PGP ’12 student, Harsh Patel, recently cleared the CFA Level 2 Exam. He shared his insight on need of CFA and approach that is required to clear it.
1) What is CFA Program and what is its scope in today’s context?
CFA program is globally recognized course in the field of finance. CFA program includes three exams (Level I, II and III). After passing all three levels and four years of work experience in finance field one can earn the CFA Charter. CFA program primarily focuses on portfolio management, valuation and investment analysis. CFA level 1 covers fundamentals of finance like financial reporting analysis, economics, statistics, fixed income, corporate finance, derivatives etc. whereas CFA Level 2 focuses on aspects of valuation. CFA level 1 and 2 exams consist of multiple choice questions. CFA level 3 focuses on portfolio management and it consists of essay type questions and MCQs.
2) Who should pursue this program? How does CFA add value to a regular MBA?
CFA is a good course to pursue for those who want to build a career in the finance field. Especially for MBA finance students, it is an added advantage.
Regular MBA is focused on case study and problem solving while CFA gives you much deeper insight into theoretical explanations and well developed US financial markets. The structured nature of the CFA course is very beneficial, as it helps in getting concept clarity and brings out clearly the interrelation and distinction among various theoretical aspects of finance. CFA exposes an MBA student early to complex financial fields like derivatives, fixed income etc., which are not covered in MBA 1st year. This will give students more clarity regarding their career preferences.
3) Do you think the popularity of the CFA is growing? If yes, what advantage do students have in placements if there are already many people having cleared CFA exams?
If we go by sheer numbers, latest data shows Indian students form third largest group (5,173 candidates) after US and China while the total number of candidates registering for CFA level 1 December 2012 exam stood at 48,981. India has seen a huge rise in CFA registration in the past decade even after financial crisis.
Clearing CFA exams are highly appreciated by recruiters. It shows dedication of the candidates who shell out thousands of rupees for reading thousands of pages!! Passing CFA level 1 is not only a strong resume point but also helps to crack the interview for summer internship. For final placements, passing CFA level 2 will be a differentiating factor.
4) How should candidates prepare for CFA considering academic rigor in MBA?
Considering rigor of MBA, especially of IIMs, candidates should start early (at least three months before exam on average) and put in regular efforts so that they can allocate reasonable amount of time for their regular academics too. For the non commerce candidates, CFA level 1 requires more time to prepare as they are getting exposed to nitty-gritty of financial field for the first time. Students appearing for CFA Level 1 in June will find the going a bit easier, as some of the concepts will be covered in MBA classes by that time. Once one gains conceptual understanding it becomes easy to build upon these for the next levels.
Apart from CFA books, there are numbers of materials available that compile the course for sort of crash course preparation. But that is not advisable as it is difficult to get learning or understanding out of that. So better stick to its original books. Candidates should start solving mock exam papers (like Schweser test papers) at least 15 days before exam followed by performance analysis. Scoring more than 70% (generally around 65%) in exam would suffice to pass the exam, but the primary aim should not be just to achieve the score instead emphasis should be on learning and application in the real world.