By Urmi Hossain
In April 2023, I achieved a significant milestone by earning my CFA designation. It was a moment of happiness, satisfaction, and accomplishment. The journey to obtaining the CFA designation required time, sacrifice, stress, and temporarily giving up on personal passions. However, after achieving this goal, I realized my learning journey had not ended there.
Back in 2018, the CAIA (Chartered Alternative Investment Analyst) designation piqued my interest. One day at the office, we received a presentation from the CAIA Association about its program and the certification content. Learning more about alternative investments sparked my interest, but I had to put it on hold to prioritize the CFA designation.
In October 2023, after obtaining the CFA charter, I knew that pursuing the CAIA designation would have been my next challenge. After speaking with colleagues, I learned that alternative investments were becoming increasingly significant in the finance sector. The CAIA designation, though undervalued, was gaining attention. With only about 13,000 CAIA members worldwide and my passion for continuous learning and studying, I wanted to join this elite group.
The CAIA program is structured similarly to the CFA program but consists of two exams: level 1 which consists of multiple-choice, and level 2 which includes both multiple-choice questions and essay questions. The content focuses heavily on alternative investments including real estate, private equity, family offices, portfolio management, derivatives, institutional investors, and more. Fortunately, having the CFA designation exempted me from the CAIA Level 1 exam, allowing me to jump directly into Level 2.
Here are some tips and strategies for anyone considering the CAIA designation:
1. Give It 4-5 Months of Preparation
The exam registration typically opens 5 months ahead, and that’s the time you have to study. To increase your chances of success, start studying as soon as you sign up. Some materials can be challenging and even if you have a finance background, don’t take this lightly. The CAIA Association recommends 250 hours of study.
2. Purchase Materials from Approved Providers
The CAIA content can be lengthy with limited practice problems. To prepare well, purchase materials from approved providers such as Uppermark or Edge Designations. They offer mock exams, revision sessions, practice problems, and video content.
3. Don’t Underestimate the CAIA Exams
Passing the CAIA exams is not a piece of cake. In March 2024, the passing rate for the CAIA Level 2 exam was 59%. While this is high compared to other exams, many candidates still fail and need to retake it. The materials can be extensive, so take the exam seriously, and diligently.
4. Practice the Essay Portions
Similar to the CFA Level 3 exams, CAIA Level 2 includes a section dedicated to short answers. Pay attention to command words such as explain, describe, list, and identify to name a few. Stick to what’s asked; writing more and not writing what is being asked won’t earn you additional points.
5. Don’t Skip Ethics
The CAIA Level 2 curriculum includes a detailed ethics section focused on ESG, regulations, and emerging topics. Unlike the CFA ethics which is more about interpretation, this section requires a lot of memorization. Use approved materials such as PowerPoint slides, and video content to learn and memorize key concepts.
Lessons Learned from My Experience
- Start early – If you want to increase your chances of passing the exam, start studying immediately
- Practice as much as you can – the CAIA curriculums don’t have the best problems and their ecosystem is not great. Uppermark has question banks, problems as well mocks that well made for your preparation
- Revise constantly– the CAIA curriculum is very detailed with a lot of information and content. The exam is mainly qualitative and quantitative. Although the quantitative aspect needs a lot of practice, the qualitative section requires constant revision.
- Skip the CAIA reading – Skip the CAIA readings, watch the content from the approved providers, and jump on to solve the problems. When you are stuck, refer back to the chapter and read only the necessary sections to close the gap.
- Create cue cards – As I said earlier, the CAIA curriculum is very detailed. I suggest using cue cards to remember definitions and specific contents and to revise them constantly
- Have your own formula sheet – the CAIA curriculum is made of a lot of formulas. I suggest building your formula sheet or using one of the approved providers. No formula sheet will be provided to you during the exam.
- Join WhatsApp Group – If you buy materials from Edge Designations, you have the opportunity to join their WhatsApp Group. I highly recommend joining their group so you can see what questions are being asked by other candidates and ask questions yourself too.
- Practice the Uppermark problems – whether you buy materials from Edge Designations, Kaplan, or Uppermark, the latter ones have problems that are far more difficult than the other providers. Because of the difficulty and the challenge, they do a better job of preparing you for the exam
Why I Pursued Another Designation
This brings me to an important question: why did I choose to pursue another designation?
I am deeply inspired by my fellow women colleagues in the industry. Seeing many women on LinkedIn with both CFA and CAIA designations ignited my desire and drive to achieve the same. The finance industry still lacks sufficient female representation, and achieving the CFA designation was significant enough in a male-dominated field. Adding the CAIA designation to my credentials was a milestone that further underscored my commitment to professional growth. Earning a professional designation can be both fascinating and highly beneficial for your career. It enhances professional credibility, opens up career advancement opportunities, and provides a wealth of knowledge and skills. Additionally, designations offer valuable networking opportunities, personal satisfaction, increased earning potential, and the assurance of staying current with industry trends. By investing in a professional designation, you are investing in your future success and growth. Studying is a lifelong journey to success.