What's the Word from Buffett in 2013?

Buffett's Letter:  Corporate Finance 101

How often have we heard investors and equity analysts say they wish they had the Buffett magic touch? That's Warren Buffett, arguably considered the best, most successful and perhaps most patient investor of all time?  How often have we heard people wonder what special analytical skills Buffett possesses? What is that something (beyond patience and wisdom from experience) he has that myriad others don't have?

The story of Buffett's investment expertise has been told often. Buffett the investment expert operates via the investment vehicle Berkshire Hathaway, Inc.  He has been the investing world's best-known value investor and relies, as he did decades ago, on old-fashioned, traditional investment analysis, the same tools, principles and techniques he picked up when he first encountered the conventions of Graham-Dodd analysis in school. Buffett studied Graham-Dodd principles (thoroughly explained in the 1940 book Security Analysis by David Dodd and Benjamin Graham).

One way to understand Buffett's investment philosophy--his thinking, his approach, his decision-making, his proclivities, his worries, and his management of risk, cash flow and liquidity--is by digesting his annual letter to shareholders. (See 2013 Letter.) Many in the industry look forward to his annual report in the way some look forward to a holiday in the Hamptons.

They count the days until March, and they  guess at what topic he will pontificate on in any given year. Recall Buffett one year, expressing disappointment in the volatility of derivatives, called them "weapons of mass destruction," although he has since employed derivatives in his business operation to a modest extent.

The letter is not a sugar-coated rambling on the performance of business divisions. It's a thoughtful argument in support of decisions the company made and will make to enhance long-term shareholder value--with special emphasis on long-term.

In any given year, the letter explains his philosophy, approach, technique, financial model, and all important decisions. The letter also evaluates bad decisions and lessons learned.  Students and even old-time professionals in finance who read the letter probably learn as much about applied corporate finance and investment management than from any other current source.

Buffett writes the letter in a crisp, down-home style--with bits of humor and little flamboyance. He claims he wants to reach the moms and pops of investing, although it helps to have had a course or two in accounting, some familiarity with corporate-finance principles, and an understanding of economics. Sometimes when the business scenario he describes is complex, it helps to have an MBA.  Still, Buffett does his best to simplify every investment situation he describes, reviews or analyzes and simplify concepts of shareholder value.

Note, too, how Buffett doesn't resort to fads and gimmicks in investing. Berkshire's portfolio includes companies in the following industries:  newspapers, railroads, insurance, and community banks.  He hardly focuses on the latest technology start-up venture, probably because he is attracted to experienced management and proven track records. His letter often attributes the success in some investments to sound, shrewd management of existing operations.

So what was on Buffett's mind this year, when the letter appeared this month?

First, in 2013, he delivered no shock-the-world message, no headline-blazing assessment of the state of capitalism, and no plea to high-frequency traders to stay clear of equity markets. He might have used his forum to do so, but didn't see a need this year.

He offered calming advice on stock investing and explored a few corporate-finance topics in depth, topics that usually get deeper attention and appreciation in an intermediate MBA finance course. Yet he presents his cases in simple, clear language.

What could be more direct than for him to say, as he did this year, that if one invested in a portfolio of stocks at the beginning of the 20th century, he would have generated a return of 17,320% by the year 2000? The comment reflects his confidence and faith in equity markets and his boundless optimism--that one who invested in 1900 was still around in 2000 to reap returns. 

Intrinsic Value

As a prominent value investor, Buffett devotes much space to the concept of "intrinsic value" of business enterprises--whether it's his own Berkshire corporation or the numerous businesses he manages or is considering acquiring.

"Intrinsic value" implies a lot and may mean different things to different investors.  "Intrinsic value" is fundamentally the real value of a business based on expected, sustainable cash flow from operations, based on the value of certain assets, and based on the ability to manage those operations wisely, efficiently, and prudently and invest in their growth.

Buffett explained once again this year that he assesses performance of business lines (and Berkshire as a whole) by evaluating the percentage change in "intrinsic value" vs. percentage changes in the S&P stock index. Investors in Berkshire have an alternative. They can invest in the S&P index or in Berkshire. And he wants them to have a reason to prefer Berkshire over a stock index.

In the absence of a pure computation of intrinsic value, Buffett reminds his readers that he uses "book value" as a proxy for deriving intrinsic value, a grossly under-stated approximation at best. Percentage change in tangible book value is as best as possible a good approximation of percentage change in intrinsic value.

The Insurance Model

This year's letter offers an excellent explanation of the insurance-industry business model. Buffett explains the model as if the industry didn't exist and is starting from scratch.  He rationalizes the insurance company as a behemoth asset manager--not necessarily a risk manager generating premiums and paying out losses.  He shows how profitability dynamics depend on the precision art of pricing premiums vs. risks and the probability of losses.

Intangible Assets

Accounting gurus who gush over discussions of intangible assets (goodwill, e.g.) will fall all over Buffett's 2013 discussions of intangible assets.  He explains how they arise in Berkshire's businesses. He even explains quirks in accounting rules that permit strange, unexpected amortization (expensing) of these assets (which has impact on reported earnings in some subsidiaries). He doesn't indict accounting principles or experts, but provides warnings about how intangibles can distort what might be the true, intrinsic value of a business enterprise.

Newspapers

In an industry that has been declining so fast for so long that nobody disputes the trend, Buffett has decided to invest in newspapers. His letter explains why newspapers will thrive in certain small communities, how they fill a niche in covering local news better than television and the Internet do, and how his portfolio of newspaper ventures will successfully combine online readers with those who will still pay for a copy at the newsstand.


Derivatives

In recent years, since he remarked on derivatives as "weapons of mass destruction," Buffett and Berkshire have warmed up to derivatives, if they are used as risk-management tools and not as arcane, volatile instruments of speculation.  Berkshire inherited derivatives positions in some of its recent acquisitions, and the company has had to manage those exposures. In the latest letter, Buffett acknowledges how derivatives can be used properly to manage financial risk and will be used in the Berkshire organization for that purpose. Other positions will be wound down.


Dividends and Stock Repurchases

Berkshire has a majority stake in numerous companies and has large positions in the stocks of such companies as American Express, IBM, Coca-Cola and Wells Fargo.  It relies on and appreciates the dividends paid out from those stakes. Yet Berkshire and Buffett don't pay a dividend, even when it has amassed substantial amounts of cash.  Buffett had some explaining to do, and he takes delight in having the opportunity to do so. Foremost, he is always on the prowl of using cash on hand to find the next big acquisition, the next "elephant," as he terms it.

He, therefore, goes through a step-by-step example showing when it's appropriate to pay a dividend, when it's appropriate to buy back shares, and when it's right to hoard cash and reinvest in or acquire business operations.  He all but declares that Berkshire will (a) not pay a dividend soon, (b) always consider stock repurchases if, by his calculations, the market under-values Berkshire stock, (c) always lean toward the view that he can reinvest cash in ways better than what the shareholder can do, and (d) will never issue new shares to make acquisitions.

To his credit, he makes the declaration, and then he explains it.  His parenthetical statements on dividends and stock repurchases might have been his under-stated response to the current controversies at Apple, Inc., where major shareholders are currently bickering over what that company should do with billions of dollars of cash it has on hand.

And to his credit, Buffett always reminds his readers he could be wrong, even if he hasn't been most of the time.

Tracy Williams

See also:

CFN: Apple's Stash of Cash, 2012
CFN:  The MBA and the CFA, 2010
CFN:  The Shareholder's Letter at Financial Institutions, 2010
CFN:  Jamie Dimon's Letter to Shareholders at JPMorgan Chase, 2011

Consortium MBA: Going the Entrepreneur Route

Consortium Alumnus Boomer

Sometimes experienced professionals among minority groups choose the route of being an entrepreneur--taking a risk and having the courage to go out on their own. They do so, once they figure out the timing and are confident about resources, opportunity, and often family support and understanding. There is a long history of blacks, Latinos and women, who gained experience at established institutions and decided to start their own firms in banking, brokerage, or investment management. Muriel Siebert, widely known as a pioneer in the industry, started her own retail brokerage decades ago after a long stint as New York state's supervisor of banking.  Her firm evolved partly into Siebert Branford Shank, now an established women- and minority-owned firm and prominent in municipal finance.  MR Beal, Loop Capital, Guzman, W.R. Lazard, Blaylock, Advent, Williams Capital and Utendahl are other examples of minority firms that launched after their principals learned the ropes at places like Merrill Lynch and Lehman Brothers. In many cases, the same firms received welcome capital injections and processing support from the owners' old firms.

Despite the hurdles (raising new capital, navigating regulatory requirements, winning new business and mandates, and gaining trust among trading counterparties), women and minorities continue to test opportunities to do it on their own.

In recent weeks, Consortium alumnus Allan Boomer decided to step away from an apparent secure environment of a large financial institution and start his own asset-management company.  Boomer has gained approval from regulatory bodies and has opened the doors to his new firm, Momentum Advisers. The firm will focus on investment advisory and financial planning. 

Boomer is an MBA from NYU-Stern and was affiliated with both the Consortium and Toigo. Before he made his move, he studied his chances and the market landscape, assured himself that certain contacts and clients will follow, brought in other partners and expertise and courageously made the move. Boomer had clients, contacts, experience, pedigree, and investment knowledge, but the hardest part of the effort may have been to make the decision. After the decision, he then had to comb through a maze of registrations, compliance and regulation, and choose securities-clearing partners. At the same time, he had to convince clients to follow him and announce that Momentum was open for business.

Years ago, before the move was more a long-term dream and after NYU, Boomer worked on Wall Street into various roles, starting at Merrill Lynch.  He soon departed for Goldman Sachs, where he worked for seven years and eventually became a Vice President in Private Wealth Management with clients, products, a global network, and hundreds of millions to manage.

At his new firm, Boomer will start with 15 clients (institutions and individuals who meet his current minimum requirements) and over $30 million under management. He says he hopes to reach $100 million under management in three years.  Michael Glickstein, also an NYU-Stern MBA, will be a strategic partner in the new firm. Jontue Long will join him as an investment advisor.  Rudy Cline-Thomas will also be a strategic partner.

At Momentum, Boomer and his partners hope to increase assets under management not only by importing old clients or contacts, but growing in other niches. For example, the partners plan to tap into money management for corporate executives, athletes, and entertainers.  Boomer spoke about managing money and affairs among sports stars at a conference at Wharton last December, hosted by its African-American MBA Association. He formally announced Momentum was open for business a few weeks ago in New York City. The group still must hustle and compete in a grinding, tough business, but  Boomer and partners are anxious, excited and hopeful.
 
To learn more about Boomer's firm, go to www.momentum-advisors.com, or contact him directly in LinkedIn. 

Tracy Williams

The Madness of Money in March

Consortium grad Rob Wilson

There's March Madness, and then there's Rob Wilson's March Money Madness.  Once again Consortium graduate Wilson will stage his contest that runs parallel to the college-basketball national tournament. This year, the prizes are bigger. In its third year, his contest helps promotes awareness in investing and stock selections.

Just like the NCAA tournament, there are brackets and rounds of competition. Participants will not project basketball winners; they must predict investment performance by choosing the stocks of companies they expect will generate the highest return during the month of March.  From week to week, just as March Madness brackets are about choosing a winner between two teams in a 64-team tournament, Money Madness also embraces "bracketology." Participants decide which of two stocks will out-perform the other. As with NCAA brackets, participants try to project the winner of several pairs of stocks in several industries.

For example, in week 1, a participant may be required to decide between Apple and Dell or Citi and Wells Fargo.  The stock with the higher percentage return in that period is the winner within the bracket. In basketball, participants tap their knowledge of the game, teams and players. In Wilson's tournament, participants must tap their knowledge of markets, stock trends, specific companies and industries.

This year, Wilson says, the contest has an entry fee of $5. That means the grand prize will be larger than before. Wilson hopes to attract up to 100,000 participants, including MBA students across the country, Consortium students and alumni, and anybody interested in projecting the outcome of stocks over a short-term horizon.  If he reaches that goal, the grand prize could total $250,000. Wilson says students could use prize money to pay for business school or invest in a start-up.

Wilson, a Consortium MBA graduate from Carnegie Mellon, is a financial adviser based in Pittsburgh. He appears often in local media to provide insight, updates and advice in investing.

To learn more about Wilson's activities, market viewpoints and financial advice, go to Rob Wilson TV.  To register for Money Madness tournament, go to March Money Madness. 

Tracy Williams

The CFA: Where It Makes Sense

MBAs in finance will often ask about the benefits of a CFA designation. Does it make sense? Will it propel my career? Can I learn something that will give me an advantage on the job or in my career? Are more and more employers requiring it? Or if I'm in transition, will it make a difference in getting attention and gaining an offer? Is it all worth the time, effort, and costs?



There are pros and cons, advantages and disadvantages in pursuing the CFA, if you have an MBA in finance already. And within Consortium and Consortium Finance Network circles, some have debated each side.



To help all sides in the ongoing discussion, CFN hosted a webinar Oct. 5, "The MBA and the CFA," to address these questions, to explain in depth what it means to pursue the CFA and to present data that show trends, growing popularity and greater demand for those who have it. (Click here to download the recording  or click here to view the slide deck.)



Charles Appeadu, Director of Sample Exam Development at the CFA Institute, was the featured presenter. "The CFA," he reminded webinar participants from across the country, "is regarded around the world." He added, "A lot of people think it's only about investments, but the content cuts across many fields. The content is deep and wide."



To prove the global reach of the CFA today, Appeadu said there are now over 99,000 people with CFA designations. About 67,000 are in the U.S., but a rapidly growing percentage of the total comes from other countries, reflecting the widespread regard for and attraction to the CFA from companies, investment funds, and financial institutions worldwide.



Appeadu said that once you have the CFA, "We (the CFA Institute) make sure you keep abreast of current knowledge and equip professionals with competence and integrity."



He presented statistics to show what those with CFAs do currently: About 22% are in portfolio managment, another 14% in securities analysis and research. About 4% are in investment banking. And 7% of CFAs globally are in C-level roles (CEO, CFO). More than a third are in positions that emphasize investment analysis, research or management in some form or another. In some of these roles, the CFA is either preferred or required.

Many CFAs, however, are in roles that may not require or may not have traditionally encouraged the CFA: consulting, risk management and accounting, for example. They have used the CFA not as a designation to meet requirements or to prove legitimacy in investment anlaysis, but as a knowledge base for other areas of finance.



Over 200,000 people are currently registered for the CFA--which means they are pursuing the CFA by preparing for one of the three levels of exams. Appeadu showed the trends of a growing number of registrants from foreign countries. (For now, most registrants are from the U.S.) Registrants have similarly expressed interest in a wide range of fields, indicating how they expect to use the CFA--from portfolio management to investment banking, corporate finance and consulting.



Webinar participants didn't hestitate to ask questions. Some wanted to know if there were scholarships to defray the costs of preparation (for the volumes of material required for study). There are, and many financial institutions support employees who express such interest. Some wanted to know whether the CFA Institute does or will ever provide an "MBA waiver," because of the overlap between MBA coursework and the CFA material. "No, but we get asked that question all the time," Appeadu said. One wanted to know if the CFA can be helpful in careers in commercial real estate.

Many wanted to know more about preparing for the three levels of exams. Appeadu said a candidate usually needs about 250 hours of studying for each exam, sometimes more. Candidates study the CFA-provided material, but they can seek and use supplementary sources. He emphasized the importance of preparing for the exams. On average for all three exams, the pass rate is about 42%, a rate that is fairly consistent among those who take it around the world and who have taken it over several decades. The same exam is given everywhere in English.

Appeadu, who has a Ph.D. in finance as well as the CFA, explained how the pass rate could be higher. Many candidates, he said, tend to be smart, well-educated and well-versed in finance and investments. They are also used to being successful and making swift progress in academics and careers. More confident than they should be, they, however, tend to underestimate the time and attention required to prepare for exams. "They sometime think they don't need to prepare as much," Appeadu said, "and then become overwhelmed."

In the exams, Level 1 focuses on knowledge. Level 2 is about analysis, and Level 3 is evaluation and synthesis. Levels 1 and 2 are multiple-choice questions (graded by computers). Level 3 includes essays graded by humans.

Registrants can take practice exams. Participants wanted to know if there is a relationship between performance on the practice exams and the real exams. There is a high correlation, but Appeadu reminded his audience there is no direct "causality," that if one does well in practice, then it doesn't mean he/she will do well on the exam.

For each exam, Appeadu explained, there is no consistent cut-off for the percentage number of questions an exam-taker must get correct. A committee of experienced experts each year determines what it thinks a "just qualified" candidate should know and how many a "just qualified" candidate should get right. That number can change from year to year, as exam questions and content change.

Because finance topics, issues and investment products evolve and get more complex, CFA content changes, too. The material covers ethics, risk management, new products, and may even cover topics such as Islamic finance.

Appeadu, who taught finance at Wisconsin-Milwaukee and Georgia State, lamented the small number of registrants and CFA charter-holders from under-represented groups. He said there is no accurate data about minorities who hold the CFA (among the 99,000) and who are in the process of taking exams (among the 200,000). But the numbers are low. "We want that to improve," he said. The CFA Institute has embarked on initiatives to spread the word by making similar presentations around the country, even speaking to undergraduates at HBCU schools.



Appeadu weighed the pros and cons of the CFA and the MBA. (The CFA Institute didn't have information on how many of the 99,000 have MBAs.) Some will ask whether an MBA should get a CFA; others will ask differently: Should one pursue the CFA and not bother with the MBA? He showed the MBA's advantages of networks, connections, contacts with professors and corporate recruiters and the broad business curriculum covering operations, marketing, accounting and policy. He showed the CFA's advantages of costs (relative to MBA tuition) and specialized knowledge and expertise.

In the end, he said he was a proponent of both. "The MBA is a degree," he said. "The CFA is a designation." In many ways, he showed, both are about a lifetime of learning, keeping up and maintaining networks and industry ties.

Tracy Williams

The MBA and the CFA: Part III

MBA students and graduates in finance, especially in current times when they seek an advantage of some kind, have wrestled with whether or not to pursue the CFA designation. They ask themselves: Is it worth the time, effort, costs, and uncertainty? Can it be used to propel a career? Some ask: Is there overlap with finance courses in business school? And many are now wondering: Does it make a difference in a career path? Or in pursuing a specific job spot?

The Consortium Finance Network is helping to respond to some of these questions by sponsoring a webinar, "The MBA and the CFA," October 5 from 5-6:30 p.m.

The webinar will raise these same questions and address topics related to the CFA. Most MBAs know there are three levels of exams, but what do they entail? How much preparation is necessary? How can I prepare for the CFA while in a demanding job? What topics are covered? How can an MBA student choose certain courses in business school that will help prepare for the CFA? In investment management roles, do I really need the CFA to succeed?

Charles Appeadu (above), Director of Sample Exam Development at the CFA Institute, will make a presentation, followed by questions and commentary. Appeadu was a finance professor at the Univ. Wisconsin-Milwaukee and Georgia State Univ. before joining the Institute in Charlottesville, Va. He has a Ph.D. in finance from the Univ. Washington. Not only does he have a CFA, he also has certifications in FRM (financial risk management) and CAIA (alternative investments).

Appeadu will address some of these questions. He will describe what the CFA covers and what business schools don't and tell about other topics the CFA covers in the wake of the financial crisis.

Some institutions (funds, banks or investment managers) actually require the CFA for some spots. Others are encouraging it, even if it doesn't have a direct connection to the role. Others find the CFA gives them a knowledge advantage ("oneupmanship") in traditional banking roles.

CFN members, Consortium students and alumni and others interested in finance, investments and the lure of the CFA should join the webinar.

Tracy Williams
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For more on the MBA and the CFA, see:

http://consortiumfinancenetwork.blogspot.com/2010/05/mba-and-cfa.html

http://consortiumfinancenetwork.blogspot.com/2010/06/mba-and-cfa-part-ii.html

Register on the Consortium Finance Network Linkedin: www.linkedin.com

The MBA and the CFA, Part II: The Debate

They are not easy decisions for finance professionals--deciding to get an MBA, pursue the CFA, or do both. Nobody disagrees with the benefits of the MBA or the CFA. There are the knowledge and discipline, the tools and models, the theory and information, and the exposures, experiences, and contacts.

Yet assessing the value of pursuing both is a tough, agonizing decision--even when many say having both "separates you from the pack" or "gets you in the door" or when a growing number of investment funds and asset managers are requiring MBA and/or CFA credentials.

The time involved in preparing and studying (while holding a demanding full-time position) and the money invested are factors that weigh heavily on anybody who--with an MBA--has thought of getting the CFA. Even after they decide they have the money and can manage the time, candidates must assess whether the designation will help propel a finance career. Can it be the impetus to help professionals reach the level of partner, principal, managing director, portfolio manager, or senior trader? Can it even give them a thrust to get the important entry-level position?

Consortium Finance Network members this past week engaged in hearty, lively debate about the pros and cons of the CFA after the MBA. Everybody weighed in--including recent Consortium graduates, long-time finance professionals, candidates studying for exams, and those who have passed all three Levels.

Often in such debates, there is no right or wrong, no winner or loser. There are, however, viewpoints, shared experiences, informed advice, and encouragement for anyone who is in the throes of deciding what to do. There are recounts of bad experiences and overwhelming moments, but also thrills of having mastered a discipline or learned something new.

This debate, however, had a special wrinkle: Does the combination of MBA and CFA give those in under-represented groups (minorities and women) a boost in getting offers from top investment firms and in accelerating their careers in finance?

In the end, intelligent, respectful debate is healthy. Students and younger MBA's get to hear well-reasoned arguments from all sides, especially from experienced people who grappled with these issues and career decisions over 10, 15, or 20 years ago. They get to take it all in and make right decisions for themselves.

The debate over what best prepares women and people of color for careers in finance will continue and will be enhanced by others' experiences. But there are a few things CFN members or other experienced professionals in this debate agree on.

1. While views of the benefits of the MBA and CFA in the long term vary, almost all agree that with both you amass enormous amounts of knowledge in corporate finance, accounting, economics, investment analysis, portfolio management and capital markets. You do learn something. And knowledge is always useful and helpful in the short and long term.

2. The MBA/CFA designations are no guarantee of employment at full potential (the best possible job or career, given your preparation and education)--especially in current times. The MBA/CFA draws attention and gives you a unique brand. But there are countless others with the same credentials, vying for similar spots.

3. Although the MBA/CFA is no guarantee for securing the ideal position, in an environment where employers have the upper hand, they may still choose to require it--because they can or because they need to filter through hundreds of candidates.

4. In finance, other exams or certifications may be necessary, even if you have the MBA or CFA. If you sell or trade securities, provide investment or merger advice, or manage investment professionals, you will need to take FINRA series exams. Having the MBA and/or CFA, however, will likely make you better equipped to take these exams.

5. An MBA and/or CFA doesn't necessarily make the playing field level for minorities and women, as much as everybody wishes or hopes. Why? Because, as CFN members debated this week, securing top-notch positions in top firms still requires relationships, networks, contacts, luck, and getting prospective hiring managers comfortable with who you are.

6. Despite a general upturn in markets and hiring over the past year in finance, it is still a tough marketplace for all, especially for those in under-represented groups.

The irony is that while many agonize and debate the value of extra credentials, many focus on extra credentials to get attention and squash any doubts hiring firms may have about technical skills and knowledge. And many understand that credentials, plus relationships, networks, contacts and luck, will be what gets people closer to the ideal finance role they covet.

7. The current discussion is fruitful to all, but the debates will continue as long as there are financial institutions, MBA degrees, and finance certifications (including CFA, CFP, and CPA).

The CFA Institute has acknowledged that its mission is not to take a side, although it can outline the pros, cons, factors to consider, and preparation and it can introduce candidates to experienced CFA's who can advise them in decisions.

Its primary objective is to ensure people are well-informed about the content, costs, time and requirements of CFA Levels, and it certainly wants to do a better job in educating and increasing the numbers of those from under-represented groups.

Tracy Williams

The MBA and the CFA

MBA students and professionals in financial services sometimes ponder getting a CFA, especially those in investment management, equity research or investment banking. They do so in the way they have sometimes considered adding a CPA or pursuing the MBA before they got it. In the recent environment of uncertainty, mentors and coaches have encouraged adding a CFA designation to make yourself known from the pack, to help brand you, or to demonstrate competence with prospective employers or even supervisors.

Pursuing a CFA is not a casual step. It requires time, discipline, focus, the ability to amass enormous amounts of information, and the skill in presenting cogent, insightful analysis. Similar to pursuing an MBA. So while students and professionals acknowledge the value of both, they wonder about the value, time and effort in pursuing both.

That's where the CFA Institute can assist. The institute is best known for being the organization that administers the CFA exam and sets standards and guidelines among CFA professionals. Allison Williams, Director of Diversity Outreach at the institute, is reaching out to those in under-represented groups in colleges, in business schools and via diversity partnerships to help them understand not only the value of the CFA, but what it takes to pursue it. They want to answer questions and raise awareness: What professions will likely require it going forward? For Consortium MBA's, how do you pursue both the MBA and CFA? Where do MBA and CFA studies overlap?

Williams and the institute have been instrumental in setting up partnerships with schools and organizations around the country. There are 118 partnerships in place, she says. They include ties to Consortium schools UVA, UNC, USC, NYU, Wisconsin and Cornell. Most recently, she and the CFA Institute agreed to support the Consortium and will be attending this year's Orientation Program in Orlando. The institute, she says, does not suggest the CFA is more useful or valuable than the MBA, but asserts that it helps MBA's enhance what they've already learned or plot strategies to pursue the CFA if they are interested.

MBA's "are already in study mode," she said, highlighting that they have the discipline and habits it takes to reach all three CFA Levels. In finance, some of the MBA/CFA courses of study overlap: economics, corporate finance, investment analysis, equity valuation, portfolio analysis, derivatives, etc.

Hence, Williams says their mission is to tell those from under-represented groups about the content of the exams and to show what they can do to achieve the certification, if they have the interest, time and discipline. They want to show those aspiring for the CFA how the MBA-CFA overlap can be used to an advantage. For example, an MBA student considering the CFA may want to take courses that will also help him/her prepare for the CFA, too. The three Levels of exams are widely known to be progressively difficult. The passing rate declines as a candidate approaches Level III. However, MBA immersion and depth of study help candidates be better prepared for CFA progression.

In some finance fields, just as they may do so with the MBA degree, employers are now either urging prospects to have the CFA or requiring them, especially in investment management or equity research. In investment banking and at private-equity groups, the CFA is not necessarily required, but is regarded as a badge of competence, a way to get inside the door or get promoted.

The institute also encourages networks and relationships between CFA professionals in chapters around the country with MBA students and professionals exploring the CFA. Williams says they want to pair MBA/CFA aspirants, including minorities and women in finance, with CFA professionals.

The Consortium Finance Network will explore sponsoring a webinar to allow Williams and colleagues at the institute to help MBA's decide if they should pursue a CFA, show the specific steps in achieving certification, and explain the contents of both the self-study work and the exam itself. She, also, wants to remind them of specific professions that will likely want to see both the MBA and CFA on the resume'.

For those interested in more, see http://www.cfainstitute.org/. Or contact Williams directly allison.williams@cfainstitute.org for more details about its diversity initiatives. CFN welcomes input about the planned webinar.

Tracy Williams