Financial services have become increasingly specialized to meet the varying needs of a more sophisticated and demanding clientele and to reflect the complexities of global capital markets. A full discussion of the recondite nature of these markets, and the many professional certifications that have arisen to better arm professional cadres to address them, is beyond the scope of this article. Here, we review three credentials in particular: the Chartered Financial Analyst, the Certified Financial Planner™ and the Commodity Trading Advisor.
Requirements for Certification
To understand career opportunities for individuals with such credentials, it is helpful to understand the requirements to obtain them.
Chartered Financial Analyst (CFA)
The requirements to become a charterholder are threefold: One must have four years of relevant work experience, complete three rigorous examinations that build on the fundamentals of financial analysis and portfolio management, and adhere to the Code of Ethics and Standards of Professional Conduct issued by the conferring body, the CFA Institute.
Certified Financial Planner™ (CFP®)
Here, as well, there are three requirements to become a CFP® Professional: One must have three years of relevant work experience, complete a two-day, 10-hour board exam and adhere to the Certified Financial Planner™ Board of Standards' Standards of Professional Conduct.
Commodity Trading Advisor (CTA)
Commodity trading advisors counsel investors on the purchase and sale of commodities contracts. Compared to the two foregoing professional designations, the professional's role and responsibilities are a bit more circumscribed. The requirements to become a CTA are the following: submit to a background check, pass the national commodity futures exam (FINRA Series 3, a professional license) and register with the appropriate professional association or government agency.
The CFA and CFP® certifications are earned through accrual of applicable work experience and examinations. In this sense, the path is similar to that taken by the medical student. He or she completes medical school and then apprentices through fellowship and residency before donning the white coat. Unlike the medical student's pursuit of a medical doctor's license, however, the CFP® and CFA are not prerequisites to managing money or offering planning services. To become a Commodity Trading Advisor, one must pass the Series 3 exam and register with the appropriate self-regulatory organization (SRO) and government agency before holding oneself out to the public as a CTA. The Series 3 is a professional license, as is one to practice medicine or law.
What constitutes acceptable work experience? To answer that is to understand the basic skills that underpin what these three sorts of professionals do.
Chartered Financial Analyst (CFA)
A CFA analyzes financial data as part of the decision making process, be he or she a practitioner or supervisor of one. Additionally, the (aspiring) charterholder may teach any number of topics that are within the CFA Institute's Body of Knowledge (BOK). Charterholders aspire to greater knowledge, are intellectually curious, adept thinkers and strong with numbers. What follows is a partial list of some of the more common professional roles taken from the CFA Institute's website. Bolded titles are the author's emphasis on some of the most typical jobs of which one thinks when hearing the acronym CFA.
Client service representative
Corporate chief financial officer
Corporate finance analyst
Institutional sales professional/business development (buy and sell side)
Investment banking analyst
Mutual fund sales
Private client investment adviser
Quantitative investment or risk analyst
Real estate investment manager
Supervisor of investment firm
Valuator of closely held business
Venture capital analyst
Certified Financial Planner™ (CFP®):
A Certified Financial Planner™ Professional helps individuals, professionals and business owners with all manner of financial planning decisions. A successful planner is intellectually curious, facile with numbers and enjoys working with people. An interdisciplinary certification, the CFP® encompasses insurance, education, investment, tax, employee benefit and estate planning. Planners may often serve as generalists in a quarterback role, marshaling all of the parties to a client engagement or may be "a foot wide and a mile deep." An example would be a rollover specialist who assists wealthy individuals in managing assets in an Individual Retirement Account (IRA). In the eyes of the CFP Board of Professional Standards, acceptable work experience "must fit within at least one of the six primary elements of the personal financial planning process."
|The Financial Planning Process||Examples of Qualifying Work Experience
|Establishing and defining the relationship with the client||Financial advisor, tax planner (CPA with or without an active license, Enrolled Agent, tax attorney), insurance agent, general securities representative, registered principal, Certified Employee Benefits Specialist (CEBS), Chartered Life Underwriter (CLU), Chartered Financial Analyst (CFA), Chartered Financial Consultant (ChFC), attorney with or without an active license, estate planner.
|Gathering client data|
|Analyzing and evaluating the client\'s financial status|
|Developing and presenting the financial planning recommendations|
|Implementing the financial planning recommendations|
|Monitoring the financial planning recommendations|
Commodity Trading Advisor (CTA):
A commodity trading advisor counsel clients on the purchase and sales of commodity futures contracts. While a CTA may be an entity as well as an individual, this discussion focuses on the requirements of the latter. CTAs are risk takers and streetwise in the ways of markets. Often they work as traders in the manage futures segment of the hedge fund industry. Successful traits of this professional include an ability to think on one's feet quickly, analyze multiple scenarios and outcome and manage risk.
The Bottom Line
The evolution of financial services has given rise to a plethora of opportunities for those with the right skill set. CFA charterholders fill many different roles. Their common understanding of markets and products suits them well for these opportunities. CFP® Professionals help individuals plan in a multidisciplinary framework, addressing some or all steps in the six stage financial planning process. Finally, CTAs are facile in the study of futures markets, often serving a critical role in the managed futures domain of the hedge fund industry. But the career opportunity/skill set nexus does not stop here. As with healthcare, the number of highly specialized professional cadres who have arisen to address the profession's growth and complexity continues and will continue to evolve.