The Chartered Financial Analyst, or CFA designation, has long been heralded as one of the most challenging and well-respected designations in the world of finance. Focusing primarily on security selection and portfolio management, the CFA is widely pursued by those specializing in investment management. However, as fees in the investment management space continue to compress and many Americans choose passive investment vehicles, our recruiters are speaking with more and more CFAs who are looking to apply their technical expertise in the world of personal financial planning.
Though investment management is certainly part of the financial planning process, most financial planners view investing as a means to an end, rather than the end in itself. Planners are increasingly leveraging passive investment vehicles, empirical solutions such as Dimensional Fund Advisors, Avantis Investors or outsourcing the investment management altogether to Turn Key Asset Management Platforms (TAMPs) so that they can spend more time focusing on retirement, cash flow, tax, estate, insurance planning, and their client’s financial planning needs. So, where does a CFA fit into the financial planning profession? How can a CFA add value?
The good news for CFAs is that the technical skill set that has made them successful will translate well into financial planning. The ability to articulate complex investing topics to sophisticated clients will be helpful as well. Further, a deep understanding of tax loss harvesting, rebalancing, and trading large blocks of securities will be appreciated by many, if not all, RIAs. Financial planning firms that utilize actively managed or alternative investment strategies may benefit greatly from the addition of a CFA. Larger RIAs are increasingly hiring Chief Investment Officers and creating robust investment committees to manage model portfolios and set the investment philosophy for the practice, opening another potential door for CFA charter holders. CFAs should be careful to articulate their career goals during the initial interview to make sure they aren’t pigeon holed into a purely investment role unless they want to be.
This begs the ultimate question: how should CFAs who are interested in financial planning make the transition? Below are a few ideas:
- Sit for the CFP® Exam - Yes, I know, you’ve already passed an extremely difficult series of exams. However, the CFP curriculum, though not quite as deep, is much broader and encompasses topical areas that many CFAs don’t encounter on a daily basis. The good news is that CFA charter holders can “challenge” the exam and do not need to complete the coursework.
- Leverage your network – If you are an investment manager who has been at this for very long at all, you likely have a robust network to tap into. Connect with a current CFP who works in the type of firm that interests you and find out what skills you can bring to the table, or which skills you need to sharpen.
- Alter your content consumption – There is no shortage of great content in the investment management and financial planning professions. If you find yourself currently consuming a lot of podcasts and articles that focus on the daily gyrations of the economy and stock market, consider adding behavioral finance or more planning centric content to your list. Not only will you pick up on more financial planning lingo, but it will also provide you with a better idea of how financial planners are implementing ideas you may already be familiar with.
If you are a CFA seeking to transition to comprehensive financial planning: welcome! This transition, though challenging, is both sensible and, ideally, rewarding. We have a host of resources about the profession here and a place for you to submit your resume here. Be sure to check out our podcast as well and listen to others share their testimony about joining the financial planning profession. We look forward to helping you on your journey!