If you look into students’ brains pursuing the CFA Program with all their might, we will see one thing common. They have an immense urge to earn big.
- CFA is not an exam that can be passed by anybody. Everybody shouldn’t pursue even CFA. It’s a very tough nut to crack and to pass the exam. You need to let go of your weekends and any left-over relaxation on weekdays (we assume that you’ve been working full-time with an organization).
- Most people jump in to pursue the CFA examCFA ExamThe Chartered Financial Analyst (CFA®) Program offers a graduate-level curriculum and examination program designed to expand your working knowledge and practical skills related to investment decision-making. without doing proper research. They just go with the flow. But if you’re someone who wants to pursue CFA, you need to check the data before you take the plunge.
- In this guide, we will try to investigate whether CFA is the right option for you if you’re looking for a hefty amount at the end of the day.
- To be precise, we will answer one question – “Is CFA as valuable as it seems (of course, in terms of compensation)?”
Let’s get started.
- CFA Occupation Statistics & Top Employers
- A broader view of CFA Salary
- Market Employment Outlook in terms of Investment Professionals
- What would you do with CFA salary information?
CFA Occupation Statistics & Top Employers
Before we critically analyze CFA salary data, here are two things we need to consider. First, we will look through CFA Occupation Statistics, and then we’ll discuss top employers employing CFAs globally.
Why are these two things important?
There’re two reasons. First, you need to know which job profile you would take after CFA. Second, you need to know which company can employ you in that position.
CFA Occupation Statistics
According to the statistics of June 2014, it was found that the top occupation after completion of CFA is of Portfolio ManagerPortfolio ManagerA Portfolio Manager is an executive responsible for making investment decisions & handle investment portfolios for fulfilling the client’s investment-related objectives. Also, he/she works towards maximizing the benefits & minimizing the potential risks for clients. . 22% of all the members go for Portfolio Management. After Portfolio Management, the second top position is taken by Research Analysts (15%). Then gradually, Chief Executives (7%), Consultants (6%), Risk Managers (5%), Corporate Financial Analysts (5%), Relationship Managers (5%), and Financial Advisors (5%) take their respective places.
So if you do CFA, the top four positions you should aim for are – Portfolio Managers, Research Analysts, Chief Level Executives & Consultants.
source: CFA Institute
Top Employers Globally
The top 10 employers globally. It’s based on the data received by CFA Institute in June 2014. The companies are ranked according to the number of total candidates and CFA holders. The top ten companies that provide employment to CFAs globally are –
- JP Morgan Chase
- Bank of America Merrill Lynch
- Ernst & Young
- Morgan Stanley
- Wells Fargo.
A broader view of CFA Salary
It’s important to have a big picture before you pursue your CFA. This big picture will help you broaden your vision about CFA certification and what to expect from it.
As per the statistics of June 2014, 66% of CFA members are from the USA. So, if you look at the USA’s CFA salary report, we would get a broader picture of how much compensation you can expect in the USA and nearby areas after you complete your CFA.
source: CFA Institute
According to CFA Society, Chicago, USA, the median total compensation as in October 2015 of graduate and bachelor CFA holders is US $215,542 per annum US $154,025 per annum, respectively. On the other hand, the median total compensation of non-CFA graduate and bachelor degree holders is US $160,000 per annum and the US $85,875 per annum, respectively.
The median total compensation is based on the CFA salary received by all (experienced and inexperienced). Thus it’s important to know the experience chart on which the above data is based upon.
There’s a term called “compensation perception.” In light of this study, we will see an overview of total compensation vs. compensation perception.
Let’s have a look –
According to Payscale, the median salary is a bit different. Have a look at the chart below –
After the USA, the UK, and all other European countries come to the forefront regarding the number of members.
The average CFA salary in the UK is the US $36,892 per annum, and can earn up to the US $128,290 per annum (depending on the experience). If you compare the CFA salary in the UK with CFA salary in the USA, then there’s a drastic difference. It may happen due to less popularity of CFA in the UK. But in Europe, CFA is popular; thus, a CFA holder financial analysts get around the US $124,000 per annum.
After the USA and Europe, most CFAs are from Asia. Even in India, the salary is much lesser, in Singapore, the CFA salary can go up to the US $235,000 per annum.
Let’s have a look at the CFA salary in all countries put together –
The following chart shows that the bonus and increase in salaries vary as per the country. Have a look at the chart to understand where the increase in the minimum salary is highest and where it’s lowest.
According to the chart, we can see that in Australia, there’s a maximum increase in the minimum salary and the lowest increase we can see in India. Even the increase in salary in the USA is not as significant as it should be. In Hong Kong, the average bonus earned by CFAs is highest, and in India, it’s lowest. Even in the USA, the average bonus earned is not significant.
It can be seen that in India, the compensation of CFAs is not at all up to the mark.
As per the industry, here are the average salary details of CFA holders in India –
In the following chart, we would see in which city of India you would get the maximum salary and in which city of India you will get the minimum salary as CFAs. From the chart, it can be seen that in Bangalore, CFAs get the most salary.
Market Employment Outlook in terms of Investment Professionals
It may seem that in India, the compensation of CFAs is lowest. Still, if you consider the cost of living in India, the compensation is quite high compared to the other professions. In this section, we will look at the future and see how much the employment market will increase in terms of percentages.
According to CFA Institute’s Global Market Sentiment Survey 2015, it was found that the employment opportunities in terms of investment professionals would most increase in India, then China, and then in the UK. The lowest expected growth was reported in Germany in terms of an increase in investment employment opportunities.
India is the second populated country globally (1.33 billion as of July 2016), and naturally, it’s now the most promising emerging market in the world. Thus businesses can see the opportunities and are entering the Indian market for more growth, and as a result, they’re offering more employment opportunities. No wonder, as CFA professionals, you’ve got an incredible possibility to grow in the Indian market than anywhere else.
Let’s look at the chart below to understand the potential growth of the employment market in terms of investment professionals.
source: CFA Institute
What would you do with CFA salary information?
People who do CFA know that they’re many factors to consider before one can come to any conclusion. You need to consider the country, the age group, the years of experience, the occupation statistics, the career progression, and the job roles CFAs choose to be in. Moreover, other factors like finding the right candidates, getting enough data to be called as a sample, and then justifying your research on the same control group. And finally, compare your data with professionals in finance who didn’t go for the CFA profession. Then you will be able to conclude.
The above data that we presented are based on all the factors that we mentioned above. So you don’t need to think that they’re exhaustive by nature. They are not, and no research can be exhaustive by itself. And there’s plenty of room for errors also.
So what you need to do with the information we provided?
The short answer is – just refer and pay attention to the following steps.
Know the truth. CFA is a generalized professional degree. It’s not like Actuaries, Accountants, Lawyers.
You’ve plenty of room to be in investment bankingInvestment BankingInvestment banking is a specialized banking stream that facilitates the business entities, government and other organizations in generating capital through debts and equity, reorganization, mergers and acquisition, etc., private equity, hedge fundHedge FundA hedge fund is an aggressively invested portfolio made through pooling of various investors and institutional investor’s fund. It supports various assets providing high returns in exchange for higher risk through multiple risk management and hedging techniques., management, analytics, consulting, bank, and many other industries. So treat CFA in a similar light.
Don’t do CFA just for the compensation:
If money is the only thing you think about, there’re other professions as well, which offer you a hefty amount at the end of the month. Thus if you ever think about CFA, consider two things first, whether CFA will help you advance in your career and will facilitate in achieving your long-term professional goals second, whether you feel inclined to study the subjects included in the CFA curriculum. If you feel that these two are not your main reasons to pursue CFA, you should reconsider your decision to pursue CFA.
Aim for an industry/occupation you want to go in:
If you do CFA, there’re many opportunities for you. You need to decide beforehand which occupation or industry you would choose to go in. You can choose to go for Portfolio Management or can opt for a Research Analysis profile, or else you can go for any other financial domain. Know everything about that domain and be clear about what technical skills are required for being the best in that occupation or industry. Then develop yourself for building those skills. CFA alone can’t give you an edge. If you have required technical skills along with CFA certification, you would be a great asset to any top-notch company in that industry.
See what else you can do along with CFA certification.
You can do a million things with CFA to enhance your candidature. You already know that the number of CFAs have been increasing by 8-9% every year. In this fierce competition, you need to look for other certifications, skills, classes, books, study materials, and more. You can’t just sit and do CFA. Even if you can’t afford the time to invest in anything else other than CFA, learn well in your job. Whatever financial industry you’re working in, learn the trade in depth. Later, when you get your CFA, it will help you stand out in the crowd.
This CFA salary information is just for your reference. If, in any case, you need them, just have a look at them and then go back to concentrate on increasing your learning curve. It’s often true – if you pay more heed to the salary, you’ll forget to be someone who can earn that salary. Become more as a CFA, and compensation wouldn’t be an issue for you.