"How the CFA helped me move from investment banking to private equity" (2024)

FAQs

Can a CFA help for private equity? ›

A lot of limited partner private equity firms will hire undergraduates and then put them through the CFA. It's rare for direct investment firms to do the same.

Private equity firms often seek candidates with strong analytical and financial modeling skills, as well as a deep understanding of finance and investment concepts. A CFA designation can demonstrate that a candidate possesses these skills and knowledge, and can help set them apart from other applicants.

A bachelor's degree and or a master's degree in a related field is often required to become an investment banker. Investment bankers often start their careers as analysts and do so by earning the CFA charter. Independent investment banks often pay higher bonuses to entry-level investment bankers.

Private equity tends to mean less hours for more money. In private equity, you'll also be responsible for a lot of different tasks. The deal teams are lean and your decisions will have a high degree of permanence, which is why I'd say the stress level is overall higher in private equity than in banking.

Analysts at all types of private equity firms earn significantly less than Associates, just as Analysts in IB earn significantly less than Associates. In fact, PE Analysts often earn less than IB Analysts! So, you might initially make less money if you start in private equity.

In private equity, you'll work hard, but the hours are not nearly as bad. Generally, the lifestyle is comparable to banking when there is an active deal, but otherwise much more relaxed. That said, there is some upside other than money and career prospects.

Both investment banking and private equity are well-paid jobs but the compensation ceiling is far higher in private equity than it is for investment banking. This explains why most investment banking analysts choose private equity as their exit option.

An MBA is more costly to acquire than a CFA and typically requires being a full-time student, while someone studying for a CFA can simultaneously hold a full-time job. However, the tradeoff is that after completion, an MBA often gives a bigger boost to your earnings potential than a CFA.

Is CFA still respected? ›

Limitations of the CFA Charter

The CFA charter is widely respected, globally-recognized, and a difficult undertaking to accomplish.

The CFA designation is good signalling tool and a quality indicator. However that credibility and respect you get as a charterholder is probably recognized and appreciated by a sub-set of the finance sector, not all.

MBA vs. CFA. If you're just starting out in investment banking, you're probably going for a job as an analyst. This position demands great expertise in number-crunching and financial modeling, skills that are best imparted by the CFA program rather than an MBA.

For hedge funds, it depends on the fund – if it does short-term trading, the CFA won't be terribly useful. But if it's closer to portfolio management and it focuses on long-term investments, the exam will help.

Private Equity Career Training

PE firms tend to be relatively small, tight-knit and full of extremely smart and highly motivated people.

Investment banking and private equity are two of the most prestigious and competitive areas in finance, offering significant opportunities for advancement and high compensation.

The average during a busy time for associates and analysts is usually around ~60-70 hours per week. But it's all dependent on how many deals and investments are on the go. The above hours will vary based on if there's a live deal.

Highest salary that a CFA can earn is ₹15.3 Lakhs per year (₹1.3L per month).

How much does a Chartered Financial Analyst make? The national average salary for a Chartered Financial Analyst is $67,632 in Canada. Filter by location to see Chartered Financial Analyst salaries in your area.

What is the highest salary in private equity? ›

What is the highest salary for a Private Equity Analyst in India? Highest salary that a Private Equity Analyst can earn is ₹31.4 Lakhs per year (₹2.6L per month).

Private equity employees are compensated for making good investment decisions. The larger and more successful the investment, the more money there is to go around. Mega funds offer large salaries in part because they manage large quantities of money.

Is Private Equity Buy-Side or Sell-Side? Because private equity funds make money by buying and selling securities, they are considered to be buy-side. Like hedge funds, pension funds, and other asset managers, they invest on behalf of their clients and make profits when those assets deliver returns.

Blackstone Equity Partners pays an average salary of $145,220 and salaries range from a low of $127,756 to a high of $164,566. Individual salaries will, of course, vary depending on the job, department, location, as well as the individual skills and education of each employee.

Private banks provide financial services to high-net-worth individuals. Financial institutions offer a variety of products and services to wealthy clients, including investment management, tax planning, trust planning, and estate planning.

With this power, however, comes greater accountability, as they're more deeply involved as company shareholders. This can lead to greater stress in private equity than in consulting firms.

Hedge Fund Compensation:

Hedge fund compensation is more variable than private equity salaries + bonuses, but at the junior levels, you'll most likely earn a bit more in private equity.

As for hours, both private equity and investment banking can be demanding careers. However, investment bankers tend to work longer hours, often working late into the night and on weekends. Private equity firms also tend to have a more relaxed work environment and offer more flexible hours.

The private equity space is one of the most competitive, but also offers some of the most lucrative careers in the world of finance. Private equity is often perceived as offering an exit opportunity for those who have already gained experience working in investment banking or investment management.

Goldman Sachs Capital Partners is the private equity arm of Goldman Sachs, focused on leveraged buyout and growth capital investments globally. The group, which is based in New York City, was founded in 1986.

Is CFA relevant in 2023? ›

Yes, CFA exam is helpful for getting into Investment banking as it trains the candidate for the core finance skills such as valuations.

Many CFA charterholders consider the Level 3 CFA Exam the most difficult because of the time and thought needed to answer the constructed responses successfully. While the typical Level 3 CFA Exam pass rates are the highest of the CFA Exams, only around 56% of CFA candidates pass the exam.

The CFA designation is a powerful credential, recognized and respected throughout Canada and around the world.

The CFA Institute awards it to financial professionals who have completed a rigorous program of study and passed a series of exams. In Canada, the CFA designation is highly regarded and is a prerequisite for many high-level jobs in the finance industry.

While a master's degree is not required to enter the field, many associates and higher-level M&A professionals have Master of Business Administration (MBA) degrees. Certifications like Chartered Financial Analyst (CFA) and Certified Public Account (CPA) can help you advance your M&A career.

The CFA Institute reports that historical pass rates for Level I and Level II of the exams are typically between 40% and 50% with Level III having a slightly higher pass rate.

There are many roles in corporate finance that a CFA helps prepare a candidate for, including research analysts, equity analysts, portfolio managers, chief financial officers, and corporate financial analysts.

If you earn the CFA designation as a mid-level analyst, it's fair to expect a 15-20% increase in salary. In reality, the CFA designation seems to provide more experienced analysts and managers with a larger salary increase.

How do you get into private equity? ›

Private equity firms usually look for entry-level associates with at least two years of experience within the banking industry. Investment bankers usually follow the PE firm career path as their next job and typically have a bachelor's degree in finance, accounting, economics, and other related fields.

CFA (Chartered Financial Analyst)

According to the Wall Street Journal, the CFA exam is the most difficult exam in the world, with less than 1/5th of candidates clearing it, after repeated attempts, on a yearly basis.

The Chartered Financial Analyst® (CFA) designation is considered the gold standard in the banking and investment sectors, and naturally, a career as a CFA is very lucrative.

Start preparing the right way. Will your salary increase as you go through the CFA Program? Yes, it does. In fact, you don't even have to wait until you become a CFA charterholder.

A lot of limited partner private equity firms will hire undergraduates and then put them through the CFA. It's rare for direct investment firms to do the same. However, we also see a lot of junior investment bankers with CFA level one, as it shows both technical knowledge and evidence of commitment.”

Finding the right company to buy and the best exit strategy in private equity can be challenging. The other important aspect of the process is convincing our limited partners, such as investors, to participate in the fund. Even if an investor is unfamiliar with the finance sector, most still respect the CFA.

While the CFA is the best designation to pursue in terms of investment knowledge, it certainly does not cover all of the aspects of financial planning. In very general terms, however, the CFA designation may help those in the corporate world more than those starting their own financial planning business.

Among the most esteemed global PE qualifications around, the CPEP™ charter ratifies and stamps best your potential and promise of handling even the most complex of roles and assignments in the private equity industry.

The preeminent professional qualification for equity research analysts and others working in securities research is the Chartered Financial Analyst (CFA) designation, which is awarded by the CFA Institute.

Great quantitative skills with a proven track record, a deep understanding of the hedge fund industry as well specific firms, the right educational background, and certifications like a CFA, CAIA, or CHA (Chartered Hedge Fund Associate) are all helpful.

What degree is best for private equity? ›

Candidates should have an bachelor's degree in an analytical major like finance, accounting, statistics, mathematics, or economics.

Private equity firms are investment businesses comprising investors who use their capital to invest in private businesses. Those working in private equity can often achieve a higher salary, but their income may be less stable than those working in investment banking.

What degree is best for hedge funds? The best degrees which can help you in this industry are Chartered Financial Analyst (CFA), Chartered Alternative Investment Analyst (CAIA) and Financial Risk Manager (FRM).

If you're aiming to work in roles such as financial analysts, portfolio managers, or investment bankers, the CFA designation can be a valuable asset. However, if you want to pursue careers in other areas of finance, an alternative certification or qualification may be more relevant.

If you're just starting out in investment banking, you're probably going for a job as an analyst. This position demands great expertise in number-crunching and financial modeling, skills that are best imparted by the CFA program rather than an MBA.

In most cases, senior analysts who aim to become portfolio managers must first earn certification. The CFA credential is one option. The Certified Financial Planner (CFP)® designation is another popular pursuit for portfolio managers.

Landing a career in private equity is very difficult because there are few jobs on the market in this profession and so it can be very competitive. Coming into private equity with no experience is impossible, so finding an internship or having previous experience in a related field is highly recommended.

Private Equity Associate Compensation: Base Salary + Bonus

For the vast majority of private equity associates, the base salary is around $135k-$155k. Then, based on fund performance, bonuses tend to range from 100% to 150% of the base salary.