Financial advisors can earn a range of certifications and designations indicating their specialty and expertise. Two popular designations are CFA (chartered financial analyst) and CIMA (certified investment management analyst). CFA is a common designation that shows someone has a background in investment reporting and analysis. CIMAs, on the other hand, focus on strategic financial management. SmartAsset’s free financial advisor matching tool can help you find an advisor who serves your area.
What Is a CFA?
CFA stands for chartered financial analyst, so it is not surprising that many CFAs pursue a career in financial analytics. The CFA program and certification is administered by the CFA Institute, which is a global organization. According to the CFA Institute, the two most common jobs for a CFA are portfolio manager and research analysts.
CFA charterholders typically work in investment analysis roles at financial advisor firms, investment firms, insurance companies, banks and investment funds. Financial planners or advisors with the CFA certification have a mastery of financial analytics, trends and markets. Clients who want help with investing and asset allocation will often work with a CFA.
You must have a bachelor’s degree, or be in your final year completing your bachelor’s degree. The bachelor’s degree can be substituted for four years of full-time work experience. You also have to have an international travel passport, understand English and live in an eligible country. You must also pass the CFA Institute’s conduct criteria, which includes past complaints, accusations or convictions.
The CFA Exam
After meeting the requirements for registration, you must then pass all three levels of the CFA Exam. The CFA Institute offers the exam for each level in some combination of May, August and November. The recommended study time before taking the exam is 300 hours for each level. The combined global pass rate of the exam is just under half, at about 47%.
The exam rigorously tests your knowledge of ethics, investment tools, asset classes, portfolio management and wealth planning. However, each of the three levels focus on a different aspect of this knowledge. The Level I exam covers basic knowledge and focuses on investment tools. Level II emphasizes more complex analysis and focuses on asset valuation. Level III’s focus is on portfolio management.
After you complete all the necessary requirements you will receive your certification and become a member of the CFA Institute. Every year, you will have to pay dues and certify that you are adhering to the standards of the CFA Institute.
What Is a CIMA?
CIMA is an acronym for certified investment management analyst. The certification is offered by the Investments and Wealth Institute. The designation focuses on asset allocation, ethics, due diligence, risk measurement, investment policy and performance measurement. Those with the CIMA designation typically focus on investment consulting.
CIMAs generally have jobs with larger financial consulting firms, where they have extensive interaction with clients and manage large accounts. They can work with both individuals and corporations. They typically advise large companies or high net-worth individuals, for several reasons.
The main reason for this is that the CIMA credential allows these advisors to significantly raise their rates. Additionally, CIMAs have to show they are skilled not only in finance but also business strategy, management and operations. This means they are well-prepared to assess risk and make decisions for entire corporations or funds. For the same reason, they are often better suited to advise wealthier clients and large corporations.
CIMA certificate holders are required to prove their expertise through continual recertification. This means CIMA designees must complete at least 40 hours of continuing education every two years.
In order to be eligible for the CIMA certification, you must be an investment consultant with at least three years of professional experience and no record of ethical misconduct. You must also take the two-to-four-day executive education program, which is offered in person at the University of Pennsylvania, Yale and the University of Chicago. (Yale also offers an online alternative.)
The CIMA Exam
After completing the course, you are eligible to take the CIMA designation certification exam, which is administered year-round at Pearson VUE testing centers. The test is five hours long and has 140 multiple-choice questions.
Other than the mandatory course, you study on your own terms to prepare for the exam. However, you should plan to study for around 150 hours to pass the CIMA exam.
After passing the exam, you’ll still need to pass a second background check, provide compliance disclosure, complete the license agreement and pay the initial certification fee in order to become a CIMA.
What’s the Difference Between CIMAs and CFAs?
CIMA and CFA are both highly respected credentials, especially in the worlds of investing and financial planning. There are similarities between the two credentials, though, and up until 2019, it was possible for CFAs to skip the CIMA course and just take the exam. However, there are differences between the two credentials as well.
CIMA vs. CFA: Differences
- The CFA program is more flexible with the educational and work prerequisites than the CIMA program. In order to be eligible for a CIMA, you must be an investment consultant with at least three years of professional experience. To be eligible for a CFA you have to have a bachelor’s degree, be in your final year completing your bachelor’s degree, or have four years of relevant full-time work experience.
- CIMA does not require you to have an international travel passport, while the CFA does.
- The CFA does not require you to take a course, online or in person. In order to be eligible to become a CIMA, you must take a course.
- You have to take three different exams in order to become a CFA, while the CIMA only requires you to take one five-hour exam.
- CFAs are better suited to advise individuals on financial planning issues than CIMAs are, unless they are very high net-worth individuals.
CIMA vs. CFA: Similarities
- Both sponsoring organizations (the Investments and Wealth Institute and the CFA Institute) are global organizations.
- Both require you to have no record of ethical misconduct.
- Both require you to pass one or more exams.
- Individuals with the CIMA designation often focus on investment consulting, and CFA charterholders often work in investment analysis roles at financial advisor firms, investment firms, insurance companies, banks and investment funds.
- Both CFAs and CIMAs can do an excellent job with investments and asset allocation.
Both CIMAs and CFAs bring vast and wide-ranging expertise to investment consulting and portfolio management. If you’re considering a firm to do investment management for you and you see that their investment advisors are CIMAs and CFAs, you’ll know your money is in deservedly credentialed hands.
Tips for Finding a Financial Advisor
- Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Another highly regarded certification is the CFP, which stands for certified financial planner. This designation is given to candidates who have completed extensive training and passed a rigorous exam, among other requirements.
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