The journey to the CFA designation is extremely long and difficult. It’s understandable that candidates believe the charter will virtually guarantee them a job and just as understandable the disappointment they feel when they still don’t have a job after earning the designation.
While the CFA curriculum is one of the best sources of professional education in the world, it is still just education. A lot of candidates are still shut out of their dream job because they just don’t have the experience or practical knowledge required.
What more do employers want?
Of course qualifications vary according to specific jobs but many of the employers I talk to say the same thing when asked about their perfect job candidate. They say that the CFA designation or progress to it is a great start, ensuring them that the candidate has a strong base of core knowledge, but they also need someone with practical experience.
While the CFA curriculum may help you understand the ‘what’ and ‘why’ of asset valuation, it doesn’t do such a great job of explaining the ‘how’ of analysis. The material on financial statement analysis is detailed but it is not integrated well enough that candidates can use it practically.
Employers are willing to train new hires but they don’t want to start from scratch. They don’t necessarily want 20-year analyst veterans but they want candidates that already know the basics of cash flow modelling and working in Microsoft Excel.
How to get experience without getting a job
So we’re left with the chicken and the egg problem facing candidates. They can’t get a job because they’ve got no experience but can’t get experience without a job.
There’s actually a pretty easy solution.
There are several credible websites that offer self-study courses on financial modelling and other practical valuation courses. Before I talk about a couple I should note that FinQuiz is in no way endorsing any particular site or study course. Those below are only the ones I have used and have found to be detailed and informative.
Your first stop should be a basic financial modeling course, something to show you how to construct your own financial statement model in Excel. An integrated financial statement model is the backbone of an analyst’s work, integrating all the previous information from the company’s regulatory statements and working through a proforma of your own assumptions. Wall Street Prep offers a basic course and a premium course that includes the basic model, discounted cash flow modeling, M&A modeling and a leveraged buyout model. When I was putting together my team for a sell-side research department a few years ago, it drove me crazy how many candidates did not know the basics of constructing a model and how to integrate credible assumptions into the valuation estimation process.
I have also taken the Real Estate and REIT modeling course at Breaking into Wall Street. I already had some development and commercial RE experience before the course but was surprised at the amount of detail. I would generally recommend that you focus on basic modeling courses and not do too much training in a specific industry until you get a job and find out in which industry you’ll be focusing. Some employers may want their analysts to start as generalists first. The course is very good though and might help you get in the door to a RE development or REIT analysis firm.
Simon Benninga has published a very respected book on financial modeling through the MIT Press. It may be harder to follow than the videos that come with a self-study course but a new copy of the book will come with a data disk of models.
The two websites above are well respected for their course material. If you choose another provider, check around with other candidates to get feedback on CFA study material. As a sneaky way of getting your foot in the door, you might try asking around the local CFA society about modeling courses. Asking a few charterholders their input on modeling courses lets them know that you’re willing to do what it takes improve your skills and get a job. You might just have one waiting for you after you finish the course.
‘til next time, happy studyin’
Joseph Hogue, CFA