In 2014, I enrolled in the CFA (Chartered Financial Analyst) program. 5 years, countless hours of studying, sleepless nights, many tears and grey hairs later, I passed all 3 exam levels to earn the CFA charter.
The CFA exams are gruelling. I speak from experience.
Yet, every year, around a hundred thousand finance professionals across the globe file into exam halls to take the marathon 6-hour1 exam. All to earn the right to place those three letters at the end of their name on their business cards and LinkedIn profiles.
In finance, there’s a certain allure to obtaining the CFA designation. It’s like going through war to earn your stripes. But outside of finance, not a lot of people know about the CFA charter.
So, what exactly is the CFA charter? How much does it cost to take the exams? And what do you need to consider if you’re thinking of enrolling in the program? Let’s get into it.
What is the CFA charter?
The CFA charter is a globally accredited, legally recognised, and some would argue, prestigious professional qualification in finance.
If you plan to pursue a career in investment banking, asset management, or research, either in Malaysia or abroad, having a CFA charter gives you the extra edge over other job candidates.
How to get a CFA charter
In order to get a CFA charter, you’ll have to sit and pass 3 exams – aptly called Level 1, 2 and 3.
These exams test your knowledge on financial fundamentals and pretty much the entire spectrum of finance – from economics all the way to corporate finance, with the idea that you’ll become a well-rounded financial professional once you’ve passed the exams.
So, you’ll learn things like how to value assets, how to project cash flow, portfolio management, macroeconomic principles and so on.
You’ll also need to fulfil other criteria such as having qualified work experience, and submitting reference letters before you can get your charter.
About the CFA exams
Each level is contingent on you passing the previous one. So, before you can proceed to Level 2, you’ve got to pass Level 1. And you can only sit for the Level 3 exam, once you’ve passed Level 2.
Since 1963 until 2019, there were roughly 1.7 million candidates that sat for Level 1. Out of that 1.7 million, about 260,000 candidates passed Level 3. That means about 15.3% of candidates actually complete all three exams in the last 56 years.
Who benefits from taking the CFA exam
There are more than 100,000 charterholders worldwide. That’s a small number if you think about how many job seekers apply for investment banking, corporate finance, and asset management roles globally.
In fact, in Malaysia, there are only 869 registered CFA charterholders as of December 2019. In Singapore, it’s way more competitive, with 4,000 charterholders.
If you are planning to work in finance, the CFA could be your ticket to get into investment banks such as Morgan Stanley, JP Morgan, and so on. You’ll have a competitive advantage over candidates who don’t have the designation.
Even if you don’t have a finance background, you can also obtain a CFA charter as a way to get into the financial industry. I know some engineers who took the exams because they wanted to switch careers and go into finance. But you’ll have to fulfil at least 4 years of working experience before you can get your charter.
Important CFA exam updates as of 2020
With the pandemic, the CFA Institute has changed a few things about the exams.
The organisation has increased the number of testing centers and introduced computer-based exams (previously the exams were all paper-based) to accommodate for social distancing rules.
They’ve also increased the number of testing dates. The exams used to be held twice a year for Level 1, and once a year for Level 2 and 3. Now, Level 1 is held 4 times a year, and Level 2 and 3 are held twice a year. They’ve even changed the number of hours of the exams from 6 hours to 4.5 hours.
It used to take about 1-2 months for you to know your results but with computer-based exams, candidates will likely get their results sooner.
To me, these changes mean that the exams are becoming more accessible to people.
For one, more testing locations means more people who can take the exams. Meanwhile, more exam dates allow candidates who fail their exam to retake the exam a few months later, instead of waiting a whole year.
And it also means that if you’re a super genius, you could get your charter in 1 year, instead of 2.5 years.
How much it costs to take the CFA exam
Your total costs for taking all three exams will vary depending on: 1) how early you register for the exams, and 2) how many times you retake the exams.
In 2021, if you’re enrolling in the CFA Program for the first time, you’ll need to pay a one-off enrolment fee of US$450. You’ll also need to pay a registration fee for every level of exam you sit for. If you register early, you’ll need to pay US$700, but if you register closer to the deadline you’ll need to pay US$1,000.
So, in a scenario where you’re a super genius and you’ll pass all 3 levels on the first try, your total cost would be:
US$450 (Enrollment Fee) + US$700 (Level 1 Early Bird Registration) + US$700 (Level 2 Early Bird Registration) + US$700 (Level 3 Early Bird Registration)
Total Cost = US$2,550 or about RM10,000.
So, at minimum, you’ll be paying RM10,000 to sit for the exams. When you pay your fees, you’ll receive a digital version of the CFA textbooks as your study material.
You could just self-study for the exams. But most people find that it’s challenging to study just using the textbooks. The solution? You can pay for courses and other study prep material to help you learn the material and prepare for the exams.
In Malaysia there are a few institutions that provide CFA courses. For example, FIRIX provides a prep course for about RM5,300 per level. Here’s a list of CFA prep providers in Malaysia.
How much it costs to receive the CFA charter
Once you’ve passed all three levels, you’ll need to pay a yearly membership dues of US$275 to the CFA Institute for your charter. You’ll also need to pay US$50 every year to the CFA Society in your country.
Scholarships for the CFA exam
If you’re cash-strapped, there are a few scholarships you can apply for to fund your CFA studies.
The CFA Institute itself offers a number of partial scholarships to help ease the financial cost of taking the exams.
Yayasan Peneraju offers full scholarships for qualified Bumiputera candidates. This scholarship covers the exam registration and enrolment fees. On top of that, it covers the fees for your exam prep provider such as FIRIX.
If you work as a SC-licensed dealer rep or a remisier, you can apply for a BDREF scholarship. This scholarship also cover your course fees with a prep provider, and your exam registration and enrolment fees.
- Your company
If you’re already working in the financial sector – in a bank, investment fund, or asset manager – chances are you can also get your company to sponsor your CFA exam fees. In return for sponsoring your education, your company hopes to get a “name brand” employee that they can add to their credentials.
Should you take the CFA exams?
For those that already have a flourishing career in finance, and for those that plan to work in corporate finance, private equity, venture capital, financial sales, or trading, you may not actually need the CFA designation at all.
As I mentioned at the start, preparing and sitting for the CFA exams is a gruelling and demanding process.
Though you’ll likely spend less money on the CFA charter than on a Master’s Degree or an MBA (which can go up to RM100,000), you’ll need to invest a lot of time studying for the exams.
If you’re already working, you’ll have to study in your own time. Sure, you get the flexibility to study whenever you want. But these exams require the type of dedication you’ll only see from devoted boyfriends to their girlfriends every whim and fancy.
Jokes aside, you’ll need to dedicate at least 300 hours to prepare for each level.
Assuming you study 2 hours every day, that’s 150 days that you’ll need to spend preparing for the exam.
And you can’t just open the textbook and start reading either. You’ll need to strategise how you’re going to approach the materials, organise your life around your studies, and remain disciplined in your approach all the way until exam day.
These exams require a lot of sacrifice. That’s why I joked that I had no social life or hobbies when I was taking these exams. But if your ultimate goal is to get into the financial industry and move up the ranks (and pay scale) in an investment bank, then that sacrifice may be worth it to you.
1 As of 2020, the CFA Institute made a bunch of changes, including changing the hours of the exam. Now, the exams are 4.5 hours.