Tuesday, January 15, 2013

Changes... the 2013 CIPM Principles Curriculum

By now you have heard that the CIPM Program curriculum has been changed - signficantly!  So much so that the folks at CFA Institute have taken to calling it "The New CIPM Program!"

You may be asking yourself, what *are* the new changes?  I will try to give a summary of the nature of the changes at the Principles Level in this blog post (and later this week I will address the Expert Level) and I'll be discussing various aspects of the changes on this blog over the coming months.

Principles Level

Last year, the topic area weights were broken into three broad areas:

  • Ethics and Professional Standards (15%)
  • Performance Evaluation (45%)
  • GIPS (40%)

Ethics is still given about a 15% weight.  The major changes here are that:

- The GIPS component has been reduced significantly, both in terms of content and in terms of the weight given to it.  GIPS (combined with a new topic of "performance presentation") now carries a weight of 10%.  In previous years, candidates were required to master the content of sections I.0 through I.5 of GIPS (i.e., the main provisions excluding real estate, private equity and wrap/SMA).  Now, candidates are required to have a more general knowledge of GIPS concepts, plus also understand concepts of performance presentation.

-  The "calculations" component" (performance evaluation) is effectively bumped up to a weight of about 75%!  Approximately 20% of the total exam weighting is devoted to the new sub-topic within evaluation of "manager selection".  There is also new content (e.g., risk attribution), and some content has been "pushed down" from the Expert Level to the Principles level (e.g., geometric equity attribution).

Thus, the 2013 topic area weights for the Principles Level are:

  • Performance Measurement (30%)
  • Performance Attribution (25%)
  • Performance Appraisal and Manager Selection (20%)
  • Ethical Standards (15%)
  • Performance Presentation and GIPS (10%)

A common question I get is "how many more pages do I have to read?"  The new changes constitute somewhere in the neighborhood of 365 pages.  Of these, approximately 20 pages are optional reading, and about 67 the new pages at the Principles Level are duplicate new pages at the Expert Level for the 2013 period (mostly pages dealing with the topics of manager selection and investment performance presentation).

One of the statements that I think could have been made prior to this year was that the Principles Level content was fairly "light" compared to the Expert Level.  At this point, I definitely believe that the new changes make the two levels more balanced.

Later this week, I will give a summary of the changes to the Expert Level.

Happy studying!