Wednesday, February 08, 2006


I wanted to jot down a little bit about the Cottage industry that has sprung up which offers certification credentials in the finance industry. It appears that new designations keep popping up every few years and its amusing that people are spending a lot of money trying to secure these credentials.

While the idea of self-study for writing these exams is excellent, there is no doubt that in real world, it comes down to two things when we talk about career breaks:

1. Pedigree of education (correlated with raw intelligence.. maybe debatable but probably holds with a significance level of 80%??) (HARD SKILLS) [ It is interesting that people dont like the word "pedigree", almost sounds elitist, but just see the bios of team members of top venture capital firms - you will be hard pressed to find someone other than a HBS or Stanford MBA].

2. Contacts and "being in the right place at the right time" (SOFT SKILLS AND LUCK)

These certifications try to offer alternative 3, but in my opinion, they need to be combined with 1 and 2. I see a lot of people wasting a lot of resources of obtaining these certifications just for the letters to follow their name or trying to get that one promotion in their job. It is important to analyze the industry you are into and then talk to some people who have pursued these designations (and please, this doesnt include flashy literature on the society webpages). For example, FRM might suit somebody who wishes to work in core risk management role, while CAIA will appeal to someone in the alternative investments area. I wish, there was a study that compares all these designations and really lets people uderstand the nuances in each one of them.


Blogger derivativesgeek said...

Very good points: 1, 2 & 3. Ultimately, the major industry/professional associations have done very well at creating consumers from their member pool. I like it; excellent business model. I'm probably the only one pushing for to create a proficiency exam, non-compulsory of course. They should, and I'm very interested in anyone who has access to articles or information on such a proposition.

8:17 PM, February 11, 2006  

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