Many financial professionals seek the Chartered Financial Analyst designation to improve their marketability and salary prospects. In this article, we’re going to delve into the numbers behind CFA salary data to discover how much difference a CFA charter can make in salary. It’s not an easy task, because the CFA Institute does not make such information available and because, unlike, say, a law degree, the CFA is broadly applicable to the financial services industry and doesn’t have a clear career progression. This makes it hard to measure any salary increase attributable to the CFA charter.
Salary Based on Experience
According to CFAplanet, a site that tracks CFA-related statistics, there are a couple of different ways to break down a CFA salary, such as by years of experience. According to their estimates, a charter holder with between one and four years of industry experience can expect to earn a median salary of $78,190, while those with between five and nine years under their belts will earn an average of $99,370. Those with more than 20 years of experience will take home a median salary of $152,122. Now, remember that those are median salaries, meaning that there will be many people earning more and less than those figures.
Perhaps the most meaningful way to compare CFA salaries is by job title since that will be most useful to anyone seeking to determine how much they could add to their current salary by pursuing a CFA charter. Data from Payscale.com confirms that the least paid CFA charterholder positions are financial analysts, who earned salaries between $43,741 and $99,957. The highest paid positions will come as no surprise to most of us and are those held by Chief Financial Officers, who earn between $78,410 and $242,395. Investment analysts are next in line at the trough and can earn as much as $125,403.
A 2007 CFA Institute membership compensation survey of 9,000 U.S.-based respondents give us some illuminating data. 64% of respondents had between five and 20 years of experience and over 50% had completed an MBA. On the other hand, 37% did not have any graduate education. 42% of respondents worked at investment management firms. The top three positions reported were: Portfolio manager (9%), Buy-side research analyst (8%), and C-Suite executive (8%).
Caveats and Exemptions
Now that we’ve given you some of the data, let’s talk about all of the caveats and exemptions. Since there is no official data from the CFA Institute, most of these salary numbers were cobbled together from employment data and job search sites. As you may expect, it’s important to control for factors like educational background, years of experience, and job position when looking at salary data. According to industry data, compensation in the financial services industry is highly correlated with experience.
A significant number of CFA charterholders are also compensated with bonuses and incentive pay that may not be captured in their reported salary. According to the CFA, compensation reported cited above, 90% of 2007 respondents were eligible for cash bonuses and 80% were eligible for non-cash compensation like restricted shares or share options.
In short, there isn’t an easy way to analyze CFA salary information. However, for comparative purposes, the easiest way to judge how much a CFA charter would benefit your career is to look up salary information for your target job role and determine what it will take for you to achieve that role.
Understanding the base requirements for achieving your desired job or level of seniority and then understanding what desired characteristics can get you there faster is key to working out a career trajectory. Some career tracks require a CFA charter as part of the educational background. For others, it’s simply a way to differentiate yourself from the competition and increase your analytical skills.