How to Become a Chartered Financial Analyst

A chartered financial analyst is a globally recognized designation for financial professionals who have passed the CFA Institute’s investment and wealth management exam. This three-level exam covers accounting, economics, derivatives, investment strategy, quantitative methods, ethics, and security analysis.

CFA charterholders are investment professionals with extensive backgrounds and knowledge in financial research, investment analysis, portfolio management, and corporate finance. The CFA title is one of the highest recognitions in the financial and investment industry.

There are many chartered financial analyst roles with varying job responsibilities within the investment and financial services field, including:

• Consulting: Consulting is a broad term for providing professional advice. CFAs can work as investment consultants and financial advisors, guiding their clients toward the best investments. As investment consultants, CFAs develop long-term relationships with their clients to help them reach their financial goals.
• Investment strategy: Investment strategists view the market from a macro perspective, analyzing economic indicators to advise trades and investment management. CFAs often work for investment firms due to their extensive background in portfolio management and asset allocation.
• Portfolio management: The portfolio manager is one of the most common positions for CFAs. A portfolio manager will focus on investment decision-making, outlining which investments to buy or sell and when to make those trades. Portfolio management also involves creating and implementing investment strategies to achieve client goals.
• Research: There are two main areas of research for CFAs: credit analysis and equity analysis. Credit analysis research focuses on bonds and default risk, while equity analysis research prioritizes investment performance. However, both areas of financial analysis require CFA research analysts to collect data on investable companies, generating valuation reports for clients and firms.
• Risk analysis and management: CFAs can also work as risk analysts, researching and managing financial risks. Risk analysis includes measuring potential risks and determining ways to solve problems with alternative investments. Most risk analysts work for companies that manage large sums of money, such as insurance companies, hedge funds, or investment banks.

To receive a CFA professional designation, you must fulfill the educational and professional development prerequisites and pass a three-part examination. While each exam covers the same ten topics, from quantitative methods to portfolio management, each level is increasingly challenging.

• Education: A bachelor’s degree or degree from an accredited academic program is a requirement for becoming a CFA. To apply for the CFA designation while still in school, you must be within or under eleven months of graduation.
• Work experience: To become a CFA, you must have 4,000 hours of professional work experience related to investment decision-making, completed throughout a minimum of three years. You can complete the relevant work experience before, during, or after your CFA exam.
• Applications: To be eligible to take the CFA exams, you must apply to be a member of the CFA Institute. The application requires candidates to calculate and elaborate on their relevant professional experiences. Along with work descriptions, every applicant must submit two or three references. Learn more about requesting a professional reference.
• Exams: The CFA program includes three levels, each with its own CFA exam. The Level I exam consists of 180 multiple-choice questions, and the Level II exam consists of eighty-eight multiple-choice questions. The Level III exam is the most challenging, as this test includes multiple-choice and essay response questions. Most candidates self-study using the CFA Institute's online resources and typically spend 300 hours studying for each level. You must first register for the CPA program and pay the enrollment fee to sign up for an exam date.
• Apply at companies of choice: After completing the CFA application process and passing the three exams, you can apply for various investment-related positions. Many CFAs work in commercial banking, wealth management, private equity, and investment banking.

The main differences between chartered financial analysts and certified public accountants are the industry they relate to and the contents of their respective exams. While CFAs work in investment banking and wealth management, CPAs focus on accounting, tax regulation, and audits.

As for testing, the CPA exam is a four-part exam covering auditing and attestation, business environment and concepts, financial accounting and reporting, and regulation. Whereas the CFA designation has three levels, the CPA certification only has one level, so passing the four parts of the exam leads to certification.

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