CFA Institute Makes ‘Biggest Single Package of Changes’ in Its History

New level III pathways, including private wealth and private markets, and practical skills modules are just two examples of sweeping changes to the curriculum.

Illustration by II

Illustration by II

The CFA Institute has made sweeping changes to its credentialing program after more than two years of surveying members, according to sources. The CFA Institute confirmed the changes and said it will announce the news on Tuesday.

The six changes — the “biggest single package of changes,” according to an insider — include introducing specialized tracks to the Level III exam, including private wealth management, private markets, and the traditional portfolio management path, Institutional Investor has learned.

The CFA Institute also is adding practical skills courses such as coding for investment managers; recognizing professionals who complete level I or level II using digital badges; and offering learning materials at a lower price than most test prep providers.

“There’s a very real sense in the education and credentialing industry that today’s learners want something a little bit different,” a source from the CFA Institute said. “One question I get a lot is why we are changing so much at once. Yes, we are moving quickly, but that’s because the industry is moving quickly.”

The CFA Institute administers exams for investors looking to obtain the coveted CFA credential and provides educational research for investment industry professionals. People can only obtain the CFA credential after completing all three levels of the program.

The institute’s changes aim to modernize programming and to recognize the efforts CFA candidates put in across all exam levels, even if they don’t complete all three.

The first change — adding practical skills modules to all three levels of the CFA program — will include ten-to-15-hour long courses that focus on subjects such as financial modeling, analyst skills, and Python for investment managers. Candidates will have to complete one module for each level of the program.

“This came about after speaking with employers who were bemoaning that while what’s in the program was very practical, when they hire new charterholders, they’re not quite job ready,” the source at the CFA said.

The next change is the introduction at level III of specialized pathways, private wealth management, private markets, and traditional portfolio management. No matter the level III course of study, people will obtain the CFA charter. The institute will implement the pathways with level III exams in 2025.

The CFA source believes the specialized tracks will work in concert with other designations like the Chartered Alternative Investment Analyst and Certified Financial Planner designations.

“I don’t think it’ll disturb those markets, but I do hope that it helps expand our appeal by being that much more relevant to those industries,” the source said.

When asked about the programming changes, CAIA Association CEO Bill Kelly said: “There are no shortcuts in the learning pathways for a professional in our industry. Democratization, performance dispersion, and opacity are all on the rise, at a time when median returns to our investors are in decline. Our sole mission remains focused on better outcomes for the investor and there we will never compromise, stray, or pretend to be all things to all people.”

The CFA Institute also plans to offer 1,000 more practice questions and six additional mock exams first for level I, starting in May 2023.

“A lot of people asked me if we’re going to disrupt the prep provider market,” he said. “A lot of prep providers offer other things that candidates one. This provides a high quality and much less expensive option.”

In an effort to streamline the studying candidates do for the program, the institute is also trying to focus the content. “First off, we took the low-hanging fruit and identified those spots where the program is duplicative,” the source said. “We’re taking some of the most introductory content from quant, economics, and financial statement analysis and moving that to a prerequisite. It’ll still be available to all candidates as an optional reference resource if they need it.”

The CFA Institute also aims to recognize the work candidates put in before obtaining the charter at level III. For people who pass the first two levels, the organization will offer a digital badge that they can use on sites like LinkedIn and in their job searches.

The final change has already been announced: The CFA Institute will now allow students with two years remaining in their undergraduate degree to begin preparing for the exam, rather than just one.