You might have heard of how gruesome preparing for a CFA exam can be. To make matters worse there are three exams to get through, assuming you don’t fail any (chances are you will).
- Q2/H1 Hedge Fund Letters - Letters, Conferences, Calls, And More
The sheer amount of the material to be studied is what makes the exam so hard. Dedicating over 300 hours of study, coupled with a full-time job, to ensure that you’re in the 45% of exam takers that pass might just send shivers down your spine.
In his 2021 year-end letter, Baupost's Seth Klarman looked at the year in review and how COVID-19 swept through every part of our lives. He blamed much of the ills of the pandemic on those who choose not to get vaccinated while also expressing a dislike for the social division COVID-19 has caused. Q4 2021 Read More
THAT BEING SAID, THERE ARE 2 COMMON TACTICS FOR STUDYING FOR THE EXAM:
1. Solely reading from the CFA books (6 in total) all at least 500 pages each.
2. Buying summarized material from an external educational provider that focuses only on information that will most likely be tested on.
Tactic 1 exemplifies brute perseverance and relies heavily on the reader’s ability to sift through a mountain of information to retain few nuggets relevant to the exam. Unfortunately, too many users of this tactic fall into the trap of needing to know everything in the books, usually causes them to give up too soon.
Tactic 2 also requires perseverance, however, because the study material is very targeted, the required effort is better concentrated. The condensed nature of the material provides candidates more time to gradually master important concepts, increasing their chances of success in the exam.
As deduced from the two previous paragraphs, tactic 2 is easier than tactic 1 and should yield a higher pass rate. A leading provider of external CFA course material boasts of having a pass rate of 50-60% across all levels; a 5-15% percent increased success rate versus the entire CFA pool.
So, why would anyone pick tactic 1 over tactic 2? Ignorance. Ignorance of how hard studying for the exam really is and how effectively the external material simplifies testable concepts.
SO, WHAT DOES THIS CFA RANT HAVE TO DO WITH MARKETING IN THE ALTERNATIVE INVESTMENTS INDUSTRY?
WHEN IT COMES TO MARKETING, FUND MANAGERS USUALLY HAVE 2 OPTIONS:
1. Manage marketing on their own.
2. Pay a fee and get their marketing efforts streamlined, by an external expert, to focus only on what will drive results.
Most fund managers don’t have the resources of Bridgewater Associates to manage marketing effectively on their own. Becoming a fund manager require expertise in matters of investing, therefore there’s no shame in not being a marketing whiz as well.
So, why would any fund manager with scanty marketing abilities not get an external expert to streamline their marketing? You guessed it, ignorance. Ignorance about how hard effective marketing can be for someone engulfed in this industry’s way of thinking. Yes, that means that marketing based on diversification and risk mitigation won’t roll any heads.
Nowadays, for a fund to stand out, it must be presented in a different light than the rest of the industry, no matter how scary that may seem. Seeing and presenting that different light is usually easier for people who haven’t been entrenched in industry beliefs and jargon; external experts.
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.
By Dami Oloidi