CFA Charter: Why Investment Professionals will benefit from an exam primarily focused on Portfolio Managers

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So I started my finance career in 2013 with no knowledge of what finance really meant. My background was economics and so I knew about the Cobb-Douglas equation,  Solow Growth Model, multiplier effect of taxes, difference between comparative and absolute advantage in international economics and how Nash equilibrium affected incentives in OPEC and other collusions.

But concepts like the time value of money, liquidity, IPS or even the fundamental law of “the higher the risk; the higher the return” or “the role of arbitrage in market efficiency” were concepts I had never heard before not to even talk about understanding. 

I recall  been asked about what professional certification I wished to pursue in my interview for an internship at a leading stockbroking and issuing house in Nigeria. I was completely blindsided. What are professional qualifications? Does a PhD count; because that has always been an intent of mine. I remember honestly answering I knew little about the options and had not considered it.

Ironically, one of the panelists in my interview who was a certified broker  and dealing clerk suggested right there and then that I should consider taking the CFA exam. He explain that the program is a globally recognised certification and since I was young with less commitments, it would be a strategic use of my time. 

His advice was further reiterated to me by my sister, an investment banker with over 7 years experience in the Nigerian market. Now after securing my internship (which led to a full-time role in that institution eventually), I was assigned to the Research department as an Equity Research Analyst. 

It was a steep learning curve but to my surprise the role was engaging and stimulating; we had to search for data on everything about a company- from financial ratios to their new shipment orders and outlook by management- to determine the fundamental value of the stock. I got to put on my detective hat and search for clues about the future expectations of some of the biggest companies listed in Nigeria as I assisted in covering the cement industry amongst others.

Besides the training scheduled by my company on excel and model as well as business writing for research reports, I finally took the initiative to see what the CFA program was all about. So in 2014, I registered for the exam and paid to take classes at the New Frontiers Learning Centre in Lagos Nigeria.

This seemingly insignificant decision would change the entire course of my life because not only did it provide direction for my future goals but it also opened me to a wealth of knowledge on one of the most important decisions an individual will have to make about their money- how to invest it.

I learnt basic things like the power of compounding, the benefits of diversification and the rewards of starting early but also learnt in depth knowledge on the rationale behind financial reports, valuation of asset classes, capital budgeting in project decision making and a holistic approach to portfolio management centred on mean-variance analysis, skills I found useful when I worked as an investment banker in the leading investment banking company in Nigeria.

Now as a Level III candidate in the CFA program, I finally see that I will be required to put it all together. I must understand the concepts but also the reasoning behind the theories and show how this can be put in practice in ultimately planning, executing and monitoring investment decisions for individual and institutional clients.

As much as, the probability of me being a portfolio manager is still low, there really is no wasted knowledge as I find even the concepts of behavioural biases relevant to my interactions with clients as an investment banker now and the economic and quantitative method insights gained from the CFA program has reaffirmed my desire for that PhD in Economics or Data Science for Public Policy.

In conclusion, irrespective of where you ended up in the finance value chain, the CFA program is a comprehensive qualification that has the potential to improve your performance. At the very least you will gain from the ethics which will ensure a more patronised, equitable and efficient capital market.

– Thank you and God bless  

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