CFA adds private wealth specialization to Level III

Financial advisors interested in becoming CFA charterholders will soon be able to focus on private wealth management in their Level III exams instead of the traditional portfolio management requirement.

This specialization option is part of a suite of updates unveiled Monday to the Chartered Financial Analyst designation, which the CFA Institute called the most significant changes made since the program’s inception in 1963.

Chris Wiese, managing director of education with the CFA Institute, said the changes were developed in consultation with employers, candidates and industry globally, and that the desire for a private wealth specialization came up frequently in those discussions.

“That’s not surprising because our No. 1 contributor to Level I [exam-takers] tends to be private wealth management,” Wiese said.

Beginning with the February 2025 exams, candidates will be able to choose one of three pathways for Level III: private wealth management, private markets or portfolio management. More than half the content will be common across all three pathways, but the differentiated parts “will be equally rigorous,” the institute stated.

Wiese said topics covered in the private wealth specialization could include assessing a client’s risk, determining need for liquidity and building a well-balanced portfolio.

The institute will also introduce “practical skills modules” beginning in 2024 for Levels I and II. Topics include financial modelling, analyst skills and Python programming. One module is mandatory per level, but it is not graded and related questions will not appear on the level’s exam.

Wiese said modules for Level III are in the works, some of which will relate to private wealth. Private wealth-related modules could also be released for Levels I and II in future, he added.

Also related to Levels I and II, the CFA Institute has created digital badges that can be displayed to indicate successful completion of those exams, even if candidates do not yet have the full charter. The badges will be available sometime in 2023, first to candidates receiving exam results and then retroactively to past candidates.

Sarah Maynard, global senior head of diversity, equity and inclusion with the CFA Institute, said this strategy will support the notion that all levels of the CFA should “open doors that otherwise might not be available” to underrepresented groups and newcomers, especially since the charter is recognized worldwide. “That’s a very critical piece when you’re at the early stages of your [career],” she said.

Finally, the CFA Institute is changing some of the program’s preparation elements. It will release a new paid but optional practice module in May when registration opens for the February 2024 exam. At the same time, it will reduce the volume of study materials at each level in an effort to limit study time “to the brand promise of 300 hours,” it said, having found that candidates tend to study for longer.

“Introductory content that most candidates would have learned during undergraduate studies will remain available to registered candidates in the preparatory materials but will not be tested on the exams,” the institute said.

Last year, the institute announced it would allow candidates to begin their CFA journey earlier: as of Nov. 1, 2022, undergraduate students with two years remaining in their studies can take the Level I exam. Prior to that date, only students with a year left were eligible.

Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.