From the Beginning: My CFA Journey
I first learned about the CFA Program as an undergrad finance major in the mid-1980s. I had always had an interest in the stock market, and would frequently read through the stock tables in the local newspaper and in the copy of Barron’s at the school library. The stock tables fascinated me - I would examine the dividend payout, daily trading volume, and daily gain or loss in price. In Barron’s, I discovered a wealth of not just stock data, but also mutual funds, currencies, bonds, futures and options, and economic data.
All this data overwhelmed me - how could anyone make sense of investing with this incredible amount of data? Did every single investor comb through the Wall Street Journal or Barron’s every day, making their investing decisions this way? I knew that wasn’t the case from talking to some stock investors, but if I was to work in the field of investments, I wondered if there was a program that specialized in or focused on how to scour through and interpret all this data.
And so, I found a copy of a CFA Program study book in the school library. This discovery answered my questions almost perfectly: stock investors usually rely on financial and operating analyses of the companies they invest in, and this program showed the way to perform these analyses.
After I graduated, I worked as a commercial banker, but I retained my fascination with investing in the securities markets. Later, during my grad school studies in investments, I learned more about analyzing and investing in stocks and bonds, and about some of the “newer” forms of securities such as mortgage-backed securities and index derivatives.
As I delved into the CFA study program, I found myself drawn to becoming a buy-side analyst or manager. And being able to work in the investment division for the largest public pension plan in the U.S. after grad school became my ticket to applying the investment knowledge I received in grad school to my career - and also prompted me to sit for Level 1 of the CFA. The CFA exams were tough and mentally exhausting, but the reward of passing the three exams made up for those hours spent on practice exams and review.
Thirty Years Later
Now fast forward a little more than 30 years to today. Sometimes I ponder whether the effort to attain the Chartered Financial Analyst designation was worth it.
Inevitably, the answer is always “yes,” in terms of (1) career advancement, (2) compensation, and (3) fulfillment.
1. Career Advancement
My career has spanned more than 30 years in a number of institutional buy-side roles and responsibilities. Without a doubt, the CFA charter enabled me to rise above others who possessed only a bachelor’s degree. Having the CFA charter positioned me to take advantage of the face time required for advancement within (or sometimes outside of) the organization (though the MBA didn’t hurt, either). Whether it was a bureaucratic state pension system or a small, niche-oriented hedge fund, the CFA charter was a defining characteristic that helped me stand out.
My experience suggests that the CFA charter enhanced my compensation along the way. I received pay increases upon attaining the CFA charter, and upon advancing up the career path to portfolio manager and principal.
At higher levels, compensation tends to flow largely from performance-based measures. Even for the short time I managed my own firm, many of the principles from the CFA program about running an asset management firm were relevant: pay practices, technology, vendor selection, and projections.
For me, since college, an intense interest in securities markets has continued to drive me. Discovering the CFA program when I did made a lasting impression on me, and participating in the program at the national and local levels has served me well throughout my career.
I continue to be fascinated by and curious about how financial markets have developed throughout the world, to the point that, in the few times I get to read for pleasure, I usually reach for a book about financial market history or about a luminary who played a key role in the markets at a pivotal time.
Not everyone who becomes a CFA charterholder will share these interests, but for me, it has been beneficial to have a perspective that lends credence to discussions about portfolio management positioning, asset allocation, and security selection. I would not characterize myself as “all work and no play,” but it helps to have an ongoing curiosity about the asset management business and the financial markets.
Was It Worth It?
For me, the answer is a resounding “yes!” On an almost daily basis, I’m utilizing skills from the CFA body of knowledge that contribute to my understanding and perspective as a portfolio manager.
The CFA program has historically targeted the buy-side of the financial markets, but increasingly, the sell-side also finds value in the CFA designation, and even corporate treasurers are noticing the benefits of the investment knowledge that the CFA program provides. As a portfolio manager, I would not think twice about my participation in the CFA program - it has clearly benefited me professionally.
About the Author
Ed Terrill, CFA, has more than 30 years of direct investment experience with asset managers, pension plans, fiduciaries, and mortgage-backed securitization. He received his BBA and MBA from the University of Texas at Arlington and is a Chartered Financial Analyst (CFA), registered representative (FINRA), and a member of the CFA Institute. He is currently a portfolio manager with Arvest Wealth Management in Lowell, Arkansas.