful in a corporate finance career. Corporate finance includes implementing various strategies for corporate investment and increasing shareholder value. The CFA exam covers some corporate finance topics, such as portfolio management, working capital management, and more. This article explores the corporate finance roles for which earning the CFA charter is a good idea.

    Research Analyst

    Research analysts play an important and specific role in corporate finance, using a combination of mathematical processes and qualitative data to look for trends and patterns that can inform corporate investment and financial planning. They are able to process data and provide recommendations. The intelligence they gather is incredibly valuable to corporations, and 15 percent of CFA charterholders are research analysts. Many of them are in a corporate finance role.

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

    Corporate Financial Analyst

    Corporate financial analysts use historic and qualitative data, microeconomics, and macroeconomics to uncover trends and patterns that enable them to make predictions and forecasts. In corporate finance, these analysts conduct research, provide advice, and are relied on as critical advisors in the process of making investment decisions. According to CFA Institute, 5 percent of those who hold the CFA charter have a corporate financial analysis role.

    Equity Analyst

    Equity analysts research and report how strong companies are in the securities market. Their focus is on stocks. The equity analysts who work in corporate finance research companies in their employers’ portfolios. Some equity analysts prepare reports that offer buy and sell recommendations to management. We were not able to find statistics for what percentage of CFA charterholders are equity analysts, but it is a valuable designation in this field.

    Portfolio Manager

    Portfolio managers in corporate finance are in charge of their company’s fund or group of funds. They spend their days working with analysts and researchers to stay current on the markets and business news that might affect their funds. They make decisions to buy and sell assets as the markets fluctuate. They look beyond surface information and make decisions for their companies based on expert insight and experience. CFA Institute reports that 22 percent of CFA charterholders are employed as portfolio managers. It is likely that part of that percentage of charterholders is in corporate finance.

    Chief Financial Officer

    CFOs are the head of corporate finance. Holding the CFA charter does not guarantee you’ll make it to the C-suite in corporate finance. CFA Institute says that approximately 7 percent of all the CFA charterholders are chief-level executives, but they do not specifically state whether they are CFOs, CEOs, CIOs, and so on. However, CFO positions are considered the pinnacle of finance achievement, so CFOs probably make up a great deal of that percentage.

    In addition, if the CFO or someone in a senior corporate finance role is a CFA charterholder, holding the charter can be a big plus for you. If those with the responsibility of hiring or choosing analysts and managers in corporate finance hold the charter, they tend to look favorably on candidates or entry-level roles who have also earned it.

    Ready to Learn How to Become a CFA® Charterholder?

    We have five good reasons why you should. If you’re planning to sit for the CFA exam, explore our CFA study materials.

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    Posted by Kaplan Schweser - December 17, 2020
    Is the CFA Useful for Corporate Finance Roles

    Chartered Financial Analyst® Salary: What Do CFA® Charterholders Make?

    Earning your CFA® charter sets you up well for growth in your career as a finance professional. But what kind of salary can you earn? According to Payscale, in the United States, the CFA charterholder salary is anywhere from $64,234 to $255,000 a year. Why is there such a big range? Because there is a lot you can do with the charter in jobs with varying degrees of responsibility. Bonuses and years of experience make a difference, too. So let’s look at what the average salary is for some of the most common jobs for CFA charterholders.

    Portfolio Manager Salary—With the CFA® Charter

    According to CFA Institute, 22% of CFA charterholders are employed as portfolio managers. CFA Society Chicago’s annual financial compensation survey reports that the median base annual salary for a fixed income portfolio manager is $132,500; and for an equities portfolio manager, it is $136,000.

    Everything To Know About Being A Portfolio Manager >>

    Research Analyst Salary—With the CFA® Charter

    In a survey compiled by CFA Institute,15% of global CFA charterholders said they were research analysts, responsible for analyzing mathematical processes and qualitative data to make future predictions. Payscale reports that CFA charterholders who are research analysts earn, on average, $73,954 a year.

    Everything To Know About Being A Research Analyst >>

    Chief-Level Executive Salary—With the CFA® Charter

    CFA Institute says that approximately 7% of all CFA charterholders in the world have made it to the C-suite. The most common titles for executives with the CFA charter are chief investment officer or chief financial officer. CFA Society Chicago says that chief investment officers with CFA charters have a median annual base salary of $227,500; for CFOs, Payscale says it’s $170,618.

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

    Consultant Salary—With the CFA® Charter

    Companies hire consultants to bring an independent expert perspective to business valuation, provide economic forecasts and analysis, and identify opportunities to grow shareholder value. The median base annual salary of CFA charterholders who work as consultants is $74,000, according to CFA Society Chicago.

    Risk Manager Salary—With the CFA® Charter

    Financial risk managers help identify and assess potential risks that a company faces or could face in the future. CFA Society Chicago reports that CFA charterholders who work as risk managers have a median yearly base salary of $126,060.

    Relationship Manager Salary—With the CFA® Charter

    Some CFA charterholders work to help their company maintain business relationships with partners and clients to prevent churn. These relationship managers average $120,000 a year, and they number about 5% of all CFA charterholders.

    Financial Advisor Salary—With the CFA® Charter

    A small percentage of CFA charterholders are financial advisors, helping clients make decisions about investments, tax laws, and insurance product selection. On average, they earn a median base salary of $110,000.

    Interested in Pursuing the CFA® Charter?

    Although earning the CFA designation does not guarantee you a job or a top position at a firm, it can make a difference when an employer is deciding between two otherwise equally qualified candidates. In that situation, the CFA charter could be your competitive advantage. Passing the CFA exam is your first step in earning the charter, and our CFA exam study materials can help.

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    Posted by Kaplan Schweser - December 17, 2020
    Chartered Financial Analyst CFA Salary

    Buy Side vs. Sell Side: Comparing Research Analyst Career Paths

    While the research analyst job title is frequently seen in the investment field, the job duties for a research analyst can vary considerably. One key area of variance is whether the position is on the sell side or the buy side of the industry. While both types of positions involve spending time researching companies and industries, the types of research conducted and advancement path is different. Read on to get a better understanding of buy side versus sell side and the career paths available in each.

    Buy Side vs. Sell Side

    Buy-side research analysts work for firms that purchase securities and other assets for the purposes of managing money. Sell-side analysts sell stocks, bonds, foreign exchange, and other financial products. That’s the very basic difference. But the differences go deeper when you take a look at the day-to-day work and responsibilities of buy-side and sell-side analysts.

    The Sell Side Explained

    Sell-side workers and firms create service products that are made available to the buy side of the financial industry. Individuals on the sell side are generally investment bankers, sell-side researchers, or traders.

    Sell-side research analysts do a great deal of in-depth research on companies within a specific sector of an industry. A key difference between sell side and buy side is that sell-side individuals go into a lot more depth in their research on a particular sector of an industry. They are narrow in focus and develop strong expertise, and then they provide reports to the public with recommendations and opinions. Buy-side research analysts often develop a list of go-to sell-side analysts in relevant sectors to get reliable reports and information.

    The Buy Side Explained

    Buy-side individuals work for institutions that buy investment services. Typical buy-side entities include private equity, life insurance, trusts, hedge funds, prop trading, venture capital, or pension funds.

    Buy-side research analysts do many of the same tasks as sell-side research analysts (e.g., reading news, reports, building models, etc.), but they focus on a broader knowledge area of responsibility to make the best recommendations possible for what stocks and financial products to buy. Buy-side research analysts are compensated more for the quality of recommendations they make, whereas sell-side research analysts are paid more for the quality of information they provide.

    Whether you choose buy side or sell side, having the CFA® charter can help you pursue a research analyst career. Download the free Before You Decide to Sit for the CFA® Exam eBook for invaluable advice from successful CFA professionals.

    Which Research Analyst Career Path Is Right for You?

    Both buy-side and sell-side careers can be lucrative, prestigious, and rewarding. The right path for you depends entirely on what is most important to you in a finance job.

    Job Tasks

    These do not vary considerably at the beginning of a career between the buy side and the sell side, but they do begin to vary significantly more as individuals move up in the ranks. On the sell side, the job functions remain focused heavily on financial modeling and analysis, but also incorporate report and investment opinion writing. Buy-side jobs, in contrast, vary widely as individuals move up. Investment bankers, for example, get more opportunities to work on mergers and acquisitions and other deals.

    Work-Life Balance

    If this is something that is important to you, a sell-side career may be a better fit. While both sides require hard work and long hours at times, a sell-side career has more phases of calm. Burnout is a common reason that individuals on the buy side leave the industry, but this is considerably less common on the sell side.

    Recognition

    There is more potential opportunity for recognition at the beginning of your career on the sell side than the buy side. Getting your name on research reports can help you build a strong name for yourself because they are often publicly distributed to clients and media outlets. As you become more senior on the sell side, you may become a go-to expert in your niche for the media.

    On the buy side, there is generally little opportunity for recognition at the beginning stages of your career. However, as you climb the ladder in your firm, there is opportunity to receive visibility later, particularly if you work on large, newsworthy deals.

    Opportunities for Advancement

    There are opportunities for advancement in both buy-side and sell-side jobs. However, buy-side jobs generally have a clearer path with timeframes. On the buy side, the path often goes analyst (2 to 3 years), associate (3+ years), director or managing director, or VP.

    The sell-side career path generally goes associate, analyst, senior analyst, and VP or research director. The timeline and path is less defined on the sell side, however. It can be more difficult to move up in these analyst roles because they are not making deals with clients and managing relationships like individuals on the buy side do.

    There are perks and downsides to both buy-side and sell-side jobs in the financial industry. Now that you have an idea of what each side is about, learn more about the steps to becoming a research analyst.

     

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    Posted by Kaplan Schweser - December 15, 2020
    Buy side vs sell side for research analyst career paths

    What Does a Portfolio Manager Do?

    Portfolio managers are finance professionals who manage investment portfolios. Depending on the type of portfolio management job, a portfolio manager could work for individual clients or as part of a larger firm or financial institution. This article explores the day-to-day life of a portfolio manager and the types of potential portfolio manager jobs available.

    What Portfolio Managers Do: The Basics

    Portfolio managers spend a lot of their days researching current events and financial markets. Portfolio managers meet regularly with analysts to discuss the implications of market developments and current events. Both buy-side and sell-side analysts from investment banks present investment ideas to portfolio managers. The portfolio managers then need to sift through the information and make decisions about what securities to buy and sell.

    Not only do portfolio managers need to make investment decisions, but they are also responsible for meeting with investors, both in person and via phone or email, to explain their research, strategy, and rationale for decisions. There is also a large maintenance component of portfolio management. Adding an investment to the portfolio is not the end of the work for the manager. Portfolio managers must continue to pay attention to the portfolio companies and investments well after they are made and recognize when to hold or sell.

    If you’re thinking about becoming a portfolio manager, earning the CFA® charter can help. Download the free Before You Decide to Sit for the CFA Exam eBook for advice from successful CFA charterholders.

    Specializations in Portfolio Manager Positions

    Portfolio managers often specialize in particular areas of investing. The following are a few different types of specializations commonly seen in portfolio management.

    • Size of Fund: Portfolio management jobs can vary considerably based on fund size. Some may manage assets for small independent funds, while others will work for large asset management institutions. Some portfolio managers manage the capital of a large institution, such as a bank or a university with a large endowment.
    • Type of Investment Vehicles: While all portfolio managers manage assets for their investment vehicles, the range of vehicles varies greatly. These could include mutual funds, institutional funds, hedge funds, trust and pension funds, and commodity and high net worth investment pools. It is common for a portfolio manager to specialize in either managing equity or fixed-income investment vehicles.
    • Investing Style: Portfolio managers can also specialize in styles of investing. Some portfolio managers are specialists in hedging techniques, growth or value style of management, small or large cap specialties, and domestic or international fund investing.

    Portfolio Management Skills for Success

    Portfolio managers have big decisions to make and numerous reports to analyze every day. There are a number of skills necessary for success in the portfolio management sector, but here are four of the most important:

    • Innovative: All portfolio managers look at the index and news. The exceptional portfolio managers do outside-the-box research and know where to find information on potential investments that others do not. There is tremendous potential payoff for investors who can find a good investment that others failed to see.
    • Critical Thinker: Analyzing reports from financial analysts and other research requires portfolio managers to have strong critical thinking skills. Portfolio managers must be able to think through strengths, weaknesses, opportunities, and threats for every potential investment decision.
    • Decisive: Being a portfolio manager means making many investment decisions. There will never be any certainty in this industry; therefore, it is important that portfolio managers are good at evaluating options and making confident decisions.
    • Experience: Becoming a portfolio manager requires first working as a financial analyst and gaining important investment experience. The research analysts do informs the decisions portfolio managers make. Gaining experience as an analyst will help individuals better understand the life of a portfolio manager and see if it is a potential good fit.

     

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    Posted by Kaplan Schweser - December 15, 2020
    Everything To Know About Being a Portfolio Manager

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