CIPM: The Key To A Niche Career In Finance

By David Allison AAA

Are you looking for a career as a key player in the highly competitive field of finance? The increasing complexity of investment strategies used by large financial institutions and the growing acceptance of the Global Investment Performance Standards (GIPS) has created a greater need for ethical professionals who know how to measure, present and explain complicated investment performance numbers to sophisticated investors.

The CFA Institute has answered this need with the Certificate in Investment Performance Measurement (CIPM) designation. This designation is global, not held by many, and can be an excellent way to get your foot in the door at some of the world's most prestigious financial institutions. Read on to find out more about how to obtain this highly specialized designation and some of the exciting careers that are available to holders of the CIPM designation. 

What Is the Purpose of the CIPM Program?
According to the CIPM Association, the CIPM program was developed by the CFA Institute as a specialty credentialing program that develops and recognizes the performance evaluation and presentation expertise of investment professionals who "pursue excellence with a passion." The program also provides a strict code of ethics to guide investment professionals throughout their careers.

What Are the Requirements to Successfully Complete the Program?
Program prerequisites:
The only prerequisite to enter the CIPM program is that you must agree to abide by the CIPM Association Code of Ethics and Standards of Professional Conduct. You do this by signing a Candidate Professional Conduct Statement as part of each exam registration. This helps to protect the high standards of the CIPM exam and the integrity of the designation.

Exam requirements:
To be considered for the CIPM designation you must successfully complete two difficult exams: the CIPM Principles Exam and the CIPM Expert Exam. Both exams are computer-based and can be taken twice a year at designated testing centers in 80 different countries. One exam window is in the spring, and the other is in the fall, so it is possible to complete the program in one year.

Speaking from experience, these exams should not be taken lightly. They cover some very thorny topics like attribution analysis of portfolios containing futures, multi-currency attribution analysis, and complex hedge fund risk ratios. The ethics portion of the exams will test your best judgment and you will have to know the GIPS standards "cold" to pass both exams.

SEE: A Guide To Global Investment Performance Standards

The CIPM Principles Exam
The principles exam consists of 100 multiple choice questions and is three hours in length. The 2013 topic weights for this exam are: 30% performance measurement, 25% performance attribution, 20% performance appraisal and manager selection, 15% ethical standards and 10% performance presentation and GIPS standards. Historically, the pass rate for this exam is about 56%.

The CIPM Expert Exam
The expert exam consists of 80 "item set questions," or 20 different scenarios followed by four multiple choice questions, and is also three hours in length. The 2013 topic weights are: 10% performance measurement, 15% performance attribution, 40% performance appraisal and manager selection, 15% ethical standards and 20% performance presentation and GIPS standards. Historically, the pass rate for this exam is about 50%.

As far as studying for the exam, the online courseware provided by the CIPM Association is sufficient and easy to use. If you need a little coaching, the CIPM Association lists Ashland Partners and Company, The Spaulding Group, IEB and VBA as prep course providers to help you study for the exams. Like studying for any difficult exam, you should make a schedule for studying and stick to it. Some of the concepts are very advanced and take a lot of patience to master.

Experience Requirements
Like any other respected financial designation, there are work experience requirements associated with the CIPM designation (although you can sit for the exams before you meet the professional experience requirements). Before you can earn the CIPM designation, you must first become a regular member of the CIPM Association. The CIPM Association recognizes either two years of experience in performance-related positions or four years in the investment industry, and lists the following activities as qualifying work experience for regular membership:

  1. Two years of professional experience in one or more positions substantially entailing performance-related activities, such as:
    • calculating, analyzing, evaluating or presenting investment results.
    • providing consulting, technological, legal/regulatory or accounting services directly in support of such activities.
    • verifying compliance with the GIPS standards.
    • supervising, directly or indirectly, persons who practice such activities set forth above.
    • teaching any of the above activities.
       
  2. Four years of professional experience in the investment industry that consists of:
    • evaluating or applying financial, economic and/or statistical data as part of the investment decision-making process.
    • marketing investment management services.
    • monitoring an investment firm's compliance with applicable laws, regulations and standards.
    • evaluating or recommending investment managers.
    • teaching any of the above activities .

If you are a CFA charterholder, a regular member of the CFA Institute or an Associate of the Society of Investment Professionals (ASIP), you are exempt from the experience requirements.

SEE: What Does "CFA" Mean?

Once you meet the ethical, expertise and exam requirements, you will be awarded the CIPM designation. To keep your designation current, you will have to fulfill 45 hours of continuing education credits every three years and sign a professional conduct statement annually.

Career Opportunities Available to CIPM Designation Holders
Before you go through the process of studying for many hours and taking two grueling exams you may be wondering what types of jobs are available to CIPM certificants. Most of the available careers are highly-specialized careers in the investment industry. The CIPM program equips you for a position as a performance analyst with a central vantage point for understanding an investment firm's asset-gathering activities and decision-making processes, a position as an analyst at an accounting firm with a GIPS verification practice, or an analyst's position at an investment consulting firm that conducts manager searches and monitors institutional clients' investment results.

In addition, professionals working in investment firms' compliance, IT, portfolio accounting and marketing departments seek the CIPM credential, because it helps them do their jobs well. A list of the organizations that hire CIPM designation holders reads like a "who's who" of investment banks, investment management and research firms, GIPS verification firms, plan sponsors, and performance measurement software development companies.

SEE: Financial Career Options For Professionals 

The Bottom Line
Although there is no golden key to a career with a prestigious financial institution, this designation should definitely help your resume float to the top of the pile. The CIPM designation is globally recognized and has the backing of the prestigious CFA Institute. Some of the best minds in the investment performance measurement business have earned the right to use this designation. If you are looking to show employers that you are dedicated, ethical, have a deep understanding of investment performance and know the GIPS "cold," then CIPM is the designation for you.

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