I have the same feeling, I’m a long term member of the organization. And I even took one of their new certificates, the ESG certification. That certificate was unfortunately highly dogmatic, designed to pass the exam, and probably driven by a business opportunity rather than connecting ESG issues and investing (1 out 9 chapters were ESG related). I find that appalling.
Not to mention the salaries they draw for something that should be an honorable assignment.
They just recently sent out a (panicky) e-mail to try and increase enrollment in the CFA exams (?) that came off more as an MLM pitch than anything. But it really just showed the Institute's true colours and focus. All they seem to care about is empire building.
They've also completely failed when it comes to policing their own members and what they say publicly. This has been a huge problem over the last couple of years and some high profile members have deliberately spread misinformation (repeatedly) to drive engagement to their own "brands". I've reported a number of these individuals and provided dozens of tweets and other social media posts as evidence and yet nothing has ever happened to them.
Thank you for this candid post. I had been thinking of this but not yet brave enough - but energised by your comments. Of course I would know if I listened to my son starting his career in finance, none of his peers will sit the exams. 37% is the pass rate I hear. Know 25% of the course really well and throw darts at the rest of the questions. And the academics that encouraged students (I still do career talks and I lecture at 3 ‘partner’ unis) feel let down by lack of contact and no research challenge. I am responsible for encouraging colleagues also to keep membership, but no longer feel I can advocate. I know you have put in immense work and thought to build CFAI and its research but it’s not the same organisation. There was a vision to be more of a professional body but it’s commercial now and we don’t need a not-for-profit to do that. Not enough on the board or leadership with real world buy side experience to relate to the membership. Not many sell-side practitioners either. I have 4 professional memberships and CFAI stands out as the one that didn’t adapt. No direct engagement with the majority of the membership by its leadership. I just feel sad but five years ago I feared this might happen. Membership of any organisation, much like being a citizen or bank customer, is an exchange of credit. Demonstrating value in that should be an easy win for an organisation. You certainly were a net contributor in that reputational exchange and it’s diminished by your departure.
I definitely agree with your observations that the CFA is more of a credentialling institution. But... it's still immensely valuable to early-career folks and those that want to break into investing. It's valuable for employers because they can 'outsource' the training curriculum, and the industry continues to put a lot of weight on it when hiring less experienced professionals. Viewed that way, it still has some value and perhaps was the right business decision, though at the detriment of their overall mission (one can argue that's the same way universities have become).
Perhaps a model that they should consider is by breaking out the credentialling bit from the other bits - i.e. there are members who 'have passed the exams' and then there are members who are active contributors/participants in the investment community.
Thank you for these candid comments, Joachim. I for one am certainly sad to see you go. I was enjoying our conversations at the annual conferences too much not to, and I hope we can go back to that when (!) they come back. As somebody who has been deeply involved with CFA Institute, you know as well as I do that it doesn‘t beat speed records at making changes when they are not absolutely vital, such as the Covid induced ones.
You‘re quite right: CFA Institute is no longer what it used to be - nor is the industry. The old model was relying on accelerating growth of the candidate base for its resources. That growth base is no longer available, not least for geopolitical reasons, but also because the perception of relevance changes. If CFA Institute wants to continue to play the role given by its mission statement, it has to make its business model sustainable to harness the required resources. And yes, you can always second-guess this or that decision made along the way - I sure don‘t agree with them all.
Nevertheless, I‘ve started my new volunteer role as PCR for Western Europe coinciding with your lapsing membership and I‘m happy to find CFA societies essentially onboard with adapting the model to the changing environment in order to ramp up the value proposition for existing and future members alike. We (that is the entire system of CFA Institute and societies) certainly have our work cut out for us to bring you back on board!
Thanks for the post. All these comments are about CFAI (where I have been an active volunteer for 25+ years), but I really appreciated your call-out of the data mining potential. How can a study of 24 trading days over a period of 8 years (quarterly 32 earnings periods, 38 thousand S&P Global Index member announcements) be a fair representation?
In CFAI, I've been grading Level 3 exams since 2001. Since Covid it's been virtual, and a *much* worse experience for the graders. I still believe the CFA credential has value, especially as an affordable alternative to B-school and as a powerful collation of the best investment writing. I don't know of any other institution that summarizes and publishes a Global Body of Investment Knowledge and creates a curated list of the material necessary to achieve a level of competence. My own feelings about CFAI is that it's better to be part of the institution and advocate for reform, but each to their own.
Your personal contributions to this corpus have been material. You will be sorely missed.
Thanks David. Not sure if this is a criticism of me writing about dropping the CFA, but I no longer claim to be a CFA charterholder, nor do I use the fact that I used to be one anywhere. I agree with you, if you want to benefit form the three letter then you should pay your dues and be ethical about it.
But reading through your post, I have some bad news for you. I know that there are plans to significantly reform the CFA exams and make them more relevant to the actual job experience of candidates. That may mean getting rid of the 'basics' in the curriculum like econ or learning how a DCF works and turning them into a pre-requisite that is not taught anymore. Not sure whether that is a good or bad thing
This is very interesting feedback, I appreciate your candor. I have roughly 7 years in the industry working on both sell side trading desks and buy side PM, I was encouraged to sign up for Level 1 of the exam for this Feb. After getting the material and seeing the recommended study time, I am struggling with the opportunity costs to get the credentials. Studying for the recommended 100 hours, for a 37% pass rate, does not add up to me when that time could spent actually participating in the markets that the material is trying to teach you about. Aside from the opportunity costs, I am increasingly skeptical of the test after seeing its own ecosystem of run off businesses promoting study packages, material, and courses for $500+ that further insists this is the test you need as a financial professional.
Well, I still think people at the beginning of their careers should try to get a CFA. the reason is that it is a door opener in the sense that many HR people and potential future bosses use the CFA designation as a simple check that the candidate has the required body of knowledge to do well in a finance job.
Also, be aware that the 37% pass rate is a global average that is dragged down a lot by Chinese and other Asian candidates who struggle with the English language. In the US, the pass rate is more like 50%. And as for the cottage industry providers of study materials, I never used them. I bought the books in the official curriculum at the time (admittedly that was almost 20 years ago) and studies with them and it was no problem at all.
Besides, you should ask your employer to cover the costs for exams and studdy material. Normally they pay for it and take the cost off of your books.
I have the same feeling, I’m a long term member of the organization. And I even took one of their new certificates, the ESG certification. That certificate was unfortunately highly dogmatic, designed to pass the exam, and probably driven by a business opportunity rather than connecting ESG issues and investing (1 out 9 chapters were ESG related). I find that appalling.
Not to mention the salaries they draw for something that should be an honorable assignment.
I'm not a Boy Scout anymore, having left some time ago. As an over-50 yr old I can confirm that leaving didn't harm my career at all.
The CFA Institute definitely seems to have lost it's way. I'm on the fence whether to let my membership lapse next year or not.
They made fairly dramatic changes last year that flew under the radar (Chris Bloomstran led the fight to vote them down but the odds were heavily slanted in the CFA's favour) https://twitter.com/ChrisBloomstran/status/1546965288524079111
They just recently sent out a (panicky) e-mail to try and increase enrollment in the CFA exams (?) that came off more as an MLM pitch than anything. But it really just showed the Institute's true colours and focus. All they seem to care about is empire building.
They've also completely failed when it comes to policing their own members and what they say publicly. This has been a huge problem over the last couple of years and some high profile members have deliberately spread misinformation (repeatedly) to drive engagement to their own "brands". I've reported a number of these individuals and provided dozens of tweets and other social media posts as evidence and yet nothing has ever happened to them.
It seems the CFAI is more interested in increasing diversity than in upholding standards.
Thank you for this candid post. I had been thinking of this but not yet brave enough - but energised by your comments. Of course I would know if I listened to my son starting his career in finance, none of his peers will sit the exams. 37% is the pass rate I hear. Know 25% of the course really well and throw darts at the rest of the questions. And the academics that encouraged students (I still do career talks and I lecture at 3 ‘partner’ unis) feel let down by lack of contact and no research challenge. I am responsible for encouraging colleagues also to keep membership, but no longer feel I can advocate. I know you have put in immense work and thought to build CFAI and its research but it’s not the same organisation. There was a vision to be more of a professional body but it’s commercial now and we don’t need a not-for-profit to do that. Not enough on the board or leadership with real world buy side experience to relate to the membership. Not many sell-side practitioners either. I have 4 professional memberships and CFAI stands out as the one that didn’t adapt. No direct engagement with the majority of the membership by its leadership. I just feel sad but five years ago I feared this might happen. Membership of any organisation, much like being a citizen or bank customer, is an exchange of credit. Demonstrating value in that should be an easy win for an organisation. You certainly were a net contributor in that reputational exchange and it’s diminished by your departure.
I definitely agree with your observations that the CFA is more of a credentialling institution. But... it's still immensely valuable to early-career folks and those that want to break into investing. It's valuable for employers because they can 'outsource' the training curriculum, and the industry continues to put a lot of weight on it when hiring less experienced professionals. Viewed that way, it still has some value and perhaps was the right business decision, though at the detriment of their overall mission (one can argue that's the same way universities have become).
Perhaps a model that they should consider is by breaking out the credentialling bit from the other bits - i.e. there are members who 'have passed the exams' and then there are members who are active contributors/participants in the investment community.
Thank you for these candid comments, Joachim. I for one am certainly sad to see you go. I was enjoying our conversations at the annual conferences too much not to, and I hope we can go back to that when (!) they come back. As somebody who has been deeply involved with CFA Institute, you know as well as I do that it doesn‘t beat speed records at making changes when they are not absolutely vital, such as the Covid induced ones.
You‘re quite right: CFA Institute is no longer what it used to be - nor is the industry. The old model was relying on accelerating growth of the candidate base for its resources. That growth base is no longer available, not least for geopolitical reasons, but also because the perception of relevance changes. If CFA Institute wants to continue to play the role given by its mission statement, it has to make its business model sustainable to harness the required resources. And yes, you can always second-guess this or that decision made along the way - I sure don‘t agree with them all.
Nevertheless, I‘ve started my new volunteer role as PCR for Western Europe coinciding with your lapsing membership and I‘m happy to find CFA societies essentially onboard with adapting the model to the changing environment in order to ramp up the value proposition for existing and future members alike. We (that is the entire system of CFA Institute and societies) certainly have our work cut out for us to bring you back on board!
Thanks for the post. All these comments are about CFAI (where I have been an active volunteer for 25+ years), but I really appreciated your call-out of the data mining potential. How can a study of 24 trading days over a period of 8 years (quarterly 32 earnings periods, 38 thousand S&P Global Index member announcements) be a fair representation?
In CFAI, I've been grading Level 3 exams since 2001. Since Covid it's been virtual, and a *much* worse experience for the graders. I still believe the CFA credential has value, especially as an affordable alternative to B-school and as a powerful collation of the best investment writing. I don't know of any other institution that summarizes and publishes a Global Body of Investment Knowledge and creates a curated list of the material necessary to achieve a level of competence. My own feelings about CFAI is that it's better to be part of the institution and advocate for reform, but each to their own.
Your personal contributions to this corpus have been material. You will be sorely missed.
Here are my thoughts, Joachim:
https://alephblog.com/2022/12/14/the-value-of-a-cfa-charter-ethics/
Thanks David. Not sure if this is a criticism of me writing about dropping the CFA, but I no longer claim to be a CFA charterholder, nor do I use the fact that I used to be one anywhere. I agree with you, if you want to benefit form the three letter then you should pay your dues and be ethical about it.
But reading through your post, I have some bad news for you. I know that there are plans to significantly reform the CFA exams and make them more relevant to the actual job experience of candidates. That may mean getting rid of the 'basics' in the curriculum like econ or learning how a DCF works and turning them into a pre-requisite that is not taught anymore. Not sure whether that is a good or bad thing
This is very interesting feedback, I appreciate your candor. I have roughly 7 years in the industry working on both sell side trading desks and buy side PM, I was encouraged to sign up for Level 1 of the exam for this Feb. After getting the material and seeing the recommended study time, I am struggling with the opportunity costs to get the credentials. Studying for the recommended 100 hours, for a 37% pass rate, does not add up to me when that time could spent actually participating in the markets that the material is trying to teach you about. Aside from the opportunity costs, I am increasingly skeptical of the test after seeing its own ecosystem of run off businesses promoting study packages, material, and courses for $500+ that further insists this is the test you need as a financial professional.
Well, I still think people at the beginning of their careers should try to get a CFA. the reason is that it is a door opener in the sense that many HR people and potential future bosses use the CFA designation as a simple check that the candidate has the required body of knowledge to do well in a finance job.
Also, be aware that the 37% pass rate is a global average that is dragged down a lot by Chinese and other Asian candidates who struggle with the English language. In the US, the pass rate is more like 50%. And as for the cottage industry providers of study materials, I never used them. I bought the books in the official curriculum at the time (admittedly that was almost 20 years ago) and studies with them and it was no problem at all.
Besides, you should ask your employer to cover the costs for exams and studdy material. Normally they pay for it and take the cost off of your books.