CFA predicts growing membership from Asia-Pacific

The next generation of chartered financial analysts (CFAs) will increasingly come from outside the US and Canada as the number from other parts of the world – especially the Asia-Pacific region – continues to gain on the Americas.

Capping what it terms ‘a decade of extraordinary growth’, CFA Institute reports that the number of investment professionals with the CFA designation has more than doubled over the past decade.

Members are still drawn predominantly from the Americas (about 70 percent), with the remainder split between Europe, the Middle East and Africa (EMEA) and the Asia-Pacific region. In 2000, CFAs – who numbered fewer than 50,000 – were drawn predominantly from the Americas (roughly 90 percent).

These are some of the highlights from CFA Institute’s recently released 2010 annual report. The increasingly global membership trend will likely continue, particularly in the Asia-Pacific region, based on the geographic distribution of the current pipeline of candidates, which today is split roughly evenly between the Americas and Asia-Pacific (around 40 percent each) with the remainder coming from EMEA.

‘The globalization of the CFA program and CFA Institute is clearly illustrated in the changing candidate and member demographics over the last decade,’ says Tim McLaughlin, chief administrative officer of CFA Institute, writing in the letter to members. ‘The current candidate distribution is a likely indicator that CFA Institute membership will be more evenly spread around the globe over the next decade.’

The report also notes that there are now almost two CFA candidates for every active member, the highest the ratio has been in recent memory. The total global population of CFAs grew only 5 percent to 102,800 in 2010 after averaging 9 percent annual growth over the previous decade. And the number of entry-level candidates for the prestigious designation actually shrank by 11 percent from 2009 to 2010, as the total pipeline remained flat at 200,700.

CFA Institute admits it dodged a bullet in 2010, however, as it had projected going into the year facing as much as a 30 percent decline in new Level 1 candidate registrations after several years averaging 24 percent growth. Because CFA program fees constitute 85 percent of the not-for-profit organization’s revenues, that outlook posed a serious financial challenge.  

In response, the organization started the year  ‘with a sharp focus on core strategic priorities and included various cost-reduction initiatives,’ McLaughlin says.

The partial recovery in registrants combined with cost cuts didn’t exactly produce an ‘outperform’ rating, but certainly kept CFA Institute off the sell list. In the report, operating revenues are up 6 percent to $193.1 mn, while operating income has dropped 5 percent to $5.4 mn.

‘I am happy to report that our mission objectives were largely achieved, the cost reduction initiatives were effective, and CFA program examination registrations rebounded somewhat, which together resulted in a positive operating margin and cash flow for the year,’ McLaughlin states. ‘This market strengthening and resulting financial performance have positioned CFA Institute to make new member-focused investments in 2011.’