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What does CFA Stand For (and Why It’s Important to Your Career)

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what does cfa stand for

CFA® and Chartered Financial Analyst are trademarks of CFA Institute.

CFA® stands for Chartered Financial Analyst.

The title, granted by CFA Institute (formerly AIMR), is the most global qualification in finance and investment.

Basically, the CFA charter covers security research, asset management, portfolio management, hedge funds, and other buy-side investment houses.

CFA charter holders are not regulated nor granted “privilege” to perform certain attest functions. (For example, CPAs are the only ones allowed to sign an audit report). But then, major investment firms consider the CFA as a gold-standard–or even a prerequisite–in their hiring process.

What Does CFA Stand For in Technical Terms?

Chartered Financial Analyst is technically defined as a designation for someone who has gone through the CFA program by the CFA Institute.

The CFA program is a self-study, graduate-level program for investment professionals. It consists of coursework on portfolio management, investment tools, asset valuation, wealth management, and ethics.

After entering the CFA program, candidates must pass 3 levels of examinations together with 4 years of relevant experience to become a charter holder. Candidates can only put the “CFA title” on their resumes and business cards after passing the CFA Levels 1, 2, and 3.

CFA Program Eligibility

The entry barrier for the CFA program is low. You either need a bachelor’s degree in any discipline or 4 years of experience in any field. In other words, as long as you have been busy with your career either by studying or working after high school, you are qualified to enroll in the CFA program.

The bottle neck to obtaining the CFA charter is more on the experience requirement. You ultimately need this experience to get the CFA charter, but you can start accumulating the experience before, during or after the CFA exam. Given that candidates normally take 4 years to complete the three CFA exam levels, you have plenty of time to get the experience finished.

Although the definition of relevant experience is quite broad, the CFAI is serious about this step. And you need to pay attention on how you word your application to obtain the CFA charter.

What Exactly are the CFA Exam Levels and CFA Experience?

The CFA exam is divided into three levels, because there are too many topics to cover in a single setting. In fact, the CFA curriculum covers 10 topic areas.

Each CFA Level Builds on the Others

In Level I, candidates should have basic understanding of a very wide coverage of finance and related topics, such as economics, statistics, and financial accounting.

The same topics from Level 1 also appear in Level II with more specialized coverage and more focus on application. The questions are presented in item sets (groups of multiple-choice questions) to allow more complex and in-depth scenarios.

And finally, Level III narrows down finance topics, and the questions are heavily focused on portfolio and wealth management. CFA Level 3 also includes essay questions together with item sets.

Candidates have to pass the first level to move on to the next, and second level to move on to the third.

Is the CFA Charter Helpful to Break Into Finance?

It depends on your background, and the type of finance jobs you are looking into.

For example, assume you are a computer engineer working in a big tech company. Let’s review some scenarios.

Scenario 1: Computer engineer with strong technical skills

If you are a technically savvy engineer spending most of your time in core engineering expertise, it would be hard for you to jump into finance at this stage. You can work really hard and pass the CFA exam on your first try. But as talented as you may be, however, it’s too much of a gap in terms of the nature of work and how your existing expertise adds value to any finance job.

Scenario 2: Seasoned engineer transitioning to project manager

This scenario is much better. As someone who is less into the technical aspect and more into the management side of your job, overseeing projects and analyzing their profitability, you get valuable experience on how financial analysis and management works. Depending on how you package this experience, this may be sufficient to be considered relevant experience in the eyes of the CFA Institute.

Scenario 3: Industry expert in the technology niche moving toward equity research analyst

Banks and investment houses love industry people to join their team as research analysts. To get this job, you must not be limited to your own technical skills, but you must also able to see the big picture and understand the industry from operational and financial points of view.

If you are this person, the CFA Institute will very likely approve your experience.

What Are Other Benefits of Getting the CFA Charter?

Other than switching info finance and investment, there are lots of reasons — for prestige, promotion, and survival. You may find these posts helpful:

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