Bull Bear Report Jul 07 2011

Wet, Hot CFA Summer

By kyle stock

Becoming a certified Chartered Financial Analyst is a grueling and competitive process, but not as tough as winning the right to grade CFA exams.

For the past 12 days, 541 CFA charter-holders have been holed up in a Charlottesville, Va. high school, grading almost 23,000 completed CFA exams. The group works for two weeks, roughly seven hours a day -- no more, no less, in order to finish on time and still remain sharp. In off hours, they play golf, sip wine at nearby vineyards, tour Thomas Jefferson's Monticello estate and belt out bad pop songs at an annual karaoke night. They are paid a few hundred dollars a day and plied with a steady supply of food, coffee and alcohol.

"It has some aspects of summer camp,"said Tom Robinson, managing director of education at the CFA Institute, the Charlottesville-based nonprofit that administers the test.

For an aspiring financial analyst, the extended fete is a supercharged networking session, a chance to rub shoulders with business's most dedicated -- if not most successful -- professionals. Of the almost 106,000 CFA members, one quarter are portfolio managers and 8% are chief executives, according to the CFA Institute.

For accomplished finance professionals, the retreat provides a good way to stay sharp and brush up on new material.

Joe Biernat, 57, has been wanting to grade tests since he became a CFA in 1982. He was always too busy running European Credit Management, a firm that invested for institutional clients. Biernat made the trip to Virginia for the first time last year after Wells Fargo bought his business.

"It's an amazing group," Biernat said. "And it's very easy to get to know people. At the end of the day, you've gotten through 200 to 250 exams and you're cross-eyed, so it's just good camaraderie."

Although most of the graders were chartered by the institute years ago, for many, the invite to Charlottesville is the ultimate honor in the arduous CFA process, a three-test curriculum that demands about 900 hours of study, on average, and takes at least 18 months to complete.

John Richardson started grading CFA exams in 1986, along with 76 other volunteers. He has made the trip to Charlottesville every year since, including in 2000 when a record 978 graders descended on the sultry city.

"I really feel like I'm getting on a plane and going to see family," Richardson said in a phone interview last week as he waited to take off from a Phoenix airport.

This year, the assembled finance pros were broken up into 41 classrooms, with each team focused on a single question in the Level III exam -- the only one of the three tests that has a component that is not graded by computer.

As one might expect, the graders are a diligent crowd. Each question has an answer key, which the assemblage of volunteers spends a day or two discussing and being tested on. And each of the grading rooms is manned by a "captain" and "assistant captain" -- veterans of the process who secretly grade a number of the tests before passing them out in order to double-check the performance of less-experienced volunteers.

After all the test are graded, roughly half of the team goes home; the remaining skeleton crew re-grades about half of the tests to ensure accuracy.

Though the work is painstaking, securing an invite to grade is more challenging than passing the test. Last year, 46% of candidates passed the Level III test, a record low. However, only 15% of those who volunteered to grade the tests were accepted. Almost 3,000 aspiring graders were turned down this year, according to Robinson.

"We try and get a mix," Robinson said. "We want to have people of different specializations and we want to make sure we're getting that generalist perspective."

This year, 41% of the graders came from outside of the U.S. The UK sent 20, another 11 came from Australia and 10 made the trip from Hong Kong. A greater share of graders are flying in from Asia, an area that now boasts more CFA candidates than any other, 41% of all prospects.

Last week, after a long day of reading exams, the team of volunteers gathered at a big barn in rural Virginia for a barbeque and country music concert.

"I played horseshoes with a very small Chinese woman who had never played horseshoes before," Biernat said. "It was her and a German man -- quite the cultural mix."

Write to Kyle Stock

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