The chartered financial analyst (CFA) is an international professional designation offered through the CFA Institute, awarded following the completion of three exams. It is a prestigious title in the finance and investment sectors and should at least be considered by anyone interested in a career in corporate finance. The CFA is aworthwhile venture in some cases, while in other cases, it is more advisable to pursue a master's degree in business administration (MBA) or even a Chartered Alternative Investment Analyst (CAIA) designation.
It is not easy to earn the CFA title and the time, effort, and money required for the designation are substantial. It takes more than four years and under $5,000 to pass the tests. However, note that your employer might cover the costs or reimburse you after you pass the exams.
Corporate Finance in the CFA Exams
The CFA is broken into three levels, often called simply L1, L2, and L3. As of 2022, 8% to 12% of the first exam covered corporate finance topics. The second exam varies from year to year, but corporate finance topics typically cover between 5% and 10% of the exam. The third level often gets no corporate finance emphasis.
Portfolio Management, Equity Research, and Hedge Funds
As a general qualifier, the CFA designation never hurts. However, certain parts of the curriculum apply more to corporate finance careers than others. Corporate finance is a somewhat nebulous term, but the CFA exams cover typical areas in the field, such as working capital management, budgeting, leveraging, foreign exchange, and all associated research.
The CFA Institute has self-reporting data from its charter holders up to 2021. At that time, there were more than 167,000 charter holders. Twenty-five percent of global CFA professionals were portfolio managers, the most common profession. The second-highest reported job function was research analyst at 12% globally, followed by consulting, at 10%.
Hedge fund analysts often perform similar duties as equity researchers for big fund managers and a CFA designation can help the credentials of a professional trying to break into the buy-side of investing. This may or may not be considered corporate finance, depending on where the job is located. For example, corporate finance in the United States is often a synonym for financial planning, accounting, and analysis. However, in the United Kingdom, corporate finance extends further into investment banking or hedge fund activity.
Is Your Employer a Charter Holder?
Whether or not you pursue a CFA may depend on the company where you want to work. Suppose you want to work for a multibillion-dollar corporation or even a multinational with a sizable treasury department. If the treasurer for the company is a CFAcharter holder, which is more likely for large firms, then the CFA is potentially useful. Having this designation in your resume should help you against non-CFA candidates for career advancement, and the training involved with preparing for the CFA exam should help with advanced functions, such as foreign exchange transactions or international equity research, that larger firms tend to need.
The CFA curriculum is broad and not particularly deep. For many specialized professions, such as corporate accounting or capital financing, a more specific degree or designation might be more useful. For many corporate finance jobs, you might be better off with a master's degree in finance.
If You Are Just Starting Out
Many Fortune 500 finance and investment companies use the MBA as a filter for applicants. The MBA has higher costs and generally takes more total time to complete than the CFA. Furthermore, the total number and range of opportunities for young professionals with an MBA are much wider than for those with a CFA.
What Roles in Corporate Finance Are Applicable to the CFA?
There are many roles in corporate finance that a CFA helps prepare a candidate for, including research analysts, equity analysts, portfolio managers, chief financial officers, and corporate financial analysts.
What Corporate Finance Topics Does the CFA Cover?
The CFA covers a variety of corporate finance topics, such as budgeting, leveraging, portfolio management, working capital management, and foreign exchange.
What Are the Main Activities of Corporate Finance?
Generally speaking, corporate finance focuses on the activities that help maximize shareholder value in both the short and long term. Capital investment, taxation, and overseeing capital investment decisions are among the activities that fall under the corporate finance umbrella.
What Portion of the CFA Exam Is On Corporate Finance?
Across Level I and II of the CFA exams, corporate finance make up 8% to 12% of the total questions. There are no corporate finance questions for the Level III exam.
In the Level II exam, corporate finance questions will surround capital budgeting, corporate governance, capital structure, and mergers and acquisitions, among others.
FAQs
There are many roles in corporate finance that a CFA helps prepare a candidate for, including research analysts, equity analysts, portfolio managers, chief financial officers, and corporate financial analysts.
Is a CPA or CFA better for corporate finance? ›
The CPA is great if you want to rise up the finance department at a corporate business and ultimately become the CFO, or if you want to rise up the ranks at a public accounting firm. The CFA credential, by contrast, is great if you want to work at a bank and, in particular, in investment management or equity research.
Is CFA useful in finance? ›
According to the CFA Institute, this credential "is the professional standard of choice for more than 31,000 investment firms worldwide."1 It can be especially helpful if you don't have an undergraduate degree in finance, economics, or accounting, and your goal is a job or career in the finance industry.
Do CEOS have CFA? ›
The most common professions for those who hold the CFA designation are portfolio managers and research analysts, followed by a smaller percentage who work as chief executives and consultants.
Is CFA worth it for CFO? ›
If you're aiming to work in roles such as financial analysts, portfolio managers, or investment bankers, the CFA designation can be a valuable asset. However, if you want to pursue careers in other areas of finance, an alternative certification or qualification may be more relevant.
How much do CFA vs CFP make? ›
– The CFA Institute says a CFA charter holder can earn between $126,000 and $177,000. – Comparably.com data from Feb. 2023 shows the average CFP salary in the U.S. is $121,099. The total range is between $39,300 and $187,200.
Is CFA exam harder than CPA? ›
In that respect, the CFA certification is typically viewed as harder than the CPA because of the greater time commitment and work experience requirements.
Is CFA outdated? ›
The CFA Program was never mandatory, but many employers list it in job descriptions as a “preferred” qualification. The charter is a widely respected credential in the investment profession and is often supported financially by many top investment organizations for their employees to pursue.
What are the disadvantages of being a CFA? ›
The Time Needed to Complete It. Becoming a CFA is a huge investment in time, between studying for and taking the exams and logging the minimum 4,000 hours of experience required over 36 months. 8 You will sacrifice time with family and friends and the pursuit of hobbies you enjoy.
Is CFA the hardest finance exam? ›
The Chartered Financial Analyst credential is one of the most demanding exams on Earth when it comes to preparation and study time required. The average pass rate for the CFA Level 1 is only 41%. For Level 2, you're looking at a passage rate of 45%. And Level 3 is not much easier at 52%.
The CFA charter is widely respected, globally-recognized, and a difficult undertaking to accomplish.
What is the salary of a CFA? ›
In India, the average salary paid to a CFA is approximately Rs. 9, 00,000/-. Freshers are paid Rs. 50000/- per month in commercial cities like Gurgaon and Mumbai.
Do you need high IQ for CFA? ›
I'd figure that if you work hard, one would only need a 100-110 IQ. I don't think a high IQ will necessarily help you on the exam though, it's not like you are doing spatial reasoning problems or anything close to real mathematics.
Is CFA or MBA better? ›
Career aspirations: While there is certainly overlap in how business school graduates and charterholders apply their expertise, MBA programs are generally ideal for professionals who want to pursue management positions in any industry. A CFA designation suits professionals dedicated to working in the finance industry.
Is the CFA harder than the bar? ›
Considering their pass rates—approximately 50% for the CPA exams, around 13.5% for candidates completing all three levels of the CFA exams, and roughly 70% for the Florida bar—statistics would suggest that the CFA credential is in fact the hardest.
How much do CFA vs CPA make? ›
CFA vs CPA Salary: Everything You Need to Know. The average salary for a CFA charterholder ranges anywhere from $51,000 to over $274,000, while CPAs may earn an annual salary ranging from $50,000 to upwards of $240,000.
Is a CPA worth it in corporate accounting? ›
The salary difference between a licensed CPA and an unlicensed accountant throughout a career could be hundreds of thousands of dollars. Moreover, the license is so desirable that accountants can use it as leverage for raises outside the typical pay raise windows.
Is corporate finance harder than accounting? ›
Generally speaking, people consider accounting majors to be more difficult to study and pass than finance majors. And there are a few different reasons for this. The content of accounting majors is, on average, much more technical than for finance majors, and this can make it more difficult.
Should I get my CPA and CFA? ›
The CPA and CFA combination is best suited if you plan to work in the research department within investment banks, hedge funds, and mutual funds or plan to hold another job in the investment or finance community.
Is CPA worth it for finance? ›
It validates a general understanding of accounting and finance topics, and it opens a lot of doors in both the private and public sectors. It is not an easy exam, and relatively expensive to take, study for, and pass. It is absolutely worth it. You will see that many Controllers and CFOs are CPAs.
