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SO YOU WANNA BE A CFA  …. An Introduction to the CFA  Exam – Preparation, Time Commitment, and Benefits The Investment Analysts Society of Chicago October 30, 2001. AGENDA. Introduction & History – purpose & how it all started Structure & Requirements – what the program entails

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SO YOU WANNA BE A CFA …

An Introduction to the CFAExam –

Preparation, Time Commitment, and Benefits

The Investment Analysts Society of Chicago

October 30, 2001


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AGENDA

  • Introduction & History – purpose & how it all started

  • Structure & Requirements – what the program entails

  • Preparation Involved – how much time & what involved

  • Topics Covered – what subjects are necessary to know

  • Demographics of Candidates – who are they?

  • Benefits of the CFA Designation – money, reputation, and continuing education

  • Careers & Salary Analysis – what the market is paying


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AGENDA

  • Introduction & History – purpose & how it all started

  • Structure & Requirements – what the program entails

  • Preparation Involved – how much time & what involved

  • Topics Covered – what subjects are necessary to know

  • Demographics of Candidates – who are they?

  • Benefits of the CFA Designation – money, reputation, and continuing education

  • Careers & Salary Analysis – what the market is paying


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INTRODUCTION & HISTORY

  • Purpose of the exam is to establish standards of competency and integrity.

  • Exam is designed to reinforce fundamental knowledge of investment principles.

  • Encompasses cutting-edge topics of today (if the topic is current, it will show up in the exam).

  • Focus on ethics & thus, upholding the highest standards of ethical responsibility.

  • Not an exam for a specialist, but supplements the specialist’s “general” knowledge


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INTRODUCTION & HISTORY

  • History –

    • Program first administered in June, 1963

    • 268 security analysts emerged as first class of CFAs

  • Today –

    • As many as 80,000 candidates to register for the June, 2002 exam.

    • Nearly 400,000 CFA exams administered

    • More than 35,000 investment professionals have earned right to use the charter (to have the letters CFA after your name)


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AGENDA

  • Introduction & History – purpose & how it all started

  • Structure & Requirements – what the program entails

  • Preparation Involved – how much time & what involved

  • Topics Covered – what subjects are necessary to know

  • Demographics of Candidates – who are they?

  • Benefits of the CFA Designation – money, reputation, and continuing education

  • Careers & Salary Analysis – what the market is paying


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STRUCTURE OF PROGRAM

  • Divided into 3 Levels – Level I, II, and III

    • You may sit for 1 examination each year.

    • Exam usually offered either the last Saturday in May or first Saturday in June.

    • You must pass each level sequentially in order to take the next level. If you fail one level, then must re-take the exam the following year.

    • Minimum completion time is 3 years, maximum is 7 years.


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STRUCTURE OF PROGRAM

  • Level I – Multiple Choice

  • Level II – 50% Short Answer / 50% Essay

  • Level III – 50% Short Answer / 50% Essay

  • Self-Study Curriculum –

    • Pro – flexible enough for the busy professional.

    • Con – The exam is self-study.



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REQUIREMENTS OF DESIGNATION

  • Completion of all 3 Levels only one part to receiving the CFA Designation.

  • Must have at least 3 years of relevant work experience within investment analysis by the time you finish Level III.

  • Must have completed a Bachelors Degree in order to sit for the exam.

  • Must apply for membership in AIMR and an AIMR Member Society/Chapter.

  • And must meet professional conduct requirements (you have no crimes or skeletons in the closet)


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AGENDA

  • Introduction & History – purpose & how it all started

  • Structure & Requirements – what the program entails

  • Preparation Involved – how much time & what involved

  • Topics Covered – what subjects are necessary to know

  • Demographics of Candidates – who are they?

  • Benefits of the CFA Designation – money, reputation, and continuing education

  • Careers & Salary Analysis – what the market is paying


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PREPARATION

  • ON AVERAGE, each level of the Program calls for 250-300 hours of exam preparation. Can vary due to “self-study” nature of the exam.

  • Reading assignments compose the core of the study program and are the basis for the exam questions.

  • Reading assignments are from both textbooks other readings that are necessary for taking the exam. These must be purchased as part of the preparation for the exam.


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PREPARATION

  • Upon enrolling into the program, you will receive a comprehensive study guide detailing Learning Outcome Statements (LOS) – or specific subtopics that you are required to know for the exam.

  • The study guide is divided into study sessions that list the required readings and learning outcomes for each reading.

  • Textbooks and Readings are required purchases for the exam.


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PREPARATION

  • Review Courses, such as BeckerConviser / Stalla, are available to facilitate the learning process.

  • But they are not a substitute to preparing for the exam.

  • The best ingredients for successful preparation –

    • Mental focus & determination

    • Regular scheduled studying

    • Studying the assigned reading per LOS

    • And if it helps, taking review courses & getting involved in study groups.


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AGENDA

  • Introduction & History – purpose & how it all started

  • Structure & Requirements – what the program entails

  • Preparation Involved – how much time & what involved

  • Topics Covered – what subjects are necessary to know

  • Demographics of Candidates – who are they?

  • Benefits of the CFA Designation – money, reputation, and continuing education

  • Careers & Salary Analysis – what the market is paying


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TOPICS COVERED ON EXAM

  • The CFA Program’s Body of Knowledge includes –

    • Ethics & Professional Standards

    • Quantitative Methods

    • Economics

    • Financial Statement Analysis

    • Corporate Finance

    • Analysis of Debt Investments

    • Analysis of Equity Investments

    • Derivatives

    • Alternative Investments

    • Portfolio Management

    • Performance Measurement



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CALCULATOR POLICY

  • Due to programming functions available for “formulas” – only 2 calculators are permitted to be used –

    • Texas Instruments BA II Plus

    • Hewlett Packard 12C

  • Proctors instructed to confiscate unauthorized calculators.


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AGENDA

  • Introduction & History – purpose & how it all started

  • Structure & Requirements – what the program entails

  • Preparation Involved – how much time & what involved

  • Topics Covered – what subjects are necessary to know

  • Demographics of Candidates – who are they?

  • Benefits of the CFA Designation – money, reputation, and continuing education

  • Careers & Salary Analysis – what the market is paying


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CFA CANDIDATEAGE PROFILE


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CFA CANDIDATEGEOGRAPHIC PROFILE


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CFA CANDIDATEGROWTH


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CFA CANDIDATEGLOBAL GROWTH


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CFA CANDIDATEEMPLOYMENT PROFILE


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AGENDA

  • Introduction & History – purpose & how it all started

  • Structure & Requirements – what the program entails

  • Preparation Involved – how much time & what involved

  • Topics Covered – what subjects are necessary to know

  • Demographics of Candidates – who are they?

  • Benefits of the CFA Designation – money, reputation, and continuing education

  • Careers & Salary Analysis – what the market is paying


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BENEFITS OF CFA DESIGNATION

  • Symbol of professional excellence, and as a result…

    • A primary qualification for senior level investment positions (and most analysts positions as well).

    • Frequently backed and financially sponsored by employers.

  • Global Acceptance –

    • In fact, in some parts of Asia, this is a way of keeping their financial system “clean” and “self-regulated” – something they have a hard time regulating themselves.

  • Membership into AIMR and local CFA Societies require the CFA. Bottom Line? Networking and Continuing Education access.


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THE IASC

  • The Investment Analysts Society of Chicago (IASC) –

  • Oldest CFA Society founded in 1925.

  • Also most prestigious with the history in finance that many of our members created.


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BENEFITS OF IASC MEMBERSHIP

  • Weekly luncheon meetings providing interesting speakers, networking, and most importantly, lunch…

  • Education & Career Development programs – new intellectual capital that can be used in practice.

  • Committee Involvement – there are several committees you can participate on to network and make a difference.

  • Jobs Listings – www.tiasc.org - and the site is also another way to network with the Society.


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AGENDA

  • Introduction & History – purpose & how it all started

  • Structure & Requirements – what the program entails

  • Preparation Involved – how much time & what involved

  • Topics Covered – what subjects are necessary to know

  • Demographics of Candidates – who are they?

  • Benefits of the CFA Designation – money, reputation, and continuing education

  • Careers & Salary Analysis – what the market is paying


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COMMON OCCUPATIONS OF CFAs

  • CEO / Principal

  • Chief Investment Officer

  • Equity Analyst

  • Fixed Income Analyst

  • Investment Banker

  • Investment Counselor

  • Investment Firm Manager

  • Portfolio Manager

  • Portfolio Strategist

  • Sales / Marketing Professional


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EMPLOYERSWITH LARGEST # OF CFAs

  • ABN Amro

  • American Express Financial

  • Bank of America

  • Bear, Stearns & Company

  • CIBC World Markets

  • Donaldson, Lufkin, & Jenrette

  • Chase J.P. Morgan

  • Lehman Brothers

  • Loomis, Sayles & Company

  • Merrill Lynch

  • Morgan Stanley Dean Witter

  • Nesbitt Burns

  • PaineWebber

  • Putnam Investment Management

  • RBC Dominion Securities

  • Salomon Smith Barney

  • Standish, Ayer & Wood, Inc.

  • State Street Global Advisors

  • UBS Asset Management

  • Wellington Management


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CAREER & MONEY BENEFITS

  • Definite correlation between high base salaries / bonuses with those individuals having the CFA and approximately 6 years of relevant experience.

    • Supported by 1999 study by HQ Search where 230 equity analysts and 60 mutual fund analysts working for 55 different Chicago-based investment companies, banks and consultants.

    • Also supported by 1999 Russell Reynolds national survey.

  • The CFA credential provides better career opportunities and not just in investment management.

    • Investment bankers, bankers and other financial managers value a CFA.


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CAREER & MONEY BENEFITS

  • Chicago as a financial hub – Growing money management industry base and thus, job prospects increasing – this is due to –

    • 1999 exodus of Chicago-based firms left numerous Chicagoans extremely wealthy from their sell-out provisions.

    • September 11 effect encouraging financial firms to diversify their locations.



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