Understanding the different types of financial planning professionals and the services they typically provide can be confusing. Professionals often have one or more credential listed after their name, usually in the form of an abbreviation that doesn’t provide much information. At Harvest Financial Planning, we want to help educate consumers about financial planning and investment options, including learning more about the training and accreditation that is required for certain financial planning credentials, and what they may mean for consumers.
For this article, we’ll focus on one particular credential – the Chartered Financial Analyst® (CFA®). This globally recognized designation is issued by the CFA Institute and is designed to measure competence and integrity in areas that include accounting, economics, ethics, money management, and security analysis.
What Does a Chartered Financial Analyst® Do?
The CFA® designation is not a job title, or one specific position in a company, but rather a credential that professionals earn by demonstrating a high level of knowledge in their field.
It is not meant to indicate which services a professional provides but recognizes those who show a high level of knowledge and professionalism in a financial services role.
The services a CFA® provides will vary greatly depending on their position within a company, or the services they provide as an individual. A client needing financial services wouldn’t typically seek out a CFA® but may look for the services of someone such as a Certified Financial Planner™ or an investment advisor representative who is also a CFA® charter holder.
According to the CFA Institute, the most common job titles for charter holders include portfolio manager, research analyst, chief level executive, and risk manager. The CFA® is considered a graduate-level credential, and many candidates have been working in a financial planning role for several years before applying for the program.
What is Required to Become a Chartered Financial Analyst®?
The process for earning a CFA® charter is highly selective. The CFA Institute reports that fewer than one in five candidates will go on to become charter holders.
Candidates for a CFA® credential must:
- Enroll in the CFA® Program and register for the first exam.
- Pass the Level I, II, and III exams.
- Document work experience of no less than four years in the investment decision-making process.
- Become a member of the CFA Institute to obtain a charter.
The CFA® exams are difficult to pass and require a strong understanding of investment management. Candidates spend an average of 1,000 hours or more preparing for the three exams, and most still do not pass. Each exam has an average pass rate below 50%, and only about 15% of candidates who take the Level I exam will go on to become charter holders.
The rigorous requirements and continuing assessment required of all charter holders have made this a highly respected credential. Investors who choose to work with a CFA® charter holder often find comfort in knowing they have selected a vetted professional who has real-world investment management experience.
Is There a Chartered Financial Analyst® in My Area?
There are currently over 150,000 professionals worldwide who have earned the CFA® designation. In Northwest Indiana, our advisors are supported in managing client portfolios by CFA® charter holder Neal Schering at Harvest Financial Planning, LLC. Neal earned his CFA® credential in 2019 and serves as a Portfolio Manager Assistant, and focuses on helping advisors build investment portfolios designed to meet their clients’ long term needs.
At Harvest Financial Planning, we are committed to expanding our knowledge of investment management in order to better serve our clients and our community. Earning credentials like the CFA® designation is just one way we work to provide the best investment experience possible for each client. To learn more about our staff, their skills, and how we can help investors of any size, contact our office today to schedule an appointment.
*This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.