Feb 16

About the CIPM

by David Harper, CFA, FRM, CIPM

Exams |

In 2005, The CFA Institute unveiled its first specialty designation called the Certificate in Global Investment Performance Standards. (CGIPS). About one year later, they relabeled CGIPS into the Certificate in Investment Performance Measurement (CIPM). This was a change only in name to reflect a curriculum that includes ethics and performance measurement in addition to GIPS, the increasingly relevant international standard for presenting investment performance data.

From the candidate's perspective, the CIPM is different from (independent of) the CFA. You can earn the CIPM without holding a CFA charter. But the CIPM is administered and governed by the CFA Institute; i.e., from a governance perspective, CIPM is not independent of the CFA Institute.

To earn a Certificate in Investment Performance Measurement (CIPM), you must sequentially pass two exams (the Principles exam, then the Expert exam), prove two years of performance-related work experience (or four years, if the experience is merely investment-related), agree to be ethical, and become a member:

  • First exam: Pass a three-hour Principles exam
  • Second exam: Pass a three-hour Expert exam
  • Work experience: Accrue either (i) at least two years (2 years) of performance-related experience or (ii) at least four years (4 years) of investment-related experience. Performance-related work experience is concerned with the analysis or presentation of investment results, or related activities; e.g., verification, supervision, teaching, support. Investment-related work experience is a broader set of activities: involvement in the investment-decision making process, marketing investment management services, work in compliance, the monitoring/evaluation of investment managers, supervision of investment-related activities, or teaching the above. (CFA charterholders and regular members of CFA Institute are exempt from the experience requirement, as their experience requirement is redundant with CIPM's)
  • Ethics: Agree to comply with the Code of Ethics and Standards of Professional Conduct
  • Membership: Become a CIPM Association member (Annual dues are $200 but only $75 for CFA Institute Members)

Certification requires passing both exams, which are both offered during both exam windows: March-April and September-October. Again, the first exam is called the Principles exam, and the second is called the Expert exam. Both are three hours long and multiple-choice, but the Expert exam clusters questions around twenty or so mini-cases ("vignettes").

Both exams cover three broad areas:

  • Professional ethics (13% weight at Principle, 12% at Expert)
  • Performance measurement, attribution, and appraisals (45% at Principle, 44% at Expert)
  • The GIPS standard (42% at Principle, 44% at Expert)

This is a relatively new program: the very first Expert exam was conducted during the the September/October 2006 window and, according to the CFA Institute, almost 100 candidates passed to soon become the first certificants. (There were about 500 candidates in both Principles & expert during this Sep-Oct window, the pass rate on the first Expert exam was 60%).

Candidates who passed the Principles exam reported spending 63 hours preparing for the Principles exam. Although we don't have data, clearly the Expert exam requires more preparation time (maybe a lot more).

The program is meant for investment performance professionals. Mainly that's folks who work in investment management, investment consulting, software firms, and GIPS verification firms (early adopters have included Mellon Financial, Citigroup, Nicholas Applegate Capital Management, State Street). Such jobs typically have duties like performance analysis, performance consulting, accounting, portfolio management, and regulatory/compliance related.

There is a good frequently asked questions published here.

Comments

  1. Nitesh Aggarwala 28 Apr 2007

    Thanks

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