While Ivy League MBAs Impress, Hottest Three Letters Are CFA

Korman Tam is a currency exchange specialist at MGForex. He frequently appears as an analyst on CNBC and his commentary shows up in stories on the Bloomberg and Reuters.

But even with that type of sought-after expertise, the 27-year-old Mr. Tam plans to spend every weekend for the next five months in the library. "Not very exciting," he said with a smile.

Mr. Tam, like many young professionals, think that these days having a CFA after your name — Chartered Financial Analyst — is the best way to give one's career a shot in the arm and make the big money on Wall Street. In Mr. Tam's case, he's studying for a Level 2 (of 3) designation.

Make no mistake about it: At the latest gathering at the New York Society of Security Analysts, the buzz isn't about getting an Ivy League MBA or taking the CPA examination. It's the CFA.

"You've decided to set yourselves apart — it's an arduous path, but well worth it," the NYSSA's executive director, Alvin Kressler, told the audience as if they were ready to be ordained into the College of Cardinals.

These young turks and an estimated 120,000 others like them around the world will in the next year spend six months studying for any one of the three exams that lead to the CFA title and the better salary and career prospects that presumably come with it.

The number of candidates for the CFA title worldwide has risen 15% annually since 1990, to some 120,000 people this year alone. The surge stems from the CFA Institute's efforts to rebrand itself and appeal to investment professionals beyond the usual suspects of just analysts and portfolio managers.

In the last month, the institute added more leading business schools to the list of MBA programs that integrate the CFA curriculum into their own.

"We have a terrific brand, but the word analyst in the title is unfortunate," the managing director of the CFA program, Robert Johnson, said, calling the CFA an "investment generalist credential." Two years ago, the Institute changed its name from the Association for Investment Management and Research in an effort to make that point clear.

There are already 50,000 CFAs in America, including 9,500 in the New York City. But the institute estimates they represent only 28% of potential CFAs, meaning it wants to reach up to another 200,000 investment professionals out there, mostly traders, investment relations officers, and others who haven't traditionally pursued the title. That push has led some to question its motives.

One San Francisco-based CFA, who declined to provide his real name but posts numerous messages under the name "sfca" on the Web site Nuclearphynance.com, dismissed the institute as a "certificate mill."

What's more, he thinks the institute's push for more candidates "degrades the value" of the CFA and is just a way to generate more revenue.

The most recent batch of CFAs this year brought the worldwide total to over 80,000 chart holders, up about 17% in just one year.

And getting the charter is about to get harder: Starting next year, candidates will have to have four years of professional experience in the investments field instead of three, on top of passing a curriculum observers say is getting more difficult and now includes more coverage of alternative investments and derivatives.

Despite its rising popularity and the institute's wish to see the designation expand to other investment professionals, in New York, according to NYSSA statistics, the bulk of CFAs remain analysts and portfolio managers. Only 10% are traders.

Even though he's a proponent of the CFA, Sidney C. Hardee, a vice president at JP Morgan Securities' credit markets division, said he doesn't think it is valuable for everyone. "You don't need the CFA for credit derivative trading and it is not as relevant for institutional sales," said the 41 year old, himself a CFA since 2001.

Over at Goldman Sachs, it's the same story. It is mostly investment research and investment managers who hold the designation, although it is not a requirement.

Still, there is no denying the pull of getting that CFA.A 2005 compensation survey by the CFA Institute found (surprise!) that a CFA earns on average 54% more than investment analysts with comparable experience, with a median salary of $180,000.

And judging by job advertisements in business publications, the title has gone from being an advantage to being a requirement for many jobs in finance. Mr. Hardee said that trend has accelerated noticeably in the past five years. "Getting a CFA is becoming a criterion to weed people out," he said.

At JP Morgan, even mid-career professionals with significant experience have had to hit the CFA study books again if they want to stay on their career track, he said.

Scott Silverberg, 30, one of the attendees at the NYSSA session, is just about to start a new job at a credit rating agency in Manhattan. "[The CFA] came up a lot in interviews," he said.

Getting that CFA is not for the faint of heart. Only one person in five who signs up for the Level 1 exams in December and June — about 8,000 candidates in New York City — will eventually get the title. The passing rate for Level 1 was 40% last year, and 52% for all three levels combined.

The average person needs four attempts to pass all three levels, spending about 250 hours to prepare for each test, not including the pricey preparatory courses many candidates take to stack the odds in their favor. Courses range from $700 for a three-hour review of, say, financial statement analysis, to $2,000 for an intensive weeklong retreat. (Which leads us to ask: Retreat from what?)

It used to be that getting an Ivy League MBA was the key to landing a lucrative Wall Street job. Now it seems adding a CFA to that distinction is the wining formula.

According to the CFA Institute's survey, a CFA with 10 years of experience makes 18% more than someone with an MBA only, but those with both credentials make 8% more than a CFA alone, and 25% more than an MBA.

The institute estimates that 60% of charter holders also have a graduate degree, including an MBA.