I receive a lot of questions about the CFA. Is it worth it or not when we want to work in investment banking?
Since so many students are asking me this question, I decided to write an article about it to share my views.
Now, before you read any further, bear in mind that this article is somehow controversial. And if you’re a die hard fan of the CFA, you’ll probably get offended.
If that’s the case, be aware that the goal is not to offend students, but to give them an honest, rational view on the merits of the CFA, after having spent over 4 years at top-tier investment banks and hedge funds.
Since it’s my job to help students obtain the finance offer of their highest ambitions, I think I now have a very good idea of the reasons why they choose to pursue the CFA…
In most cases, students study for the CFA for a simple reason: to give their resume a little boost, hoping that it will help them break into the most prestigious financial firms.
For instance, many students who have average or mediocre grades, coming from less known schools, often want to use the CFA as a way to add some kind of academic stamp on their profile, to improve the way they are perceived by finance recruiters. To add a little bit of makeup to the bride, so to speak.
Some students claim to study the CFA just for learning purposes, that is, to accumulate financial knowledge. But that’s rarely the primary reason they’re doing it.
And there is nothing with that. When I was a student, I also enrolled into the CFA programme, because I believed it would have facilitated my internship research at the time. And it did, to some degree, but not as much as I thought…
Some students seem to think that passing the CFA exam will magically open the investment banking doors to them, as if it was some kind of gold standard venerated by bankers and recruiters alike.
Except it doesn’t work like that. Sorry to break it to you, but if you can’t get any interviews at top-tier investment banks right now, studying for the CFA won’t make that much of a difference, for specific reasons that I explain below…
In reality, the CFA is not that useful, especially for investment banking roles. I’ve met dozens of senior investment bankers while working at GS and Lazard, and none of them had the CFA.
And there’s a very logical reason for that: the knowledge you learn as part of the CFA programme is not really useful for investment banking. There’s limited overlap.
Skills that are valued in investment banking include: strong financial modeling skills, a professional demeanor, an ability to work accurately under high pressure, and good teamwork skills.
The CFA doesn’t really help with that. It’s more about learning abstract academic knowledge instead of real-life practical competencies that are useful in IB.
So showing your involvement with the CFA won’t magically make GS IB interviews fall on your laps.
Why should you listen to me? Because I’ve worked in this industry for over 4 years. And because I studied for the CFA myself. While passing the CFA Level 1 did help me expand and refine my financial knowledge, it didn’t really help me to get more interviews in finance.
All the interviews I was able to get were secured via networking, building extra-curricular experience, and optimizing my CV using feedback from industry insiders.
If I had to do it again, I think I would have spent less time studying for the CFA, and more time focusing on what really matters to get a job in this industry (networking, CV building, cold emailing, interview prep, etc.).
Now, there is a follow-up question that I often get from students: if having the CFA certificate is not that helpful for IB, is it still worthwhile to at least pass the CFA Level 1 to demonstrate my interest in finance?
That’s a great question, and in some cases, it may indeed be a good idea to study for the CFA. I explain these select cases below.
In my experience, the CFA is particularly useful in those cases:
Many investment professionals working at Fidelity or Blackrock for instance have the CFA, and employees working at these firms are often strongly advised to get their CFA (notably for marketing purposes).
As such, if you want to work in asset management, passing several levels of the CFA may attract recruiters and give a solid boost to your resume.
Same thing for Equity Research: it is very frequent to see top research analysts with the CFA, showing that the certification is highly respected within the ER industry (both buy-side and sell-side).
If Equity Research seems like an interesting career path to you, investing your time in the preparation of the CFA might be a good idea.
Finally, enrolling in the CFA programme may also be useful if you’ve never studied finance in your life and you wish to expand your financial knowledge.
If you have a degree in history and would like to break into finance, studying for the CFA can help you improve your financial literacy relatively quickly.
That being said, I think it may not be the most time-effective way to learn about finance, given how time-consuming the CFA is.
There are other shorter, more focused courses that can enable you to develop strong foundational knowledge without having to spend hundreds of hours in textbooks. For a list of recommended courses for investment banking, check out this page.
Now, before you decide if you want to go ahead with the CFA or not, let’s put things into perspective:
It takes at least 900 hours to pass the three levels of the CFA, assuming that you pass all levels on the first attempt (only a tiny percentage of candidates manage to do that).
900 hours is enough time to:
All of those things would help you more in your job research than the CFA, especially if you’re after IB roles.
Bottom line: The utility of the CFA when it comes to helping you get a job in IB is highly overestimated.
I’m telling you, the most important factors that will help you get a job, far more powerful than the CFA, are: cold-emailing, networking, and relationship-building with investment bankers and senior finance professionals.
I’d suggest spending your time on that instead of the CFA, unless you have a lot of time on your hands and you are 100% you want to build a career in Equity research or Asset Management.
If you want to learn my most powerful techniques to land interviews in investment banking, have a look at this page.
Aurelian Tran is the founder of Alpha Lane and an ex-Goldman Sachs analyst who has spent 4+ years working in the investment banking industry.
He founded Alpha Lane to help students and young professionals achieve their highest professional ambitions, by securing offers at top-tier financial institutions.
@2022 Alpha-Lane. All rights reserved.
