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Only 35% Pass Wall St.’s Toughest Test. How Much Does That Matter?


When the pandemic hit, Irene Zhu decided to explore switching careers from tourism to finance. A lifelong math whiz, Ms. Zhu, 37, set her sights on becoming a chartered financial analyst, a highly coveted professional qualification in the investing world. But to do so, she would need to pass three notoriously difficult tests, the first of which she sat for in February — after staying up well past 1 a.m. on many nights studying.

She failed.

“I have to say, it was pretty messy,” Ms. Zhu said in a video chronicling her experience. “What made the C.F.A. exam really challenging for me is the time and effort that I needed to put in,” she said.

The process of earning a C.F.A. after one’s name has always been grueling: Candidates are expected to master 3,000 pages of material and demonstrate their ability to analyze companies’ financial statements, forecast investment profits and manage conflicts of interest, alongside a vast swath of concepts and scenarios.

The pandemic made that slog harder. Ms. Zhu, based in Melbourne, Australia, was among roughly 140,000 people who sat for one of the three qualifying exams required for a C.F.A. this year. Only 35 percent passed. Of those who took their first exam in the most recent round in July, the pass rate was 22 percent — the lowest on record since the nonprofit CFA Institute began administering the tests in 1963. On average, fewer than half of C.F.A. test takers across all levels pass.

The record lows revived a longstanding debate among finance industry veterans: How useful is the credential for success on Wall Street? And how does it compare to the industry’s most popular graduate degree — the M.B.A., or master of business administration? Those questions — M.B.A. vs. C.F.A. vs. nothing at all — pop up periodically in the industry, but this time around they carry more urgency, especially with registrations for the C.F.A. program down from their 2019 peak. In the midst of the pandemic, Wall Street’s biggest firms have also been forced to rethink some of the rites of passage that have long gone unquestioned — like long hours at the mercy of bosses or buttoned-up attire.

C.F.A. candidates whose exams were canceled or postponed because of lockdowns and hardships during the pandemic had poorer results, the institute said after auditing data from the last two rounds of subpar scores. Although the tests are typically offered twice a year, they were offered several times this year because of the pandemic.

“People have had, in many cases, their lives upturned — we know they’re working from home virtually, there’s a fatigue setting in,” said Margaret Franklin, the chief executive of the CFA Institute, which is based in Charlottesville, Va. “There’s kind of the optimal study conditions, and then there’s the reality of Covid,” she said.

Many of today’s top financial managers hold CFA credentials, including Marty Flanagan, the chief executive of Invesco, which manages $1.5 trillion, and Heather Brilliant, chief executive of Diamond Hill Capital Management. Other top leaders in the asset management business, including the BlackRock chief Laurence D. Fink, do not.

Howard Marks, the billionaire investor and co-chairman of Oaktree Capital Management, a fund that specializes in distressed debt, holds both a C.F.A. title and an M.B.A. degree. A firm supporter of the C.F.A. program, Mr. Marks said the title was valuable because it was the closest thing the money management business had to an industry qualification.

“The C.F.A. doesn’t tell anybody whether so-and-so is a good investor — it only goes to the question of academic preparation, but it’s clearly a plus,” Mr. Marks said. “You can take an M.B.A. and not have any investment courses, so an M.B.A. is…



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