At consumer-to-consumer trade website Taobao.com, a user named Li Li is selling her study notes for the Chartered Financial Analyst (CFA) exam. At RMB240 (US$35), the price is a bargain for a difficult exam.
Taobao features hundreds of such posts. Many are dated prior to last month, when, on June 8, approximately 175,000 people in 180 locations worldwide, including Beijing, Shanghai, Guangzhou and Hong Kong, took the CFA exams. Since the mid 1990s, the US-based CFA Institute’s self-study program has experienced an explosion in popularity, with close to half of this year’s exam candidates coming from Asia.
Ji Yuan, a Chinese-born 23-year-old finance graduate at Curtin University of Technology in Australia, was one of them. He achieved a pass grade in Level I of the thee-level CFA exam in Kuala Lumpur last year.
“I don’t know at the moment if it will be worth it,” Ji said, referring to the grueling six-hour Level II exams. “If I pass the exam, [potential employers] might say, ‘wow, you’re a CFA, so you can do [investment work] without a doubt.’”
The CFA is an international qualification for finance and investment professionals, particularly relevant for investment management, investment banking and financial analysis.
“Charterholder” qualification is awarded to individuals who pass a system of three separate exams. Level I of the exam is offered twice a year – in June and December – while Levels II and III are offered only every June. In order to participate, candidates must hold an undergraduate degree or have at least four years’ experience working in an investment-related field. The average finishing time for the CFA program is four years.
The exams cover topics such as portfolio management and corporate finance, as well as ethics, professional standards, quantitative methods, derivatives and alternative investments. Topics are drawn from surveys of investment professionals throughout the world to determine the skills and knowledge required in the workplace.
“It emphasizes principles that are relevant across markets and across a broad set of jobs,” said Henry Chua, public relations director at the CFA Institute in Hong Kong.
He noted that most CFA charterholders go on to work for mutual funds, investment banks and brokerages, but a significant number also employed by hedge funds, insurance companies and commercial banks.
In China, roughly 13,000 people have registered for the exams since they were first offered in the country in the 1990s. Almost 1,300 Chinese investment professionals are now charterholders. Part of the appeal for Chinese graduates and investment professionals is that the CFA charter is internationally recognized.
“They become part of a global network of like-minded investment professionals, with all of the advantages that such a network can convey,” Chua said. “The body of knowledge mastered by CFA charterholders is seen to be as applicable and valuable in China as it has been around the world.”
Being part of that global network means attracting international job offers.
A wide range of Chinese and multinational firms actively hire CFA charterholders in China, including Bank of China, HSBC, PricewaterhouseCoopers, Ping An Insurance and Morgan Stanley, according to Chua.
Yet, the generalist nature of the CFA approach is both a strength and a weakness. In addition, strict entrance requirements, steep exam fees – the Level I exam can cost as much as US$1,395 – lengthy test preparation times and high failure rates are all potential deterrents for those sitting on the CFA fence.
An MBA companion
Perhaps to hedge their bets, many aspiring Chinese investment professionals like Ji are looking at CFA qualification as a supplement to – not a replacement for – their formal business education.
“Eventually, I’ll take an MBA and start my own business,” said Ji.
MBA programs, for their part, have incorporated the CFA curriculum into their own course offerings.
“Our curriculum covers 70% of the CFA curriculum,” said Rebecca Chow, executive officer of the department of finance at the Hong Kong University of Science and Technology Business School. “But we’re more in depth [than the CFA’s exam content]. We have all sorts of students, and some already have the CFA certification.”
Chinese students in particular are keen for exposure to CFA material.
“I would say a higher percentage of [Chinese students] are aware of the CFA program and express interest in it than do native Kiwi students,” said Dr J. Scott Chaput, senior lecturer in the University of Otago’s department of finance in Dunedin, New Zealand.
Some business schools are going even further, becoming CFA partners by covering almost three-quarters of the CFA curriculum and meeting specific course requirements and ethical standards. These partners can also award “CFA scholarships” to five graduate students or final-year undergraduates every year.
“Those university partners embed the CFA curriculum into their degree programs, allowing them to offer their students degrees that focus on the concepts and principles in the CFA program,” Chua said.
Gaining CFA-specific knowledge at such institutions might be the difference between success and failure for those who go on to take the full CFA exam.
Then again, there’s always Taobao.