Practical Skills Modules (PMS) for CFAs

Ever wondered how one can stand out in the finance industry, where competition is high and rivalry is cutthroat? Well, it’s not only about taking the CFA exams; it is all about showing that one has actual, practical skills above the textbook. This is where the PSMs come in, the secret ingredient that takes your CFA credentials and places them in a powerful position when building your career.

Prepare to learn how to pick PSMs that will add value to your resume and give you the real-world edge needed to succeed in the finance industry. Okay, let’s get out there and put these practical skills into play!

Practical Skills Module (PMS): An Overview

PMS modules are undertaken to equip CFA candidates with practical, job-ready skills beyond the mere knowledge covered during the exam. Though the CFA program is deeply focused on financial analysis and investment management, with a touch of ethical standards, the best part about PMS is its focus on practical tools that finance professionals use daily. It’s almost like building a layer of expertise that employers are actively looking for like mastering Python, mastering financial modelling, or learning data analytics and how to use them in investment strategies.

Practical Skills Modules: Why CFA Candidates Need Them

In today’s rapidly-paced financial world, knowing is no longer enough; one has to put knowledge into action. That’s where the Practical Skills Modules come in. Whether you are looking to step into a job in investment banking, asset management, or financial consultancy, PMS modules hone the required skill set on the ground. Hiring managers look for a candidate who can start off running, and these modules will help in doing just that.

Adding a PMS module to your CFA journey will prepare you much better to analyze data, create financial models, or even build automated workflows using programming languages like Python. In other words, PMS modules fill the theory-practice gap and make you more attractive as a candidate in the competitive finance job market.

What are the Best Practical Skills Modules for Me?

Choosing the right CFA module depends on your career goals and the specific skills you want to develop. If investment banking or corporate finance interests you, modules on financial modeling are a must. If your interest lies in the tech-driven finance sector, a module on programming using Python would be a game-changer. The idea is to think long-term about the career path you’d want to end up in and the skill sets that would be required for that role.

CFA Level 1 PSM Modules

For the CFA Level 1, important practical skills should be built on your knowledge. Here are two of the most popular modules:

Financial Modelling

Anyone in finance would need financial modelling. You could predict any company’s financial performance, assess an investment option, and make decisions based on actual data. In this module, you will learn how to build complicated models from scratch using Excel or other software; this is an indispensable tool for roles in investment banking, private equity, and corporate finance.

Python Programming Fundamentals

This module covers the basics of Python, and how to use it for automating certain tasks, analysis of large datasets, and even building financial algorithms. It’s such a valuable skill that finance professionals are tagging to their list with the rise of fintech and data-driven decision-making. Mastering Python gives you an edge in any competition, especially if you are eyeing roles in quantitative finance, risk management, or portfolio management.

CFA Level 2 PSM Modules

At CFA Level 2, the program becomes more intense, as it moves into asset valuation, financial reporting, and portfolio management. Adding the Practical Skills Module (PSM) will provide the opportunity at this stage for your further honing of technical skills while keeping you up to date with advanced theory. Modules that are provided at this level are expected to enhance your skills in a way that you can apply as soon as you have learned them, supporting the analytical orientation at the second level.

Analyst Skills

The Analyst Skills module is for any aspirant who aims to become a financial analyst or investment professional. This module ensures the development of the key skills, which include:

• Equity and credit analysis to appraise investment opportunities.
• Financial statement analysis that enables one to better understand company reports.
• Valuation techniques like DCF and relative valuation.

At the end of this module, you will be much better equipped to provide full analyses and reports, skills crucial in asset management, equity research, and investment banking.

Python Programming Fundamentals

Want to learn the basics of programming? Python Programming Fundamentals is the course for you. Using this module, you’ll learn how to:

• Write simple Python scripts for automating repetitive tasks.
• Use libraries, such as Pandas and NumPy, when working with financial data. 
• Perform basic statistical analysis to support financial modelling. 

Regardless of your interest in pursuing a tech-intensive career, knowing Python is now a key skill for every finance professional. This course is excellent for applicants who will be adding programming to their skill set but who still want to remain close to traditional finance roles.

Python, Data Science & Al Practical Skills 

Data-driven finance is becoming the biggest trend, and thus, the module stands out as one of the most innovative courses that CFA Level 2 candidates can take advantage of. Moving beyond the basics in Python, the module teaches you how you can apply techniques of data science to:

• Analyzing large datasets for patterns and trends
• Building machine learning models to automate tasks like forecasting stock price or assessing risk.
• Design AI algorithms for financial use.

This module equips you with the skills to succeed in roles that straddle finance and technology, such as in quantitative analysis, fintech, or AI-driven portfolio management.

CFA Level 3 PSM Modules

All the PMS modules will be available for you to choose from along with the addition of the Portfolio Development and Construction module. This stage of the CFA program will still be working on sharpening practical skills modules, making you better at managing portfolios, or giving some type of investment advice.

Portfolio Development and Construction

Portfolio management will be the core of CFA Level 3, and the Portfolio Development and Construction module is perfect for refining these skills. This module covers:

• Asset allocation strategies according to a client’s risk tolerance and return objectives.
• Portfolio diversification through asset-class balancing, sector-wise distribution, and regional diversification.
• Techniques to rebalance at or near optimum portfolio weightings in the face of market volatility. 

Any candidate who intends to be a professional in wealth management, private banking, or institutional investing, must meet this module.

CFA Practical Skills Modules: When Should You Take Them

Strategically timed Practical Skills Modules can go really far in your CFA journey, and of course, there are no rules governing how long it should take but these modules need to be aligned either with the career goals of a member or with their preparation for the exam.

Level 1 candidates should also consider a PSM at or about the middle of their study period when all foundational concepts of finance have been well laid out. Modules like Financial Modelling or Python Programming Fundamentals can provide a hands-on understanding of topics you are studying as part of your CFA curriculum.

At Level 2, things get more interesting. Take the most out of your study breaks by solving a PSM to complement theoretical knowledge. For example, the Analyst Skills module will really prove to be very helpful while applying the valuation techniques for real-world cases.

It is recommended to schedule your PSMs at the end of your studies for CFA Level 3 candidates since these focus on portfolio management and other advanced subjects that also match the content studied for your CFA Level 3 exams. Portfolio Development and Construction or Python, Data Science & AI modules at this point would help in solidifying knowledge while providing practical insights into the actual role.

CFA Practical Skills Modules: How to Prepare

Ensure that, for your PSM, you study both CFA exam studies and module content that complement each other.

Understand the Relevance: Find how the module you’ve chosen relates to your level in CFA and the aspira­tions of your career. For instance, Financial Modeling is perfect for investment banking or asset man­agement roles.

Dedicated Time: Even though these modules are flexible, there will be times when you will have to dedicate time to keep motivated and absorb everything. Plan by dedicating at least four weeks for those who are going to take the PSM test so that you do not cram. 

Leverage Your CFA Knowledge: It is the theoretical framework that you have obtained through CFA studies. Apply it when studying for PSM. For instance, applying concepts from equity valuation when working through a financial modelling module will reinforce both your CFA knowledge and practical skills.

Practical Exercises: This is another area where PSMs are practical. Make sure you are quite actively using the tools provided—be it coding exercises in the Python module or building a financial model in Excel. The more you practice, the better you will be at it.

An Explanation of the Flexibility in Changing the Selected PSM

The CFA Institute knows that as you continue with your studies, you might change your interests or career goals. They have, therefore, designed flexibility in the PSM system, whereby a candidate can switch module choices. This feature is beneficial for:

Switching Focus: You can switch to another module that aligns better with your career path in case you come to know after starting a module that it is not in the right direction for you.

Switch to New Trends: The candidates may want to switch from traditional modules like Financial Modeling to newer ones like Python, Data Science & AI due to rapid changes in new technological era technologies such as AI and data science.

However, please note that changes are available depending on the season and time of your application as well as might attract an extra charge, depending on the season.

Requesting a Change in the Chosen PSM

If you decide that the PSM you have chosen is no longer aligned with your career direction or interest, changing your PSM is an effortless procedure:

Availability Check: First go into your CFA portal and check the list of available PSMs. Make sure the new module you want is open for enrollment.

Request: Contact the support team of the CFA Institute via their official portal. Explain why you want to switch, which module you are currently on, and which PSM you prefer.

Understand the Fees: There is indeed a fee associated with changing your PSM, depending on when you submit your request. The fee may be lower or even waived upfront in the process of change, but later changes come with a higher cost.

Complete the Change: Once your request is processed and a fee is paid, you will be enrolled in a new PSM. Do not forget that timing is everything, so plan your change well before exam prep intensifies.

Requirements For Candidates Pursuing the CFA Charter on or After January 1, 2024, have been clarified.

Students can take up more than one PMS in one level if they wish to study extra modules to enhance their future. 

CFA Practical Skills Modules: Where To Find Them

Candidates can view the CFA Practical Skills Modules (PSMs) in their candidate portal within their CFA Institute account under “My PSMs”. Every candidate must select a unique module for each exam level, and no one is allowed to pass the same PSM more than once. As a result, candidates will have an excellent variety of different skills developed in the CFA certification as they move up the levels of the program with new, advanced PSMs available along the way.

CFA Practical Skills Modules: How to Confirm Completion

Following the completion of any CFA Practical Skills Module, the candidate is provided with an email confirming it. If the automatic email confirmation is not received by the candidate, they are free to access the “My PSMs” section of their CFA Institute account. There they can establish which modules have been completed and what modules qualify for formal recognition that the requirement has been met.

CFA Prep Course at Zell Education 

At Zell Education, we offer comprehensive preparation courses tailored to help candidates excel in their CFA journey. Our CFA prep courses include deep-dive sessions on the Practical Skills Modules so that besides preparing for the exam, you leave equipped with practical skills essential in the finance industry. We advise on the right PSMs to choose and support you all along your module completion process. Zell Education recognizes that your CFA journey is going to be smooth and effective with customized study plans and access to a large number of material resources.

Conclusion

One important part of the journey toward the CFA charter would entail the successful navigation of the CFA Practical Skills Modules (PSMs). These were designed to give practical and hands-on experience along with the knowledge learned in the exams. They are, in effect, part and parcel of the journey toward the charter. Only by choosing the best PSMs for every level, and verifying their completion, will you improve your chances of becoming a highly regarded CFA professional. 

FAQs on CFA Practical Skills Module:

Does the CFA Program require the Practical Skills Module (PSM)?

Yes, the PSMs are mandatorily conducted for all candidates who aim to become charter holders in the CFA from January 1, 2024. These modules would ensure that the candidate draws hands-on practical experience besides just going by theories in his charter.

What is the average time it takes to complete a PSM?

It would depend on how complex that particular module is and the familiarity of the candidate with it. On average, a candidate would take anywhere from 10 to 20 hours to complete a PSM.

Does the CFA exam registration fee include PSMs?

No, the cost of Practical Skills Modules is not included in the fee. Candidates must select and complete these modules as part of their CFA curriculum.

What are the most difficult Practical Skills Modules in the CFA Program?

PSMs are subjectively difficult based on a candidate’s background and experience, but Financial Modelling and advanced Python Programming seem to be the modules people often complain about because they require technical aptitude and in-depth knowledge.

What are the prerequisites for passing the CFA PSM exam?

There is no specific prerequisite for PSMs themselves; however, it is only advisable that the candidate should have a good grasp of the CFA curriculum topics about which they have chosen to sit.

Partham Barot is an ACCA-certified professional. showcasing his expertise in finance and accountancy. he’s revolutionising education by focusing on practical, real-world skills. Partham’s achievements underscore his commitment to elevating educational standards and empowering the next generation of professionals.