We realize that the alphabet soup of financial designations can seem overwhelming. Distinguishing between valuable certifications and the more arcane offerings is becoming increasingly difficult. This is one reason many traditional financial firms still highly value the classic MBA. But some designations are useful, providing niche curriculum not heavily covered in Master’s programs.
Here are some worthy financial designations that can complement an advanced financial degree.
CAIA- Chartered Alternative Investment Analyst
The growth in alternative investments has been astounding. Greater accessibility and transparency has resulted in an industry with over $7.4 trillion in assets.1
PWC further reports the category saw 11% compounded annual growth rate over the last decade while “liquid alternatives are growing at rates as high as 15% per year.”2
While dominated almost exclusively by institutional and extremely high net worth individuals, we have even seen the alternatives theme penetrate into basic mutual funds and ETFs.
The CAIA designation is becoming increasingly desirable in the financial industry and is a must-have if dealing in areas such as real estate, private equity, oil & gas partnerships, infrastructure, private placements, hedge funds, commodities, derivatives or 144a offerings.
Though relatively young (the first exam was in 2003), there are CAIA candidates from a wide variety of financial institutions including banks, M&A advisory firms, asset management providers, family offices, insurance companies and accounting firms.
The CAIA is not like other designations- the charter holder has demonstrated an understanding of sophisticated investments and portfolio management strategies. Their association refers to the designation as the “global benchmark in alternative investment education”.3
Given the higher fee structure associated with alternatives, professionals holding this designation discover potential employers seek them out.
It is no secret that alternative fund managers charge higher fees than traditional managers, but nowhere is this more visible than with asset servicers. These firms, such as prime brokers, earn fees that are “two to six times those paid on traditional equity or fixed-income investments”.4
Consequently, the CAIA is a very marketable designation simply because of the network many CAIA professionals have developed over time.
The program extensively covers the alternatives landscape. On the product side, it delves into structured products, managed futures and funds of funds. The program also addresses manager selection as well as regulatory and ethical concerns. Many CAIA clients are part of complex legal structures, often involving offshore operations.
From a resources standpoint, the CAIA program is quite manageable. The cost for an individual course registration is $895 while the time frame for program completion is ‘within a year’.5
The curriculum consists of 20, one-hour ‘modules’, all done online.6 There are two exams given, Level I (all multiple choice) and Level II (multiple choice and essay). Although the curriculum is challenging, the passing grade is a forgiving 70% mark. Compare that to the CFA exam, which is scored on a rather brutal curve.
The CAIA program also counts towards the continuing education requirements of some more popular offerings such as the Certified Financial Planner (CFP) program.
CIPM Certificate in Investment Performance Measurement
As the number of asset managers continues to increase, it is more important than ever to scrutinize performance results. This is important considering clients may pay performance fees of 20% on profits.
There are times where the underlying investments are so illiquid that calculating ‘returns’ is more difficult to come by. It has become a fiduciary responsibility to analyze performance results and associated costs. It also reinforces operating in your client’s best interests.
Enter the CIPM designation. The program, administered by the CFA Institute, is designed for ‘investment performance’ professionals and provides “practice-based investment performance and risk evaluation skills.”7
The curriculum sharpens investment insights, allowing for valuable feedback to clients and employers. 30% of the material covers ethics and professional standards, while 70% of the material covers performance evaluation (including measurement, attribution, appraisal and manager selection).8
The importance of manager selection cannot be understated. While it’s true that some buy-side institutions such as Calpers have publicly stated that they are managing more and more assets in-house, a substantial amount is still outsourced to external managers. Even a small allocation to a fund can amount to an investment worth hundreds of millions of dollars, often the retirement money for teachers, police and firefighters.
Additionally, the skills learned provide an extra layer of safety for clients and managers. Following frauds like Bernie Madoff’s, a detailed review of investment funds is absolutely necessary. Due diligence of Madoff’s purported returns using his described methodology should have drawn red flags.
Further CIPM requirements include at least two years of qualifying employment (calculating or presenting investment results or providing consulting or accounting services to support them) and passing the CIPM test (consisting of two, 180-minute proctored exams).9
A quick look on Linked in revealed CIPM charter holders employed at a number of major asset managers including Goldman Sachs Asset Management, Oaktree Capital Management, PIMCO and DoubleLine Capital. It is also prevalent among investment consulting firms, such as Towers Watson and Wellington, often hired by pension funds to maximize the funds efficiency.
CAMS- Certified Anti-Money Laundering Specialist
If you are interested in combatting financial crimes such as money laundering, fraud, tax evasion and even human trafficking, the CAMS designation is for you. The topics covered in the program include all the tricks of the trade to deter, detect and catch fraudulent financial activity.
This designation can improve your career trajectory in the compliance, operations and risk management sector.
The curriculum explains how to identify suspicious investment activity and customer behavior, properly conduct auditor interviews, freeze accounts, and legally obtain information uncovered from the internet and social media. It also teaches how to spot the latest tricks of the trade for financial criminals including the use of internet casinos, shell companies, selling vehicles, import-export companies, art dealers and the use of corrupt notaries.10
This designation is offered by the Association of Certified Anti-Money Laundering Specialists (ACAMS) and is pursued by fraud investigators and risk management personnel worldwide. The certification requires a passing grade on the CAMS exam, adequate professional experience and 40 hours of qualifying educational credits.
To keep CAMS program up to date, professionals are required to complete 60 hours of continuing education every three years.11
But before you can begin the program, you must attain membership in the ACAMS. The standard annual rate for ACAMS membership is $295 for professionals working in the private sector and $195 in the public or government sector.12 Once the CAMS designation has been awarded, recipients can pursue more advanced certifications such as CAMS-Audit (auditing and accounting) and CAMS-FCI (financial crimes investigation).
In addition to the education, the CAMS designation has another important benefit-increased compensation. According to an ACAMS survey, Anti-Money Laundering professionals with the designation earned 42% more on average than non-certified peers.13
Perusing LinkedIn revealed that professionals with the CAMS designation were not only employed as Chief Compliance and AML Officers, but also Heads of Financial Crimes Investigations and Anti-Bribery and Corruption divisions at various organizations. We found AML professionals working for major financial institutions including Deutsche Bank, RBC Capital, Wells Fargo and Pershing. They also work for the SEC, FINRA and law enforcement agencies. Some higher ranking professionals with the CAMS designation had also received Masters in Finance as well as MBA in Fraud Management degrees.
So if you want to fight financial crime like a superhero, while safely sitting behind a desk, consider the CAMS designation.