CFA Institute, the global association of investment professionals, announced a 7.5% increase in UK takers of the Chartered Financial Analyst exams, highlighting the growing threat to business school degrees.
An MBA was once the choice qualification for anyone hoping to work on Wall Street or in the City of London. But investment professionals are increasing opting instead for CFA, whose rigorous curricula and complexity of study have placed a premium on charter holders.
CFA Institute said that 57,500 candidates passed Level I, II, and III of the Chartered Financial Analyst exams, with a 7.5% increase in exams sat in the UK.
This builds on a momentous increase over the past several years. Comparatively some business schools have struggled to maintain enrolment numbers over the global financial crisis that erupted in 2008. In 2003, around 50,000 candidates sat CFA exams. In 2014, 160,000 candidates did.
“The main area of growth we’ve seen over the seven years [since the crisis] is in relation to CFA training,” said Steven Young, head of the accounting and finance department at Lancaster University Management School.
But he played down the competition between the CFA Institute and business schools, saying: “CFA exams test a different skill set to our exams. They focus primarily on application and technique rather than theory and concepts.”
However Viet Ha Tran, a senior associate director for IE Business School’s Master in Finance programs, said that CFA exams are “quite theoretical”.
She added that degree programs at the Spanish business school will “apply these concepts into the real situation of the capital markets”.
Bo Becker at the Stockholm School of Economics, admitted there now are multiple ways to develop skills to work in the financial sector.
But he added: “Academic education, especially at very selective schools…Is a unique way to acquire expertise of a depth and rigor and of a sustainable long-term value, which has proven its worth for millennia.”
To earn the CFA charter, candidates must sequentially pass three six-hour exams that are widely considered to be the most rigorous in the investment world, and accrue four years of relevant work experience. On average, candidates report spending in excess of 300 hours of study to prepare for each level.
Of 27,468 candidates who sat the Level III CFA exam in June 2015, just 53% passed.
Enthusiasm around the exams has prompted business schools to partner with the CFA Institute and incorporate elements of its program into their degree courses.
Alex Stremme, assistant dean for MSc Finance at Warwick Business School, said that the school is working closely with the CFA Institute on curriculum development, such as around ethics.
“We do not see the CFA as competition but as a partner, in the sense that we both focus on the same set of skills and knowledge but offer slightly different angles,” he said.
At Frankfurt School of Finance & Management, the Master of Finance program is a member of the CFA Institute’s University Recognition Program, said Dr Julia Knobbe, program director.
“Our students are very attracted by this and many of them sit CFA exams while pursuing their degree.”
Tom Robinson, chief executive officer of AACSB International, the business school accrediting body, said there is a growing need for specialist finance programs.
“Global markets, financial products, and regulation are constantly evolving,” he said. “Students must acquire the right knowledge, skills and abilities to distinguish themselves from other candidates in a competitive marketplace.”
CFA Institute has more than 125,000 charter holders globally, who work in some of the most prominent financial institutions, including JP Morgan Chase, HSBC, and Citi.
Markets with the largest number of CFA candidates are the US (30,715), China (21,057), India (10,651), Canada (10,651), the UK (8,746), Hong Kong (5,189), and Singapore (3,193).