Chartered Financial Analyst programme

Express (August 23, 2011)

The Chartered Financial Analyst (CFA) Institute has recently published the results of the CFA examinations. Twelve candidates from Bangladesh have passed the last (third) level of the examinations and qualified for receiving the CFA Charter. Numerous others have passed the first and second levels of the examinations on their way toward completion of the programme and toward receiving the coveted CFA designation. This is an extraordinary feat and an important achievement, and I will try to explain why.

As the financial services industry gains breadth and depth with the expansion of our economy, we increasingly feel the need for trained professionals. The challenges in this regard are two-fold. First, there is no universal standard to which professionals should be expected to be trained. After all, institutions within the same country differ in their standards and educational philosophies while training professionals. Second, it is a difficult task to train our professionals to attain global standards, especially in a country where education infrastructure is rudimentary at the best, and resources are scarce.

The CFA programme is an excellent solution in both these regards. Primarily aimed at training professionals in the investment management industry, the CFA programme has relevance for every facet of the financial services industry. Some argue that tools taught at the CFA programme are useful in analysing businesses at any role, whether or not it has any relevance to finance.

For those who are not familiar with the CFA programme, excerpts from an article in The Economist may prove helpful (http://www.economist.com/node/11511815). It states "(CFA) is increasingly seen as essential for those trying to get ahead in financial services…Unlike the well-known MBA degree, which usually requires a residential course, CFA students mostly study at home...(a candidate) says he was attracted by both the flexibility and affordability of the course; he receives a grant from his local CFA Institute to help him study…(but) this structure also means candidates need a lot of self-discipline…(another candidate) who is now chief executive of a hedge-fund group, says she studied from 8pm till midnight from three to four days a week with a further five to six hours at weekends…"

In essence, The Chartered Financial Analyst (CFA) designation is an international professional certification offered by the CFA Institute. CFA is a self-study course, deals with a number of study-areas, and is to be taken over a minimum of three years. Candidates pass three rigorous exams (according to The Economist, one of the most arduous tests of their lives) and fulfill relevant experience requirement to receive the CFA charter. Candidates must pass each of three six-hour exams, possess a bachelor's degree from an accredited institution and have 48 months of qualified, professional work experience. Study-areas cover core finance subjects as well as subjects that give a context in investment decision-making (economics, statistics, accounting). Ethics play a significant part not only in the exam syllabus, but throughout the career of a CFA candidate and eventual charter-holder. CFA charter-holders are obligated to adhere to a strict Code of Ethics and Standards governing their professional conduct.

The CFA Institute is a global association of investment professionals that traces its lineage back to the establishment of the Financial Analysts Federation (FAF) in 1947. The economic growth in the USA after World War II led to a rapid and massive growth in individual savings. This further led to an increasing demand for better investment options. The advancement of investment theories in the 1950s and '60s led to further momentum in the industry. This necessitated the formalisation of the investment management profession. Leadership of the FAF established an independent organisation - the Institute of Chartered Financial Analysts (ICFA) - to administer the CFA credentialing programme in 1959; and the ICFA administered the first CFA exams in 1963, when the first charter was awarded. In 1990, the FAF and the ICFA merged to become the Association for Investment Management and Research (AIMR). In 2004, AIMR changed its name to The CFA Institute. The CFA programme began in the United States but has become increasingly international with many people becoming charter-holders across Europe, Asia and Australia. By 2003, fewer than half the candidates in the CFA programme were based in the US and Canada, with most of the other candidates based in Asia or Europe. India and China have shown some of the highest growth from 2005-2006 with increases of 25 per cent and 53 per cent respectively in the total number of charter-holders. As of August 2010, the CFA Institute has more than 101,000 members around the world, including more than 89,000 CFA charter-holders. The roster of CFA charter-holders reads like a who's who in the global financial services industry. Most participants in the programme are employees of the financial services industry.

I now return to the issue of why the CFA programme is relevant for Bangladesh. First, no matter where a candidate resides, they attain the same standard of knowledge. So, a Bangladeshi candidate can achieve the same globally recognised training and credentials as can a student residing in New York, London or Tokyo. Second, the CFA programme is the most affordable among equally prestigious credentials, including an MBA from a top business school. In Bangladesh, few professionals or students can dream of achieving a globally reputed post-graduate education, but the CFA programme is accessible to all. Third, the CFA programme gives an opportunity to non-business students who want to transition into a career in financial services (I come from a background of Electrical Engineering).

Bangladesh has an expanding number of CFA charter-holders (25+) and candidates (over 250). Currently there exists a critical mass of CFA programme participants in Bangladesh and people with this qualification have been advancing to progressively important positions. One of the members of the newly reconstituted SEC is a CFA charter-holder. These professionals have undergone the most rigorous training on the functioning of an efficient capital market, and their views should be consulted in formulating policies, determining the timing and mode of interventions, and deciding on the various essential components of the capital market (including licensing, training, ethics, compliance). One simply needs to view the Facebook and the LinkedIn pages of the Bangladeshi CFA group to understand the knowledge and the refinement of these young professionals, reflected in their posts.

Active institutional participants in the capital markets such as commercial banks, merchant banks, brokerages and asset management companies should encourage their young and talented employees to enroll in the CFA programme and provide them financial support. For them, it would be an important investment in skill-development that is unparalleled in future returns. One last point, while our media regularly transmits "expert" view on the capital market by "analysts", I rarely see a CFA charter-holder consulted at such forums. Our CFA charter-holders are willing, ready and committed to take up their rightful role.

The writer is an investment analyst. A former member of the New York, Stamford and Calgary CFA Societies, he is an active promoter of the CFA group in Bangladesh. He can be reached at email: ahcapcorp@live.com