The financial field is full of professionals with a variety of designations, some more prominent than others, ranging from the CFA vs CFP or the CFA vs CPA.
The CFA designation, although not well known among the general public, is highly respected among professionals, and, some say, brings with it not only a wealth of knowledge, but also an increase in paycheck.
Let’s conduct a cost-benefit analysis to see if it is indeed a sound investment of your time and money by comparing average salaries in the financial industry to see if CFA charterholders really do earn a premium in the market.
In order to answer this question, we are going to rely on publicly available salary information to see if there is enough information to draw a strong conclusion.
We are focusing this article on salaries for financial analysts, both with a CFA charter and those who do not hold the charter.
Financial Analyst Average Salary
According to the Bureau of Labor Statistics, the median annual salary for a financial analyst in 2018 was $85,660.
It’s important to recognize this is a very broad figure that represents the entire US. This represents the average data point where 50% of respondents earned higher than $85,660 and 50% earned less than $85,660.
It’s also notable that the top 10 percent of respondents earned greater than $167,420 and the lowest 10% earned less than $52,540.
We should also make it clear that the BLS data does not report the number of respondents or any details on the average experience of the respondents.
Even though this isn’t a perfect data point, it does represent a good starting point.
The average financial analyst salary is also further broken down by industry segment as follows:
- Securities, commodities, and related financial investments: $101,410
- Professional, scientific, technical: $84,540
- Industry Management: $83,640
- Credit Intermediation: $81,420
- Insurance Carriers: $78,870
Granted this additional gradations are overly general, but it does give you a general sense of differences within industry segments.
Additional Sources of Information
Glassdoor provides a variety of anonymous, self-reported salary data. The information is easily accessible and can be tightly filtered by years of experience of geographic region.
According to Glassdoor, based on about 45,951 anonymous submissions as of February 2018, the average salary for a financial analyst is $63,829 per year.
Adjusting that data for years of experience provides the following ranges:
- 0 to 1 Years of Experience: $54,460 per year.
- 15 plus Years of Experience: $72,557 per year.
The survey results suggest there is a range of salary outcomes possible depending on your negotiation skills, length of experience, location, and your professional credentials.
A CFA charter may also make a material difference here.
Salary Information for Financial Analysts with the CFA designation
One place to find salary information for financial analysts with a CFA designation is periodic salary surveys conducted by the CFA Institute or regional surveys conducted by individual CFA member chapters.
The information is typically self reported and anonymous but the surveys are only completed by members of the chapter.
Additionally, the survey sample size may be significantly smaller than other data sources. However, with that said, the surveys still represent a worthwhile data source to consider.
CFA Member Society Surveys
The most recent publicly available CFA salary survey was completed by the CFA Society of Pittsburgh in May 2017.
According the CFA Society of Pittsburg survey, the median total compensation for a financial analyst in 2016 was $126,750 (slide 12), which is substantially higher than the both the figure reported by the Bureau of Labor Statistics website as well as the average salary for a financial analyst as reported by Glassdoor.
A more detailed breakout is highlighted below:
Research / Investment Analyst
- 2016 Median Salary: $97,500.
- 2016 Median Bonus: $24,500.
- 2016 Median Total Compensation: $126,750.
The CFA Society of Pittsburgh figures should be used with caution, as it is based on just 84 total respondents, of which only 24 were research analysts (slide 4).
Survey participants also chose to self-report their earnings, which may indicate their compensation could be on the higher end of the average.
Admittedly, we are making very broad assumptions here, using the Bureau of Labor Statistics median pay of $81,760 and the Glassdoor reported salaries as representative of the broad body of research analysts.
However, even with these limitations in accuracy, the difference in salary really does stand out. It pays to have a CFA charter if you decide to be an equity or a credit analyst.
CFA Society of Milwaukee Survey
The CFA Society of Milwaukee also completed a salary survey of its members. This survey was completed in November 2018 and included 227 responses.
With the larger survey size, the salary data could be classified into tighter categories for more relevancy.
Buy Side Financial Analyst (Equity)
- 2018 Median Salary: $117,500.
- 2018 Median Bonus: $100,000.
- 2018 Median Total Compensation: $201,870.
Buy Side Financial Analyst (Fixed Income)
- 2018 Median Salary: $102,500.
- 2018 Median Bonus: $44,000.
- 2018 Median Total Compensation: $158,750.
Even though a buy side equity and fixed income analyst have very similar salary ranges, when you look at the top 25th percentile, there is a fairly big difference.
The top 25% of fixed income analysts earned total compensation of $403,250 vs $274,750 for buy side equity analysts.
What about years of experience?
The Milwaukee survey segments median salary results based on years of experience which could be a more relevant statistic than a broad median that includes all experience levels.
Financial Analysts with Less than 5 years of Experience
- Buy Side Equity: $87,500 base / n/a bonus / $101,100 total compensation.
- Buy Side Fixed Income: $65,000 base / $15,000 bonus / $87,000 total compensation.
Financial Analyst with 10 to 20 years of Experience
- Buy Side Equity: $120,000 base / $92,500 bonus / $228,740 total compensation.
- Buy Side Fixed Income: $175,000 base / $150,000 bonus / $415,000 total compensation.
The salary information from the survey also include information about the median salary of charterholders vs. non-charterholders by education.
Median Total Compensation with at least a Bachelors degree
- Non-charterholder: $79,800.
- Charterholder: $162,500.
Median Total Compensation with a Graduate degree
- Non-charterholder: $108,594.
- Charterholder: $237,357.
The main limitations with these figures is that it only represents respondents from Milwaukee and it does not segment by job category or years of experience.
The results also don’t make it clear how many respondents did not hold the CFA charter and how many did hold the charter.
However, despite those limitations, the data does indicate a clear salary premium, for those people who hold the CFA charter.
It is interesting that the salary premium appears to be much more significant for those with just a bachelor’s vs. those people who hold at least a graduate degree.
Should You Pursue the CFA Charter?
The CFA curriculum takes about 1,800 hours to study for the 3 levels and only around 1 in 5 candidates makes it through all three levels of the exam.
For more information, see our CFA Exam prep guide. Given the difficulty and required time investment, it’s not surprising that certain industries would pay a premium for the credential.
Does that mean you should pursue it?
Not necessarily.
The exam represents a major commitment of time that you need to balance against a full time career and a personal life. You can still be successful in the investment management and other industries without the charter.
However, it may just take a little longer to get your foot in the door.
There are certainly ways to put your CFA Charter to use, if you decide to pursue it. You can have a very lucrative career in the financial field, and you don’t have to stick to one position or one company.
Market conditions change, new job opportunities arise, and you will always find a spot where you fit in best.
The CFA Charter will never hurt you, and may come in very handy in positioning you favorably against the next candidate. Ultimately, whether the CFA is worth it depends on your personal situation and career goals.
Finally, the more investment professionals we have that are held to a higher ethical standard, required by the CFA Institute, the better for the financial markets and the public.
