Banks and Financial Institutions

In any economy, financial institutes play an important role because all the financial dealings and matters are handled and monitored by such institutes. The major components of financial institutes are banks, insurance companies, credit card agencies, investment companies, consumer finance companies, and other specialized financial institutes.

Banks and Financial InstitutionsThough all the components have a common role to play in the country’s economy, there is a significant difference between the banking and non-banking sectors. The banking sectors include commercial banks including private banks, public sector banks, and foreign banks that are mainly responsible for ensuring fiscal stability in the country. On the other hand, the non-banking sector includes all the other components like credit card agencies, investment companies, and insurance companies that are responsible to regulate and monitor lending as well as borrowing of funds.

The key difference between banks and other financial institutes is the facility of cash deposits. This unique facility is provided by the banking sector to all its customers through means of saving accounts and current accounts. This is an easy and effective way of handling all the personal as well as business finances. Apart from this, banks also serve as financial intermediaries offering a host of financial services to all customers.

Non-banking financial institutes do provide various types of financial services but are not entitled to offer a saving account. These institutes mainly serve as investment tools or to fulfill the financial needs of individuals and companies. However, in the present day, banks are gradually expanding their operations and are offering all financial services including investment, loan, credit, and bonds under one shelter.

Actuary Vs. CFA

An actuary is a professional who is usually employed by the insurance industry to evaluate risks associated with insurance and premiums. The professional needs to be a highly trained statistician so as to use his or her mathematical skills in an appropriate manner. On the other hand, CFA is a highly trained finance professional who uses all his accounting knowledge and skills to analyze, evaluate, control, and monitor financial matters of a company or an organization. In general, both the professions require extensive knowledge on finance along with good mathematical skills.

Actuary Vs. CFAHowever, there are many differences that rule the specifications and requirements of the industry. Actuaries are mainly responsible for evaluating and forecasting the probable financial risk and hence these professionals are more demanding in the insurance sector. These are also employed by corporate to manage credit, monitor corporate securities, and also take care of all company’s investments.

When talking about the Chartered Financial Analyst (CFA), these are mainly financial analysts who are usually employed by banks, financial companies, and multinational companies as well. These are responsible for handling all the investments and credits of the company including stocks, securities, commodities, assets, and other financial tools. Accounting, economics, trading, security analysis, and corporate finance are some of the key strengths of CFA professionals.

CFA Training

Training is considered as the best method of preparation. Be it a competition, an interview or an examination, a trained candidate is assumed to perform way better than the rest.

CFA TrainingTo keep up with the growing need to perform many aspiring CFA candidates look for the right training to crack the CFA examinations. And with the emergence of right training and its benefits to the candidates, the CFA Institute has initiated a collaboration venture with over forty institutions across the globe offering the right training for the CFA program.

With over 75% of syllabus meeting the CFA curriculum, the aim of these training institutions is to make the students familiar with the style and pattern of the CFA examinations.

To ensure the standards in quality, the CFA Institute closely monitors the courses offered by the partner institutions.

The CFA Institute has 136 society members all over the world of which 86 society members are in America, 16 in Asia Pacific and 34 in Europe, Middle East and Africa. All the society members focuses towards providing their respective countries with the best financial and investment experts.

In total of 150 countries world wide there are 1,73,000 distinct candidates that are waiting to be CFA charter holders and 95,735 candidates that already are CFA charter holders. Such figures give a very clear picture of the seriousness people have shown in undertaking the training for the CFA program and how it will continue to attract such a large numbers from around the world.

Tips to Pass CFA Exam

Examinations not just tests our knowledge but also tests that how well we understand the concepts, how can we implement them to get desired outcome and how to turn real-life scenarios in our favor by depending upon the studied principles.

CFA ExamFrom a very long time examinations mark the end of a single phase of learning and declare a person capable of advancing to further levels of education.

The aim of a student taking an examination is to score and score handsomely and to get to this aim a student has to follow an organized set of rules. But this organized set of rules become hard to maintain when one aims for CFA examinations.

Being touted as hard to get through, the CFA examinations have earned a reputation of their own. But like most examinations the CFA examinations can be tamed easily if the preparation is kept according to the needs.

The 3 key needs to pass the CFA examinations are:

  1. Get Organized: Well begun is half done and a good beginning makes a good ending, if we just take notice of the above two lines then we can very well judge the importance of initiating early. Start with the studies well before six months to get the best out for the examinations.
  1. Effective Study Program: An effective study program takes the entire burden out and ensures a smooth sail towards examinations.
  1. Review: After finishing with the studies, the next important thing is to get a review done. Make points of importance. Solve practice papers to get used to the pattern and ultimately prepare for the best.

Role of CFA

The Chartered Financial Analyst (CFA) with its global acceptance and massive job prospects has played a major role in the upbringing of finance and investment experts.

Role of CFAToday, when dozens of finance focused programs are entering the educational sphere, it becomes a little hard to keep up the name and the code of conduct. CFA program and the CFA Institute, with its practical implementations of ideas and effective curriculum have kept pace with time without any compromise with the quality and produced financial experts that are working at the top spots of many big financial firms.

The CFA Institute has always backed up its students by ensuring proper ways of getting placements for them, giving them a start to bank on. With such a quality of the curriculum, the candidates get thorough with their subjects, and with the amount of focus on tools and implementations the subjects become easy to capture.

A CFA charter holder is considered better in comparison with other management graduates because of the amount of knowledge they have which is coupled up with the right working attitude. A CFA charter with good amount of experience on its side has prospered more quickly than any other finance graduate.

The organizations that have hired most CFA’s have been banking institutions, finance management firms and investment firms. Many of the fresh CFA graduates are working for more experienced CFA charters. This shows the amount of opportunities that are ahead of a new CFA graduate in the industry.

CFA Salary

The Chartered Financial Analyst (CFA) program is among the most sought after programs in the world. The salary criterion of a CFA charter holder depends upon numerous factors, the important ones being experience level, job type, employer type and the company size.

CFA SalaryFor an entry level CFA charter the average annual salary is about Rs.2,35,790. If one gains an experience of about one to four years, the average annual salary may get to some-where around Rs.4,87,900. Adding up another 10 or more years to the experience level, a CFA graduate can draw an annual salary of Rs.8,15,700 to Rs.12,86,100.

Talking about the type of job, in the last two years the chief financial officers got the highest CFA salary, which was around Rs.8,51,300. The second highest paid job type was vice president, getting Rs.8,03,400 a year. Some other job types that raked in good pay cheques were portfolio managers with Rs.6,58,000 a year, senior financial analysts getting Rs.5,70,700 a year, investment analysts with Rs.3,22,600 and banking analysts with salaries up to Rs.4,87,500 a year. The lowest paid CFA got an annual pay of Rs.3,73,200.

The employer type is another factor governing the amount of CFA salary. CFA’s working for different employers got different figures as their salary. A CFA working as contractor earned the lowest salary of Rs.3,31,900. A CFA working for a foundation or trust gets an average annual salary of Rs.5,56,300. The states and local governments pay Rs.5,49,900 to Rs.6,57,200 as annual salary to their CFA employees. The highest paid CFA’s have been working for franchises and getting paid around Rs.8,08,900 annually.

The companies, no matter small or large, have always paid their CFA employees handsome salaries, ranging from Rs.4,48,600 to Rs.5,50,000 annually.

CFA vs. MBA

The CFA vs. MBA debate has been going on since very long. Of the two, it has always been little difficult to select one, as both have their advantages and disadvantages.

CFA vs. MBATo determine the true value of each program one must be thorough with the standards and guidelines of each of the programs, as it will help in deciding which suits their career demands well and what kind of employer base they are going to target when they will be working for an organization. Also, the curriculum of each of the programs must be considered with great concern so that it can be understood as to which program’s study course is better in theoretical as well as practical terms.

With CFA, an approach more centered towards finance and investment, the candidate will be sure to deal with finance and investment organizations. CFA’s self-study program offers learning and working simultaneously. That means, through the CFA program the candidate is gaining knowledge and experience at the same time.

The MBA, unlike CFA, teaches students a wide range of other non-financial subjects such as business management, marketing, organizational behavior, human resource management and strategic management. This means the student will have knowledge of other topics apart from financial topics. With MBA, one can choose to self-study, do research, coursework or go for classes.

Recently, many institutions are offering CFA courses with their MBA program. This mixture of the two most sought after programs have the ability to give better returns as compared to each program individually. This certainly eliminates the debate of CFA vs. MBA.

CFA Jobs

The CFA charter holders are open to a flourishing career. The Chartered Financial Analyst (CFA) designation brings with it massive job opportunities within the financial world.

CFA JobsThe Chartered Financial Analyst (CFA) program graduates hold major designations in various sectors of employment. The openings available to CFA charter holders are in Banking, Corporate Sectors and Finance, and Leasing companies.

Most Chartered Financial Analyst (CFA) graduates receive offers for challenging professions positions with attractive salaries. The career prospects are as bright as of any other field of finance. Fresh graduates with a degree of CFA generally start as an executive trainee in the financial sector. After gaining experience they even go on to become head of their departments.

Within the CFA Institute, a CFA charter holder gets a number of job opportunities. The jobs range from education, member and society co-ordination, interactive and external relationships, marketing and communication, finance and technical support, information technology, human resource and within the office of general counsel.

Most CFA jobs focus on analyst type positions such as insurance, fund risk, quantitative measure, modeling, liquidity and derivatives. The greatest impact of earning the CFA designation is the demonstration it shows of an individual to take serious stake with their career. Many CFA jobs are offered by previous CFA charter holders which expect similar level of dedication from their employees.

CFA Courses

The academic session of CFA program is based on Candidate Body of Knowledge established by CFA Institute.

The curriculum comprises of three study levels. At the end of each level an exam is conducted to test the knowledge acquired.

The various topics undertaken in whole academic session of CFA program are:

CFA CoursesEthical and Professional Standards, Quantitative Methods, Economics, Financial Reporting and Analysis, Corporate Finance, Portfolio Management, Equity, Fixed Income, Derivatives and Alternative Investments.

The 3 levels are different from each other in various aspects, that is:

  • The level I study focuses mainly on tools and inputs and includes introduction to most of the topics.
  • The level II study focuses on the application of tools and inputs and the topics are taken in great detail.
  • The level III study emphasizes on the strategies for applying tools and inputs.

A brief discussion over some of the topics:

Quantitative Methods

Mainly concerned with statistics and covers probability theory, hypothesis testing, regression and time series analysis.

Corporate Finance

Covers capital investment decision, capital structure and dividend policy.

Financial Reporting and Analysis

Includes analyses of financial reports, ratio and financial statement.

Security Analysis

Covers analysis of various asset types that is: equity, fixed income, derivatives and alternate investment.

Portfolio Management

Includes Modern Portfolio Theory, Investment Practice and institutional investors, asset allocation and measurement of investment performance.

CFA Exam

In order to earn the CFA charter one has to undergo a series of three exams. The three exams, Level I, Level II and Level III must be passed in sequence.

To maintain global standards both in administering and grading, the exams are conducted in English only.

The CFA exam team develops more questions than necessary so that the Council of Examiners (CEO) can select the best of all to appear in the exam.

CFA ExamThe CFA exam format varies for each of the level.

In Level I exam, multiple choice questions are generated. In total, the Level I exam includes 240 multiple choice questions, of which, 120 are for the morning session and 120 are for the afternoon session of the exam. Each multiple choice question has three possible answers A, B and C.

The Level II CFA exam consists of 20 item sets, 10 on the morning session and 10 on the afternoon session of the exam.

Each item set consists of a case-statement and six multiple choice questions. In order to answer the six multiple choice questions correctly the candidate has to refer the case-statement for information. In total there are 120 multiple choice questions as compared to 240 in the first level.

The Level III CFA exam employees essay format in the morning session and item set format in the afternoon session of the exam. The exam has 10-15 questions and may have questions with multiple parts. The point for each question and each question part is given in the exam. The Level III exam has a maximum score of 180 points, so is the point score of the afternoon item set session.

The topic and learning focus differs in each of the level as well.

The focus varies from knowledge and comprehension, application and analysis, and synthesis and evaluation.

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