Is the value of the CFA designation what it used to be?

When I was a fresh grad (i.e., in 2010’s), working in my first financial services job (Bloomberg), CFA designation was really *something*. It was the “s***”. The way Master’s has more or less become the new Bachelor’s (or so my generation managed to convince ourselves), CFA became *the* qualification to really stand out and distinguish oneself among the crowd of ambitious, driven, predominantly Russell Group-educated peers.

I was pleased with myself and my Master’s in Finance from London Business School for about one afternoon, until my Bloomberg colleague (who shall remain nameless) asked me only half-jokingly “so are you going to do CFA now?”; and of course, that’s exactly what I did.

CFA then…

I was never much of a social butterfly, so the lame-but-true “cancel on friends again” definition of CFA prep process didn’t entirely apply to me, but I have to say compared to studying for Master’s studying for CFA was another level. Studying for Master’s or an MBA the general principle is “if you do the work, you *will* pass”; sometimes clearing the admission hurdles (GMAT, resume screening, interviews etc.) felt more challenging than the actual degree course. With CFA “the default is pass” rule simply did not apply. In fact, it was the exact opposite: in order to maintain the exclusivity and value of the qualification, the CFA Institute had every incentive to make fail a default; and it had. Back in my days the pass rate for Levels 1 and 2 was below 50%, which meant that the average candidate did indeed fail the exam; Level 3 had a slightly higher pass rate at around 50%.

Is the value of the CFA designation what it used to be?

The exams themselves (particularly Levels 1 and 2) were completely clinical. It did not matter who you were, who your parents were, where you studied, or even how you arrived at the answer. The answer was all it mattered, and seeing that it was a multiple-choice exam, there was no room for ambiguity either; you either got the right answer or not. The exams were arguably quite reductive in completely ignoring the reasoning and the thought process, but on the other hand they were the most meritocratic exams I had ever taken (save GMAT). They were clinical, sterile, anonymised with a hint of cruel; they cost me three years of my life; I loved them.

Once completed, I wasted no time updating my resume and expected my value in the professional / financial services job market to go up a significant notch. I can’t say for sure, but I think this is what more or less happened. Until…

…and now

Fast forward to 2023 and things feel quite different. Back in my days the exams used to be taken end masse, in a group setting, once a year on a first Saturday of June; the extreme intensity of the examination experience was considered to be very much a part of the package; a feature, not a bug. Back then it wasn’t just about *knowing* how to answer the questions, but also about *taking* and *passing* the exam in the sort of mid-19th century Prussia setting; the intellect counted at par with a tough stomach. The limited supply of exam dates (twice per year for Level 1 and once a year for Levels 2 and 3) helped maintain the value and exclusivity of the qualification; and the pain of failing a level (especially Levels 2 or 3) was truly… soul-crushing.

Nowadays there are *four* exam date options for Level 1, three for Level 2 and two for Level 3. It does, at least theoretically, reduce the minimum period of time required to complete the qualification, but the real crux of it is that the hugely increased supply of exam dates instantly dilutes the exclusivity of the qualification, because there is much lower cost (in terms of stress, effort, time) to retake it, and then retake it again if need be.

Furthermore, the exams are no longer real-time, all-in-one group sessions; they are administered at the computerised test centres. I appreciate that the pandemic forced the CFA Institute to get creative during two years of lockdowns and I don’t begrudge that, but I’m not sold on keeping this as a permanent solution. If anything, it feels like a convenient way for the CFA Institute to rid itself of organising costly and logistically demanding “physical” exam sessions in favour of outsourced test centres. I took GMAT at a computerised test centre and I took the CFA (all three levels) at a physical one; both the exams were super-important to me, but the test conditions for the former were a piece of cake compared to the latter in terms of the overall intensity of the experience.

Then there is the question of CFA ethics principles. They used to comprise some 20% of the curriculum back in my days. Those were (and presumably still are) perfectly good principles. The problem is that they never seem to have really taken hold in the mainstream financial industry even though this was, I assume, CFA Institute’s hope and plan. If anything, I think that over time those principles became even more obscure and effectively unknown outside the CFA circle.

Costs and benefits

Lastly, there is the ever-contentious issue of the annual designation fee (currently USD 299). That’s something I’ve always found somewhat problematic, and, increasingly, I don’t think I’m the only one. The golden rule for any qualification out there – starting with A-levels and ending with a Nobel – is that once you’ve earned it, it’s yours. With the CFA, you never really *own it* proper; you basically just lease it like an SUV or a holiday condo. The fee is usually paid for by the employers, but that’s besides the point, really. If I earned my right to those three letters after my last name, then why exactly do I need to keep paying for them year after year? USD 299 is not nothing…

Only my closest loved ones and I know how much work I put into becoming Wojtek Buczynski, CFA, and how much it cost me (financially and otherwise; mostly otherwise). I am definitely keeping the designation for now for those reasons alone; plus, I think it still benefits me professionally. That being said, I feel quite strongly that what was once extremely valuable has substantially devalued in recent years, thus lowering my ROI. For an investment qualification, I sure was hoping it would go up, or at least hold its value. But as they say: “past performance is not indicative of future returns”.