Help! I passed all three exams but the Institute denied my charter!

“I got that email that every candidate waits for saying that I passed the Level 3 exam and was able to submit my application for membership to the CFA Institute and receive my charter. I was so happy I spent the next hour calling and emailing friends and family. My happiness was quickly turned to pain and disappointment a couple of months later when my application was denied!”

This is an excerpt from an email I received last year in December and is pretty typical of ones I get each year. The problem is almost always the same, lack of approved work experience.

Before you receive your charter and are approved for Institute membership, you must:

  • Pass all three exams
  • Have two sponsors fill out the Institute’s sponsorship application, one supervisor and one member of the local CFA society
  • Meet the requirements for 48 months of ‘qualifying’ work experience
  • Pay member dues and sign the Professional Conduct Statement

The requirement for 48 months of ‘qualifying’ work experience catches more candidates than you would think. The Institute fairly narrowly defines ‘qualified’ and will deny your application if your experience does not fit the mold.

‘Qualifying’ Work Experience


Below is the guidance from the Institute on what is considered ‘qualifying’ work experience.

  • Evaluating or applying financial, economic, and/or statistical data as part of the investment decision-making process involving securities or similar investments (e.g., publicly traded and privately placed stocks, bonds, and mortgages and their derivatives; commodity-based derivatives and mutual funds; and other investment assets, such as real estate and commodities, if these are held as part of a diversified, securities-oriented investment portfolio).
  • Engaged in responsibilities and/or producing work or work product that informs or adds value to those decisions.
  • Supervising, directly or indirectly, persons who practice these activities.
  • Teaching such activities.

The problem is that the definition provided is fairly broad while the actual criteria used in judging applications is more narrow.

In fact, my first application for membership in 2011 was denied for lack of experience. I was denied credit for my three years of work as a financial analyst since my role in the investment decision-making process was not clear.

Follow the Learning Outcome Statements


First, if you are a level one or level two candidate then you’re in luck and still have a few years to get the experience you need. If you are working in a front-office position and you’re job is directly involved in the decision-making process, you’re also in luck and shouldn’t have a problem.

If you do receive that disappointing letter, you can always provide more detail on your job duties. Focus on the learning outcome statements, especially those in the level 3 exam, and how they fit with your job duties. Every company makes investments of resources in projects and most personnel help in the decision-making process in some way. You just have to find your place in the process. After providing more detail on my work experience, including a rewrite of duties more closely related to the exam LOS, I was approved for membership and received my charter.

If you are not approved for membership even after re-applying, it’s not the end of the world. You will be given affiliate member status and will enjoy all the benefits of Institute membership but will not be able to vote. Leverage your ‘charter pending’ status into a job where your duties directly affect the decision-making process and reapply when you meet the 48 months requirement.

‘til next time, countin’ the days to start the 2018 study season
Joseph Hogue, CFA

Last updated: July 4, 2017 at 5:56 am

10 Ways to Relax on CFA Exam Day

Learn how to relax on CFA exam day to help unlock everything you’ve worked so hard to learn

OK, so it’s six weeks left to the CFA exams and the last thing you want to think about is exam day. You want to hear all the secrets to getting every last point and how to master the material, right?
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Freelance Analyst Jobs for CFA Candidates

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Five Reasons CFA Candidates Fail the CFA Exams (Part 5)

This post wraps up our five-part series on the most common hurdles facing candidates for the CFA designation. The first reason was too much time spent studying about studying, posted here. The second reason, planning a schedule around life and burnout, is a big one for those of us with a family and a full-time job. The difference between active and passive studying, is probably the biggest hurdle to success for most candidates. Last we looked at the myriad of resources available to candidates and using the right ones.

Today’s hurdle could just as easily have been titled, “I’m an ethical person, so why study ethics?” While the material on Ethics and Professional Standards is not the only one neglected by candidates, it is probably the most avoided. Sure, you need to have a good understanding of the entire curriculum but a look at the topic weights provided by the Institute makes it clear that some topics are a source of some major points.

Ethics, the easiest and most difficult topic on the exams


Candidates have a big opportunity with the ethics section though it still presents a problem for most. The topic area is tested at each level and is worth at least 10% of your exam points. The opportunity comes in the fact that the topic is the only one that really does not change much as you progress. You’ll see a couple of additional sections but these are relatively secondary against the core Code and Standards, which do not change. For candidates that give the topic its due at level I, the next two levels are that much easier.

The problem with the ethics material is twofold. Some candidates consider themselves to be fairly ethical people and so think that the answers on the exam will be intuitive. They neglect the topic and end up failing on the exam. Other candidates read the material, to the point of memorizing the Code and Standards, but neglect to do practice problems.

There are two types of ethics questions on the exam, those with no answer and those that seem to have two correct answers. You absolutely must practice the ethics problems provided by the Institute at the end of the chapters. You’ll be surprised by the level of ambiguity in some of the problems and how minute details can make the difference between one answer versus another. Don’t let the first time you are surprised by this be at the exam.

You need to know Financial Reporting & Analysis for the CFA designations??? Who Knew?

If not of equal importance to the ethics material, I would put FRA a close second. Unfortunately, a lot of candidates avoid this section as well. The material, much of it focused on accounting issues, may not be as interesting for some. It can also get extremely complicated and detailed on the level II exam.

Anyone that works in the industry, whether a charter holder or not, will tell you that understanding the financial statements is of the highest priority. As an analyst, you will need to develop models and an expert knowledge of how the company is reporting its business and how it all flows together. Spending extra time on the material will not only help you pass the exams, it will make your life so much simpler further down the road.

Equity and Fixed Income: The fun parts that aren’t so much fun anymore


Many candidates start the path to the charter because the love analyzing investments, whether in the equity or fixed income market. When they realize that it is a little more than just calculating the price-earnings ratio for the stock everyone is talking about… it becomes less fun.

The two topics can get extremely formula-intensive and most candidates only have experience in one of them. Avoid the temptation of only studying the topic in which you currently work or in which you think you want to work. First, you’ll need the points from each section to pass the exam. Also important though is the fact that you never know how your career will unfold or when you might want to work in another asset class.

Each level has its own idiosyncrasies and no one topic area will get you through every exam. The four topic areas above are extremely important but you still shouldn’t neglect the other five topics. Other posts on the blog talk about specific strategies for each level and can help you further focus your study plans.

Are there any hurdles to passing the exams that I forgot? What tripped you up the most? Let me know if you have any questions about the last five posts.

‘til next time, happy studyin’
Joseph Hogue, CFA

Last updated: January 26, 2017 at 5:16 am

5 Things I Wish I Knew about the CFA Level I Exam

Last week, I listed out the things I wish I knew before each level of the CFA exams. For the most part, these were the general ideas that relate well across all three levels. This week, I am reminiscing back to those bygone days of the Level I CFA exam.
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Study Groups | candidates probably making the same mistakes that you are making

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Why I Sacrificed Three Years of My Life and am Glad I did!

The CFA exams are tough! No doubt about it. To pass the exams, you’re basically saying that you’re willing to work a part-time job for six months of each of the next three years…and you’re going to pay someone to do it.
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