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 learn how to obtain this highly specialized designation and some of the exciting careers available to those who attain it.
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 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.
Program Prerequisites and Exam Requirements
The only prerequisite to enter the CIPM program is 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.
To be considered for the CIPM designation you must successfully complete two difficult exams: the CIPM Level I Exam and the CIPM Level II 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.
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 thoroughly to pass both exams.
CIPM: The Key To A Niche Career In Finance
The CIPM Level I Exam
Formerly known as the principles exam, the Level I exam consists of 100 multiple choice questions and is three hours in length. The 2018 topic weights for this exam are: 35% performance measurement, 25% performance attribution, 10% performance appraisal, 15% ethical standards and 15% performance presentation and GIPS standards. Historically, the pass rate for this exam is about 50%.
The CIPM Level II Exam
The Level II exam, previously called 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 2018 topic weights are: 5 to 10% performance measurement, 15 to 20% performance attribution, 15 to 20% performance appraisal, 30% manager selection, 15% ethical standards and 10 to 15% performance presentation and GIPS standards. Historically, the pass rate for this exam is also around 50%.
As far as studying for the exam, the online matierial provided by the CIPM Association is sufficient and easy to use. Like studying for any difficult exam, you should make a study schedule and stick to it. Some of the concepts are very advanced and take a lot of patience to master.
Work 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). As of October 1, 2019, the CIPM Association will be disbanded. As a result, all financial professionals who apply for the CIPM designation after October 1, 2017 will have to have an active CFA Institute membership, which requires 48 months of investment decision-making work experience.
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 15 hours of continuing education credits and sign a professional conduct statement every year.
Career Opportunities Available to CIPM Designation Holders
Before studying for many hours and taking two grueling exams, you may be wondering what types of jobs are available to CIPM certificate holders. Most of the available positions 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
- an analyst 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 can benefit from 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.
The Bottom Line
Although there is no golden key to advancing your financial career or earning a position 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, CIPM is the designation for you.