Diermeier on the CFA Program

For a chronological index of my path to the CFA, click here.

Sometimes I feel like I work for the CFA Institute’s Department of Propaganda…

Jeff Diermeier is the president and CEO of the CFA Institute. I found a couple of links this morning to interviews with him that I think both prospective & current CFA candidates might find interesting. I had never heard him speak before and thought he came across as a quiet professional, versus the shameless überpromoter other CEOs can be of their respective organizations.

The first is an audio podcast which you can get (hopefully) from
this link. If that doesn’t work click here, then download the episode called Bloomberg Interview: Jeff Diermeier, CFA.

The interview is from February 2006, about 15 minutes long, and covers such items as:

    How many people who begin the CFA program complete it?
    1 in 5

    How has the exam changed over time?
    Less economics now. Glad I waited!

    Where is the biggest growth area in people pursuing the CFA?
    Asia, which now has the same # of candidates as the USA. And since the test is only given in English, having a CFA designation can also be used to demonstrate English proficiency.

    How do they decide how to update the curriculum?
    They send out surveys to employers & charterholders. Most at the time of this interview were responding that the program should cover more on derivatives.

    And what about the difference between a CFA and MBA?
    Both are generalist programs, with the CFA being a generalist program within the investing field whereas the MBA is a generalist program in basic business management. Diermeier has both and thinks that’s a good combination in moving down a path of specialization.

And in a short discussion about Sarbanes-Oxley, Diermeier mentions something I didn’t know, that the vast majority of earnings restatements come from small cap companies.

The second link is a more recent Bloomberg interview, this time with video. It covers the same sort of topics but hits on a few new areas. A bit frustrating to watch actually, as they were obviously pressed for time so Diermeier is often interrupted.

Some highlights:

    Charterholders earn >50% than those without the designation.
    Unfortunately this isn’t really expanded upon. Assume this is on average?

    Pass rates have trended downward in the last 3 decades. Why?
    According to Diermeier, it’s due to 2 factors. One is that the investment industry has gotten harder with more topics like the derivatives, global aspects, etc., so the material is a bit harder. But he also seems to start to say that a second reason is because people don’t appear to be studying the curriculum as thoroughly, but gets interrupted. The average pass rate for all 3 tests is 50%.

    With new material being added to the curriculum, what is getting dropped?
    Diermeier just gives an example – that economics & accounting used to be on all 3 tests and now they’re only on 2 to leave more room for the broader forms of portfolio management. He seems to imply that some areas are cut to more of a “tool level” as opposed to perhaps coverage-in-full per a university course.

    Best case scenario, how quickly can you pass all 3 tests?
    2 years, but that’s only for passing the tests, not fulfilling the work experience requirements.

    Is there a curve for the tests? Could everyone pass?
    There is no curve. Theoretically everyone could pass if they knew the material, but the probability of that is low.


    What is the average pay of a CFA charterholder?
    Speaking purely in terms of average, $240,000 per year. Compare to average salary of a lawyer, which is $160,000 per year.

Motivated now? 🙂

Update: I finally passed all the CFA exams and wrote an eBook about the program. If you’re interested, click here.

29 thoughts on “Diermeier on the CFA Program”

  1. Hi Lumilog,
    Thanks for a great page. I am taking the CFA in June and find this site very valuable as I don’t know anyone preparing for the test. I once read someone’s reply to your blog and they mentioned they can give invitation to Doostag. Do you remember which posting that was on. I read all of them today and couldn’t find it.
    Thanks

  2. Hi. Keep persevering Lumilog and everyone else attempting to take the CFA exam. Anyways I’m just curious what level of math minimum would you need in order to take the CFA? Reason I ask is because I’m a junior in High School taking Algebra II and was wondering what more is necessary for this type of test. Thanks

  3. The program director for the Scwheser level-2 program states that pass rate for level 1 is actually over stated because something like 20% of people who register for the level-1 exam don’t actually show up. The published pass rate for level 1 is for people who do show up. I believe this is one of the reasons that a lot of the 2008 level 1 exam material has been moved into level-2 to make the level-1 exam a bit less daunting. (Gee, thanks, I thought I just read a lot of the same things last year. You want boredom? Try reading through 100+ pages of stuff that you sort of remember but no longer find challenging or interesting.)

  4. Hey Lumilog

    been following your blog for a while now and it was one of the things that helped me make the decision to start. you site is a big comfort and it’s good to know that so many people are suffering… err studying for it as well :D. they really should have a link your blog on the CFA website.

    Gee, lvl one material is already this dense, i wonder what the rest will be like? At least we’ll all have a full year and experience

  5. Hi Mick:
    I am also taking the CFA Level 1 in June. Could you please invite me Doostag as well. My email is akhtarjacob followed by gmail dot com. Thanks
    Jacob

  6. Hey Mick, can you send me an invite to Doostang please? it would help out with my job search since I just passed L1 in Dec. Email is dzettinger at gmail dot com. Thanks!

  7. Hey Mike,

    Would you please invite me to Doostag? My email is ‘mail2jerrin@gmail.com’. Thanks a lot and good luck for your exams!

  8. Hey Mick,

    I’m planning also on taking CFA level 1 but not for a year. I was wondering if you could invite me to Doostag? My email is ‘michrha@berkeley.edu’. Thanks and good luck!

  9. Hi Andaz,

    This thread is kind of old and there are a lot of comments above. Don’t even remember who first made doostag invites available, but hopefully they’re still reading and can get you in.

    -Lumi

  10. Hello, I am from Bangladesh(a south Asian country). My elder brother lives in U.S.A. I am thinking about having C.F.A. degree. This information will be very helpful to motivate me in doing C.F.A. degree. I think it is a very valuable professional degree for today’s world.
    Regards
    Arifur Rahman
    arif_rahmanzahu@yahoo.com
    Department of Finance
    University of Dhaka, Bangladesh.

  11. Well i think CFA is an important designation which will be helpful to anyone irrespective of their background in Financing or Engineering. Now the world market is getting so competitive that students are opting out for CFA and MBA. With the rise of China and India, more bright minds are competing to get this designation.
    But it will be interesting to see one day there will be a saturation point on CFA and folks will be pursuing some another designation just to get a perfect job.

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