Advice For Young People Trying to Break Into The Finance Industry

A reader asks:

I am considering starting the CFA program now while in my last year of college and then taking the level 1 exam right after graduating. My question for you is, price of the program and exam aside, do you think there is a benefit to getting started while in college so that a lot of the knowledge is still fresh? Or is it better to wait a few years after graduating and working?

Some people in the industry like to poke fun at the CFA. Does Warren Buffett have his CFA? How about George Soros?

The implication being if the world’s greatest don’t need it why would you?

The CFA program is not for everyone. For one, it’s not easy. It requires a ton of self-motivated study time and can take anywhere from 2-4 years to complete. They recommend 300 hours or so of study for each of the three levels. Your nights and weekends will be ruined for 6-9 months each year so the biggest investment you’ll be making by taking the CFA is time and energy.

On the bright side, the CFA is much cheaper than a graduate degree. But I think the biggest net positive for young people, especially those with little-to-no experience in the markets is it shows you have the desire to learn. It shows you’re willing to put in the time. So it makes sense to take it as soon as you’re ready.

Coming out of school few people have legitimate experience or knowledge that’s applicable on the job. Most are forced to learn through trial by fire.

When I applied for a job with the investment office of a large endowment just a few years out of college they listed progress towards the CFA as a requirement for the role. I had recently signed up for level one of the test before going through the interview process. The fact that I was pursuing the CFA didn’t get me the position but it certainly helped.

Do you need the CFA to succeed in the investment world?

Of course not. There are plenty of investors who shouldn’t waste their time. Is all the material useful? Of course not. But there is enough useful material to provide a baseline of information for those just starting out in the finance industry.

How many people need a college degree to successfully pull off their job?

Going through the CFA program shows initiative. It shows you care. An investment in learning is an investment in yourself.

I talked to a group of business students this week and they asked me how they could improve their prospects for landing a decent finance job after graduation. Some were interested in portfolio management while others wanted to be a financial advisor.

I told them the CFA would be a good start for a career in portfolio management while the CFP would be more useful on the advising side of the table (I actually think CFPs will be in higher demand in the years ahead with the wave of baby boomer retirements coming).

Earning a professional designation promises you nothing of course. There were well over 200k candidates sitting for the CFA exams this year in addition to the 165k worldwide charterholders. The CFP claims more than 82k certificants.

Self-education extends beyond the textbooks. I came out of school knowing next to nothing about the markets so I read every book, research paper, and news story I could get my hands on to even get to the point where I could hold a coherent conversation with colleagues without sounding like an idiot.

Yet none of these designations, books, or whitepapers are useful in the slightest if you don’t know how to translate the knowledge you gain into useful insights or analysis. Understanding how different the real world is from the textbooks is something most schools don’t teach.

If you can find a decent job that doesn’t require an additional designation, by all means, go that route. It’s easier and saves you a lot of time and energy.

But if you’re having trouble getting your foot in the door in the finance world, I can think of worse ways of getting ahead than continuing your education to prove to potential employers you care about the field.

Further Reading:
My Letter to Young Analysts
What They Don’t Teach You in Business School