The CFA — Wall St’s toughest qualification — struggles to regain stature

There was a time when qualification as a chartered financial analyst was much more of a door-opener to a new career, changing lives around the world.

Gary Brinson, who sold his asset management business to Swiss Bank Corp in 1995, was among those to hire almost exclusively from candidates who’d made it through “Wall Street’s toughest exams”. “If we hired someone who didn’t have a CFA, we made it mandatory that they complete the CFA process,” he says.

Mike Mayo, a renowned Wall Street analyst, was one of those who saw it as a golden ticket. “I had everything riding on it,” he said of a qualification he earned aged 27. “I was going to get a CFA and go to Wall Street. I had perfect grades and an MBA, and no one cared . . . my university didn’t open any doors,” he adds. With his CFA, he went on to work for major investment banks and become a top-rated US banks analyst.

I trod the same path some 40 years after Brinson and 20 after Mayo, spending the final years of my twenties ditching friends, family, parties and common sense in pursuit of the charter.

I wanted those three letters on my business card mainly because as a young female reporter covering Ireland’s banking crisis, I wanted a shortcut to credibility. I thought the CFA would prove I was a grown-up, and would help me find my finance tribe. And, at the margins, I thought a broad grounding in finance could be a useful complement to my journalism degree.

Many of my peers had far more riding on it, especially in places like China and India, where demand skyrocketed as candidates looked to the charter for their passage to a world of high finance thousands of miles away.

But soon there would be fewer bosses like Brinson, who hired charterholders for “the discipline [they had shown] of going through that type of process and the rigour associated” with succeeding in a programme that makes a virtue of failing most of its candidates. And there would be fewer success stories like Mayo.

These days, finance bosses are ambivalent about the CFA’s benefits. “Nice to have but won’t help you get a job,” is the general verdict from a straw poll of contacts. And demand for the programme is “falling off a cliff”, according to a staff member at the CFA Institute that oversees it. In the year to August 2019, 160,900 candidates registered for the first stage of the exam. In the year to August 2021, that number was just 125,775.

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The institute mostly blames the pandemic for the recent fall in demand, with China’s lockdowns prompting cancellations in the exams’ biggest market. Finance insiders say the exams have become less relevant as the curriculum struggles to keep pace with an industry where new technologies, business models and regulations appear almost daily.

Logic says pandemic lockdowns will eventually end. And the CFA Institute’s Chris Wiese says the curriculum “must” and will evolve faster. DeFi, coding and the retirement of Libor are among the more than 20 additions to the 2022-23 textbooks. But solving those issues isn’t going to arrest the underlying decline in the CFA’s stature.

Even Brinson, the most strident CFA supporter you could meet, says the knowledge that charterholders picked in the programme was just “25-33 per cent” of the reason he hired them.

The truth is, what’s in the textbooks never really mattered that much; what mattered was the stamina and character that passing the exams demonstrated. Until quite recently, 20-hour days of work and study were feats to be celebrated, and an easy fraternity was forged between those who bore matching battle scars.

But the world is changing. That kind of endurance is less likely to be openly celebrated, and is far less likely to attract the millennials who are pushing their employers for protected weekends and guaranteed vacation days.

“If you take our print books and put them in front of them [millennials], it’s daunting and overwhelming,” Wiese admits, adding that the institute is trying to make the curriculum more “bitesized” without losing rigour or comprehensiveness.

Future demand will be further sapped by the demise of traditional portfolio managers and investment analysts, the two roles that traditionally employed the most charterholders. And Wall Street’s strategy of recruiting from a wider network of schools means the CFA is becoming less likely to be needed to open doors that “non-target” schools can’t.

I’ve already made my bet. Ten years ago, I plastered every surface in my kitchen with Post It notes of formulas and definitions. I had vivid, inexplicable, dreams of being trapped in an Excel cell. That’s how much the CFA got inside my head, how much getting those three little letters meant to me. A few years ago, I decided the annual $275 fee wasn’t worth it, and gave up using the letters altogether.

laura.noonan@ft.com