Analyst Test-Takers Anciously Awaits Results - Lynn Cowan

For months, they alternately ache for it and dread it. They shake. They lose sleep.

Methamphetamine addicts? Hardly. It is the thousands of people who take the Chartered Financial Analyst exams, a multi-year series of financial industry tests that require nearly a whole summer of waiting after each exam for the results, creating a nerve-wracking period of limbo right now after a grueling year of studying.

"I didn't pick up a fiction book for three years," recalls Beth Hamilton-Keen, an investment counselor at CIBC Private Wealth Management in Calgary, Canada, of her time cramming for the three required CFA exams in the late 1990s. "When you work a twelve-hour day, then you have to fit it into your nights and weekends. Taking long plane rides helps a lot. You can't do anything else on a plane."

Ask any academic, analyst or portfolio manager awaiting the CFA results, and they will tell you: The wait for results is almost as bad as the test itself, which quizzes participants on everything from accounting to ethics.

The tests, administered by the non-profit CFA Institute in the U.S., are given worldwide in 89 countries on the same day in early June. Results come out in late July for people who took the first-year test level, and later in August for the following two test levels. CFA candidates are currently in the thick of the waiting period, mulling over the questions they think they flubbed.

There has even been a liquor commercial made about it: In a reality spot that was aired in South Africa last year, Bells Scotch Whiskey's cameras followed equity analyst Johan de Bruijn as he logged on to a computer to find out if he had passed the final level of the exam. The 28-year-old Cape Town resident, who hadn't slept the night before, jumped out of his chair and screamed when he found out he had passed.

"I've made it!" he bellowed as the logo for Bell's whiskey appeared. "Ah, I'm shivering!"

Bruijn recalls that day, nearly a year later. "I was shivering because I was so relieved. It was more like shaking," he said. Immediately after the commercial was filmed, he went to his office and told everyone there he had completed the third level.

"There is huge pressure on the candidate to pass, especially from colleagues, some of whom have already received their charter," he said.

Where Exams Outnumber Residents

While CFA exams takers may know how to evaluate the trickiest equity derivatives, few claim to understand the long wait required before they receive their results. The answer lies in Charlottesville, Va., population 40,000, home to the CFA Institute, which changed its name from the Association for Investment Management and Research in May.

From June 5, when the exam was given this year, until late August, when the final grades are reported, the institute does little else besides organize, grade and double-check grades on the 83,000 exam booklets that CFA candidates filled out. While the first-year level of the test is a multiple-choice exam that can be machine-graded - and thus delivered to those exam takers about a month earlier - the final two years' exams include essay questions that must be read and evaluated by hand.

The initial grading process takes place over a two-week period in which 750 people who already hold CFA designations descend upon Charlottesville, located at the foothills of the Blue Ridge Mountains about 70 miles northwest of Virginia's state capital of Richmond. The influx of people fills seven area hotels and generates an estimated $1 million in revenue for the local economy.

An entire high school is taken over for the grading process, its library shelves cleared out and turned into a massive storage area for exams in various stages of grading. Test graders are assigned to teams of 20, who focus on one exam question at a time, and their efforts are tracked and bar-coded by a group of temporary workers. The graders, who are flown in from 30 countries and fed two meals a day in the school cafeteria, emerge at the end of each day blinking in the sunlight, and board shuttle buses that take them back and forth between their hotels and the high school.

A mix of academics, retirees and active money managers and analysts, many CFA holders use their vacation time to grade the tests, receiving a stipend of $300 a day. Most, like CIBC's Hamilton-Keen, think the conference helps them network and stay abreast of new trends in the investment management industry.

The test-grading process also reminds them of the intensity of the exams. It takes an average of four years to complete all the exams, all of it self-study using textbooks. Of the 83,284 who enrolled for the exams in 2004, only a little more than half can expect to pass. About 25% never even show up for their tests after getting a gander at the study guides. Nearly 80% of the people who enroll in the program never get a CFA designation.

Jim Galloway, who taught finance and investment courses at the Rochester Institute of Technology in upstate New York, said decades ago when he was preparing for the exams, fellow faculty members would sit for the test at a location outside of Rochester, to avoid taking it at the same site as their graduate students. Their fear: A student would ask how they did later, and they would have to admit they flunked.

"I would have had no confidence at all if I hadn't passed," said Galloway, who has been grading tests for 21 years.

"I Didn't Study...But I Had To Show Up"

After Galloway and his fellow charter holders complete the two-week initial grading process, the test grades are re-checked, tallied and re-checked some more. When the process is over, the results are posted online.

In some circles, particularly outside the U.S., holding a CFA is considered more important than where a prospective job candidate attended college, and carries more cachet than advanced degrees like a master's in business administration. In the U.S., the only way a Wall Street analyst can bypass taking the practical knowledge portion of a new mandated exam by next April is if he or she has passed the first two levels of the CFA.

The CFA exams have been taken by Securities and Exchange Commission Chairman William Donaldson, Goldman Sachs Group Inc. (GS) investment strategist Abby Joseph Cohen, famed asset manager Mario Gabelli, Nobel prize-winning economist Robert C. Merton and Sir John Templeton.

It has also been taken by a few lesser-knowns, including one candidate who scrawled on his booklet, "I didn't study for this exam, but my boss is sitting behind me so I had to show up" before doodling pages of nonsense for hours in the exam room, waiting for the day to end. Yet another wrote in his book, "What I'd rather have been doing today was golfing," and proceeded to fill his booklet with a description of the various holes of his favorite course.

Those who have failed must try, try again, as was the case for CFA Institute President and Chief Executive Tom Bowman, who flubbed his first attempt at the first level in the 1970s because he was so confident he would pass without studying. Bowman isn't alone; it takes the average successful candidate four exam sittings to earn a CFA.

"I had been managing money for five or six years," and thought there couldn't possibly be any unknowns on the exam, said Bowman. "I opened the study guide about a week before they exam and said, "There's no way I'm going to be able to do this." Sure enough, I failed. At the time, I almost wished I never opened the study guide."