How to Become a CFA: A Complete Guide

The finance industry is a fast-growing and quick-changing industry. Finance is one of those subsections which is necessarily present in every business, big or small. The sector is already witnessing unprecedented growth fueled by booming startups and expanding businesses, which will only see an upward trend as time passes. An increase in the number of companies and their growth also implies an increase in the demand for finance professionals. The industry offers an attractive job profile across different positions available. Multiple branches of finance require specialised professionals to focus on specific areas. One such most in-demand profession is the Chartered Financial Analyst. 

The path to become a CFA requires you to meet certain specific eligibility requirements and clear 3 different examination levels. It might seem challenging to directly start with CFA course and becomes even more confusing when you talk to different people and go to multiple websites, presenting information differently. Are you confused regarding the entire process of becoming a CFA too? We are here to take you on a deep dive into how to become a CFA and simplify them for you.

CFA or the Chartered Financial Analyst is a globally recognized profession designated by the CFA Institute. Considered the pinnacle in professional development in investment management, a CFA has broad scope across different fields in the finance sector. Some of the jobs in which a CFA is involved include Portfolio Management, Consulting, Risk Management, among many others. 

The demand for CFAs is increasing at a fast pace. Many companies hire CFAs for senior positions because of their specialised knowledge. Several big investment banking companies such as JP Morgan and Goldman Sachs have openings for CFAs in large numbers with attractive salaries and perks.

How to Become a CFA

The CFA Institute has stringent requirements for appearing in the examination. To register for the level 1 CFA exam, you should have either of the following:

  • Bachelors’ degree (or be a final year student)
  • 4 years of professional work experience, out of which a minimum of 50% of work should be in the field of the investment decision-making process.

Other than the above, you should have all of the following:

  • A valid international passport at the time of your exam.
  • A passing grade in the English assessment 
  • Be a permanent residency of the participating country

You must check whether you meet the criteria beforehand, specifically the professional one. Often, candidates don’t receive the designation even after clearing the exam because of some discrepancy in the fulfilment of criteria.

Exams you need to qualify to become a CFA

There are 3 levels of CFA exams that are well-known for their sheer competitiveness and abysmal pass percentage. You will be tested on your understanding of Equity, Derivatives, Alternative Investments, Portfolio Management and Wealth Planning, to name a few, in these exams.

Let us learn more about each level of the exam:

  • Level 1: This level tests the basic understanding of the subject, and the primary focus is on investment analytical skills. It has the lowest pass percentage among the total 3 that ranged between 22-27% in 2021 exams. It is taken in 2 shifts of morning and afternoon, each lasting 2 hours and 15 minutes. It consists of 180 multiple-choice questions – 90 in each session. 
  • Level 2: This level focuses on asset valuation and the application of investment tools. The CFA Level II exam consists of item sets that contain vignettes with 88 accompanying multiple-choice questions. The Level II exams lasts 4 hours and 24 minutes and is split into two equal sessions of 2 hours and 12 minutes, with an optional break in-between. Vignettes refer to case studies. CFA exams are held at a centre with computer based exams. There are no written exams at any level.
  • Level 3: This level focuses on planning and managing portfolios. This exam checks your knowledge of the subject in-depth. You need to answer 8-12 essay questions in the morning shift, while the afternoon shift requires you to answer 10 item set questions. 

When can you take the CFA Exam?

You can appear for the Level 1 examination in the months of February, May, August, and September. Level 2 exam is held in the months of February, August, and November, while Level 3 is held in May and August.

How to prepare for the exam?

The CFA is considered quite challenging and time-consuming due to the number of hours required to prepare for the exam. Each of the 3 levels requires an average of 300 hours of preparation. It takes about 2-3 years for CFA aspirants to clear the exam. To tackle such a challenging examination, you should have a proper strategy to utilise your time effectively. We recommend you fix a daily, monthly, and weekly schedule to help track progress and keep you accountable. Try to minimise distractions by keeping the gadgets away when you study. It will help you increase concentration and improve efficiency. Finally, if you have a patient and persevering mindset, it will make this long journey much easier. 

Reference letters

To become a CFA charterholder, students are required to have at least 4,000 hours of professional work experience completed in at least 36 hours. You are required to submit the reference letters after passing all the 3 levels. The references should attest to your skills, character and should explain why you are the right person to be awarded the charter. References coming from your supervisors are preferred by the CFA Institute since they serve as a proof of your work experience. You can also have references from individuals who can attest to your performance in the investment-decision making process. 

How to get the membership

You will have to apply with the CFA Institute to become a CFA Charter holder after meeting all the requirements and clearing all the levels of the examination.

After passing the CFA level 1 examination, you must submit a regulation application. You need to then sign the member’s agreement to follow the Professional Conduct and pay your annual fees statement. The institute takes up to 10 business days to review your application, following which you will receive a letter officially declaring you as a CFA Charter holder. 

The CFA examination Cost

There is a one-time enrollment fee of USD 450. Moreover, for each level, candidates are required to pay a standard registration fee of USD 1000 or an early registration fee of USD 700. Based on these costs, the overall cost of completing CFA can be between USD 2550 to USD 3450.

CFA Salary in India

The salary of Chartered Financial Analyst a Level 1 passed candidate is around INR 4.2 Lakh per annum, while a Level 2 passed candidate earns around INR 6 lakh per annum. The salary of a level 3 cleared candidate is INR 10 lakhs per annum 

CFA has a broad scope outside India too. After getting the CFA charter holder, you can apply for jobs abroad. There are many job opportunities available in many countries for a CFA Charter holder. CFAs are hired for the role of Research Analyst, Corporate Financial Analyst, Credit Analyst, to name a few.

CFA is a rewarding career in terms of job experience as well as monetary compensation. Many job openings for a CFA are coming up every year. The post of CFA has grown about 30% in India in the last 7 years. This field undoubtedly has vast potential in the coming future. If you wish to head start your journey, check out our Chartered Financial Analyst Program . We hope you have gotten all your answers regarding how to become a CFA, and wish you the best for your future.

Can the 3 exams of the CFA be given in any order?

No, the exams are sequential, which means that you can only proceed to the next level after passing the previous level.

How many times can I take the CFA exam?

You can attempt each exam level a maximum of 6 times. You can take the exam 2 times at most per year, but the exam windows cannot be consecutive or less than 6 months apart.

What is the pass percentage of the CFA examination?

The pass percentage of CFA hovers between 22-44% in each exam session. In 2021, it was 34% in the November session.

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