WHY THE CFA DESIGNATION MATTERS TO YOU

Being an educated consumer is important, especially when it comes to your money. That is why you need to be familiar with CFA Institute and the CFA designation. You see, through it’s education, standard-setting and advocacy programs, CFA Institute sets the benchmark with which to measure the knowledge, integrity and professionalism of the individual whom you trust to manage your financial assets. This means that when you work with a CFA Institute member, you can feel confident that he or she has answered the challenge to adhere standards for professional conduct and investment performance. Your direct exposure to AIMR may seem limited. But in the end, virtually all of the CFA Institute programs and initiatives are designed to serve you, the investing public. Find out more here.

What is the CFA Program?

The CFA Program is a graduate-level, self-study curriculum and examination program for investment specialists - especially securities analysts, money managers and investment advisors. Established in 1962, the CFA Program sets the global standard for investment knowledge, standards and ethics. Clients, employers and colleagues know that a charterholder has mastered a rigorous curriculum covering a broad range of investment topics and is committed to the highest ethical standards in the profession. Earning the credential also serves as a "passport" to entry to or advancement within the profession or to work in other countries.

Who administers the CFA Program?

The CFA Program, its curriculum, exams, and grading, are administered by CFA Institute.

Where is the CFA exam given?

Each June, thousands of CFA candidates travel to exam centers across the globe to take the CFA exam. In 2002, over 101,000 candidates enrolled to take the exam at one of the 253 centers in 79 nations and territories. In the United States, candidates come from all 50 states, including Washington, D.C. After the U.S. and Canada, the 10 areas with the largest numbers of CFA candidates are Hong Kong (7173), South Korea (5351), Singapore (4993), the United Kingdom (4849), South Africa (1921), Japan (1896), Switzerland (1687), and the People's Republic of China (1652).

Why should I look for the CFA designation when searching for an investment manager?

Simply put, the CFA designation matters to your money. Your investment advisor has access to the most personal details of your finances, and the trust you place in your investment advisor must be unconditional. Although financial professionals may hold other professional designations, no other designation within the profession of investment management carries as much integrity as the CFA charter.

The fact is the CFA charter is awarded only to a very select group of investment specialists who have mastered a rigorous curriculum covering a broad range of investment-related subjects. CFA charterholders have professional experience applying this knowledge to the investment decision-making process. And, CFA charterholders are held to the highest ethical standards. In sum, the CFA designation symbolizes the knowledge, professionalism and integrity you should demand from anyone you trust with your finances.

What areas of the investment profession do CFA candidates study?

The CFA designation represents broad investment knowledge. The broad-based, self-study curriculum of the CFA Program compels investment professionals to build a working knowledge of investment principles across core areas of the industry-from portfolio management, to asset valuation, to derivatives and quantitative analysis. To earn the right to use the CFA designation, candidates must pass three levels of examination, which requires hundreds of hours of study over at least three years. Successful completion of the CFA Program is thus a formidable challenge for even the most experienced investment professional.

CFA charterholders keep up with the ever-changing global investment industry through their membership with CFA Institute. CFA Institute seminars, workshops, publications and research equip charterholders with the advanced knowledge necessary for continued professional growth.

What are the requirements for earning the CFA charter?

The CFA designation demonstrates professional achievement. To earn the CFA charter, investment professionals must have at least three years of acceptable professional experience in the investment decision-making process. In addition, candidates must pass three sequential, six-hour examinations over at least three years and must commit to abide by and annually reaffirm their adherence to the CFA Institute Code of Ethics and Standards of Professional Conduct.

Where do CFA charterholders work?

Currently, there are over 50,000 charterholders in 100 countries and territories. The top ten companies to employ CFA charterholders are:

	Merrill Lynch & Co., Inc.
	CIBC
	Bank of America
	Goldman Sachs
	Salomon Smith Barney
	Wellington Management Company
	Morgan Stanley
	Prudential Capital Group
	J.P. Morgan & Co.
	Putnam Investment Management
	RBC Dominion Securities Inc.
	

What are the CFA Institute Code of Ethics and Standards of Professional Conduct and why are they important to me?

Membership in CFA Institute and the CFA designation symbolizes integrity. The trust that you place in your investment advisor must be unconditional. But to be worthy of such trust, integrity simply must never come into question. For this reason, CFA Institute members and CFA charterholders must comply with the CFA Institute Code of Ethics, which require them always to place the client’s interests first, to maintain independence and objectivity and to serve with integrity and honesty. So, you can invest with confidence.

The Code works in tandem with the Standards of Professional Conduct, which clarifies how to apply rules, regulations and ethical guidelines within the investment industry so that investment professionals can safely avoid ethical quandaries and properly serve their clients and employers.

Should ethically based complaints be lodged against CFA charterholders, they are required to disclose these complaints in full detail to CFA Institute or risk losing the right to use the CFA designation.

What role does CFA Institute play in promoting professionalism in the global investment industry?

Through its headquarters in the United States, offices in Hong Kong and over 100 societies and chapters around the world, CFA Institute is setting a higher standard for investment professionals worldwide, by supplying the benefits and services that investment professionals need to advance their careers and support the needs of their clients. CFA Institute encourages members to demonstrate their commitment to learning by participating in the CFA Institute professional development program. CFA Institute defends the interests of more than 50,000 investment professionals through various advocacy activities.

CFA Institute membership makes a statement to you, the individual investor. In the end, such programs and services benefit you, the individual investor.

How can CFA Institute keep pace with rapidly changing industry developments concerning professional standards?

In many cases, CFA Institute actually established the standards followed by many in the global investment industry. To keep up to date on the needs of investment advisors, their employers, and their clients, CFA Institute continually works with its members and industry authorities to build standards for financial reporting, international accounting, and ethical principles. When a specific industry practice requires additional study, CFA Institute assembles a task force to address that challenge, such as it's Report on Soft Dollars.

CFA Institute staff and members also frequently communicate with government and regulatory organizations across the globe to provide input and comment on a myriad of issues. Created with support from CFA Institute member committees, CFA Institute comment letters reinforce the organization’s and member’s mission and values.

I recently received some marketing material and performance information from an investment management firm that touts that the firm complies with the CFA Institute Performance Presentation Standards. What does this claim mean and should I place any particular importance on it?

The Performance Presentation Standards (AIMR-PPS®) and Global Investment Performance Standards (GIPS®) are ethical principles and guidelines that allow for "apples to apples" comparison of investment performance. Both promote uniformity in reporting, set expectations and provide an industry template for compiling and reporting performance. This allows investors to have a consistent and fair comparison of performance across different investment managers.

Why are the PPS and GIPS standards important to me?

The primary beneficiaries of the PPS and GIPS standards are prospective clients of investment management firms who are attempting to compare the investment performance of these firms. Current clients attempting to evaluate their managers' performance also benefit by being able to compare their actual results to the firm’s product "average" as defined by the standards. However, compliance with the standards does not erase the need for due diligence on the part of prospective or current clients or consultants in evaluating performance data and other important qualitative research.

How does an investment company claim compliance with either PPS or GIPS?

In order to make a claim of compliance, an investment firm must comply with a rigorous set of provisions that require uniformity in both the methods used to calculate returns and present them, as well as the format in which essential disclosures are made. Through voluntary compliance, managers can build an environment of credibility and trust in the investment industry. Investors should ask their investment advisor if his or her firm complies with either the PPS or GIPS standards.

What is the difference between PPS and GIPS?

The PPS and GIPS standards are both ethical standards for investment performance presentation used by investment managers. Both ensure fair representation and full disclosure of an investment firm's performance. North American firms generally use the PPS standards, whereas GIPS are designed to meet the needs of investment firms on a global basis. The GIPS standards are based on, and are very similar to, the PPS standards. Both GIPS and the PPS standards are voluntary and consist of requirements that must be followed for a firm to claim compliance with the Standards. As a general matter, firms complying with the PPS standards will likely be in compliance with GIPS. It is the expectation of both the PPS Implementation Committee and the GIPS Committee that the requirements of both sets of standards eventually will be the same.