Number of candidates sitting chartered financial analyst exams falls sharply

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The number of candidates completing chartered financial analyst exams is in stubborn decline as demand slides for a qualification once seen as essential for the profession.

The latest available results for CFA Institute, which oversees the tests, show 116,727 people sat all three levels of the exam in the first eight months of the year, down 2,735 on the same period in 2023.

Last year there were 163,000 exam registrations, 40 per cent down from the peak of 270,456 in 2019.

Margaret Franklin, chief executive at the CFA Institute, which oversees the qualification, said a downturn in growth from China was partly to blame.

Chinese and Indian candidates have boomed in number over the past decade as graduates overseas seek international investment qualifications that could lead to jobs with US and European investment companies. India’s exam registrations have doubled since 2014 to 31,600.

China’s growth rate “has slowed down, but it was hyperbolic before that,” she told the Financial Times, adding that “the CFA programme is still really highly regarded” in the country.

Candidates from India have taken up some of the slack, although she anticipates that growth from the South Indian nation will moderate.

The pandemic negatively affected the number of people attempting to qualify, especially among those under the strict lockdown regime in China. The CFA Institute has shifted to online testing but the new system took time to establish.

After a sharp dip in registrations during the pandemic, exam result numbers have shown no recovery. Pass rates overall have recovered to 46 per cent, having dipped to 22 per cent in 2021.

Whether the CFA makes a difference on the job front is what matters for candidates, some of whom see it as useful but not necessary.

“You’re not going to hire or not hire someone on the basis of having a CFA,” said Elise Badoy, head of Emea equity research at Citi. However, she said the qualification “helps for younger analysts”, and that for the first three or four years of their career “it’s definitely a positive thing”.

The slowdown comes at a time when structural changes in the asset management industry, such as the shift towards passive investment and private capital, threaten the relevance of holding a CFA.

CFA Institute has introduced new products like investment certifications in areas such as ESG and climate change. Candidates can now focus on course areas other than general portfolio management, such as private markets and wealth management. Case studies within the exam include the cryptocurrency sector.

“We are diversifying, trying to find the things that meet the needs of people in all stages of their career,” Franklin said.

To encourage more applicants, candidates for the Level I CFA exam can now be up to two years away from completing their undergraduate degree, up from one year previously. Franklin believes the CFA offers a “more meritocratic, less selective” qualification than a more expensive MBA from universities.

While she believes the worst of the pandemic effect has passed, the organisation has had to adapt to the slowdown.

“Do I think we are going to have the same hyper growth? No. Hyper growth in the business isn’t there any more.”