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Self-enhancement

Quantifiable quality

by Rachel Sproston

In the refreshing seminar "Financial analyst's road to success II" jointly organised by CFA Institute and Career Times, three prominent industry professionals confirmed that becoming a CFA (Chartered Financial Analyst) charterholder is a necessity in today's financial arena

Jan Squires, managing director, Asia Pacific operations
CFA Institute

As ordinary people seeking financial advice become ever more knowledgeable and discerning, partly due to the wealth of information currently available and the relative transparency of information channels, the number of companies seeking financial specialists increases. "The status quo has created a demand for serious investment professionals who possess the qualifications as well as the quality," said Jan Squires, managing director, Asia Pacific operations, CFA Institute.

Dr Squires stressed the importance of the "gold standard" the CFA accreditation guarantees. Candidates seeking to become CFA charterholders must fulfil several criteria. The most challenging aspect of the process is passing the three exams which are normally taken over a period of three to five years. All materials are provided by CFA Institute plus one online practice test prior to each of the three examinations. Candidates worldwide sit the same exam on the same day to ensure fairness and homogeneity across the board. There is no coursework component, no tutoring and no mentoring so as Dr Squires underlined, "You must have the internal drive to become a charterholder".

Although a bachelor's degree in finance would be a natural springboard for aspiring CFA charterholders, it is by no means a prerequisite. According to CFA statistics, the candidates who have passed all three levels of CFA exams hail from an array of industries and academic backgrounds.

However, Dr Squires reminded seminar attendees that a purely theoretical qualification involving reading, analysing and written examinations hardly equates to the "gold standard" as hands-on experience is as invaluable as formal knowledge. In this regard, candidates who succeed in all three CFA examinations need an additional four years' work experience which relates to the investment decision making process. Only then, with the blend of principle and practice can the charterholder designation be conferred.

Demonstrable ethical standards are also an integral part of the CFA charterholder's path to success and as Dr Squires pointed out, ethical dilemmas are incorporated into the examination questions which ensure the highest standards of integrity are upheld as CFA charterholders must continuously embrace the utmost ethical standards both hypothetically and practically.

Beyond the exams, Dr Squires drew the audience's attention to the increasing popularity of the accreditation, exemplified by the ever-growing numbers of CFA candidates worldwide. He was especially quick to highlight growth levels in the number of candidates from the Asia Pacific region, adding that employers are now beginning to request and sometimes demand CFA candidates for financial analysis positions.

Regarding professional mobility, candidates are also now discovering how valued not only the charterholder status has become, but also the increasing importance and recognition of level one and level two CFA candidates who have yet to fully qualify, but who have taken a quantifiable step towards greater professionalism and industry excellence.

Deconstructing analysts

Frederick Tsang, assistant general manager
China Everbright Limited
The role of an analyst can be multifarious and far-reaching. Frederick Tsang, assistant general manager, China Everbright Limited explained to seminar attendees how the CFA chartership, with its all-encompassing syllabus, is the ultimate preparation tool for analysts looking to step into one of the many diverse roles currently available in the industry.

Mr Tsang illustrated diagrammatically the responsibilities and expectations of various types of investment analysts, encouraging seminar participants to consider whether they preferred to work on the "sell" side concentrating on providing information, or alternatively work on the "buy" side as an information aggregator.

"Demand is hot," he enthused, adding that the career choices now available for CFA charterholders span the entire investment analysis spectrum. Mr Tsang described the typical career path of a handful of specific analysts including equity analysts, fixed income analysts and quantitative analysts who deal primarily with derivatives. He emphasised the international nature and portability of the CFA qualification which has come to symbolise excellence and an industry standard.

Mr Tsang noted that a growing number of finance companies now request job candidates hold the CFA designation. The lengthy list included large and established multinationals alongside smaller niche firms which manage hedge funds. Some companies were unique to the Hong Kong market while others spanned the globe, but Mr Tsang emphasised that even for analysts who have no wish to travel beyond the border, CFA designation is becoming an increasingly important prerequisite in job advertisements here in Hong Kong.

Mr Tsang also highlighted the prevalence of a growing number of analysts who are currently motivated by the "two and 20" fee structure associated with hedge funds. In short, the typical hedge fund charges management fees of two per cent per annum and performance fees are 20 per cent of whatever returns are generated. In essence, this structure keeps hedge fund analysts on their toes because their salary is performance related rather than guaranteed.

The rise of competent and qualified analysts in China was Mr Tsang's final topic and he noted the changes he has seen over the last few years regarding Hong Kong's intake of analysts from Guangdong and beyond. Increasingly, mainland Chinese analysts are taking up positions locally and Hong Kong analysts are being forced out of the market as a result. "In light of this, becoming a CFA charterholder is now more important than ever because ever greater numbers of qualified personnel continue to arrive from the mainland," he said.

Passport to professionalism

Richard Mak, head of advisory
BNP Paribas Private Bank
Richard Mak, head of advisory, BNP Paribas Private Bank gave seminar participants some frank and succinct advice about his own experience in becoming a CFA charterholder. First and foremost, he noted that there are no shortcuts to the top-notch professional designation so that candidates must invest sufficient time and be determined.

Mr Mak remembered being "very dull" during his own CFA study period and spending extensive amounts of time working independently to make the grade. "You need passion and dedication," he advised, adding that the ability to prioritise is all important. "We're all busy. Everyone has so much to do, but you must understand the value of the qualification and rearrange your time accordingly."

Career-wise Mr Mak did not opt for the traditional linear route where promotion occurs on a regular basis within one company. His experience and curriculum vitae are impressively wide, so his knowledge base is naturally concordantly broad. In this regard alone, holding the CFA designation has widened both his career perspective and professional opportunities because of the sheer body of knowledge charterholders must understand before sitting the CFA exams.

Over the last 10 years he has witnessed a transformation in investor expectations and today he feels poised and ready to embrace investor questions and suggestions. "Nowadays, private wealth clients want to know everything under the sun," he explained. Analysts should continuously upgrade their existing knowledge to exceed client expectations.

CFA Institute is a precious partner in this lifelong learning process and liaises regularly with The Hong Kong Society of Financial Analysts to organise events and educational opportunities. CFA charterholders are advised to spend a minimum of 20 hours per year post-designation focusing on continuous learning to stay ahead of the game and remain up-to-date with the latest industry news.

"CFA is just the beginning," Mr Mak conceded, adding that ethics, trust and integrity are equally important in the long term. In his eyes, ethics should really be learnt by the age of 12 and the CFA programme merely acts as a reminder for candidates. He was also insistent that there is never a second chance for analysts who cross the line ethically, and emphasised the need for every investment decision to be carried out with integrity and professionalism.

Fast facts

The number of CFA members continues to rise and the current global figure stands at 95,465. Hailing from over 130 countries, this group of investment professionals forms a true representation of global supremacy in the finance industry. With over 135 affiliated societies in more than 56 countries support and networking opportunities are never far away. In Asia Pacific alone, there are more than 19,000 members. Meanwhile, within the current group of CFA charterholders, 23 per cent are aged 21 to 25 and a whopping 64 per cent are aged 30 or younger. This demographic alone indicates the number of tenacious younger analysts who now qualify as serious investment professionals, poised and eager to embrace the challenges of tomorrow.


Taken from Career Times 06 June 2008, p. A10

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