Back‘India is among the largest markets for CFA program enrolment’
CFA has introduced an India market strategy to align the India market with its global strategy, and ensure that it take into account the differential opportunity
PremiumLast week, Chartered Financial Analyst (CFA) Institute named Arati Porwal as head of its India operations. Porwal has been associated with CFA Institute for nearly eight years as senior director - society relations before assuming the country head role. In a conversation with Mint, Porwal shares the role of CFA certification in getting hired in the mutual fund industry, its fee structure and her top focus areas for growth. Edited excerpts:
CFA charter is one of the most sought after qualifications in the mutual fund industry across roles. Why is that?
I would say there are three areas that I believe that a professional qualification such as the CFA program gives an edge to candidates. In our research over the last year on the future of the investment management industry and the future of work, which is a part of our future of finance series, we have clearly indicated that the industry requires T-shaped skills to grow through to leadership positions and develop your career. T-shaped skills basically mean a broad range of skills in breadth and in-depth knowledge of the industry or the core context of the industry, which is the depth. So, while an MBA could provide you breadth of knowledge across various segments and action activities of an industry, the depth of knowledge that is required in terms of context, products, evaluation of products, their suitability to clients, all that comes with the CFA program.
The other thing that I believe the CFA program brings in, which I believe holds a very high level of importance but is not spoken so much of, is the ethical aspect. 15% of the CFA program’s curriculum is ethics, and we take our ethical knowledge very seriously. If you look at one of the things that is clearly lacking in the industry is ethical behavior, which is becoming a barrier to building investor trust and therefore, a barrier to the growth of the industry.
The third aspect is that it delivers continuous professional development, which again, an MBA cannot, similar to ethics. No MBA college can take your degree back if you don’t behave in a certain manner. Also, while MBAs provide you a network with your alumni, it doesn’t necessarily provide you the opportunity of upskilling yourself regularly and constantly. That’s something that the CFA program, the CFA Institute, and the CFA society in India take very seriously.
How does constant upskilling happen? Is there something candidates have to do even after clearing the three levels?
If you carry the CFA designation, there are a few things that you have to do. First, if you don’t renew your membership annually, then you cannot use the CFA designation. During renewal, apart from paying the fees, you actually sign up to the code of conduct every year. The second thing is that while it is not mandatory, there is an option to acquire continued education (CE) credits. These can be acquired through consuming any of the professional learning content that we create through readings on the website, webinars or videos on various technical areas, reading our research reports, our journals or attending one of the events that our societies or institute conduct, which are technical conferences.
Does the CFA Institute have any tie-ups with AMCs, investment banks or other companies in the BFSI sector for placements or internship opportunities?
We are dedicated to ensuring that our candidates and members get the best opportunities in terms of employment in the industry. While like business schools we don’t have a placement season or campus placement, we work with them (employers) constantly to ensure that we are creating employment opportunities or increasing the recognition amongst employers of the CFA program, the charter, and the designation per se.
We have an online job portal wherein employers can post their jobs. We work very closely with the companies to channelize their job postings into the website where our candidates and members have access to these job postings and they can upload their resumes.
What is the fee structure of the CFA program?
To look at the fee structure of the qualification, there are three levels of examination, and you have to pass each level to proceed. The cost of the program is about $3,500 ( ₹2.88 lakh) across all three levels if you pass your exams in the first attempt. It is not really massive if you compare it with, say MBA, which from a tier 1 college is at least about five to six times more than this.
CFA program’s fees is not payable upfront in a lump sum and are paid at different levels as you pass. When you register for level one, you pay a one-time $450 ( ₹37,000) enrollment fee and $ 1,000 ( ₹82,300) as exam registration fee. Then for level two and three, it’s just $1,000 each of the exam registration fee.
We are constantly making an effort to reduce the impact of fees, especially dollar depreciation on Indian candidates.
How are you doing that?
Recently we tied up with a third party financier Eduvanz, that wants to offer an EMI option or a flexible payment option to our candidates in India. It carries an interest rate of 8-10% and is an unsecured loan option.
In addition to offering flexible payments, we also have different types of scholarships. In fact, India receives the highest number of scholarships from the global kitty. For people who cannot afford the fees, we have access to scholarships. Under this, in the first year the enrollment fee of USD 450 is waived off completely and the exam registration fee of USD 1,000 is reduced to USD 250 ( ₹20,500). Second, we have women’s scholarships, which are specifically for women, again, focused on these two parameters. We also have scholarships for students who study in the universities that are affiliated to us, called the University Affiliation Program. We now have about 23 institutions, most of which are IIMs and other top B schools. So, these affiliated institutes receive a few scholarships to distribute at their discretion to students studying in their college.
So, these are some of the things that we do to try to reduce the impact of the fees, even though the fees is structured in a manner that is affordable to all.
Over the last, say five to seven years, by how much has candidate enrollment increased in India for the CFA program?
India is one of the largest markets for CFA program candidate enrollment. I think 7 - 8 years ago we were the fourth largest, but now we are the second largest in terms of candidate numbers. In terms of new registrations, we are almost the first for CFA Institute per se, which means we are registering more candidates than in the United States right now.
What is the average qualification rate?
Average qualification rate globally is about one and six. To become a CFA charter holder after passing all three levels, you need to have four years of relevant work experience. Acquiring that takes time sometimes, especially in India. Passing the examinations is not really a big challenge in India as our pass rates are at par with global pass rates, in some cases even better. It varies between 40% to 35% per level in India. Age wise, Indian candidates are younger than the global average, and so they pass the exams very quickly, but take time to acquire the relevant work experience, and hence to acquire full fledged charter holder qualification.
As you take up the role of heading CFA India, what will be your top areas of focus for growth?
We have introduced an India market strategy to align the India market with our global strategy. But at the same time, to ensure that we take into account the differential opportunity as well as the challenges that we face here in India as an organization. I have been the interim head for the last eight months now and during this period I, with the team, developed the strategy and have already started implementing it. The focus of that strategy is affordability, accessibility, and employability and we will take initiatives to ensure that we deliver on these three things and make the program accessible to a wider audience of people. Anybody who aspires to be in the investment management industry should be able to qualify themselves by accessing the program. For this reason we are expanding our test centre footprint to tier-2 and tier-3 cities so that our candidates will have to travel less to reach an exam centre.
We are making it more accessible in terms of affordability, and we are working on developing modules or programs which will bridge the competency gaps and make our candidates more employable in the industry here in India.
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