Soon after Margaret Franklin, CFA, became the President and CEO of CFA Institute, the COVID-19 pandemic struck, accelerating the shift to smaller test centres. It was an opportune time to take stock of the program and its growth because there was a sense that the world was changing. CFA Institute surveyed thousands of employers, candidates, and prospective candidates, and the industry at large. Growth had been boosted for a long time by the increase in membership in Asia, especially in India and China. The CFA curriculum had not seen many changes, save for content changes as financial markets evolved and incremental enhancements to the testing process. Feedback was consistent: change was needed.

CFA Program fundamentals

In 2023, CFA Institute announced the most significant changes to the CFA Program since its inception 60 years ago. To best understand these new changes, it is important to look back before looking forward.

Since 1963, financial markets have evolved, and the variety of roles in the industry has expanded as well. Charterholders hold diverse roles in the industry because the CFA Program is foundational, valued, and relevant in many areas within financial markets.

A snapshot of the modern CFA charterholder

Today, almost half of CFA charterholders globally are portfolio managers (PMs), including discretionary PMs, pension fund trustees, passive PMs, and hedge fund managers.

The second-largest proportion of CFA charterholders are sell-side analysts. The next most common roles, similar in number of charterholders, are private wealth management, investment banking, and private equity general partners. 

As global wealth has increased and individuals have taken more responsibility for managing their financial resources, private wealth managers have also grown in number to provide investment management and financial planning advice. 

Private equity and alternatives have also enjoyed strong tailwinds over the past twenty years. In fact, every year from 2010 to 2020, the private markets in the US raised more capital than the public markets did,¹,² and so too grew the number of positions. Roles in corporate finance and mergers and acquisitions have grown in number, and CFA Institute received feedback to include transaction models for investing in private equity markets in the curriculum. To date, the Program has limited focus on this area of the markets. 

As the financial industry evolved over time, the CFA curriculum progressed by including those topics that someone early in their career in financial services would need to master to become a good generalist.

In 1963, the program taught the modern portfolio theory that Markowitz created in the 1950s. This is still taught, along with the capital asset pricing model (CAPM) and Black-Scholes model for option valuation that was first included in the 1970s. Stocks, bonds, private wealth, and ethics have been covered since inception. 

Innovation fizzes under the hood. The Candidate Body of Knowledge has 90 elements, which do not change very often. All the innovation happens below these 90 revered slots, incorporating new investing concepts as they become mainstream, be that new securities, new strategies, new theories, or new tools³ to ensure the CFA Program remains relevant. 

Some topics from the 1960s curriculum have faded away over time, like fire insurance, unions, and nepotism, while others have increased in importance, like environmental, social, and governance (ESG): negative screening in the 1980s, socially responsible investing (SRI) in the 1990s, activism in 2000s, and green bonds in the 2010s. Annual revisions to the curriculum keep the Program relevant to the topics a charterholder needs to understand today. 

Surveying employers today to educate for the jobs of tomorrow

Employer feedback in surveys and discussions indicated that the Program should be made more practical and skills-oriented, more desk-ready rather than academic. Programs such as Bloomberg, Fact Set, and Refinitiv are core tools used in a CFA charterholder’s day, yet they were not represented in the Program.

Neither was building a financial model in Excel nor data analytics. To use an analogy, the CFA curriculum not only needs to teach the theory of flying a jet but also how to fly the jet. Practical Skills Modules (PSM) were the answer to this, and they will be phased into the Program over three years. To receive their exam result, candidates must complete at least one PSM at each level.

The most substantial change was the addition of Specialized Pathways in Level III. This level will be trifurcated into classic portfolio management, private wealth, and private markets. As alluded to earlier, the latter two areas of financial markets have seen significant growth over the past twenty years, and the CFA Program needed to delve deeper into these areas. Beginning in 2025, candidates will choose one of the three pathways, which will tailor the CFA curriculum at the back end, similar to MBA programs. Candidates can select a path deeper into content directly related to their interests and aspirations.

Feedback from candidates and prospective candidates was three-fold: the burden of material was too high, and more official practice questions would be useful to allow for an earlier start. When CFA Institute looked at the data on candidates taking exams, they found that 91 percent of candidates came from finance, economics, accounting, or science, technology, engineering, and mathematics (STEM) disciplines and likely already understood the fundamentals. To keep the brand promise of 300+ hours of study, the basics of quantitative methods, accounting, and economics will be put into a prerequisite package. The expansion of the eligibility policy provides students with the opportunity to use Level I of the CFA Program to let employers know that they are serious about a career in the investment industry.

It has also become apparent that young people today prefer bite-sized learning, whereas the CFA Program is more monolithic. While PSMs and study tools help, the CFA charter is perceived as an immense commitment at 900+ hours. This is an important part of the credential. Earning a charter signals grit, determination, and knowledge.

Value comes from the difficulty of the exam, and CFA Institute will protect this very carefully. The CFA curriculum will always be a rigorous experience. There will always be a component on ethics. The Program content will continue to evolve alongside the financial industry. CFA Institute aspires to educate as many people as possible, getting them through the Program to help them transform their lives and careers and make the financial markets more professional and ethical. These changes, some more substantive than others, are an important component in the evolution in the CFA Program, ensuring it remains relevant for the next 60 years.