The road to chartered financial analyst (CFA) designation

Financial professionals have many opportunities to earn a good living. Not many people may know that they can have even greater opportunities if they take on more certifications. There are other financial certifications and designations nowadays apart from the usual chartered professional accountant (CPA) title or related master’s degree or doctorate.

One certification that Wealth Professional will focus on here is that of a chartered financial analyst or CFA. This title, as with the other financial certifications, has certain educational and work experience requirements, maintenance and professional conduct requirements, and benefits.

We will discuss all these elements, including the process of how to become a Chartered Financial Analyst in Canada. Apart from this, we will provide insight into CFA eligibility and other relevant topics.

What does a chartered financial analyst (CFA) do?

A financial advisor with the CFA title has one of the most sought-after, globally recognized designations. In a nutshell, the chartered financial analyst (CFA) is concerned mainly with high-calibre investment management. A CFA is known for being well-versed in financial reporting, economics, and corporate finance.

Chartered financial analysts are renowned for their adeptness in formulating complex equity investing strategies. They handle the investment data research and investment analysis for companies and may also guide individuals and businesses to make sound financial decisions based on the data gathered and analyzed.

Educational requirements for aspiring CFAs

Investment professionals who wish to become chartered financial analysts may find that the educational requirements to be more flexible compared to the other designations. A bachelor’s degree, ideally in a finance-related field, is the minimum educational requirement.

An aspiring CFA can be in the last year of completing their bachelor’s degree before they take the CFA exam. If they don’t have a bachelor’s degree, they may also be eligible for taking CFA courses after accumulating at least 4,000 hours of professional experience or have a mix of professional experience and higher education.

Overview of the CFA program: levels and exams 

The chartered financial analyst (CFA) program is mainly comprised of three exams and managed by the CFA Institute. They establish the curriculum, code of ethics, and exams required to obtain CFA certification.

The series of exams for the CFA program are Levels I, II, and III. Each level builds on the lessons of the level before it, gradually increasing the levels of complexity and difficulty.

Candidates must register for the level they take the exams for. Here’s a chart that illustrates their differences to give you an idea of what the CFA program has in store:

The first computer-based CFA Level I exams were launched in 2021.

Steps to become a chartered financial analyst in Canada  

As the financial industry grows in competitiveness, there has been a significant increase in the CFA title in recent years. Depending on your current finance-related designation (if you have one) and work experience, the journey to becoming a CFA in Canada can be different.

There are common paths or steps to obtaining this title. Here are the common steps that a financial advisor or other finance professionals will take to becoming a CFA:

Step 1. Enroll in the CFA program

The first step is getting into the CFA program, assuming you have the requisite education. If you have yet to acquire a bachelor’s degree, you can use this guide to get the relevant degrees and courses. Before you take the CFA program, you:

• must have a bachelor’s degree from an accredited university
• can be in your final year of obtaining your bachelor’s degree
• must have 4,000 hours of relevant work experience or a master’s degree or both

Step 2. Take and pass the CFA exams

After a CFA candidate has enrolled, the next step is to pass all three levels of the CFA exams.

The primary subjects and topics covered in these exams include:

• ethical and professional standards
• economics
• equity investments
• fixed income management
• portfolio management

Each of the different exam levels focuses on specific aspects of investment, namely:

• Level I: Investment tools – this tests the candidate’s knowledge of ethical and professional standards
• Level II: Asset valuation – this level tests candidates’ ability to apply standards to different types of situations that analysts may have to face
• Level III: Portfolio management – Level III exam tests candidates’ ability to apply standards regarding portfolio management and compliance

Congratulations to everyone who passed the CFA Program Level I exam! 🎉
Your dedication and hard work have paid off. Share your success with #CFAExamPassed and let us know how you’re feeling.

Check your email or click here for direct access: https://t.co/yNSjz8sb6X #CFAProgam pic.twitter.com/uPZkjseF1m

— CFA Institute (@CFAinstitute) June 26, 2024

Step 3. Get qualified work experience

CFA candidates must complete 4,000 hours of acceptable work experience. Those applying for the CFA designation can accumulate the required work experience before, during, or after taking the exams.

What constitutes acceptable work experience is rather broad. The job can be of a financial and investment nature, such as equities trading, economics, and corporate finance – these are deemed acceptable.

However, at least 50% of this work experience must relate directly to the investment decision-making process or to the production of a product related to this process.

Step 4. Provide reference letters

Once you've completed and passed the three levels of exams and obtained the requisite work experience, they'll need reference letters to submit to the CFA Institute.

These references letters must provide details of the candidate’s abilities and professional character.

At most two or three professional references (not related to the candidate) that vouch for your skills, work ethic and knowledge should be enough.

Reference letters from supervisors or other current CFAs can be more impactful than others.

In general, it’s best to include two letters if one is an active CFA member of your local CFA chapter, and three if none of the references are CFAs. Be sure to inform your references that you're submitting your application and naming them, so they can expect the call or email from the CFA Institute.
 

Step 5. Apply for the CFA designation

After meeting all the requirements, it’s time to apply for the chartered financial analyst (CFA) title. For this, you need to pay a fee and submit your prerequisites for review.

It can take up to 10 business days for the CFA Institute to review regular membership applications and up to four weeks for affiliate membership applications. Every candidate receives a notification email once the CFA Insitute has reviewed your application. You officially become a CFA once the CFA Institute approves your application.

The skills required of a CFA

As with many other jobs and finance professional designations, there are certain skills that can help a CFA perform better and succeed in their career path. Here are some of the recommended skills to learn and develop as a CFA:

Analytical skills

Analyzing data is the bread and butter of a CFA. You’ll need to have excellent analytical skills when helping companies or individual clients solve their problems. Your skills in analyzing data and finding solutions must be impeccable if you are to succeed as a CFA.

Math skills

CFAs must be very good at math. This skill is important when analyzing financial data and making complex calculations on investments.

Communication skills

As a CFA, you will have to do a lot of interacting with clients, colleagues, investors, stockbrokers, and other professionals. The ability to properly and concisely communicate your thoughts in words and on paper is crucial, especially when writing investment reports and recommendations. It can be reassuring to clients and coworkers if you are good at informing them of the true state of their finances.

Computer literacy

The role of a CFA entails doing a substantial amount of research and data analysis, so having good computer skills is essential. Any CFA job will require sifting through copious amounts of data and analyzing them with the help of apps and software programs.

Decision-making

The work of a CFA isn’t always confined to compiling data alone; you may be called to make decisions with far-reaching effects. A good CFA should be able to make sound decisions after analyzing relevant data.

What Jobs can CFAs take?

There are many different employment opportunities for chartered financial analysts (CFAs). Some of the roles include:

Accountant

While still different from a chartered public accountant (CPA) in Canada, the CFA role involves a lot of math accounting and analysis. Like CPAs, the CFA can perform financial audits, analyze financial statements, and do other accounting tasks.

Portfolio manager

CFAs can do the job of portfolio manager, as they can make decisions on asset management.

Financial advisor

With their specialization in data analytics, CFAs can make for better financial advisors. They can analyze financial data thoroughly, then recommend what to do with investments so their clients can achieve their financial goals.

Risk manager

As a risk manager, CFAs can assess investment risks, then inform clients or companies whether they should pursue the investment. CFAs who become risk managers can also help come up with the appropriate policies or procedures for a company to reduce risk.

Can non-Canadians take the CFA Program?

Yes, but with some conditions. If the CFA candidate is not a Canadian citizen, they must:

• be able to take the exams in English
• have a valid international passport
• meet the professional conduct criteria
• be from a country that recognizes the CFA certification

These requisites are apart from meeting the educational requirements.

How long does it take to get CFA?

The CFA Institute estimates the average candidate spends this much time per level:

The exams can take a significant amount of time and can be challenging. Some professionals choose to study for the exams while employed, while others choose to become full-time students and focus on studying for the exams to ensure success.

Studying tips for the CFA program

When studying for the CFA exams, it helps to get useful advice from the CFA Institute and those who have passed the exams and are now CFA title holders. Here are some tips from them.

General tips

• Start your studies as early as possible.
• Allow a minimum of 1 month to review before the exams or more if possible.
• Set aside time to study every day – this is more effective for retaining information than studying an entire topic in a single day.
• The assigned CFA curriculum provided by the CFA Institute when you register is the only source material you need.
• To guide your studies, use the learning outcome statements, practice questions, and problems in each section of the curriculum.

Study tools and techniques

• Use the adaptive plan in the CFA Institute’s Learning Ecosystem. This can be very helpful since the tool can assess your current knowledge and help you focus on your weak areas of study.
• Use the practice problems in the Learning Ecosystem, but don’t rely only on the practice exams. Think about how the practice problems demonstrate concepts and techniques applied in different situations.
• Don’t forget to use the “Rate Your Confidence” tool of the Learning Ecosystem. This tool can help you monitor which topics you feel you have mastered or not, regardless of whether you use the structured or adaptive study plan.
• Use the mock exam feature to assess your readiness and pace your studies.

Tips for when you get stuck

• If you have questions about topics or scenarios that may not be covered in the CFA curriculum, join a study group, reach out to your CFA society for resources, or seek out a CFA program prep provider.
• After trying the official mock exams, try purchasing a prep course; this can give you fresh mock exams.
• Many prep providers have good question banks you can use to get a different perspective on your studies.
• Switching exam prep providers may help you see the curriculum and questions through fresh eyes. This can also increase your motivation.

Tips for Exam Day

• Read every question carefully, ensuring you understand which information or skill the question pertains to.
• Read all answer choices in multiple-choice questions carefully before figuring out your answer.
• In multiple-choice questions, the incorrect answer choices are meant to seem plausible to unprepared candidates, but do not appear ambiguous to a prepared candidate.
• Frame each answer with the information accompanying the question. Do not make unnecessary assumptions or add irrelevant information.
• For essay questions, you can use short phrases and bullet points to use your time more efficiently. Be sure that your answers are clear and concise.
• Try to follow the time allotted for each question. Candidates are often shocked to discover that they have run out of time and will have unanswered questions (especially in the essay portion) when the time is up.

There are more detailed tips on the CFA exams that you can look up. Meanwhile, here’s a video from a CFA that gives some advice about the exams:

For the mentally prepared and studious CFA candidate, the CFA exams shouldn’t be too difficult to pass on the first try. And if you’re wondering if the CFA designation is worth the time and effort, the answer is the same as many of the other designations.

Is becoming a chartered financial analyst (CFA) worth it?

Whether obtaining the CFA title is worth it ultimately depends on the individual. There is no question that becoming a chartered financial analyst can be financially rewarding – if the CFA holder studied well and applies their skills, knowledge, and experience diligently to their work.

The CFA holder can look forward to a long and fulfilling career here or overseas. As with many other financial professional designations, the CFA title has a purpose – it's not there to make the titleholder sound fancy. As a coveted title that’s held in high regard in Canada and in many other countries, the CFA title can be a source of great pride and personal fulfillment.

Are you considering taking the CFA Program? What other designations are you thinking of pursuing?

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