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.

CFA exam: Practical Skill Modules (PSM)

Practical Skills Module or PSM was introduced in the CFA curriculum in addition to 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 students are 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 are available for the Level 3 CFA exam as well. Read the article below to know all about the Practical Skills Module for all three CFA program levels.

Understanding the Practical Skills Module

PSM has been introduced as an additional layer in the CFA program that is applicable to all levels of the CFA exam. As mentioned above, PSM is available for all Level 1 and Level 2 students and will be available for Level 3 students from 2025. In order to receive CFA exam results, they 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 important areas of financial analysis, investment management, customer interaction, etc. The modules focus on developing the skills of the students which will be directly applicable in the workplace of the CFA charterholders.

Every PSM uses a combination of video, MCQs, guided practice and case studies to develop practical skills. Each PSM takes about 10 to 20 hours to complete. But, we suggest that the students should spare at least 22 to 25 hours to complete a PSM as it can be time taking. 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 exam dates 2025-26

Practical Skills Modules: All CFA Levels

Check the table below to know the PSMs across different levels of the CFA exam levels along with the prerequisites of completing the modules:

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 important skill in the field of finance and is applicable to almost every role in the financial spectrum.

With 10 sub parts, Financial Modelling teaches the students how to build 3 statement financial models exactly how it is done on Wall Street. In other words, it helps the students with the skills required to build and analyze financial models. The Financial Modelling module explores the best modelling practices, design and flow and financial statements. They 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. They 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, 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 learn skills needed 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 different aspects of their role on the job. This programme, developed with insights from hundreds of successful equity research analysts, and builds and enhances the expertise of the students taking the PSM.

Students will learn the best practices for pinpointing important 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 video guides led by the instructor, utilizing various strategic frameworks. The module also includes knowledge check questions which give feedback throughout the programme. By the end of this module, students will be able 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, and AI enables machines to mimic human intelligence in areas such as natural language understanding, decision-making, and object recognition.

This Practical Skills Module guides the students 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 detailed 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, apply 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. Students will also have the opportunity to leverage important 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 knowing the impact of behavioural finance on investment decisions and mastering portfolio optimization techniques including backtesting and sensitivity analysis.

Also, 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 importnat components of a savvy investment strategy, especially for those managing portfolios with long-term objectives like endowments. The process of asset allocation involves positioning the portfolio across different asset classes to in order to optimize returns and minimising risk. This balancing act needs foresight and adaptability to ensure the portfolio meets its current payout obligations and secures future growth.

Performance evaluation serves as a 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. Engaging with these disciplines involves more than calculations; it is 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: Through PSM, students to apply theoretical knowledge in real-world scenarios, thus enhancing their ability to know and retain complex concepts. The PSM ensures that students 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 students, 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, ensuring that the content is relevant, authentic and latest. Engaging in PSM provides the students the opportunity to network with other professionals in the same field facilitating knowledge sharing and valuable networking.
• Continuous Assessment and Certification: Students 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, tehey receive a certificate of completion, adding value to their CFA charter and professional profile.

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