AMP Treatise

2005-06-03 11:07 (New York)

By Jessica Brice
June 3 (Bloomberg) -- The Chartered Financial Analyst exam, a
rite of passage in the financial services industry, is gaining in
popularity outside North America, with 53 percent of the 78,474
people planning to take the test tomorrow overseas.
The increase is spurred by candidates from India and China
and demand from investment banks and money-management firms in New
York, London and Tokyo for analysts who can dissect income
statements and balance sheets, said Jim Cudahy, spokesman for the
CFA Institute in Charlottesville, Virginia, which administers the
exams.
``It's almost critical to have CFA certification to get a
permanent position these days,'' said Robert B. Thompson, a
portfolio manager at Dodge & Cox, which oversees $145 billion in
San Francisco. ``Within the investment management industry, it's
very well regarded because it is so difficult to complete.''
Thompson, the former president of Securities Analysts of San
Francisco, completed the program in 1993. About 10 employees at
Dodge & Cox plan to take the exam tomorrow, Thompson said.
International candidates have risen steadily to 51 percent of
test takers last year from 8 percent in 1990. The number of
candidates in China, where economic growth is fueling a surge in
transactions such as initial public offerings, climbed to 4,953
this year, from 135 in 2000.

Growing Numbers

More than 110,300 candidates in 145 countries enrolled to
take the six-hour exam in the 12 months ended June. Candidates
must pass three exams, as well as have three or more years of work
experience as a financial professional, such as a broker, analyst
or fund manager, to become a CFA charterholder. The exam is
offered in June and December.
In 2004, almost 110,000 people took the test. The institute
recommends candidates spend 250 hours studying for each test,
which includes sections on asset valuation, economics and
portfolio management. Test-takers need to know how to calculate
returns on bond and derivative trades and how to value cash flow.
As the popularity of the test has grown, it has become harder
to pass. The rate of people who passed the first level of the exam
last year fell to 34 percent, said Cudahy. The total passage rate
since the exam was first administered in 1963 is
59 percent.
Fewer people are passing the exam partly because ``the
profession as a whole has become more complex,'' Cudahy said.
``The body of knowledge required to work within the industry is
much larger.''

Job Applicants

The exam enables prospective job applicants to stand out,
said Satish Swamy, senior portfolio manager who oversees
$60 billion for the University of California Regents in Oakland,
California.
Employment in the securities industry climbed by 25,400 jobs
to 780,700 at the end of 2004 from a year earlier, according to
the Securities Industry Association, Wall Street's trade group. It
reached a record high of 840,900 in March 2001.
``It's mandatory given the information available in the CFA
program,'' said Swamy, who holds the CFA credential. ``They cover
every topic known to man in investments.''
Jack Malvey, head of fixed income at Lehman Brothers Holdings
Inc., the fourth-largest securities firm by market value, said
demand to take the test would have to wane in the coming few
years. The number of test takers has grown by a
16 percent compounded annual rate since 1983 and would reach
105 million people by 2050 if that growth continued.
``At some juncture, this rate of growth is not sustainable,''
he said.

--With reporting by Thomas Keene and Cynthia Costas. Editors:
Wolfson, Merz, Holdcraft.

Story illustration: For the Web site of the CFA Institute,
see http://www.cfainstitute.org. For links to education
organizations on the Bloomberg, see {EDOR }.

# posted by AMP @ 6/04/2005 03:36:00 AM