Are You Smarter than a NEW CFA Charterholder?

CFA Society of Minnesota

Michael G. McMillan, PhD., CFA, CPA

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Four Virtues of the CFA Charterholder

ETHICS TENACITY RIGOR ANALYTICS

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Total CFA Registrations & MembersMay 2009

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May 2009

New Candidate Enrollment

June 2009 Exam Results

128,506 registered candidates from 163 countries; 104,116 sat for the exam

182 exam sites worldwide in 89 countries

19% no-show rate (10-year average of 25%)

Overall pass rates (weighted average 45%)

46%: Level I (44% avg. from 1964-2009)

41%: Level II (49% avg. from 1964-2009)

49%: Level III (64% avg. from 1963-2009)

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Charterholders and Candidates

As of  22 March 2010, there are 139,701 candidates registered for the June 2010 CFA exam (all 3 levels) worldwide.

Over 62,000 candidates are projected to register for the December 2010 Level I CFA exam. Currently 11,637 Level I candidates are registered for December.

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Candidate Enrollments(December 2009 and June 2010 exams)

U.S.54,650

Canada15,787

Singapore6,482

U.K13,081

P.R. China22,387

Hong Kong10,028

Korea8,594

Taiwan2,568

Australia5,148

Latin/South America

3,309

South Africa2,846

2011 Registration/ Exam Change

Effective 1 January 2011, a valid international travel passport will be required for CFA Program enrollment and exam registration. This will apply to all candidates.

This means that a passport will be required to register for the exam and to be admitted to the testing facility.

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First CFA Exam, 1963

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Today’s CFA Exam

The CFA® Program

A graduate level program that takes a generalist/foundations approach to investment analysis and portfolio management and emphasizes the highest ethical and professional standards for the investment profession.

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A Practitioner Driven CFA Program Process

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The CFA Program Cycle

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Bodies of Knowledge

CandidateBOK

PWMBOK

CIPMBOK

Frontier (emerging)

Global Bodyof

Investment Knowledge

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Purpose of Practice Analysis Process

To ensure the continuous development of the Global Body of Investment Knowledge (GBIK)

GBIK: The comprehensive outline of mainstream knowledge for the investment profession, encompassing an entire career – novice through expert – for both generalists and specialists.

To identify the relevant content for the CFA Program Candidate Body of Knowledge (CBOK)

CBOK: The inventory of knowledge and responsibilities expected of the professional practitioner of investment management at the level of a new charterholder. It is the roadmap for the CFA curriculum development and is organized into four functional areas: Ethical and Professional Standards, Investment Tools, Asset Valuation and Portfolio Management.

CFA Program Candidate Body of Knowledge

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Portfolio Management andWealth Planning

Investment Tools

Asset Valuation

Portfolio Management

Ethical and Professional Standards

Quantitative MethodsEconomicsFinancial Reporting and AnalysisCorporate Finance

Equity InvestmentsFixed Income DerivativesAlternative Investments

Ten CBOK Topic Domains

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Curriculum

The topic focus and learning focus differ at each level

Topic Focus Learning Focus

Level I Investment Tools KnowledgeEthical Standards

Comprehension

Level II Asset Valuation ApplicationEthical Standards Analysis

Level III Portfolio Management SynthesisEthical Standards

Evaluation

The curriculum at each level is organized into 18 study sessions

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Principles of Curriculum Development

Teach the knowledge and skills required of a generalist• Identified in the Global Practice Analysis• Defined by CBOK and DUO

Select, develop and regularly review materials that:• Are appropriate in a distance-learning environment for a global

candidate base• Are clear and accurate• Contain numerous examples/problems with solutions

Avoid curriculum materials that are:• Predominately empirical/historical in nature• Topical (current events oriented or survey articles)• Country specific and/or specialist in nature

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Custom Curriculum

Custom curriculum gives us flexibility to:

Publish only the pages of a reading that we wish

to require

Add pedagogy (examples, questions, problems)

where needed

Make improvements to readings based on practice

analysis

Update examples and scenarios to current

environment

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2009 Curriculum Changes

All MC and IS questions have 3 answer choices

• The fourth choice is often ineffective

• Exams are adequate samples of CBOK

• Time management is a factor in exam success but the primary objective is to determine mastery of the targeted KSA’s

• The Standard Setting process evaluates exam difficulty over time

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2010 Curriculum Major Changes

• Increasing proportion of curriculum developed by

CFA Institute

• Revision of Level I Equity Asset Valuation readings

• Revision of Level I and II Financial Reporting and

Analysis Readings for IFRS and US GAAP changes

• Expansion of Private Wealth Management

curriculum (Level III)

• Expansion of end-of-reading problem

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Standard Setting

• The objective of Standard Setting is to determine the score that represents acceptable competence or mastery of the concepts

• Conducted by independent psychometricians

• Group represents member and candidate demographics

• Each participant works independently to evaluate each exam question/answer

• Average score = recommended MPS

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The MPS Process

• CFA Institute Board of Governors (who are CFA charterholders) determines CFA Exam Minimum Passing Scores

• Primary input is standard setting

• Pass rate for each level is a residual determined by each level’s MPS

• Since 1996, the Board has considered performance on Ethics for candidates in a narrow band around the MPS

Volunteer Opportunities

• Practice Analysis• Curriculum Development • Curriculum Review • Exam Development• Exam Review• Grading• Standard Setting

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Chartered Financial Analyst®

A Symbol of Integrity and Professional Excellence

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