Professional Excellence

Research by our consultants, CEG worldwide, www.cegworldwide.com found that 93% of wealthy families prefer to work with an advisor when managing their money. The overwhelming majority of successful investors share this view.

Financial advisors have a wide variety of designations, but none is as rigorously focused on investment knowledge as the Chartered Financial Analyst (CFA ®) designation.

Understanding the significance of the CFA charter — and what is required of investment professionals to attain it — can be useful information when choosing your advisor.

Tradition

In the late 1940s, Benjamin Graham, often called the “father of security analysis,” first proposed a “Qualified Securities Analyst” designation for members of the growing investment profession. After much work from Graham and other dedicated professionals, the first CFA exam was administered in 1963 to 284 candidates, most of them senior-level practitioners.

The backbone of the CFA Program is a three-level examination that measures not only a candidate’s understanding of a multi-disciplinary, globally relevant Candidate Body of Knowledge ™, but also his or her ability to apply this knowledge to the investment decision-making process. A distinguishing characteristic of the program is its uncompromising emphasis on analysis and the application of financial knowledge across core areas of the investment process, particularly in securities valuation and portfolio management.

Hallmarks

The hallmarks of the CFA program throughout its history are:

• A relevant and evolving curriculum
• Rigorous examinations
• A stringent Code of Ethics and Standards of Professional Conduct

Knowledge and Experience

The CFA Exam Process

To become a CFA charter holder, a candidate must pass a series of three practice-oriented, six-hour examinations, taken in sequence.

Average completion time is four years

Core elements of the CFA curriculum include:

• Investment tools (economics, financial statement analysis, quantitative analysis and corporate finance)
• Asset valuation (analysis of debt investments, equity investments, derivatives, and alternative investments)
• Portfolio management (both institutional and individual, including performance measurement)

Importantly, each examination includes a thorough section testing knowledge and application of ethical and professional standards.

Staying Current

To ensure that the CFA Program stays current with the ever-changing dynamics of professional investment practice throughout the world, CFA Institute member volunteers and professional staff annually develop and update the curriculum and produce the examinations.

Passing Rates

Achieving passing scores on all three exams is no small feat. Each of the six-hour examinations takes, on average, a minimum of approximately 250 hours of intensive study and preparation. The combined pass rate (aggregated over all three-exam levels) has dropped from more than 90 percent in the 1960s, to the 60 to 70 percent range in the 1970s and 1980s, to less than 50 percent in 2005.

More than academic preparation

As rigorous as the curriculum and examinations are, the CFA Program requires more than academic preparation. Before they earn the right to use the CFA designation, candidates must have three to four years of acceptable professional experience in the investment decision-making process. Additionally, they must fulfill the CFA Institute membership requirements and commit to uphold the stringent CFA Institute Code and Standards.

Ethics

CFA Institute Code of Ethics and Standards of Professional Conduct

The integrity of investment advisors is of the utmost importance. Their skills and advice directly affect the financial well-being of their clients. That is why every CFA charter holder, CFA Institute member, and CFA candidate is required to sign an annual statement declaring their adherence to the CFA Institute Code of Ethics and Standards of Professional Conduct.

• The Code and Standards require them to:
• Act with integrity,
• Practice in a professional and ethical manner,
• Exercise independent professional judgment, and
• Put client interests before their own.

The 300-page CFA Institute Standards of Practice Handbook — an “instruction manual” for ethical guidance within the investment community — interprets and expands upon the requirements of the Code and Standards.

CFA Institute investigates all allegations of violations of the Code and Standards, whether self-disclosed by the CFA charter holder or raised by an investor, fellow investment professional or the media. Those who are found to have violated the Code and Standards, or who fail to divulge formal complaints as required in the annual CFA Institute Professional Conduct Statement, are subject to disciplinary sanctions from CFA Institute. Sanctions can range from private censure up to and including losing membership in CFA Institute and the right to use the CFA designation.

Global Relevance

With CFA charter holders in more than 100 countries and increasing demand worldwide for the CFA Program, the CFA charter has become the global professional investment credential. Each June, tens of thousands of candidates sit for the CFA examination at more than 180 sites in more than 88 nations.

Since 1998, some of the most significant growth in candidate numbers has occurred in Europe and Asia, particularly China and India. The CFA charter is often referred to as a professional global “passport,” providing the background that allows CFA charter holders to practice across international boundaries. Others have referred to it as the gold standard of the industry.

Recognition

Recognition of the CFA Program’s globally relevant Candidate Body of Knowledge and the professional standards embodied in the program makes the CFA designation the mark of distinction for investment professionals worldwide. It is a distinction recognized and rewarded by employers, respected by regulators and investment institutions, and, increasingly, demanded by private investors.

CFA Institute

CFA Institute is the global, non-profit professional association that administers the Chartered Financial Analyst ® curriculum and examination program worldwide and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute was known as AIMR (Association for Investment Management and Research) from 1990 to early 2004, and before that was two separate organizations whose roots go back to 1947.

More information may be found at www.cfainstitute.org