CAIA vs CFA: Competing or Complementary?

The CFA and CAIA designation attracts a very similar pool of candidates: those who are committed to a career in the field of investment and financial analysis. There are however notable differences and they can help decide which designation to pursue, or whether to go for one or both.

CAIA or CFA? A Comparison

Similarities

Both CFA and CAIA are “programs” that you can earn through an exam series. Unlike the US CPA exam, the entry barrier is relatively low — bachelor degree for CFA and none (for now) for CAIA.

Differences

CFA has a much bigger membership basis: there are 112K+ CFA members (and 104K+ CFA Charter Holders) at the end of 2012. CAIA was established in 2002 and currently has 6,000 members.

The CFA program offers a comprehensive educational program on traditional investments,while CAIA focuses in alternative investments.

Because of this, the CFA program is more “static” (i.e. little change from year to year) because of its emphasis on traditional fundamentals. CAIA program is more dynamic which is in line with the AI industry’s rapid development.

CFA CAIA
Prerequisites Bachelor degree (any country),
or final year of your bachelor program, or any combo of college + work experience that totals 4 years
None, but expect you to have basic knowledge in finance.
Number of exams
3 Levels
2 Levels
Standard registration and exam fees Level 1: $1,080
Level 2: $640
Level 3: $640
Total = $2,360
Registration: $400
Level 1: $1,250
Level 2: $1,250
Total = $2,900
Other requirements after passing the exam 4 years of relevant experience 1 year of relevant experience (with bachelor degree); 4 years of relevant experience (without degree)
Affiliate members For those who want access to the publications, networking, events For those who have passed all the exams but haven’t completed the work experience requirement
Suggested study hours per exam
250 hours
200 hours
The exams are given how often? Level 1: 2x per year
Level 2: 1x per year
Level 3: 1x per year
Level 1: 2x per year
Level 2: 2x per year
Recent exam pass rates Level 1: 37% (Dec 2012)
Level 2: 42% (Jun 2012)
Level 3: 52% (Jun 2012)
Level 1: 64% (Sep 2012)
Level 2: 62% (Sep 2012)

 CFA or CAIA — Which One Should I Choose?

Given the long history, bigger membership base and the broader scope in traditional investment, CFA is the preferred designation if you are going for a general career path related to traditional investment, such as fund managers and security analysts. The flip side is that it is hard to distinguish yourself when there are more than one hundred thousand CFA chartered members out there.

Alternative investment is a much smaller niche and therefore CAIA will likely remains smaller than CFA in terms of popularity and membership base. However, it is an exciting and rapidly developing segment within investment that attract professionals who want to specialize in this niche. If you are interested in the alpha and want to stand out from the crowd, CAIA could be the best designation for you.

In practice an increasing number of CFAs are getting the CAIA title to get the best of both worlds.

Does It Make Sense At All To Get The CAIA After CFA?

There are CFAs going for CAIA for different reasons. Some CFAs are genuinely interested in learning more about the alternative investment. If you flip through the books, you will see that the topics are actually quite interesting and different from the CFA curriculum, e.g. hedge fund strategies and real estate, and the books are kept up-to-date (which is very important in this industry).

There are also people who want to get the CAIA designation before it gets more and more difficult — it is understandable that CAIA association doesn’t want to make it super hard in order to push up the membership at this stage, as evidenced by the fact that the CAIA exams have the highest pass rates in the 60+%. However, once it gets a critical mass of members, I can see how they want to make it more difficult and achieve a pass rate similar to CFA (high-30% to mid-40%), or at least CPA (around 50%).

Next Step

Whether you want to take the CAIA as your first designation or get it after your CFA, you can learn more the process of becoming a CAIA here. Good luck!

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