While the pass rates have begun to normalise from the pandemic-induced lows, Nick Pollard, the managing director – Asian Pacific at CFA Institute pointed out another key reason for the pass rates declining.
“While the pass rates for the three exams have begun to normalize from the pandemic-induced lows, we also observe from our data that deferred candidates were less successful in their exams due to the lengthy delays, and, therefore some are not continuing with the program,” Pollard told ETMarkets in an interview.
Edited excerpts:
Do you think clearing CFA exams are getting tougher and why?
It’s worth noting that the bar for passing has not changed; we have held to our high standards. As such, we expect pass rates to return to historical norms once pandemic conditions abate. While the pass rates for the three exams have begun to normalize from the pandemic-induced lows, we also observe from our data that deferred candidates were less successful in their exams due to the lengthy delays and therefore some are not continuing with the program.
With the growing size of the capital market and the participation, wealth management is gaining significant traction. What are the initiatives that CFA institute is taking to move in parallel with the evolving opportunities?
Our research found that undergraduate university students, who are already immersed in studying and skilled at exam preparation, expressed interest in enrolling in the CFA Program earlier as they seek an edge in the highly competitive marketplace for coveted internships and employment. As such, we recently extended the CFA Program candidate eligibility by one year to include students with two years remaining in their undergraduate studies. The expansion of the eligibility policy will provide students with the opportunity to use Level I of the CFA Program as a clear signal to employers that they are serious about a career in the investment profession. Many of the skills of portfolio management and financial planning, which are core competencies of the CFA Program, are transferrable to the wealth management industry, and will therefore help address industry demand for well-trained, ethical professionals.
What are the upcoming trends that you are seeing in the wealth management space?
The wealth management industry is experiencing rapid change, mainly as new technologies and alternative investment strategies shift priorities and change the way relationships are built. Stocks, bonds, and real estate are the traditional assets of wealth management, but cryptocurrency is quickly going mainstream, as interest in digital assets continues to grow despite recent developments. Investors are increasingly considering more than just profits as they look at ESG factors in choosing where to put their dollars. Wealthtech, robo-advisors, and digital wealth solutions are also enabling firms to offer more personalized approaches and capabilities to their clients. The generational wealth transfer from baby boomers to younger and more digitally savvy millennial investors, may also lead to a new generation of younger and more diverse investment advisors and wealth managers who can cater to their clients’ unique needs.
Have you been able to institutionalize some of these in the syllabus? Or do you see scope for it?
CFA Institute undertakes annual Practice Analysis surveys of investment practitioners to help with updates to the CFA Program curriculum, through first-hand evidence of how skills and competencies in the investment industry are evolving. This process ensures CFA Program candidates are tested on the most up-to-date concepts and practices applicable to a range of roles in the investment profession. Key updates include decentralized finance and blockchain. ESG content was also increased by 130% in the current curriculum, compared to the previous version.
Could you elaborate on some of the well known codes of your institute that have been adopted by mutual funds, financial institutions, or wealth management firms?
An integral part of CFA Institute’s mission is to develop and administer codes, best practice guidelines, and standards that guide the investment industry and help ensure all investment professionals place client interests first.
These include the voluntary Asset Manager Code, which is designed to help investors identify asset managers who have committed to high standards of professional conduct. There are more than 1,000 firms around the world that adhere to the Asset Manager Code, including
Asset Management Co, one of India’s leading mutual fund managers.
The Global Investment Performance Standards, or the GIPS standards, are a set of industry-wide principles that guide investment firms on how to calculate and report their investment results to prospective clients.
The Code of Ethics and Standards of Professional Conduct is also the benchmark for professional conduct for investment professionals around the world.
CFA Institute has also developed a voluntary, global industry standard to establish disclosure requirements for investment products with ESG-related features.
We believe our voluntary code to guide DEI can play a role in greater inclusion of wider viewpoints from diverse talent, which should result in better investment outcomes and help create better working environments, and we expect there to be about 100 signatories by the end of this year.
What are the steps taken by the CFA institute to increase accessibility to the Indian wealth managers and aspirants, given that India today is the second biggest emerging market in Asia?
India is experiencing dynamic growth, and we are fast-tracking CFA Institute’s outreach in this rapidly developing market. We recently added new test centers in India, which were very well received.
Our ability to attract diverse talent from different parts of the educational landscape is also very important, as we know we can teach skills to people for this business.
We are also very encouraged by the keen response we are seeing from both participants and partner firms in the Young Women in Investment program.
This program not only equips women with technical knowledge, such as financial modeling, and new technologies, like machine learning and artificial intelligence, but also combines that technical knowledge with social or softer skills, like networking and entrepreneurship, that are increasingly important in the investment industry. Participants also gain access to internships at reputed financial institutions.
What are the challenges faced by the wealth management industry according to you, and how can CFA institute help firms navigate this?
Wealth managers are primarily facing challenges from the need to retain assets across generations, and upgrade capabilities and offer new propositions, to cater to younger and more digitally savvy millennial investors, who are more comfortable with self-servicing. CFA Institute is focused on helping shape a more trustworthy, forward-thinking investment profession that better serves society. As such, wealth management firms can reposition themselves as being uniquely placed to put customers first, and to always be there to talk through options directly.
For someone who is looking at pursuing a career in finance, which course would you recommend? CFA, MBA or any other specialization?
There are many respected credentials in the investment industry. Traditionally, MBA programs have been the conventional path taken for business management. The CFA Program curriculum specifically focuses on investment analysis and portfolio management and provides deep knowledge of investment principles and ethics. The CFA Program also connects candidates to a global network of over 190,000 elite investment professionals. In fact, the CFA credential was recently benchmarked by Ecctis, an internationally respected reference point for global qualifications and skills standards, as the equivalent to a master’s degree in finance in many markets around the world.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
