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Discussion Starter #1 (Edited)
It is my impression that it is impossible for any private individual in Canada to get paid legally as an portfolio manager no matter how many securities courses or exams he can pass UNLESS he can obtain specific industry work experience from an established financial institution. Registraiton requirements (ie National Instrument 31-103) ask for a CFA or CIM designation in addition to "investment management experience", but it is impossible to get a CFA without work experience in the industry. Even if one passes all CFA exams, he needs to have 4 years of full time qualified position doing mostly analytical work for a institution (eg no accounting, auditing or any non-investment jobs) before he can be given the CFA charter. The CIM designation requires IMT and PMT courses, and CSI's site states that IMT students need to have "a minimum 2 years industry experience".

This suggests that in order to realize the goal of becoming a paid portfolio manager, not only do I need to pass all CFA exams (where the majority of candidates fail), I must keep job hunting until a financial institution will, somehow, hire me to carry out investment analysis for them in a full time paid job. This premise seems a bit unrealistic when I read about people who passed the CFA exams but can't find work experience. My previous assumption was that passing certain licensing exams would enable one to handle portfolios professionally, but it seems that I was being naive.

Can anyone who is familiar with security regulations confirm all this?

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Robillard,

It does feel like one of bigger catch-22s I've encountered. In this case, competency in portfolio management is apparently measured indirectly by social, networking and job hunting skills, and not solely by investment knowledge or performance. Who says one will not be stuck in a bottom rung job for years while dreaming to be granted access in "investment analysis" by upper management? The U.S. is like paradise in comparison for would-be capitalists: write one series 65, no sponsor needed (unlike for series 7, though there are sponsors who takes almost anyone), and you get to run your own hedge fund. So it's series 65 vs CFAI+II+III+4y investment industry experience. The Americans seem to believe that competency can be measured by *gasp* standardized tests alone.

That's life, quit whining and deal with it. That's my Canadian experience, eh? I wonder if the average licensed Canadian portfolio manager beat his clearly less-qualified American counterpart recently. Even less qualified outsiders of the industry like me have seen our own portfolios reach an all time high this year. Hopefully, those managers have added more value to their investors.
 

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User,

I'm sort of in the same boat as you describe. When I graduated from university I was hoping to find work with a fund management company. Unfortunately, the industry seems to have a bit of a catch-22. Fund management companies want to hire people with the CFA, but one can't earn the CFA without professional experience.

Fortunately, I believe that the CFA institute has lightened up a bit on what qualifies as acceptable professional experience. They have posted a list of sample job titles that most likely qualify for membership here: https://www.cfainstitute.org/cfaprog/charterholder/membership/jobtitles.html.

I believe accounting firms are not a bad place to earn the necessary experience. The list says that auditor and corporate finance analyst are qualifying job titles. Furthermore, most of the larger accounting firms, in addition to auditing, do corporate finance advisory, valuations, even investment banking. According to the institute, the key is that the work must be involved in (or supporting?) the investment decision-making process.

Incidentally, a good place to start in the industry might be as a portfolio administrator or fund accountant. They aren't exactly glamourous positions, typically involving pushing paper and bookkeeping transactions. But once one is in the door and has some professional experience, it is much easier to get into investment analysis and management.
 

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It's not that the CFA is necessarily a requirement in the portfolio management industry in Canada. Actually, I'm not sure if it is. It's my understanding that most of the reputable portfolio management firms only hire portfolio managers with that designation though. The institute has been focusing its lobbying efforts to make the designation mandatory in various jurisdictions. On the plus side, it should mean that the average portfolio or asset manager will be more knowledgeable, and bound by the institute's ethical code. On the downside, it limits the pool of possible talent that can do that work (perhaps also raising salaries and compensation of managers).

Having passed the first two exams, I am a little sceptical that any amount of standardised testing ever qualifies one to do anything. What it does show is that you are able to work hard, study for long hours and basically suborn one's social life to the goal of making money. I'm not saying it's not worth it. I wouldn't have signed up to write the level III if I didn't think it had value for me. Still, I think most of the real learning, when it comes to portfolio management, is done on the job.

The finance has always had an element of the "old boys network" aspect to it. It's not about to change any time soon. If you really want in, in addition to studying, you should try attending some of the social and educational events put on by your local CFA society and networking with professionals in the industry.
 
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