The CFA exams are favored as one of the top financial services qualifications to achieve—across the world. A common misconception is held though that simply passing the exams will help you get higher pay. Education always opens the door to better-salaried jobs. True, right? Hmm.
Many students ask me straight, “If I pass the CFA exam will I get higher pay?” and my answer to them is always, “No.” This may come as a shock, so let me explain more.
Only Time Will Tell
According to the CFA Institute, “Candidates report dedicating in excess of 300 hours of study per level to prepare for each exam.” This means nearly 900 hours of study is necessary to pass all three CFA exam levels.
900 hours = 5.36 weeks = 37.5 days
That’s all of your average paid working vacation, and then some. If you’ve started early—perhaps you’re studying in full-time education—the added pressure of CFA exam preparation is still going to be a monumental task. You may get more vacation time, but this is still no easy feat. And don’t fall victim to the belief that a financial degree means you won’t need to put in the same study hours, the CFA exam is not the same as college.
Once you’ve decided to begin, you should commit to studying and passing all three levels. Passing the CFA Level I exam (and so on) only allows you to put that you’ve passed the CFA Level 1 exam on your resume and social profiles. To gain full CFA charterholder status, you must sit and pass all three. (Check out the exact guidelines here.) And the work doesn’t stop there.
Being disciplined enough to devote 900 hours to any area of your life is hard, but applying that length of time to solitary study alone is nearly impossible for most. The good news is that you only have to study 300 hours between each CFA level since the exams occur iteratively over time.
Equality for All
Setting yourself the target of passing all three CFA exams is an intelligent and admirable choice in such a competitive global economy. The financial world needs experts who are capable of offering crucial financial advice. But while the CFA program can help you break into the financial industry of equity research, asset management, and hedge funds, there is a lot more you need to do than just pass the three exams. Once you’ve passed Level III, you also need to submit 48 months of requisite “acceptable professional work experience.”
There is no limit to the number of times a candidate can sit the CFA exam. Once completed, it will not matter how long it took, those who pass Level III will receive the same designation as others on the same level.
What are the implications of this, you ask? Consider: One candidate takes 10 years or more to pass, with multiple exam failures on each of the three levels. A second candidate passes all three tests in the swiftest possible time of 18 months. Having passed Level III, these two now have the exact same designation, and there is no way to tell them apart if they apply for jobs or speak as an authority on a financial subject. The distinguishing accomplishment only comes from achieving the full CFA charter designation once all the requirements are met—including the strict work experience guidelines.
So, back to the salary. If your main goal is only to earn a higher income, then you are unlikely to stay motivated for 900 hours. However, if your goal is about becoming a leader in the field of finance, becoming a leading financial employee, and becoming a better manager of your own money, then you may just be able to stay focused long enough.
Heed this article’s warning; If you’re ready to work hard, the CFA charterholder designation is definitely a worthy ambition. But don’t make money your sole motivation for aiming to reach this prestigious global designation.
For CFA exam candidates looking to master the equity valuation portion of the exam, sign up today to the Valuation Master Class. The course is designed for anyone looking to strengthen their valuation skills; from beginner to intermediate levels.
CFA Institute. (n.d.). CFA Program Course of Study. Retrieved March 06, 2018, from https://www.cfainstitute.org/programs/cfaprogram/courseofstudy/Pages/index.aspx