As a professor of finance, now in my fourth decade of teaching, I’ve had the pleasure of speaking with hundreds of young people transitioning from the university to the job market. During these conversations, three hesitations often arise. The first can be represented by students worried that their coursework failed to coalesce into a solid foundation of the practice of finance, and the resulting lack of confidence in job interviews.
The second by students brimming with confidence but discouraged by the sinking feeling that they fail to stand out in the crowd. The third with the nagging question “should I now consider an MBA?” With respect to the third question, there have been recent changes in the market for the MBA degree that are worth considering. The MBA degree, at its height of relevancy 25 years ago, is today in decline. Applications are dropping, tuition is up, more and more programmes are shutting down, and most importantly, the very notion of the value of a generalist degree in business is being questioned, giving way to replacements offering concentrated curricula and sharper focus.
As the landscape of university degree programmes has shifted, so have the choices available for finance students. And here the news is good. Those eyeing to enhance but also streamline their learning would be smart to consider professional designations that are designed to provide what millennials want most – relevant knowledge presented in a way that’s easy to access, has short duration, is relatively inexpensive, and at the end builds-out your resume.
What designation(s) are best for you to pursue? According to the Corporate Finance Institute, the leading six designations, in alphabetical order, are:
CAIA: It is globally recognised as the credential for professionals managing, analyzing, distributing and regulating alternative investments, defined through different asset classes given by hedge fund trading strategies, private equity investment opportunities including venture capital and distressed debt, real assets such as real estate, infrastructure, intellectual property, and commodities, and structured products that span the full range of derivative products. With respect to general characteristics, these asset classes typically occupy the north-east corner of the risk premium curve, appealing to high net worth investors seeking both return enhancement and diversification. CAIA Charter holders must pass two levels of exams and cost about $2,500, and successful exam candidates that hold a bachelor’s degree must also have one year of relevant work experience.
CFA: The Chartered Financial Analyst designation confers the CFA Charter to candidates who pass three levels of exams and meet work experience requirements. The curriculum is built from the CFA Institute Body of Knowledge covering areas of traditional finance such as financial analysis, equity and fixed income security analysis, economics, portfolio theory and analysis and professional standards and ethics. The examinations can be completed in as few as 18 months with the typical candidate taking four years at an average total cost of about $3,000.
ICAI: The Chartered Accountant of India designation is a degree conferred to qualified accountants in India. The ICAI curriculum covers subjects such as quantitative aptitude, economics, law and all areas of accounting. It takes a minimum of four years to complete the three levels of exams (entrance, intermediate, and final), although many candidates spend longer amounts of time, with an average total cost of about $600.
CFP: The Certified Financial Planning designation is awarded to individuals holding a bachelor’s degree from an accredited university and who completes coursework in financial planning. The curriculum is broad, covering areas such as insurance, investments, tax, estate and retirement planning. The CFP designation requires all candidates to pass one exam that costs about $1,000, while also requiring a three-year work experience requirement in India.
FRM: The Financial Risk Management designation is issued by the Global Association of Risk Professionals (GARP) to candidates successful in passing a two-part exam and who meet a work experience requirement in risk management. The programme follows the major strategic disciplines of risk management including quantitative analysis, models, and risk management in areas such as market, credit, operational, and measurement risk.
FMVA: The Financial Modeling and Valuation Analyst designation programme provides applications of accounting, financial management, valuation, and modelling skills. Students must successfully complete courses and demonstrate mastery of the topics through completion of the course materials, quizzes, and assessments. The cost of the designation is about $750.
The writer is director of examinations, Chartered Alternative Investment Analyst Association