Practical Skills Module: When and How To Approach CFA Program’s PSM

PSM has been introduced as an additional layer in the CFA program applicable to all levels of the CFA exam. Read the article below to know all about the Practical Skills Modules in CFA.

Practical Skills Module or PSM was introduced in the 2024 CFA curriculum to complement the theoretical knowledge with hands-on practical skills required for a successful career in finance. With an aim to bridge the gap between academic learning and real-world application, the modules ensure that CFA candidates are well-prepared for the challenges they will face in their professional roles. Practical Skill Modules were introduced for the Level 1 and Level 2 CFA exams in the year 2024, and from 2025 onwards, the PSM will be available for the Level 3 CFA exam as well. Read the article below to know all about the Practical Skills Module (PSM) for all three CFA program levels.

Also Read: CFA exam dates 2024-25

Understanding the Practical Skills Module (PSM)

PSM has been introduced as an additional layer in the CFA program applicable to all levels of the CFA exam. As mentioned above, presently, PSM is available for all Level 1 and Level 2 candidates and will be available for Level 3 candidates from 2025. In order to receive CFA exam results, candidates have to complete at least one PSM at each level.

The objective of PSM is to provide the students with hands-on experience in the key areas of financial analysis, investment management, customer/client interaction, etc. The modules focus on developing and enhancing the skills of the students which will be directly applicable in the workplace and enhance the effectiveness of the CFA charterholders.

Every PSM uses a combination of video, multiple-choice questions, guided practice and case studies to develop practical skills. Each PSM takes about 10-20 hours to complete. However, we suggest that the students should spare at least 22-25 hours to complete a PSM as it can be time-consuming. Students can take over two weeks to complete the PSM module and they can start this any time after the CFA application form submission.

Also Read: CFA pass rate

Practical Skills Modules: All CFA Levels

Check out the table below to know the PSMs across different levels of the CFA exam levels along with the pre-requisites of completing the modules:

CFA Level	Practical Skills Module(PSM)	Recommended Pre-Requisite
Level 1	Financial Modelling Python Programming Fundamentals	Candidates who wish to opt for the Financial Modelling PSM are recommended to have basic familiarity with the principles behind financial modelling or should have completed CFA Level 1 Financial Statements Analysis content. Candidates who opt for the Python Programming Fundamentals must have basic familiarity with the CFA Level 1 Quantitative Methods content
Level 2	Analyst Skills Python, Data Science & AI Python Programming Fundamentals	Candidates who opt for the Analyst Skills PSM are recommended to have familiarity with the principles behind Equity Investments and Financial Statement Analysis content from CFA Level 2 curriculum Candidates should have fundamental clarity of Python and with the CFA Level 2 Machine Learning curriculum Candidates should have basic familiarity with the Level 1 Quantitative Methods content.
Level 3	Analyst Skills Financial Modelling Portfolio Development and Construction Python, Data Science & AI Python Programming Fundamentals	Candidates who opt for the Analyst Skills PSM are recommended to have familiarity with the principles behind Equity Investments and Financial Statement Analysis content from CFA Level 2 curriculum Candidates opting for the Financial Modelling PSM are recommended to have basic familiarity with the principles behind financial modelling or should have completed CFA Level 1 Financial Statements Analysis content. For this PSM, candidates should have a thorough understanding of the principles of portfolio management or should have completed the CFA Level 1 and Level 2 Portfolio Management content. Candidates should also have a basic familiarity with the principles behind financial modelling or should have completed CFA Level 1 Financial Statement Analysis content Candidates should have fundamental clarity of Python and with the CFA Level 2 Machine Learning curriculum Candidates should have basic familiarity with the Level 1 Quantitative Methods content.

Also Read: What to Expect of CFA Level 1

CFA Practical Skills Module: Details

Check below the in-depth details of the different CFA Practical Skill Modules across the three levels. 

Financial Modelling

For students who wish to pursue a career in finance, financial modelling is the best choice. Financial Modelling is an essential skill in the field of finance and is applicable to almost every role in the financial spectrum.

With 10 sub-units, Financial Modelling teaches the students how to build three-statement financial models exactly how it is done on Wall Street. In other words, it equips the candidates with the essential skills required to build and analyze financial models. The Financial Modelling module explores the best modelling practices, design and flow and financial statements. Students will get to practice advanced Excel techniques in tandem with the instructor and also how to solve common financial modelling problems.

Python Programming Fundamentals

Students will get to explore the basics of Python, one of the most popular languages of machine learning, artificial intelligence and big data projects in Python Programming Fundamentals PSM. Candidates will also learn how to use Jupyter Notebooks in order to develop, present and share data science projects-related to finance. Candidates will be guided through a series of videos, knowledge, check questions and projects to build up their coding skills quickly through applying them to industry-specific examples.

Analyst Skills

In the Analyst Skills Practical Skills Module, there are 6 units. The students will acquire crucial skills essential for success as both buy-side and sell-side equity research analysts. This module teaches them how to perform comprehensive industry research, strategically evaluate companies, accurately forecast, spot mispricing, and make well-informed recommendations.

These skills are important for anyone pursuing a career in finance. Often, Equity Research Analysts struggle to learn critical aspects of their role on the job, as these skills are seldom covered in university courses. This programme, developed with insights from hundreds of successful equity research analysts, is designed to build and enhance the expertise of the students taking the PSM.

Students will learn the best practices for pinpointing key factors of stock, generating unique insights, using practical valuation techniques to set accurate price targets, mastering stock call techniques, and effectively communicating these calls to motivate action. The module includes step-by-step video guides led by the instructor, utilizing various strategic frameworks. The module also includes knowledge check questions which provide feedback throughout the programme. By the end of this module, students will be equipped to apply these skills in real-world scenarios.

Python, Data Science and AI

There are four units in the Python, Data Science and AI Practical Skills Module of the CFA exam. The students will learn how and why to use Jupyter Notebooks for developing, presenting and sharing data science and AI projects. Python is simple, scalable and a rich library of open-source modules. On the other hand, data science involves tasks like data cleaning, visualization, and modelling to aid decision-making, whilst AI enables machines to mimic human intelligence in areas such as natural language understanding, decision-making, and object recognition.

This Practical Skills Module guides you through the data science workflow, from ingesting financial data to training artificial neural networks. Rather than delving deeply into theoretical mathematics, each unit offers a high-level overview of data science tools and practical, code-based solutions tailored for investment professionals. Candidates will have the chance to pull financial data, use standard tools and techniques to prepare it for insights, forecast percentage changes in EPS, and perform sentiment analysis—a common natural language processing task.

Additionally, the module includes an overview of Python Programming Fundamentals, available as a separate module for Level I, for those who need a comprehensive review.

Throughout this module, students will be guided by a series of videos, knowledge check questions, and projects, enabling them to quickly build a practical understanding of Python, data science, and AI concepts, applying them to industry-specific scenarios.

Python Programming Fundamentals

With five sub-units, Python Programming Fundamentals PSM helps the students to explore the basics of Python and the usage of Jupyter Notebooks to develop, present and share data science projects related to finance. The PSM gives students the opportunity to master Python programming fundamentals including variables, loops, datatypes, conditional statements and functions. Candidates will also have the opportunity to leverage key Python libraries such as Pandas for data wrangling and analysis, Matplotlib and Seaborn for data visualization, and Plotly Express for interactive data visualization in a financial context. Students will get hands-on experience with real-world financial data using Panda Data Reader and Yahoo Finance API in Python.

Portfolio Development and Construction

In the Portfolio Development and Construction PSM, students will get the opportunity to delve into the complexities of creating and evaluating Investment Policy Statements (IPS) along with understanding the impact of behavioural finance on investment decisions and mastering portfolio optimization techniques including backtesting and sensitivity analysis.

Additionally, students will develop skills in performance analysis, asset allocation, and managing currency risk to maintain robust investment strategies for endowment funds.

Asset allocation and performance evaluation are crucial components of a savvy investment strategy, especially for those managing portfolios with long-term objectives like endowments. The process of asset allocation involves strategically positioning the portfolio across various asset classes to optimize returns while minimizing risk. This balancing act requires foresight and adaptability to ensure the portfolio meets its current payout obligations and secures future growth.

Performance evaluation serves as a critical diagnostic tool, offering clear insights into the effectiveness of investment strategies. Rigorous portfolio analysis enables professionals to make data-driven decisions and adjust portfolio strategies when necessary. For those managing endowment funds, this scrutiny goes beyond outperforming benchmarks—it's about stewardship and the responsibility to preserve and grow the financial foundation that supports educational and philanthropic missions. Engaging with these disciplines involves more than calculations; it's a proactive and intellectually stimulating part of investment management that ensures a portfolio's vitality and relevance in an ever-changing financial landscape.

Also Read: What to Expect of CFA Level 2?

Benefits of the Practical Skills Module

Listed below are some of the benefits of completing a PSM:

• Hands-on learning experience: The PSM allows the students to apply theoretical knowledge in real-world scenarios thus enhancing the ability of the students to understand and retain complex concepts. the PSM ensures that candidates can immediately apply their knowledge and skills in their professional roles.
• Enhanced Employability: The PSM equips candidates with practical skills that are highly valued by employers, making them more competitive in the job market.
• Professional Development: The module helps in the continuous professional development of candidates, preparing them for advanced roles in financial analysis, portfolio management, and advisory services.
• Industry-related insights and networking opportunities: The PSMs are developed with insights from the industry professionals hence ensuring that the content is relevant, authentic and up-to-date with the current industry trends and practices. Engaging in PSM may provide the students the opportunity to network with other professionals in the same field facilitating knowledge sharing and valuable networking.
• Continuous Assessment and Certification: Candidates are assessed continuously through projects, presentations, and practical exercises to ensure they have mastered the necessary skills and upon successful completion of the Practical Skills Module, candidates receive a certificate of completion, adding value to their CFA charter and professional profile.

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