HSE and CFA: a Special Level of Knowledge and Honour

The HSE Banking Institute has become a partner of the CFA (Chartered Financial Analyst) Institute, which unites about 70000 certified financial analysts worldwide. Vasily Solodkov, Director of the HSE Banking Institute and Richard Hainsworth, President of CFA Association (Russia), told us about this joint programme.

- What is the history of the CFA Institute, what are its functions?

Richard Hainsworth

Richard Hainsworth:The CFA Institute has grown out of several professional associations created in the USA after the Great Depression. Their task was to create a testing system for financial professionals which would distinguish those having an appropriate experience and certain ethical standards from those not having them. Now there are two interacting branches:Societies which represent and defend the interests of professionals possessing CFA certificates, and the Institute which conducts research and tests for CFA certificate. As for the methods of testing, its development involved experienced teachers who had a good understanding of how the educational process should be built. And to get a certificate, one should not only pass three levels of examination, but also have at least three years of appropriate professional experience.

 

Gradually the CFA programme has spread beyond the U.S. borders. The CFA Institute has started setting up partnerships with leading world business schools and universities. The Institute was greatly interested in establishing such connections in Russia as well, and I can say that I have brought together the CFA Institute with the Higher School of Economics.

Vasily Solodkov:One of the Institute's key tasks is to try create a unified culture of financial analysis in all countries of the world, and to conduct research on the potential and trends of the world's financial markets. From this point of view, the offer that Richard Hainsworth and Tom Robinson (Director of the CFA educational programmes) made to us was in line with the HSE Banking Institute's development strategy. We want our students to be up-to-date with world standards. One of the CFA's demands for the selection of a partner university was a 75% correlation between the university's curriculum and the CFA programme. We studied our programme in detail and were surprised to find out that it complies with the CFA standards by 80%. After that we made a formal application and became the first Eastern European university which got a status of the CFA partner.

- How can the CFA certificate be obtained and what does the Banking Institute offer to its students in terms of this?

Vasily Solodkov

Vasily Solodkov:Basically, you could prepare for the exam independently. In this case you cpay a certain sum of money to the CFA Institute and they just send you a set of necessary literature. We, however, offer two options for training.

The first is to apply for the MBA programme in Investment Management which has become a CFA partner. That means, our students at the same time prepare for the CFA test and receive a degree in their professional field.

The second option is to use our special programme solely intended to prepare students for CFA tests. But it is necessary to understand that this option implies a lot of independent work.

- Who will teach the CFA Master's programme?

Vasily Solodkov:There is a limited number of teachers of the level appropriate for teaching this programme, that's why we have found the following solution. Firstly, the teachers will be the best professors in the Higher School of Economics. Among them I'd like to mention Revold Entov, Head of the Department of Money Theory and Credit, Sergey Smirnov, Head of the Department of Risk Management and Insurance, and Fuad Aleskerov, Head of the Department of Higher Mathematics at the Faculty of Economics. Besides them, we have involved some people who work for Russian companies and have already passed all three CFA levels. Most of them are top managers and are very busy people, but each of them has expressed an interest in working with us. For example, our friend Richard Hainsworth, who is also CEO of RusRating ranking agency, has already taught some courses on our MBA programme.

 

- Are CFA examinations only in English, and what is the language of the educational process?

Vasily Solodkov:Usually the CFA programme is taught in English. But we have negotiated with Tom Robinson the following conditions. Since our country is very big and people often do not have experience of talking in English (we are not Holland where almost everybody speaks English), we shall conduct teaching in Russian. But all the terminology will also be given in English, so that the students do not get confused during the examination. So, unfortunately, this programme is not for people who know no English at all.

There is also another condition for successful graduation. Candidates needto have an advanced level of mathematics, since up-to-date financial analysis, risk analysis, investment analysis require a very strong mathematical background.

Richard Hainsworth:I'd like to mention that CFA examinations solely in English are not a whim of the CFA Institute. It is generally accepted that English is the working language of the financial sector and it is impossible to communicate with international partners without a knowledge of English. In this regard financial analysts are like pilots of international airlines who also should know English. Moreover, there is the example of China where many thousands of people are listed as candidates for CFA certification. And the vast majority of Chinese financial officers insisted that the programme should be carried out in English, since its knowledge itself shows the level of a candidate's professional skills.        

- How are the examinations created and how specific is their American character?

Richard Hainsworth:At first, a certain volume of knowledge is outlined which a candidate should grasp. Then an appropriate list of literature is formed, and for that purpose the CFA Institute publishes compilations of different books on finance. The situation is that the most complete and quality books on economics and finance are published in the USA, and this is the largest market of appropriate book production. That's why there is a certain imbalance towards the American agenda. But the CFA is actively looking for authors who describe the international situation in finance, and I think that gradually the volume of this material will increase.

- Why does the CFA examination have three levels and what is the difference between them?

Richard Hainsworth:The volume of information is too large to be tested only once, so the three-stage examination process has practical reasons. As for the level of complexity, I can say from my own experience that the first test is easier than the successive two, which is logical:it is like a filter aiming to separate those who are not prepared for CFA certification. And the latter two levels of examination can be viewed as testing the candidate's commitment and readiness to complete the whole course.

- Bankers and financial investors accussed of being responsible for the world financial crisis. What was CFA's position on this?

Richard Hainsworth:This is not the first time when disregard of ethics becomes the cause of a crisis. The 1929 crisis was also largely caused by greed, and the risky and aggressive pursuit of profit and a careless attitude towards other people's money. As I have already said, one of the reasons for the foundation of societies later transformed into the CFA was to unite professionals who were not ready to abandon ethics in pursuit of profit. And by the way, among the most "distinguished"financiers there were no CFA certificate holders.

I think that many people remember the story of Bernard Madoff who stole more than 50 billion dollars from his clients. Over a period of eight years, one of the members of the American CFA Association sent several warnings to the U.S. Securities and Exchange Commission where he proved that Madoff's foundation had all characteristics of a financial pyramid. Unfortunately no one wanted to listen to him.

Now at the CFA Institute, a Centre for financial market integrity has been created, which conducts research and actively promotes CFA work principles and ethical standards among financial regulators and lawmakers in different countries.

Information about the partnership programme at the CFA Institute website.

Oleg Seregin, HSE News Service