The Chartered Financial Analyst® (CFA) designation is considered the gold standard in banking and investment sectors. Because this credential is recognized globally, becoming a charterholder can help you increase your earning potential, expand your career opportunities, and boost your professional reputation in the finance industry.
Insights into the Average Earnings of CFA Charterholders
The CFA Institute (CFAI) acknowledges that charterholders often earn higher base salaries than non-chartered peers in equivalent roles. The average salary for a CFA charterholder depends on their firm’s compensation structure, which typically includes:
- A base salary
- Company cash
- Performance bonuses
- Commissions
- Stock options
- Equity
Based on a recent survey, charterholders in the United States receive an average total compensation of around $300,000, with a median base salary of approximately $180,000. The remaining amount is distributed between cash bonuses and a combination of equity or profit-sharing arrangements.
Source: The Corporate Finance Institute
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When considering the impact of a CFA charter on total compensation, it is important to recognize the factors that also affect an investment professional’s pay, including:
- Academic background
- Experience
- Location
- Industry
- Job title
The following paragraphs will provide a comprehensive overview of each factor, allowing you to make an informed decision.
Academic Background
There are alternative ways to enhance your earning potential and advance in your investment career besides pursuing a graduate degree. Charterholders who hold a bachelor's degree typically earn a median total salary of $162,500, while those with a graduate degree tend to receive a higher median total salary of $237,357. However, it's important to note that years of relevant job experience can also play a crucial role in achieving your desired compensation, even without an advanced degree. By gaining practical experience and building a strong track record in the industry, you can demonstrate your expertise and competence, leading to increased earning potential and career progression.
Experience
Obtaining relevant work experience, whether before, during, or after completing all three exam levels, is crucial for individuals aspiring to become CFA charterholders. This journey towards earning your charter may be demanding, but it includes a mandatory requirement of accumulating 4,000 hours of paid work experience. This prerequisite not only boosts your professional standing and industry credibility but also expands the range of compensation you can expect. In line with other industries, the level of experience you acquire directly correlates with your salary potential. Therefore, it should come as no surprise that charterholders in mid-level or executive positions tend to earn more than their entry-level counterparts.
| Experience | Average Pay |
|---|---|
| Less than one year | $85,000 |
| 1-4 years | $77,250 |
| 5-9 years | $80,000 |
| 10-19 years | $147,395 |
| 20 years and higher | $142,500 |
Source: Payscale
Location
Location can have a more significant impact on pay than you might think, regardless of job title. Charterholders in large, metropolitan areas typically earn more than those in smaller towns or rural locations. Proximity to major, global financial centers like New York City, San Francisco, Dallas, Hong Kong, Tokyo, and Dubai increases the cost of living, and in turn the charterholder’s salary.
Industry
Your salary may also be affected by your chosen industry. For instance:
- CFA charterholders working for foundations or trusts earn roughly $100,000 per year; those in private practice with a company earn around $85,000.
- Charterholders working in colleges or universities earn around $75,000.
- Federal, state, or municipal government employees make between $81,400 and $87,000 per year,
- Charterholders working in hospitals earn roughly $92,600.
- Self-employed and contract CFA charterholders often earn more than charterholders who work for major firms, with veterans (20+ years of experience) earning an average of $170,900 annually.
Job Title
Much like Portfolio Management encompasses most of the CFA exam, the Portfolio Manager role also accounts for the highest earning potential in the investment industry outside of executive leadership positions.
According to a 2019 Pay Research study conducted by CFA Institute (CFAI), charterholders employed as Portfolio Managers earn an average base salary of $126,000 and a total compensation package of $177,000.
The table below outlines total compensation values for additional roles in the investment industry.
| Title | Compensation |
|---|---|
| Financial Analyst (corporate) | $80,930 |
| Portfolio Manager (fixed income) | $253,250 |
| Portfolio Manager (equities) | $316,600 |
| Chief Investment Officer | $344,500 |
CFA Salaries Around The World
CFA charterholder salaries exhibit substantial variation contingent upon factors such as country of residence, local labor laws, and regional economic conditions. To illustrate this point, let's examine the average gross income for charterholders across distinct experience levels within three countries:
| United States | India | UK | |
|---|---|---|---|
| CFA charterholder | $101,812 | ₹11,50,068 ($15,334) | £57,950 ($58,580) |
| Entry-level CFA charterholder | $71,778 | ₹8,23,310 ($10,977) | £40,855 ($41,299) |
| Senior-level CFA charterholder | $126,259 | ₹14,48,218 ($19,309) | £71,864 ($72,645) |
Source: Salary Expert
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Frequently Asked Questions
What is the average salary of a CFA charterholder?
The average salary of a CFA charterholder can vary depending on factors such as experience, industry, geographic location, and job role. However, according to various surveys and data, the average salary for CFA charterholders is typically higher than the average salary for professionals without the designation. In some regions, the average salary can range from $80,000 to $150,000 per year, but it can be significantly higher for those in senior or executive positions.
How does the salary of a CFA charterholder compare to other finance professionals?
CFA charterholders often earn higher salaries compared to other finance professionals who do not hold the designation. The CFA designation is globally recognized and signifies a high level of expertise in investment management and financial analysis. This recognition, along with the rigorous curriculum and examinations required to earn the charter, often translates into better career prospects and higher earning potential.
How does work experience impact CFA charterholder salaries?
Work experience plays a significant role in determining the salary of a CFA charterholder. As professionals gain more experience in the field, their expertise and value to employers increase, which can lead to higher compensation. Additionally, individuals with a track record of successful performance and achievements may have leverage in negotiating higher salaries or bonuses.
Do CFA charterholders receive bonuses in addition to their base salary?
Yes, it is common for CFA charterholders to receive bonuses in addition to their base salary. Bonuses can be performance-based and vary depending on individual and company performance. Financial firms, such as investment banks, asset management companies, and hedge funds, often provide performance-based incentives to attract and retain talented professionals, including CFA charterholders.
How does the industry or sector impact CFA charterholder salaries?
The industry or sector in which a CFA charterholder works can have a significant impact on their salary. Industries such as investment banking, private equity, asset management, and hedge funds tend to offer higher salaries to finance professionals, including CFA charterholders, due to the demanding nature of the roles and the potential for high returns on investments.
Does geographic location affect CFA charterholder salaries?
Yes, geographic location is a crucial factor that affects CFA charterholder salaries. Salaries can vary significantly between different countries, regions, and cities. For example, financial hubs like New York, London, Hong Kong, and Singapore tend to have higher salary ranges for finance professionals, including CFA charterholders, compared to other locations.
How does the level of seniority impact CFA charterholder salaries?
The level of seniority or job role within an organization can greatly impact CFA charterholder salaries. Professionals in senior positions, such as portfolio managers, chief investment officers (CIOs), or directors, often earn higher salaries compared to entry-level or mid-level professionals. Senior roles typically require more experience, responsibility, and decision-making authority, which are reflected in the compensation package.
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