By Maria Wiedner MRICS CFA MPhil (Cantab)
As an experienced real estate financial investment consultant and trainer, I receive regular enquiries about the best way forward to career progression. The most common question I am asked is which is a better investment, the CFA charter or the MRICS.
Here is my analysis of the pros and cons of the CFA vs RICS qualifications.
I recently passed my APC (June 2020) and am working as a valuer [at a large surveying firm]. NowI am weighing 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 where I’m able to use the skills learned during that course on a daily basis.
I am considering taking the CFA Level 1 exam and I need to understand how relevant this 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.
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.
Qualifications in Property
The most important question to ask here is if you really need any qualification to move your career forward. I would say ‘no’ and I believe that a degree is not necessary either. Of course, this is my personal opinion, 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 earned from ‘learn by doing’; you need to have worked in real estate projects in order to prove your competencies as ‘case studies’. This is why it is hard to qualify for the RICS qualification unless you have been enrolled in graduate schemes of large companies that offer you with a broader exposure to different projects. It is also executed in an interview format, hence it favours those who have good presentation skills and can build rapport with the examiners. The upside is that the pass rates are quite high at 77%, especially in the Commercial Property Pathway. So, as long as you manage to get your submission through in good timely 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 followed by level 3 with ‘open’ style questions (in my time it was around a third of the exam). If you work in real estate, the material covered in the CFA bears very little resemblance with your day-to-day job as a surveyor, as a valuer, as an investment broker or as an analyst. The CFA curriculum favours those who work in mainstream equity and debt markets. The CFA exams are difficult and the pass rates low. Only 20% of those who embark on the programme end up qualifying as pass rates at each level (there are three) are at the 45% mark, hence the probability of you passing the three levels straight away are as slim as 9%.
In my view the CFA and RICS are complementary. However, neither actually cover real estate finance and investment as core subjects. For example, in the CFA we talk about yield to maturity of bonds; in the RICS, if you cover the more financial competencies, you will need to know what an IRR is, BUT how they both relate is left entirely up to you to work out as the linkages between the two markets are not well covered in either programme.
Why isn’t the MRICS enough?
The main challenge with the RICS qualification for graduates who want to move to the sought after financial jobs in private equity or investment banking, is that it overlooks crucial subjects such as economics and financial analysis, and it is not quantitative enough. Even those who have completed the Property Finance and Investment Pathway will benefit from the CFA programme. Graduates qualifying under the general Commercial Property Pathway account for approximately 95% of surveyors working in the property capital markets, will benefit even more.
Therefore if you are an analytical person and intend to grow your career in the competitive investment sectors, the CFA is a suitable option.
The Role of An Analyst Within the Property Industry
Whilst the day-to-day role depends on the company itself, my experience as an analyst included sourcing data, creating and maintaining financial models in excel, and making investment presentations or memoranda. I had to learn and apply my knowledge very quickly. Rarely though I had to visit properties, measure and inspect them; this type of work was managed by the building surveyors, structural engineers, electrical engineers and 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?
I analysed the background of my first connections (50 in total) on LinkedIn of Analysts up to Senior Associates working for Blackstone Real Estate in the UK only. Here is what I discovered:
- Their previous jobs were in investment banking (Credit Suisse is their favourite at 6 counts, JP Morgan at 4, Morgan Stanley at 4, Goldman Sachs at 3).
- And / or they have worked for a competitor (Starwood, TPG, Carlyle, Lone Star).
- They hold a degree from a highly regarded university (Cambridge at 9, HEC Paris 7, London Business School 7).
- The most common skills highlighted in are Excel (17 times), Financial Analysis (14), Financial Modelling (13,) and 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. None within this list held an MRICS qualification.
- Most analysts speak a second language fluently.
It tends to be: Analyst > Associate > Senior Associate > Principal / VP > CFO / CIO / CEO, which is the same route for banking.
However, what it takes to scale these career levels is the study of another blog.
What should you do?
This depends on where you want to work. If companies like Blackstone or private equity companies are your target list, then it is worthwhile assessing how many skills you tick off from the above criteria and other practical tools you will need to break into this sector.
As a real estate investment expert, my philosophy is that it’s better to know than not know what you don’t know, so best to invest in education or read a lot.
If you would like me to write you a recommendation letter for Harvard, 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 🙂