willcrackcfa
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- Jun 18, 2026
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A simple analogy to illustrate the short comings of the CFA program.
Throughout the 3 levels, we are taught about efficient frontier and methods to quantify risk and return (CAPM), and techniques to maximize your return (sliding up and down the CML for example) based on it. AT the end of the day, we are all experts in answering investment questions, GIVEN the frontier.
But nowhere does it tell you how to actually derive the frontier (well, to be fair, there are qualitative mentions of various techniques in L3, if only briefly). Now imagine you are a PM, do you reckon the frontier will be presented to you at work? Even if it is, are you sure it is even efficient in the most basic sense? Even so, are you able to incorporate some personal insights that you have into the frontier? Not from just CFA at least.
And quite frankly, what do you reckon is your sustainable competitive advantage over a fellow PM? Yes, it is the ability to quickly incorporate new information into the models you developed, one of which must be the efficient frontier.
The point I'm trying to make this is: CFA tells you the important things in PM and equity management, but it doesn't tell you how to go about deriving it quantitatively. And without that frontier, it doesn't matter how well you know your CFA stuff because you have nothing to apply to.
In my opinion, the most valuable thing about CFA, which ironical is also what people hate most, is FSA. It forces one to read financial statements and make sense of it.
As for the practical aspects of actually managing a portfolio, or the quantitative analysis, well, let's just say it is like fastfood - all grease, but where is the meat?
Derivation of the frontier is just one simple example, and there are many more. For example, the entire part on derivatives is almost akin to high school material in today's finance. The treatment on time series, or the entire quant aspect of CFA, is at best cursory. The list goes on.
Well, you might argue: Do we need to know some much math/stats. Let's just say that knowledge of these analytical tools gives you the competitive advantage. Sure, one can survive on just the basics from CFA, but at some point, you'll find the lack of tools wanting.
Throughout the 3 levels, we are taught about efficient frontier and methods to quantify risk and return (CAPM), and techniques to maximize your return (sliding up and down the CML for example) based on it. AT the end of the day, we are all experts in answering investment questions, GIVEN the frontier.
But nowhere does it tell you how to actually derive the frontier (well, to be fair, there are qualitative mentions of various techniques in L3, if only briefly). Now imagine you are a PM, do you reckon the frontier will be presented to you at work? Even if it is, are you sure it is even efficient in the most basic sense? Even so, are you able to incorporate some personal insights that you have into the frontier? Not from just CFA at least.
And quite frankly, what do you reckon is your sustainable competitive advantage over a fellow PM? Yes, it is the ability to quickly incorporate new information into the models you developed, one of which must be the efficient frontier.
The point I'm trying to make this is: CFA tells you the important things in PM and equity management, but it doesn't tell you how to go about deriving it quantitatively. And without that frontier, it doesn't matter how well you know your CFA stuff because you have nothing to apply to.
In my opinion, the most valuable thing about CFA, which ironical is also what people hate most, is FSA. It forces one to read financial statements and make sense of it.
As for the practical aspects of actually managing a portfolio, or the quantitative analysis, well, let's just say it is like fastfood - all grease, but where is the meat?
Derivation of the frontier is just one simple example, and there are many more. For example, the entire part on derivatives is almost akin to high school material in today's finance. The treatment on time series, or the entire quant aspect of CFA, is at best cursory. The list goes on.
Well, you might argue: Do we need to know some much math/stats. Let's just say that knowledge of these analytical tools gives you the competitive advantage. Sure, one can survive on just the basics from CFA, but at some point, you'll find the lack of tools wanting.
. You will now fail your CFA exams due to Plagarism. The CFA Institute has been notified of your current IP Address.