How to get your CFA

It takes four years, on average, to get a CFA designation. It took Vince Fabiano eight.

“I took the designation very lightly, thinking that, like [in] my university years, I could cram and still get a decent mark,” explains the senior financial advisor at ATB Securities Inc. in Calgary. “It was a rude awakening when I realized it was going to take a lot more effort than just studying on the weekends.”

Another reason he says it took him so long? He was already an advisor, trying to build his business “as fast and aggressively as possible.” So he had trouble balancing work, life and study.

But Fabiano was determined, even though statistics say only one in five who start the CFA program actually finish.

“The CFA designation is considered the gold standard in the investment profession,” he explains. “There’s no other discipline that’s as rigorous and focused on investment knowledge, and that was one of the main reasons I wanted to do it.”

He adds becoming a CFA charterholder would allow him to “have deeper, richer conversations with clients”; for instance, he learned to use analogies during client meetings. If a client wants to take too much risk to achieve short-term goals, he’ll remind her that “investing without proper planning is like building a home without a blueprint.”

The advisor

Vince Fabiano, CFP, FMA, CFA ATB Securities City: Calgary Years in the business: 11 Clients: Executives, retirees, business owners AUM: $125 million Client asset range: $100,000 to $1 million-plus Compensation style: Revenue-based (commission based on revenue from client fees and trailers; no front- or back-end loads, no upfront commissions)

After working as a bank teller throughout university, Fabiano got his securities license and took a job at a discount brokerage firm in 2000. In 2003, he got his CFP and, shortly after, joined ATB Securities.

By 2005, he’d decided to take the CFA exam. “I already had several years as a financial advisor and had a bachelor of commerce degree in finance, so I fit the criteria to take the program.”

Challenges he encountered

Level I

Held twice annually, Level I features a six-hour, multiple-choice exam.

On his first attempt, Fabiano read the textbooks, completed a couple of practice questions and went in to take the exam.

“I absolutely bombed. In fact, I didn’t even finish the exam,” which had 120 multiple-choice questions in the morning, and another 120 in the afternoon. He’d planned to spend 90 seconds per question, and recalls leaving about 20 questions unanswered in each of the a.m. and p.m. sessions.

To prepare for his next attempt, Fabiano put his social life on hold so he could study. He’d spend two hours each workday with the books at home or at the office, and about six hours a day on Saturdays and Sundays.

He also took six practice exams. At that time, CFA Institute offered a few free sample exams, and allowed him to purchase additional exams online for US$50. He’d print out a hard copy and, just like the real exam, “I’d write for three hours, take a one-hour break and then write for another three hours.

“It’s not enough to memorize—you need to know the material because you don’t have time to think. It almost becomes instinctual when you’re writing these exams.”

It paid off. He passed on his second try.

Level II

Offered once a year, Fabiano found Level II the most difficult. It took him five attempts to pass the exam.

What makes it so challenging? The addition of vignettes, which are mini case studies. “They steer you in the wrong direction, or have superfluous information. They want you to be able to pluck out the right information because, in the investment world, you’ll also be thrown all this information,” says Fabiano. “Some you’ll need, some you won’t.”

He came close to passing on his third attempt, he says, which gave him confidence that he knew the information. On his fourth attempt, he’d planned to spend three minutes per question, or 18 minutes per case study. (The exam features 20 case studies total, with six questions each.)

But he panicked. “I started spending too much time on a couple of questions, and I just couldn’t catch up.” By his fifth attempt, he knew what to expect, kept his nerves in check and passed.

Level III

The final exam is held once a year and features eight to 12 essay questions, in addition to 10 case studies.

While prepping, Fabiano met Daren Miller, who earned his designation in 1999 and teaches a course on CFA exam preparation. Miller hosted an open session through CFA Society Calgary. “I liked the way he explained things, and he knew what he was talking about. He’d been through the program, and worked in the industry.”

Fabiano enrolled in Miller’s weekend programs, which were held once a month on Friday and Saturday, and ran eight hours each day (Fabiano would take the Friday off from work, but put in longer hours Monday to Thursday to make up the time).

One key concept that Miller explains for Level III candidates is how to prepare investment policy statements for private wealth clients. “So I’ll teach the concept, then get candidates to do a past exam under time pressure,” says Miller. “Then, we’ll go through their answers in class.”

Being succinct is important. “The idea is to get the maximum number of points by spending the least amount of time structuring answers,” he adds. “Many people think answers to essay questions should be a formal response. But it’s about coming up with a concise answer in a bullet-point format.”

Writing lengthy answers is why Fabiano failed the first time he took Level III. So, with Miller’s help, he spent more time practicing on past exams. He learned to be more specific and, on his second try, he passed.

“Studying for the CFA program isn’t a sprint. I liken it to running a marathon, where you’ve got to be consistent every day, several months in advance,” says Fabiano.

CFA Institute suggests around 300 hours of study per exam. “I probably put in about 400 hours per exam,” Fabiano says. “I would carry cue cards with me and, even if I was at the gym on the bike, I’d be memorizing formulas and reading concepts.”

What it’s done for me

Fabiano says his resolve to complete his CFA designation paid off.

“It’s heightened my credibility, and given me more confidence when connecting with clients.”

For instance, his conversations used to focus solely on the technical aspects of portfolio management, like strategic asset allocation and the benefits of diversifying.

Now, he recognizes how behaviour and emotions can impact clients’ financial decisions.

“A better understanding of [their] motivations and expectations is paramount in developing long-term relationships,” he says.

10,161

The number of people in Canada who sat for the CFA exam in 2014.

Source: CFA Society

“I now focus more on bridging the gap between a client’s cognitive thinking, emotional biases and the detailed mechanics of their portfolios.”

One cognitive bias clients can have is representativeness, where clients focus on recent trends and think they can get the same returns as last year.

“So, I’ll explain that asset class returns are highly variable, it’s impossible to predict future returns and the inclusion of all asset classes results in a more diversified portfolio,” Fabiano says.

As a result of his new take on service, he’s received many referrals, though he can’t provide a figure on how many have turned into clients. But, with $18 million in net new assets last year, he surpassed his growth target of $12 million.

Still, Fabiano’s not in a rush to get another designation or make a career move: “Clients say, ‘Hey, now that you’re this big deal, where are you going to go?’ My answer is, ‘Nowhere. I’m just here to serve you better.’ ”

Suzanne Yar Khan is a Toronto-based financial writer.