I could not clear the CFA exams! I want to get into a private equity job! What to do?
Do these questions worry you?
This is a common plea among finance graduates looking forward to breaking into private equity careers. It is a common misconception that passing CFA alone can get you into the industry. Of course, the CFA program helps you to get into equity research, hedge funds, and asset management. But you also need to work a lot apart from clearing CFA. There are alternative certifications available too.
Let’s understand the importance of CFA for investment bankers to move into PE firms.
Importance of CFA for investment bankers
The CFA covers every aspect of the financial market and investment management, which is crucial for joining the best private equity firms. The firm demands expertise in debt financing, modeling wizard, population demographics, monetary policy, and many more. A CFA professional has all this knowledge and hence they are in demand.
Private equity is all about convincing investors to make an investment for the projects you are raising funds. An investment banker with a CFA can easily do this. CFA is a professional qualification that binds the professionals under the Code of Ethics and Standards of Professional Conduct. They are more mature in dealings, resolve conflicts of interest, prioritizing deal executions, and following market ethics. A CFA qualification proves that you are capable of understanding these differences and maintain the firm’s reputation.
Also, working in an investment bank for a few years and passing the CFA exam that has a minimum of 1000 hours of study collectively gives you practical experience in multi-tasking. Moreover, most of the finance graduates’ choice of destination is a career in private equity.
All these attract PE firms to hire investment bankers with a CFA.
Moving into PE firms as an investment banker with a CFA
One of the best ways to use CFA candidacy status is networking. You get a bright opportunity to network with other CFAs, investment management professionals, and get noticed to hiring people. On the contrary, if you have an MBA from a top business school with a good score, CFA would be an additional qualification for you to get into private equity.
Above all this, you should have strong analytical and technical skills, strong commercial judgment and strategic thinking, an entrepreneurial mindset, and the ability to work pro-actively and autonomously.
Not cleared CFA! What to do?
Want to enter the private equity world? Clear CPEPTM Exams
It’s understood that seeking a job in the private equity industry is difficult, that too without an additional qualification like CFA. The other alternative way to enter the industry is by clearing CPEPTM exams.
CPEPTM exams help you to stay updated with the new standards of asset valuation, business performance, and smart deal closures. The CPEPTM qualification covers the major knowledge areas like critical comprehension and proficiency required for organized private investing.
Overcome the stiff competition, regulation, and multiple challenges that exist in the PE industry. Get certified with CPEPTM qualification.
Compensation benefits at private equity firms
Private equity investment professionals get paid in three forms of compensation namely, base pay, carried interest, and bonuses. As you climb up your career ladder, carried interest matters a lot for you.
The highest known salary in North America for an Associate is USD 260K with a bonus of USD 275K. The Vice-president receives USD 350K and USD 700K as a bonus. Further, the Principal receives USD 1100K and a bonus of USD 700K. The Managing Director or Partner receives USD 2000K and USD 2100K as per Heidrick and Struggles 2019 survey reports.
To conclude, along with an MBA degree, have an additional professional qualification and networking to get your foot in the door of private equity.