What is the Earning Potential of a CFA® Charterholder?
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
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
