By Trevor Hunnicutt | NEW YORK
The CFA Institute will weigh changing its formidable exam to tackle artificial intelligence and the "big data" investors cull for an edge in markets, a senior official from the U.S. accrediting group said on Tuesday.
The institute's Chartered Financial Analyst accreditation is seen as the gold standard for everyone from wealth advisors to Wall Street analysts.
The grueling set of three exams that leads to the credential already covers a sweeping range of topics, from understanding how corporations spend cash to the mechanics of complex financial instruments and regulation.
Yet Stephen Horan, managing director of credentialing for the CFA Institute, said investment managers are increasingly collecting and processing huge amounts of data, such as satellite images of parking lots, that they use to guide their investments. Those topics are not addressed in the CFA exam.
"We've always had a very big emphasis on statistical analysis, econometrics and data analysis in the program, and from what the industry is telling us folks still need this," Horan said in an interview.
"But there are different analytical methods to use big data because big data is unstructured data that is used in entirely different ways."
The CFA Institute's staff and consultants will discuss how to respond at a two-day workshop starting on Sunday in Chicago. Topics under consideration include artificial intelligence, machine learning, algorithms and robo-advisers, which are automated online investment services.
Fund managers who pick individual stocks and bonds are under increasing pressure and reaching to increasingly esoteric techniques to deliver strong performance as investors take money management into their own hands using cheaper index funds.
While big data has long been the domain of hedge fund managers, retail-oriented fund managers like BlackRock Inc (BLK.N) are using the techniques, too, in a bid to boost results.
Some 190,000 people will sit for the CFA exam on June 3, a record number. Nearly six in 10 people who took the day-long Level 1 exam last year failed it.
Horan said an increasing proportion of candidates sitting for the CFA exam come "from the IT field."
"Our job is to bring the coders up to snuff on the investment management," he said.
While the CFA exam is not going to teach analysts how to code anytime soon, investors today may need to know how to guide analysis done using data-science technologies and understand its implications for an investment portfolio, Horan said.
(Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan and Andrew Hay)