Assessing CFA’s pass rate & participation trends

The Chartered Financial Analyst (CFA) designation has long been recognized as a prestigious qualification in the finance and investment sectors. One of the key factors contributing to its esteemed status is the rigorous exam process consisting of three levels of exams. However, recent results have shown a decline in the pass rates for the final level of the CFA exam, dropping below the decade average of 51 percent to 48 percent. To shed light on this concerning trend, Thato Mashigo, Vice President of the CFA Society, joined CNBC Africa for an insightful discussion. Mashigo highlighted that the CFA designation is globally revered, with over 200,000 charter holders worldwide. Holding a CFA charter signifies dedication, commitment, and a comprehensive understanding of the investment industry. Distinct from accounting qualifications like Chartered Accountant (CA), the CFA focuses on capital markets, providing a broad knowledge base that covers various asset classes and subject matters. Comparing the CFA to alternative qualifications such as an MBA, Financial Risk Manager (FRM), or Certified Public Accountant (CPA), Mashigo noted that while these credentials are niche and specialized in specific areas of capital markets, the CFA designation remains more generalist, encompassing a wide array of asset classes and market segments. Discussing the recent exam results, Mashigo addressed concerns over the falling pass rates. Contrary to the prevailing worries, he emphasized that the pass rates for Level 1 still remain above the 10-year average, demonstrating a consistent performance. He also pointed out the significant gap in pass rates between candidates who write the exams promptly and those who defer, underscoring the importance of timely preparation and commitment. Moreover, the discussion delved into the performance disparity between first-time CFA test takers and repeat candidates. While acknowledging the higher success rate of first-timers, Mashigo attributed this phenomenon to the level of preparation and dedication put forth by candidates. He highlighted the recommended 300 hours of study time and the necessity for consistent practice and revision to excel in the exams. Shifting focus to the impact of artificial intelligence (AI) on the finance industry, Mashigo acknowledged the looming threat posed by AI to various professions, including investment professionals. Stressing the potential of AI to automate quantitative tasks like portfolio optimization and forecasting, he emphasized that the qualitative aspect and human understanding of market behavior remain key strengths that set professionals apart from algorithms. As the industry grapples with advancing technology and evolving demands, the conversation with Mashigo underscored the resilience and adaptability required to navigate the changing landscape. The CFA designation continues to stand as a beacon of excellence in the finance realm, demanding dedication, strategic preparation, and a deep understanding of market dynamics to thrive in an increasingly competitive environment.