I am going to say this right at the very beginning. If you want a career in finance, your best option is to get an MBA from a good university. That’s just how it is. Finance certifications are hugely beneficial but an MBA is just more versatile and if you can get into a really good university, you will simply be better off.
Niche finance degrees like MFE (Masters in Financial Engineering) are also helpful but if you are considering those, you probably already know what’s what.
Then where do the finance certifications come in? These are for people who already have an advanced degree and don’t want to get another one. For example, if you have an advanced Physics, Computing or Engineering degree, you are a pretty good candidate for a finance role. In that case, a finance certification will help you get the finance knowledge you need.
So the next question is which finance certification should be pursued? It depends on what career path you want to pursue. Whether you want to be a trader or a quant, whether you want to be a financial planner and help people manage their money, whether you want to work in cooperate finance or accounting and so on. I’ll give you brief breakdown below to help you get a general idea of what you should pick based on your goals and personality type.
Chartered Financial Analyst (CFA)
The CFA has been the gold standard of finance certifications for decades now. They are one of the oldest professionals certification and have thus built up a lot of recognition and alumni base. This gives them an advantage that is hard to beat.
Who should take this? The CFA mostly has to do with markets and portfolio management. So if you are into trading or dealing in equities, bonds, commodities or other markets then this is a good option. The focus is more on portfolio management rather than trading but its close enough that it should work for both.
What’s it like? There are three exams which means it will take you two and half years at least to complete it. Not to mention four years of work experience. I personally find this to be quite annoying. I completed Level 1 in college, Level 2 right after college and by the time I could take Level 3, I was already working in the role that I wanted so the benefits of the CFA kick in way too late for many of us. The exams are difficult but if you prepare well, you should not have a problem.
Financial Risk Manager (FRM)
FRM is a more recent certification and, as the name suggests, it is more focused on financial risk management. It really gained popularity after the 2008 financial crisis and I think it is a better choice overall than the CFA. Why? Because risk management is applicable to more roles across finance.
Who should take it? Risk Management is more of a middle office role so if you are not into being a trader or relationship manager and prefer a less stressful role, this is a good choice. The exam is a bit more quanty than the CFA with a lot more statistics but there are only two levels which is a bit of a relief. The work requirements are also less so you can benefit from this a lot sooner in your career.
What’s it like? Be prepared for a fair bit of statistics and maths. But its not just math, there is a lot of basic risk management principles here as well that will benefit literally everyone in the business world. Which is why I feel this is a more broad-based certification than something that focuses only on the markets.
Certified Financial Planner (CFP)
This is more of a retail focused cousin of the CFA. You help people manage their finance and your clients will range from average income earners to high net-worth individuals with millions in investable assets. Of course the competition is fiercer at the higher levels with wealth management firms trying to muscle in.
Certified Public Accountant (CPA)
CPA’s are accounting professionals whose bread and butter is managing corporate balance sheets, auditing, tax planning and financial resource management. Its a pretty broad mandate and you will find CPAs leading finance departments in quite a few corporations around the world.
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