+- Accountancy Forum (https://www.accountancy.com.pk/forum)
+-- Forum: The Profession (https://www.accountancy.com.pk/forum/forumdisplay.php?fid=4)
+--- Forum: Students (https://www.accountancy.com.pk/forum/forumdisplay.php?fid=13)
+--- Thread: CFA relative to Accouting Certifications (/showthread.php?tid=9370)
CFA relative to Accouting Certifications - arif_irfanullah - 01-10-2011
In this article I will address the fundamental question of who should pursue the CFA. I will also talk about the CFA relative other popular finance and accounting certifications.
Many people wonder how much education is necessary to enter the CFA Program and whether a finance background is necessary. This is addressed on the CFA website
To enroll in the CFA Program and register for your first exam, you must meet the entrance requirements
Have a bachelor's (or equivalent) degree
- or be in the final year of your bachelor's degree program at the time of registration
- or have four years of qualified, professional work experience
- or have a combination of work and college experience that totals at least four years (Note Summer, part-time, and internship positions do not qualify)
Taking a Pakistan-specific issue, some of my students have entered the CFA program after completing their B Com degree. From this we can conclude that the CFA Institute implicitly treats B Com as equivalent to the bachelorâs degree. In terms of whether a finance background is necessary, the simple answer is âNoâ. The course material does not assume prior knowledge of finance and economics. Hence engineers, IT professionals and others can enter the CFA program.
With the eligibility criteria now clear, let us explore the more subjective area of who should enter the CFA Program. The CFA is a logical choice if you are interested in careers which involve investment analysis. Examples of such occupations include treasury management, pension fund management, equity research and asset management, just to name a few. The CFA also make sense if you are a non-finance professional at a financial institution, such as a large bank, and want to move to the business side. For instance, imagine you are an IT consultant implementing a Treasury Management System at UBL and decide that you want to switch from IT to Treasury. Pursuing the CFA will certainly help with the career change.
While the CFA is logical in the above example, this does not mean that it is the only certification for any finance career. There are several other qualifications such as FRM, CIMA and CA, just to name a few. The certifications and qualifications you pursue should be in line with your interests and career aspirations. As an example the increasingly popular Financial Risk Management (FRM) certification makes sense for people who are committed to an international career in risk management for financial institutions. I emphasize âinternational careerâ because FRM goes into depths of material that is seldom relevant in the Pakistani market. FRMâs emphasis on credit risk, market risk and operational risk highlights the focus on risk management for financial institutions. While FRM is growing in popularity it still lags behind the CFA in terms of global recognition. In browsing through job postings phrases like âCFA requiredâ or âCFA recommendedâ overshadow reference to FRM. To learn more about FRM visit www.garp.org.
If you are interested in climbing the corporate ladder at large non-financial companies (FMCGs, Oil and Gas, etc.) the CFA is probably not the obvious choice even if you wish to focus on the financial side of such organizations. Qualifications such as CA and CIMA will be considerably more useful in this case. The CA (Chartered Accountancy) is a rigorous, competitive and globally respected finance program. Personally I find the term âChartered Accountancyâ slightly misleading because there is a lot more to the CA than accountancy. While training to become a Chartered Accountant one receives a well-rounded education in business, economics, corporate finance, auditing, taxation, management, corporate governance and information systems. Chartered Accountancy is the logical choice for those who want to build a career at accounting/auditing firms like PwC and E&Y. CAs are also sought after in finance/accounting departments at local and multi-nationals companies. Many chief financial officers and even some chief executive officers have a CA background.
Another certification which has been gaining ground is CIMA. CIMA stands for Chartered Institute of Management Accountants and is the worldâs largest professional body of management accountants. CIMA focuses on the use of finance as a strategic management tool. Hence if you are interested in the finance track at large multi-nationals, CIMA is an appropriate choice. To learn more about CIMA visit www.cimaglobal.com. A comparison of CIMA with other finance and accounting certifications is available at www.cimaglobal.com/Documents/ImportedDocuments/White_paper_linked.pdf. When reading this report keep in mind that it was sponsored by CIMA.
In summary then, do not simply enter the CFA program because that is what your friends are doing. Your decision should be based on your career aspirations. If your current or future line of work is in the financial services industry and involves some form of investment analysis, the CFA make sense. If not then you should look elsewhere.
For this and other articles visit www.arifirfanullah.com
- arif_irfanullah - 01-10-2011
CFA Benefits
By Arif Irfanullah
The general benefits of taking (and passing) the CFA exams are described on the CFA Institute website (www.cfainstitute.org/cfaprogram/benefits). In this space Iâll make a few points specific to candidates from Pakistan.
If you are in the finance industry and have aspirations of working abroad, you should consider enrolling in the CFA program because it is a globally recognized certification. Even if youâve graduated from a well know university in Pakistan, it is unlikely that finance professionals outside Pakistan have heard of your institution. On the other hand, almost everyone in the global financial industry knows about the CFA! In fact, many organizations look favorably on candidates who have simply cleared Level I. Successfully completing the first level will not guarantee a job or a promotion, but it will certainly improve your chances relative to someone who is not pursuing the CFA. Even employers in Pakistan are paying increasing importance to the CFA. I expect this trend to continue and predict that the CFA will evolve from a ânice to haveâ to a âmust haveâ for jobs related to treasury management, brokerage, security research and investment management in general.
Technologies such as the Internet and low cost video conferencing are fueling the growth of knowledge outsourcing. It is only a matter of time before this trend impacts the brokerage and investment research industry. I foresee CFAs sitting in Karachi and Lahore working for brokerage houses in Singapore, London, Frankfurt and New York. A Pakistani graduate with a CFA will probably be just as good at analyzing financial statements as an Imperial graduate working in London. The only difference is that the Pakistani analyst will cost a fraction of the London-based analyst. This does not mean that all financial analysis will move to low cost locations. Most analysis will continue to happen from the central offices of firms. However, I believe well defined work such as financial statement analysis will eventually be outsourced. When this happens, professionals with a CFA under their belt will benefit.
While many Pakistanis focus on tangibles like international job opportunities, promotions and salary increments, the most significant benefits of the CFA are intangible. The principal advantage is the wealth of knowledge you will gain. The CFA Institute has a rigorous and sophisticated curriculum development process which relies on input from practitioners and leading authorities in their respective fields. As an example the fixed income segment has been primarily authored by Frank Fabozzi (www.frankfabozzi.com) who is currently one of the most well know experts on fixed income analysis. The curriculum is updated every year which ensures that it remains current and relevant. A very appropriate compliment for the CFA curriculum comes from Mr. David Harper who says âI think this six-volume set for Level I is just about the best, most well-organized introduction to finance that you can find anywhere. If you could take only one finance text on your desert island sabbatical, I think it should be the Level I CFA readings.â
The fact that studying for the CFA will enhance your knowledge is clear to all. What might not be so evident is that preparing for the CFA also develops and sharpens your brain by creating new pathways of understanding. This is because many Pakistanis have grown up in an education system which emphasizes rote learning. While memorizing facts has its role in the CFA, considerable emphasis is placed on understanding concepts and applying them. Furthermore, the CFA exam does not give you the luxury of time. On the Level I exam you only have an average of 90 seconds per question. This forces your brain to become fast and nimble!
This article has focused on the tangible and intangible benefits of the CFA. In the next article I will discuss the challenges associated with embanking on the CFA journey. I will also share my thoughts on who should and who should not attempt the CFA.
To view this and other articles visit www.arifirfanullah.com.