What The CFA Exam Can Teach You About Marketing

Preparing for the CFA exam is an onerous undertaking. It’s not just one exam; not just two; but three exams that one has to get through in total. That’s assuming you don’t fail any (statistics show that <10% make it through without failing at least one exam).

The sheer amount of the material to be studied is what makes the exam tedious. 300 hours of study (coupled with a full-time job), is usually the deciding factor behind whether you are in the <50% of exam-takers who pass.

The 2 common tactics for studying for the exam:

Tactic #1 Solely reading the CFA textbooks (6 in total), which total over 3,000 pages.

Tactic #2 Purchasing summarized material from a 3rd-party educational provider that focuses on material more likely to be tested.

Tactic #1 exemplifies the traditional route: perseverance and grit, complemented by the reader’s ability to sift through a mountain of information. The latter – and one that has become more popular in recent years – also requires perseverance. However, because the material is more targeted, it helps readers to optimize study time, increasing their likelihood of success in the exams.

On the surface, Tactic #2 seems like the easier option. Statistically, it also has a higher success rate (3rd-party educational providers boast of a pass rate ~5-15% higher relative to the entire CFA pool of candidates).

So, why would anyone pick tactic 1 over tactic 2? Many reasons such as costs, not being aware of the other tactic, or having a conservative approach to exam preparation.

So, what does this CFA stuff have to do with marketing in the alternative investments industry?

Managers generally have 2 options when it comes to marketing their fund:

Option #1 Manage marketing on their own.

Option #2 Seek an expert to get marketing efforts streamlined.

Managers are where they’re at because of a hugely successful track record, strong expertise in investment research and trading, and a reputation that has been built up as the ‘go-to guy for anything finance-related’ among their friends and family. However, sales and marketing is often a new game and can be consuming.

Much like Tactic #2, Option #2 allows a manager to do what he/she is best at – to focus all personal time and resources to investment research and trading. Sure, there’ll be instances where the manager is needed to be the face of the company in a meeting, but again – seeking an expert for each arena i.e. business development, compliance, marketing, etc. increases one’s ability to scale.

When managers focus their efforts on trading (without too many other distractions), one can make the argument that there’ll be a higher likelihood for better performance. Better performance = easier to raise capital. And with strong marketing – again, from someone who is focused solely on it – your image and brand presence will likely be perceived better than someone who’s handling it, along with 17 other things.

The hardest exam in the industry manages to teach us one more thing; to be successful at something you know little about its smarter to get assistance from an experienced outsider. If you think it's burdensome to hire a professional to do the job, wait until you hire yourself.

Superior performance + Superior marketing = Easier capital raising.