CFA designation still in demand for hiring as fewer pursue it

The CFA may be down, but it’s not out, financial advisors say.

A total of 116,727 people sat for all three levels of the CFA exam in the first eight months of 2024, down 2,735 from the same period in 2023, according to the CFA Institute. There were 163,000 registrations for the exam last year, down 40 percent from the peak of 270,456 in 2019.  

The decline in registrants for the CFA exam can partly be attributed to a downturn in test takers in China, the CFA Institute said. Passing the extremely detailed and difficult multi-part CFA exam has traditionally been seen as a ticket to high paying jobs and promotions within the financial services industry.

Despite the downturn in CFA test takers, however, Jennifer Hutchins, Co-CIO at Avantax, maintains that the CFA designation remains a must for a portfolio manager, calling it a “gauntlet of finance topics and concepts.” In fact, when hiring a new analyst, she looks for someone who has either attained the designation or is working toward it.

“If someone has passed the entire CFA test, I know that the analyst has been introduced to and understands economics, quantitative mathematics, financial statements, derivatives, and fixed income enough to pass this incredibly challenging test. This is foundational knowledge for any analyst or portfolio manager,” said Hutchins, adding that achieving the CFA designation is also an indication of “focus and passion” for the financial industry.

And while she will consider job candidates with other designations, such as the Certified Investment Management Analyst (CIMA), an MBA or other advanced finance degrees, her strong preference when hiring analysts or portfolio managers is the CFA designation.

“I want to see the applicant is committed to the grueling path of putting in the time and effort to expand their knowledge of advanced financial concepts,” Hutchins said. “In short, when hiring for the portfolio team, we’re looking for someone with advanced finance knowledge, and while the CIMA and MBA overlap with some CFA test areas, it’s simply not the same rigor and breadth of the CFA test.”

Along similar lines, Kenneth Sanchez, managing partner of KWM Wealth Advisory at Stifel Independent Advisors, agrees that the CFA designation is valuable for his team members to aspire to or to already have, when being hired, and throughout their career with KWM Wealth Advisory. That said, designations and certifications such as CFA, CFP, and college degrees, as well as life accomplishments, are “desired although never required” at KWM Wealth Advisory.

“Life, as demonstrated in many ways, such as by those who run and founded the largest corporations, to the people who accomplish the world's most impactful milestones, often never completed formal education or credentials,” Sanchez said. “The most important criteria KWM Wealth Advisory looks for is the will to do and be better than great, and most importantly, to become meaningful in the lives of others, and this can be demonstrated in many ways.”

The designation, or pursuit of it, is an important factor for certain positions, said Steve Wruble, director of portfolio solutions at Amplify Technology and a CFA Charterholder. Earning the charter demonstrates robust expertise and experience in the wide field of analysis, markets, structures, and portfolio management, he said.  

“When I took the exams, levels two and three were only given once per year, whereas currently there are four opportunities for L1, three for L2, and two for L3.  Historical pass rates over the last 15 years average below 50 percent and if you look at level one, in particular, the pass rates weed out excess of candidates who may not take the program seriously,” Wruble said.

“In my experience, successfully navigating L2 and 3 required around 750 and 1,000 hours respectively," he said. "At the time I was in the very small group who were able to pass the exams on the first try for each. The point that I'm trying to make is that unlike other designations, the charter requires a material dedication, and in looking at employees, my opinion is that said dedication along with a full-time career illustrates work ethic and character.”