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The CFA ® Program

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  1. The CFA® Program Philip J. Young, Ph.D., CFA ----- College of Business & Public Affairs Career Day March 2005 CFA Institute

  2. The CFA® Program A self-study, distance learning-based program that takes a generalist approach to security analysis and portfolio management and emphasizes the highest ethical and professional standards. CFA Institute

  3. Member and Candidate Growth Note: CFA Candidates as of 15 September 2004 CFA Institute

  4. The CFA CharterGrowing Non-US Numbers . Other = Latin America, Africa, & Middle East CFA Institute

  5. The CFA® Program CCC COE CURRICULUM EXAMINATIONS GRADING BODY OF KNOWLEDGE Practitioners at every step of the process MINIMUM PASSING SCORE (MPS) JOB ANALYSIS CFA Institute

  6. Job Analysis CCC COE CURRICULUM EXAMINATIONS GRADING BODY OF KNOWLEDGE Practitioners at every step of the process MINIMUM PASSING SCORE (MPS) JOB ANALYSIS CFA Institute

  7. Job Analysis • Determines topics taught in the CFA Program • Conducted every five years: next in 2005-2006 • Involves investment practitioners worldwide: Regional Expert Panels and member surveys • What knowledge and skills are expected of a candidate for an entry-level position? CFA Institute

  8. Body of Knowledge CCC COE CURRICULUM EXAMINATIONS GRADING BODY OF KNOWLEDGE Practitioners at every step of the process MINIMUM PASSING SCORE (MPS) JOB ANALYSIS CFA Institute

  9. Body of Knowledge • Ethical and Professional Standards • Quantitative Methods • Economics • Financial Statement Analysis • Corporate Finance InvestmentTools • Analysis of Equity Investments • Analysis of Debt Investments • Analysis of Derivatives • Analysis of Alternative Investments Asset Valuation • Portfolio Management CFA Institute

  10. Curriculum CCC COE CURRICULUM EXAMINATIONS GRADING BODY OF KNOWLEDGE Practitioners at every step of the process MINIMUM PASSING SCORE (MPS) JOBANALYSIS CFA Institute

  11. Developed by Candidate Curriculum Committee CCC); over 130 people involved world wide; extensive review; each level consists of 18 study sessions in CFA Institute-produced study guides Curriculum CFA Institute

  12. Curriculum • Readings are drawn from a variety of materials, both CFA Institute-developed and other • Each reading has learning outcome statements (LOS): “The candidate should be able to…” • Each LOS has one or more command words, which indicate type of learning expected: “discuss, calculate, contrast” • LOS are NOT a proxy for examination questions, but ARE the best guide for candidate study CFA Institute

  13. Curriculum 2004 Exam 2005 Exam 2003 Exam CFA Institute

  14. Study Requirements Estimated minimum study time required per Level • Level I – 15 hrs per week for 18 weeks • Level II – 15 hrs per week for 18 weeks • Level III – 15 hrs per week for 18 weeks • Suggest one week of study per study session through late April to allow the final month for review. CFA Institute

  15. Examinations CCC COE CURRICULUM EXAMINATIONS BODY OF KNOWLEDGE GRADING Practitioners at every step of the process MINIMUM PASSING SCORE (MPS) JOB ANALYSIS CFA Institute

  16. Examinations Based on assigned readings and LOS; over 50 people involved; each exam is six hours in length CFA Institute

  17. Examinations 2005 Examination dates • Level I, II & III • June 4 • June 5 - Eastern Asia & Oceania Level I only December 3 December 4 - Eastern Asia & Oceania CFA Institute

  18. Grading CCC COE CURRICULUM EXAMINATIONS GRADING BODY OF KNOWLEDGE Practitioners at every step of the process MINIMUM PASSING SCORE (MPS) JOBANALYSIS CFA Institute

  19. Grading Guiding philosophy – fairness and consistency CFA Institute

  20. Minimum Passing Score CCC COE CURRICULUM EXAMINATIONS GRADING BODY OF KNOWLEDGE MINIMUM PASSING SCORE (MPS) JOB ANALYSIS Practitioners at every step of the process CFA Institute

  21. Minimum Passing Score • MPS for each level established by CFA Institute Board of Governors • Multiple inputs (standard setting, candidate performance statistics, quality of candidate responses, etc.) used to set the MPS • Passing rate for each level is a residual determined by each level’s MPS CFA Institute

  22. Candidate Performance Candidates 2004 (June + December) Level I = 43,777 Level II = 23,896 Level III = 13,452 CFA Institute

  23. Declining Pass Rates – Why? • Decline in candidate preparation – 57% of Level I candidates studied < 200 hours • Fewer candidates indicate they are using the assigned curriculum – nearly 75% of candidates relied mainly on review courses or study notes and only 29% of Level I candidates purchased some or all of the assigned readings • Prep courses and study notes should be used as a supplement, not a substitute for the assigned readings CFA Institute

  24. Candidate Progress For every 100 candidates that entered the CFA Program: In 1996 22 candidates had earned their charters within 5 years In 1985 27 candidates had earned their charters within 5 years Successful candidates average 4 years in the program. CFA Institute

  25. The CFA® Program CCC COE CURRICULUM EXAMINATIONS GRADING BODY OF KNOWLEDGE MINIMUM PASSING SCORE (MPS) Practitioners at every step of the process JOB ANALYSIS CFA Institute

  26. CFA® Charter Benefits • Knowledge across core areas of the investment industry • Respect and credibility in the investment community • Career opportunities in a competitive environment • Accepted global and portable standard of competence and integrity CFA Institute

  27. Earning Power - The CFA Premium The CFA Premium: US$40,000 $203,000 $163,000 Median Total Compensation for CFA Institute members with 10+ years experience Source: 2003 Compensation Survey CFA Institute

  28. Career Opportunities CFA Institute

  29. CFA® Charter Requirements • Sequentially pass Level I, II, and III exams • Have 4 years of professional experience • Provide professional references (Level III) • Submit professional conduct statement • Apply for membership in CFA Institute and a local analysts’ society CFA Institute

  30. Online Registration Candidates may now register online at www.cfainstitute.org/cfaprogram CFA Institute

  31. CFA® Program Costs Estimated Basic Costs for Level I (all amounts USD) • Registration Fee to Enter CFA® Program $375 • Enrollment Fee for Level I Examination $360 Required Fees $735* • Study Materials for Level I: Study Guide Free CFA Institute Publications $268 Primary Textbooks $427** Approximate Total Costs for Level I $1,430 *Assumes Registration and Enrollment received by 15 September 2004 **Sharing textbooks can reduce costs CFA Institute

  32. 2005 Registration Deadlines May/June administration Received byRequired Fees* 15 September 2004 $735 15 February 2005 $815 15 March 2005 $1,120 Final Deadline: All forms must be received by CFA Institute on or before 15 March 2005 *Includes registration fee that candidates pay only when first entering the CFA Program CFA Institute

  33. The CFA® Program CFA Institute

  34. The CFA® Program www.cfainstitute.org Information Central Click on “CFA® Program” CFA Institute 560 Ray C Hunt Drive PO Box 3668 Charlottesville, VA 22903 USA Telephone: (434) 951-5499 800-247-8132 Fax: (434) 951-5265 E-mail: info@cfainstitute.org CFA Institute