AS growth begins to materialise and developing countries experience the flow of wealth into the economies, more wealth and investment advisors will be needed to guide persons on money management, says managing director of the Education Division of the CFA Institute Dr Thomas Robinson.

The CFA Institute is a global association of investment professionals.

Dr Robinson, who was responding to Sunday Finance queries on the relevance of the CFA (Certified Financial Analyst) designation to the local business community following the announcement of a visit here by the Institute this month, said the designation has become increasingly important in developing financial markets such as in Jamaica.

“Emerging markets are seeing increases in income and wealth. Additionally, emerging markets are seeing increases in capital flows from investors in developed markets. As a result emerging markets are seeing a need for individuals who can assist individuals and institutions in managing this wealth for the future,” said Robinson.

According to Robinson, the need is becoming more acute as the need for the diversity of investment products and depth of capital markets becomes more apparent in less developed economies.

“There is therefore also a need for individuals who can assist in developing the capital markets and associated regulations. Emerging markets will be better able to attract capital flows from developed markets if they embed sound corporate governance practices and are transparent. Finally, despite increasing wealth among individuals in emerging markets, the general level of investment sophistication is relatively modest, increasing the need for professionals who can help guide them through the financial markets,” Robinson.

First introduced in 1963, the Chartered Financial Analyst designation, or CFA charter, has become the most respected and recognised investment credential in the world. To earn a CFA charter, you must have four years of qualified investment work experience, become a member of CFA Institute, pledge to adhere to the CFA Institute Code of Ethics and Standards of Professional Conduct on an annual basis, apply for membership to a local CFA member society, and complete the CFA Programme. The CFA programme is organised into three levels, each culminating in a rigorous six-hour exam. Only 50 Jamaicans are reported to have achieved the designation, widely regarded as one of the most difficult to attain internationally. However, while developing countries such as Jamaica will require more CFAs, Robinson tried to downplay the paucity of persons locally who have achieved the designation, comparing the level of difficulty to becoming a professional in law or medicine.

“There is no limit or quota on the number of individuals passing any level of the CFA examinations. Each year a standard setting process is convened where practising charterholders evaluate the difficulty of the exams and what a newly qualified CFA charterholder (or candidate for each level exam) needs to know to practice. Based on this process the board of CFA Institute establishes a minimum passing score for each level. The percentage passing is solely based on how many candidates are able to achieve at least this minimum passing score,” Robinson said.

“The main factor influencing a candidate’s ability to pass is their level of preparation. If a candidate studies the curriculum and masters the learning outcome statements provided, they can pass the exam. The number of hours of study required will vary based on the individual. Candidate surveys indicate that on average candidates spend about 300 hours studying for each level.”

“We believe that to become a true professional an individual must have knowledge, work experience, and a strong ethical base. This is true of individuals in other professions such as law and medicine.”

Robinson said one of the key features of the CFA that distinguishes it from a Master in Business Administration (MBA) or Certified Public Accountant (CPA) is its global acceptance. “The CFA Charter is an internationally recognised qualification with the same curriculum, examinations and passing standards globally. In effect, the CFA charter is based on global best practices,” he said.

Robinson has served as a grader and a member of the Council of Examiners and has been involved in advocacy work as a member of the Financial Accounting Policy Committee and the Financial Instruments Task Force.

Kevin Terhaar, the director of exam development of the CFA institute, will make his first visit to Jamaica on January 25 this year to introduce the study programme, the way the content is selected and marked and to discuss the future prospects of the CFA charterholders here. The presentation, which is free and organised by B&B University College, will be held at the Wyndham Kingston Hotel at 6 pm.