By Maria Wiedner MRICS CFA MPhil (Cantab)
From time to time, I receive enquiries about career progression in real estate and even though my career path is not the most common (if you know me you will know!), here is my 2p-worth analysis of the pros and cons of the CFA vs RICS qualifications.
I recently passed my APC (June 2020) and am currently working as a valuer at [a large surveying firm]. However, I am considering my options going forward. I completed the Cambridge Finance’s Real Estate Investment & Financial Modelling Course (Jan 2018) and I think that I’d like to move my career in a direction where I’m able to use the skills learned during that course on a day-to-day basis.
I am considering taking the CFA Level 1 exam and I need to better understand how relevant the qualification would be if I were pursuing a career as an analyst in Property. My understanding is that it would certainly be seen as a positive, but it isn’t a necessity. Your name always appears near the top in a google search for ‘MRICS and CFA’(!) so I thought you would be a logical person to ask. I also need to better understand the role of an analyst (day-to-day) and the career progression that the role provides.
Any insight that you’re able to provide me with regard to: the CFA qualification in property, the role of an analyst within the property industry and the subsequent career progression would be very much appreciated.
Here you go:
Qualifications in Property
I think the most important question to ask here is if you really need any qualification to start with. I would say ‘no’ and I even think that a degree is not necessary either. But that’s my personal opinion, of course, and as you saw on Google, I am a top-ranked professional in real estate finance in terms of qualifications. But if you are thinking about a career move or progression, in front of an employer’s eyes, you are a commodity and labels can open certain doors. However, closing it behind you and climbing the ladder is another matter and the topic for another article, I suppose. So, if you want to move on to become an analyst, go for it.
The CFA vs RICS qualifications
Both qualifications are hard to get through. The CFA and RICS take the life out of you for a couple of years until you get qualified. On that end, congratulations on recently passing your APC!
The RICS qualification is more ‘learn by doing’; you need to have been involved in some projects so you can prove your competencies as ‘case studies’. That’s why it’s hard to qualify if you have not been enrolled in one of the graduate schemes of those large companies that can provide you with a broader exposure to different projects. It is also an interview format, so you need to be good at presentation and engaging with the examiners. The good news is that the pass rates are quite high, especially in the Commercial Property Pathway at 77%. As long as you manage to get your submission through in good order, the actual examination seems to be more of a formality than an actual examination, or at least the odds are in your favour.
The CFA is a multiple-question exam up to level 2 and then at level 3 there are some ‘open’ questions, in my time it was approximately a third of the exam. If you work in real estate, the material covered in the CFA has very little resemblance with what you do on your day-to-day job as a surveyor, even if you work as a valuer or as an investment broker or analyst. The CFA curriculum favours those who work in the more mainstream equity / debt markets but even for them the examination is tough. Only 20% of those who start the programme end up qualifying as pass rates at each level (there are three) are around 45%, so the probability of you passing the three levels straight away are as slim as 9%.
I would say the CFA and RICS are complementary, but my opinion is that neither actually cover real estate finance and investment as core subject. For example, in the CFA we talk about yield to maturity of bonds, in the RICS, if you do the more financial competencies, you will probably need to know what an IRR is, but how they both relate is completely up to you to figure out as the linkages between the two markets are not well covered in either programme.
Why isn’t the MRICS enough?
The main problem with the RICS qualification for graduates who want to move to the more competitive financial jobs in private equity or investment banking is that it is a wide overview of the whole chosen career path. There is so much depth available in each interlinking area that it would be impossible to test every avenue. It skims crucial subjects such as economics and financial analysis, and is not quantitative enough, this is out of necessity but if you aim to steer your career towards investment roles it falls short if taken in isolation. Even those who have done the Property Finance and Investment Pathway, within the RICS APC, will benefit from the CFA programme. Graduates qualifying under the general Commercial Property Pathway, which I would say make up 95% (it’s a guess!) of surveyors working in the property capital markets, will benefit even more. So, if you are an analytical person and want to move into the more competitive investment jobs, I think the CFA will be a good idea.
The Role of An Analyst Within the Property Industry
Their day-to-day role depends on the company, of course, but in my experience as an analyst, I was mainly sourcing data, creating and maintaining financial models in Excel and making investment presentations or memoranda. All fairly quickly, of course. Very rarely I had to visit properties, measure them and inspect them; this more mundane work was left to the building surveyors, structural engineers, electrical engineers, architects; my focus was always on the economics of the properties and the investment risks involved.
Will the CFA guarantee me a job as a Real Estate Analyst in a private equity firm or investment bank?
Maybe. I analysed the background of my first connections on LinkedIn of Analysts up to Senior Associates working for Blackstone Real Estate in UK only. You will be surprised I had 53. Here is what I found out:
- Their previous jobs were in investment banking (Credit Suisse is their favourite at 6 counts, JP Morgan 4, Morgan Stanley 4, Goldman Sachs 3).
- And / or they worked for a competitor (Starwood, TPG, Carlyle, Lone Star)
- They have a degree from a good university (Cambridge at 9, HEC Paris 7, London Business School 7)
- The most common skills they mention is Excel (17 times), Financial Analysis 14, Financial Modelling 13, PowerPoint 10. (Note that each person can have multiple skills).
- There are 4 analysts or associates that have passed CFA Level 1 and one who is fully CFA qualified. I didn’t find anyone with an MRICS qualification.
- It appears that most of them speak at least a second language fluently (I couldn’t do the count of languages and level of fluency though).
It tends to be Analyst > Associate > Senior Associate > Principal / VP > CFO / CIO / CEO, which is the banking structure as well. But what takes to get from one level to another is the topic of another blog.
What should you do?
I don’t think you necessarily want to work for Blackstone, but that was an example of companies in real estate private equity (they are the largest) and getting a job there seems competitive enough. So, see how many boxes you tick from the above and what would be the most practical way for you to achieve your career goals.
If you would like me to write you a recommendation letter for Cambridge, take the CFA, do the RICS qualification in commercial property or property finance and investment (the pathways that I assess), learn about Excel and financial modelling, learn another language (I speak another 4) or anything else, you can drop me a line (details at the end of the blog) and I can give you some other insights.
Alternatively, come to my courses. They are listed on www.cambridgerefinance.com/calendar.
Boa sorte, Viel Glück, Onnea, Buena suerte, Good luck 🙂