The Chartered Financial Analyst (CFA) program is a postgraduate professional certification offered internationally by the US-based CFA Institute (formerly the Association for Investment Management and Research, or AIMR) to investment and financial professionals. The program teaches a wide range of subjects relating to advanced investment analysis—including business analysis, statistics, probability theory, fixed income, derivatives, economics, financial analysis, corporate finance, alternative investments, portfolio management, ethics applicable to the finance industry—and provides a generalist knowledge of other areas of finance.
A candidate who successfully completes the program and meets other professional requirements is awarded the "CFA charter" and becomes a "CFA charterholder". Successful candidates take an average of four years to earn their CFA charter.
History The predecessor of the CFA Institute, the Financial Analysts Federation (FAF), was established in 1947 as a service organization for investment professionals. The FAF founded the Institute of Chartered Financial Analysts in 1962; the earliest CFA charterholders were "grandfathered" in through work experience only, but then a series of three examinations was established along with a requirement to be a practitioner for several years before taking the exams. In 1990, in the hopes of boosting the credential's public profile, the CFA Institute (formerly the Association for Investment Management and Research) merged with the FAF and the Institute of Chartered Financial Analysts.
The CFA exam was first administered in 1963 and began in the United States and Canada, but has become global with many people becoming charterholders across Europe, Asia, and Australia. By 2003, fewer than half the candidates in the CFA program were based in the United States and Canada, with most of the other candidates based in Asia or Europe. The number of charterholders in India and China had increased by 25% and 53%, respectively, from 2005 to 2006.
CFA Charter The CFA designation is designed to demonstrate a strong foundation in advanced investment analysis and portfolio management, accompanied by a strict emphasis on ethical practice.
A charterholder is held to the highest ethical standards. Once an investment professional obtains the charter, this individual also makes an annual commitment to uphold and abide by a strict professional code of conduct and ethical standards. Violations of the CFA Code of Ethics may result in industry-related sanctions, suspension of the right to use the CFA designation, or a revocation of membership.
Requirements To become a CFA charterholder, candidates must satisfy the following requirements: Have obtained a bachelor's degree or equivalent or be an undergraduate whose selected examination window is no more than 23 months before graduation. Complete at least one Practical Skills Module (PSM) at each program level before the corresponding examination result is released. Pass all three levels of the CFA program (mastery of the current CFA curriculum and passing three examinations). Have 4,000 hours in a minimum of three years of qualified work experience acceptable by the CFA Institute. However, individual-level exams may be taken prior to satisfying this requirement. Have two or three letters of reference. Become a member of the CFA Institute. Adhere to the CFA Institute Code of Ethics and Standards of Professional Conduct.
Due to the timing of the exams, completing all three levels of the CFA is possible within two years, but candidates must still complete the work experience requirement of 4,000 hours over a minimum of three years to become a charterholder.
Pass rates In 2021, the CFA program made news headlines after the level I examination pass rate dropped to a record-low of 25%. In August 2021, the level II pass rate fell to 29%.Bloomberg, CFA Level II Exam Pass Rate Is Lowest Ever at 29%
Curriculum
The curriculum for the CFA program is based on a Candidate Body of Knowledge established by the CFA Institute. The CFA curriculum is updated annually to reflect the latest best practices, with the extent of changes varying by year and level. The curriculum comprises, broadly, the topic areas below. There are three exams ("levels") that test the academic portion of the CFA program. All three levels emphasize the subject of ethics. The material differences among the exams are: The Level I study program emphasizes tools and inputs and includes an introduction to asset valuation, financial reporting and analysis, and portfolio-management techniques. The Level II study program emphasizes asset valuation and includes applications of the tools and inputs (including economics, financial reporting and analysis, and quantitative methods) in asset valuation. The Level III study program emphasizes portfolio management and includes descriptions of strategies for applying the tools, inputs, and asset valuation models to manage equity, fixed income, and derivative investments for individuals and institutions. Since 2025, CFA Institute has introduced a Core curriculum plus a choice of 3 elective options called Specialized Pathways: Portfolio Management, Private Markets and Private Wealth.
For exams from 2008 onward, candidates are automatically provided the curriculum readings from the CFA Institute at the time of registration for the exam. If the student fails an exam and is allowed to retest in the same year, the CFA Institute offers a slight rebate and will not send the curriculum again (the curriculum changes only on an annual basis). If the student retests in a year other than the year of failure, he or she will receive the curriculum again, as it may have been changed. Study materials for the CFA exams are available from numerous commercial learning providers, although they are not officially endorsed. Various organizations (some officially accredited) also provide course-based preparation. As of 2019, the examination includes questions on artificial intelligence, automated investment services, and mining unconventional sources of data.
Ethical and professional standards
The ethics section is primarily concerned with compliance and reporting rules when managing an investor's money or when issuing research reports. Some rules pertain more generally to professional behavior (such as prohibitions against plagiarism); others specifically relate to the proper use of the designation for charterholders and candidates. These rules are delineated in the "Standards of Professional Conduct", within the context of an overarching "Code of Ethics".
Quantitative methods This topic area is dominated by statistics: the topics are fairly broad, covering probability theory, hypothesis testing, (multi-variate) regression, and time-series analysis. Other topics include time value of money—incorporating basic valuation and yield and return calculations—portfolio-related calculations, and technical analysis. Recent additions, as mentioned above, are a survey of machine learning and big data.Discussion is top down; see: Kathleen DeRose and Christophe Le Lanno (2020). "Machine Learning".
Economics Both microeconomics and macroeconomics are covered, including international economics (mainly related to currency conversions and how they are affected by international interest rates and inflation). By Level III, the focus is on applying economic analysis to portfolio management and asset allocation.
Financial statement analysis The curriculum includes financial reporting topics (International Financial Reporting Standards and U.S. Generally Accepted Accounting Principles), and ratio and financial statement analysis. Financial reporting and analysis of accounting information is heavily tested at Levels I and II, but is not a significant part of Level III.
Corporate Corporate finance topics include capital investment decisions, capital structure policy and implementation, and dividend policy; building on accounting, economics, and statistics. It then extends to more advanced topics such as the analysis of mergers and acquisitions, corporate governance, and business and financial risk.
Security analysis The curriculum includes coverage of global markets as well as analysis and valuation of the various asset types: equity (stocks), fixed income (bonds), derivatives (futures, forwards, options, and swaps), and alternative investments (real estate, private equity, hedge funds, and commodities). The Level I exam requires familiarity with these instruments. Level II focuses on valuation, employing the "tools" studied under quantitative methods, financial statement analysis, corporate finance, and economics. Level III centers on incorporating these instruments into portfolios.
Equity and fixed income The curriculum for equity investments includes the functioning of the stock market, indices, stock valuation, and industry analysis. Fixed income topics similarly include the various debt securities, the risk associated with these, and valuations and yield spreads.
Derivatives The curriculum includes coverage of the fundamental framework of derivatives markets, derivatives valuations, and hedging and trading strategies involving derivatives, including futures, forwards, swaps, and options. The curriculum incorporates various pricing models and frameworks, such as Black-Scholes and binomial option pricing (extending to coverage of interest rate trees), while coverage of the underlying mathematics is conceptual as opposed to technical.
Alternative investments The curriculum includes coverage of a range of topics in the alternative investment category. Topics include hedge funds, private equity, real estate, natural resources (particularly precious metals), infrastructure, and other alternative investments, including, as applicable, strategies, sub-categories, potential benefits and risks, fee structures, and due diligence.
Portfolio management and wealth planning This section increases in importance with each of the three levels—it integrates and draws from the other topics, including ethics. It includes: (i) modern portfolio theory (efficient frontier, capital asset pricing model, etc.); (ii) investment practice (defining the investment policy for individual and institutional investors, resultant asset allocation, order execution, and hedging using derivatives); and (iii) measurement of investment performance.
Efficacy of the CFA program Given the time and effort that candidates must undergo to complete the CFA program, it would be expected that CFA charterholders have higher performance than those who do not complete the program. Academic research has suggested evidence that differential performance is economically significant, supporting the predominance of signaling. Furthermore, research in the Financial Analysts Journal (a journal published by CFA Institute) suggests a positive human capital impact from the CFA program.
Global regulatory and legal recognition
Legal recognition by country
Australia The Australian Securities and Investments Commission (ASIC) has ranked the RG 146 Gap Training Program for CFA charterholders and CFA Program candidates at Tier 1. The RG 146 Gap Training Program is intended for candidates who have passed the CFA Level I exam or charterholders who wish to fulfill the requirements necessary to provide both financial product advice to retail clients and personal advice. The Government of Australia recognizes CFA charterholders as having automatically satisfied Standard Sets A, C, and D under the Code of Professional Conduct for Authorized Financial Advisers (AFA).