Bloomberg News

CFA June Test Takers Fall First Time Since 2005 as Firms Shrink

May 31, 2013

Enrollment for the Chartered Financial Analyst exam in June fell for the first time in eight years as Wall Street employment tumbles.

The number of candidates registered to take the June CFA exam, administered worldwide today, dropped 2.2 percent to 146,605 from a year earlier, Charlottesville, Virginia-based CFA Institute said in a May 29 statement. The number of June CFA hopefuls had increased annually since 2005 and reached a record 149,954 candidates last year.

Fewer investment professionals are taking the exam as firms cut costs and jobs to boost shareholder returns. Morgan Stanley (MS:US) said in January it would eliminate 1,700 investment-banking positions and defer all bonuses for top earners. Goldman Sachs Group Inc.’s staff has declined by 3,400 positions over the last two years to 32,000 at the end of the first quarter.

“If you’re an analyst, you’re in that part of the industry that is shrinking,” Richard Bove, a bank analyst with Rafferty Capital Markets LLC, said in an interview. Fewer CFA exam applicants is “a cyclical phenomenon, it doesn’t reflect any fundamental changes. I would assume in future years, as markets go up the number of CFAs taking the exam will go up.”

Steve Horan, a spokesman for the not-for-profit institute, said that the decrease in enrollment is the “cumulative effect of a shrinking industry.” He said the CFA expects the number to grow long-term.

Applicants take the test in hopes the CFA certificate will help them stand out in a competitive hiring environment. Goldman Sachs (GS:US) hired 350 summer analysts in its investment-banking division this year out of 17,000 applicants, President Gary Cohn said May 30.

Failure Rate

Candidates are required to have at least four year’s experience in the investment industry and spend an average of 300 hours preparing for each of the three six-hour tests, the institute said. Thirty-seven percent of applicants passed the Level I exam in December, down from 38 percent when the test was given in June 2012 and a year earlier in December 2011. Historically, more than half of all test takers fail.

Each exam includes a section on ethics. John Rogers, president of the CFA Institute, has pushed to improve the industry’s standing amid declining confidence stemming from the 2008 financial crisis.

“The candidates who will take the CFA exams this weekend are already committed to raising the professional standards of all participants in this industry, and to rebuild public trust,” Rogers said in the release.

The total number of candidates who registered to sit for the exam this fiscal year, including both the June and December sessions, also fell. Total enrollment decreased to 210,000 from 219,642 last year. The most candidates for the June exam, 63,104, are from Asia, according to the statement.

To contact the reporter on this story: Elizabeth Dexheimer in New York at edexheimer@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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Companies Mentioned

  • MS
    (Morgan Stanley)
    • $35.19 USD
    • -0.12
    • -0.33%
  • GS
    (Goldman Sachs Group Inc/The)
    • $188.27 USD
    • -0.59
    • -0.31%
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