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    Hello everyone and welcome to another interesting article that discusses how to become a licensed chartered financial analyst.

    While you can practice without being licensed, you need to boost your credibility within the industry.

    Being licensed will also help you improve your skills as well as your efficiency.

    By the end of this article on CFA Certification and License, you will have come to understand everything there is to know about the journey to being a licensed CFA.

    Here are the main points we will cover in this article:

    The requirements for being CFA certified
    The certification exam
    How to become a member of the CFA institute
    Getting your license to practice

    Let’s go straight to the business of the day!

    CFA certification requirements

    We understand that you’re pursuing a CFA license and we sincerely wish that you get it.

    However, keep in mind that there are steps that must be fulfilled.

    Here is how the entire process works:

    You meet the eligibility check for writing the certification exam, you pass the exam, get certified, and you can have your license to practice as a chartered financial analyst.

    You must have completed your bachelor’s degree or its equivalent before being eligible to write the CFA exam.

    Alternatively, you could also qualify to write the CFA exam if you are in the final year of your bachelor’s program.

    While you can write the Level I CFA exam in the final year of your bachelor’s program, you must have completed the entire program before you can write the Level II CFA exam.

    If you are in school and you are not sure if your program is going to earn you a university degree, you can speak to your college or university administrator to find out if it is equivalent to the degree.

    The CFA institute will request a copy of our degree or any other supporting documentation. This way, they can validate the result you told them you have earned.

    Many have found that taking the level I exam as a student affords them the opportunity to prepare well for the exam.

    They are better equipped for success than working-class citizens who want to write the exam.

    However, keep in mind that if you decide to write the exam as a student, you will have to sacrifice extra-curricular activities.

    If you are enrolling for the exam, be ready to devote time to quality preparation.

    You must pass the exam if you will stand any chance of getting your CFA certification and license.

    CFA work experience requirements

    It is not just about your education; another thing that qualifies you for the CFA exam is your professional work background or experience.

    The work must be full time and the start date of any of the jobs should not overlap with the time you are still in school studying.

    Not all jobs count with CFA; experience gathered in the financial market and any other skill that shows that you have sound judgment and great business ideas will make the cut with the CFA Institute.

    Here are other skills that are of interest to CFA:

    • Time management skills
    • Critical thinking to solve business problems
    • Analytical outlook
    • Leadership skills
    • Ability to work in a team
    • Good financial judgment
    • Adaptability

    Think about any job you have been on in the past that highlights one or more of the mentioned skills.

    Add them, and any award of excellence received during your time there. These minor details matter to the CFA Institute.

    If you are doing professional work at a family business, it counts.

    Paid interns also qualify.

    But no matter what work experience you list, CFA will require proof of that work experience when registering for the exam.

    These proofs include employment letters, payment slips, or other work-related documentation.

    Other requirements

    Even after meeting the education and work experience requirement, there are some things you must also have in addition.

    Here they are:

    • An international passport that is not expiring in 6 months
    • A language assessment in English
    • Meet the language admission criteria
    • Must be a resident of a participating country

    How to register and the exam fee

    If after finding out that you have all it takes to satisfy CFA eligibility, go ahead and register for the Level I exam.

    You can register for the CFA exam electronically on the CFA institute’s website.

    To register for the CFA program, an applicant must pay a one-time enrollment fee of $450.

    Each of the three exams also costs $1000, meaning if you are making a budget for all the exams plus the registration fees, you should budget $3,450.

    Here is another trick, you can save some funds (up to $300) if you register 4 months before the exam.

    This is because instead of the $1,000 per exam, you will pay $700.

    If for any reason you won’t be available to write the exam on the exam date, you will pay an additional $25 for rescheduling.

    CFA program exam structure

    The CFA exam is in three stages, with each state or level focusing on a specific area of the curriculum.

    Although the exam was formerly longer, the entire duration has been reduced to just five and a half hours.

    This was recommended by an independent psychometric research team, stating that the exam should be shorter yet not any less comprehensive.

    The five and a half hours are subdivided for each exam as follows:

    • 135 minutes for the first session
    • 135 minutes for the second session
    • 30 minutes for the pledge, the tutorial, and the survey
    • 30 minutes of break

    Let’s take a closer look at the curriculum and the format of the CFA exam:

    CFA Level I Exam

    The main focus of the level: To test your knowledge of the ethics of financial reporting and analysis.

    Other objectives: To test your understanding and application of the founding principle of various financial initiatives.

    What to expect: You will be expected to answer 180 multiple choice questions, which are divided into two parts, each allotted a 135 minutes window.

    Overview: The level I exam is held twice every year, usually in June and December. You will be tested in the 10 topic areas. The areas are:

    • Economics
    • Fixed income
    • Portfolio management
    • Equity investments
    • Quantitative methods
    • Derivatives
    • Ethical and professional standards
    • Alternative investments
    • Wealth planning
    • Financial reporting and analysis

    The exam comprises 240 multiple choice questions that must be answered within 6 hours.

    The average pass rate for the CFA level I exam is 40%

    CFA Level II Exam

    The main focus of the level: To test your knowledge of financial reporting and financial analysis. It also evaluates your understanding of fixed income and equity investments.

    Other objectives: Some more advanced application of basic financial principles. A little bit on how to analyze financial situations and the synthesis of some industry material.

    What to expect: Multiple-choice question format.

    Overview: The level II CFA exam is held just once every year, usually in June. The focus is mostly on every facet of assets and the use of investment tools in various real-life scenarios.

    The exam questions are based on the International Financial Reporting Standards (IFRS).

    There are 120 multiple choice questions in all, subdivided into 21 sets of six questions each.

    According to the CFA Institute, the average pass rate of the CFA level II exam is 45%. 

    CFA Level III Exam

    The main focus of the level: To test your knowledge of wealth planning and portfolio management.

    Other objectives: A more advanced analysis and application of industrial materials in various dire financial scenarios.

    What to expect: multiple choice question format and some response questions.

    Overview: Just like with the Level II exam, this exam is also held once every year in June.

    The exam comprises both the essay part and the multiple-choice questions.

    There are between 8 to 12 essay questions based on real-life situations within the industry and also 10 multiple-choice questions.

    Both the multiple-choice part and the essay section must be completed within 6 hours as usual.

    The essay section is usually handwritten and also graded manually.

    The CFA level III exam has the highest pass rate of the three CFA exam Levels with a pass rate of 56%.

    Note: You must pass one level before you are eligible to take the next level.

    That means you must present your result for the level I exam as proof that you are all clear to take the next.

    So, it is in the order of Level I < Level II < Level III

    CFA Exam Curriculum Topics

    According to the CFA Institute (the nonprofit body that awards the CFA certificate), all applicants will be tested on the following topics:

    • Economics
    • Portfolio management
    • Fixed income
    • Equity investments
    • Ethics and professional standards
    • Corporate finance
    • Derivatives
    • Alternative investments
    • Wealth planning
    • Financial reporting and analysis
    • Financial analysis
    • Quantitative methods

    Although some topics may be peculiar to some levels, all the questions in the entire exam will reflect all the topics mentioned above.

    Exam candidates are advised to try the online practice questions on the CFA website in preparation for each exam.

    All the exams are computer-based.

    Each year, registration for the exams will be open four times, however, you can only register to take the exam twice in that year.

    The CFA institute states that there must be a 6 months period between a failed exam and a retake by a candidate.

    Get your study plan right

    The three CFA exam Levels can take between four to five years to complete.

    So successful candidates will have to put in about 300 hours of study for each Level.

    Having a plan is important, and your plan should include the following:

    • Start early and allocate enough time to studying for the exam
    • Devote at least 15 hours each week in order to reach the projected 300 hours a week
    • Time and unforeseen events can happen, so make sure you make provisions for it
    • Do not procrastinate, track your progress and progressively increase your knowledge

    You can use a reputable CFA prep course from an approved provider. These prep courses are taught by experts within the industry.

    Most of the prep course comes with a personalized study guide and practice questions to better equip you for what’s to come.

    The exam is difficult, however, you can come off victorious with proper preparation.

    The CFA institute has over 164,000 charter holders, financial professionals, and portfolio managers in more than 150 countries around the world.

    The goal is to promote education within the investment industry as well as ethical and professional standards.

    After meeting the requirements, and having passed all three exams in sequential order, you will then become a member of the CFA Institute.

    As a member, you will be required to pay annual dues.

    You will also be required to adhere strictly to the Institute’s code of conduct and standards for conducting investment analysis.

    A deliberate attempt to flout these rules will automatically result in the revoking of the certificate and a lifetime ban on your duties as a certified financial analyst.

    Membership in the CFA institute

    This is the final part of the certification process.

    Once you have successfully completed every other eligibility requirement, you will then be designated with the title of being a member of the CFA Institute.

    You must follow these five steps to finalize your membership with the institute:

    • Submit an application to become a member of the CFA Institute. This includes meeting all requirements and submitting some professional references
    • Next, you must activate your membership
    • Pay the membership fee of $250. Note that to maintain your membership, this fee is paid annually
    • Fill out and submit the membership agreement and the professional conduct statement
    • Proceed to join the CFA society

    How bagging your certificate can help your career

    Apart from the opportunity to improve your skills and widen your scope of practice, bagging your CFA certificate is one favor you can do yourself.

    It stands you out from among your contemporaries and makes you a force to be reckoned with in the industry.

    It helps clients and colleagues understand your advanced knowledge of investment analysis, professional ethical standards, and portfolio management.

    Apart from all these, you are guaranteed a better job with nicer work environments and of course better pay.

    Your career paths will improve a lot and your skills will be sharpened with every attempt at solving a real-life financial problem.

    You can better serve your clients and guarantee them a better result each time they either consult or employ your services.

    How to get your CFA license

    Now that you have gotten your certification and are now a member of the CFA Institute, there is one final hurdle: the state CFA program.

    This requirement differs from state to state but one thing is common, you must undergo a state-sponsored training, sit for the state’s CFA exam, pass the exam and receive your license to practice.

    The exam convinces the state that you are indeed qualified to take on this role.

    It verifies your competence in investment analysis.

    In the United States, each state has the right to determine its set of regulations, however, the exam is general in most states.

    On passing the state CFA exam, you are now free to practice in the state where you took the state exam.

    If you desire to practice in another state, you may need to write the state-sponsored CFA exam in that state.

    Conclusion

    Life is in stages, and so is your journey to earning your CFA certification and license. This article has prepared you for what is to come your way.

    Remember, you need your certification from the CFA institute first before getting a state license to practice.

    The entire process is really not cumbersome as long as you can follow the steps highlighted in this well-researched article.

    Don’t attempt skipping the steps and don’t allow too much time in between steps, especially with the education requirements.

    Are you in school? Here is your chance to boost your career very early in life.

    Are you already in the industry but willing to add to your credibility? You can arrange your affairs so that you can get certified and licensed.

    With proper preparation, you too can surmount the hurdle.

    As a kind reminder, the exams are difficult, but all passable.

    Maybe this can be the start of something new in your chosen career as a certified financial analyst.

    FAQs

    References

    Investopedia

    Efficient Learning

    Accounting.com

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