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Passing any of the CFA Institute's exams, a requirement to become a Chartered Financial Analyst (CFA), is a very difficult and stressful process.

A CFA exam is not only a test of one's intellect, but also of endurance, diligence, creativity and will. It is designed in such a way as to demonstrate one's commitment to becoming a CFA charterholder. Like many standardized exams, such as the SAT or GMAT, learning to take the exam is as important as knowing the material. In this article, we'll take a look at the personal requirements needed before entering the exam.


All of the three exams within the CFA program are designed as a self-study curriculum, but whether you decide to do it alone or with the aid of a tutor or study course, there are certain things that you must consider to effectively prepare for taking the exams.

The first thing that you must understand is that the commitment to the program is a long and extreme one. Each of the exams is given at least once a year: on the first Saturday in June for all three levels, and additionally in December for Level I. Because of this, the program can conceivably be completed in as little as 18 months, but statistically, doing that is very remote.

The 10-year average pass rate between 2007 and 2016 was 42% across all levels (Level I, Level II, Level III), with the lowest pass rate on Level I. But don't be discouraged. The key is to prepare yourself mentally and strategically to gain that small but necessary edge over the other program candidates.

According to the CFA Institute, the following is what a CFA candidate can expect:

  • An average of four years to complete the program
  • Six months of preparation for each exam
  • 250 hours minimum of study time = 10 to hours per week (Although candidates report to study 308 hour on average)

Making a sincere and internalized commitment to completing the program is a prerequisite for success. The program is so intense and requires so much of one's time and energy that for many, trying to complete the program due to some person or institution's requirements will not provide the motivation necessary to realize the end goal.

Develop a Study Strategy

In addition to specific study skills that must be developed to pass the exams, you must develop a specific exam strategy that provides for time management, skill assessment and taking multiple previous and sample exams.

Time management relates to the time necessary for study, and also for taking the exam. For example, a three-hour exam with 120 possible points means one for each minute and a half. At the one hour point you should be on question 40; any extra time used means less time for other questions. But the exam begins with ethics questions (more reading required) so maybe you shouldn't panic if you are at question 45. This understanding will only come with hundreds of practice questions.

Skill assessment relates to determining which sections are your strongest and which are your weakest. The importance of determining this is so that you can allocate more time to studying those sections where you are weaker and spend less time on sections where you have the best probability of passing. On multiple choice sections of the exam, you must learn which questions to skip and return to later if time is available. You must be sure to answer questions that you understand instead of wasting time on questions that you do not feel comfortable with.

In addition to fostering greater confidence when taking the actual exam, taking exams periodically helps determine sections that require additional study, makes explicit your ability to manage time, and gives you a better sense of how to take the exam beyond just answering the questions. It is a wise idea to take as many timed sample exams (corrected for a score) as time allows periodically throughout the study period.

Consider, but Don't Rely on, Self Study

Although many have passed the CFA exams by studying alone, it is undoubtedly the most difficult approach. The volume of information the candidate is required to digest is so large that it can be overwhelming. This strategy allows the candidate the greatest amount of freedom in managing time and resources; however, those who aren't diligent about studying continuously for the six or so months before the exam run the risk of leaving too much material to be learned in a relatively short period of time.

There is an abundance of study materials provided by the CFA Institute and third-party vendors on a variety of subjects, including how to approach the exam. However, if using this strategy, the candidate is responsible for making their own interpretation of the quality of the information and the best way to use it.

Take a Study Course

There are many study-course options available, from weekly classroom programs to short-term immersion courses. Many local CFA societies run exam prep courses, and there is an abundance of third-party vendors providing similar services. The advantage of taking a course in preparation for the exams is that it forces the candidate to focus on some section of the exam on a regular basis. Many of the courses offered will also require students to take timed sample exams and then help students determine where their weaknesses lie. Study groups within these classroom settings also help to distribute study responsibilities, allowing students to use available resources efficiently.

The key to getting the most out of a study course is to do some research before deciding on a particular service vendor. The strength of the local society courses is that they are usually taught by multiple CFA charterholders teaching a subject that they are experts in. Their weakness is that although the teachers know the material, the quality of teaching skill can be inconsistent. As for outside vendors, any institution worth their salt will make data such as student pass rates, their ability to forecast the questions that will be given on a particular exam, and any other information that they feel makes them superior to their competition available to the public.

The most successful of these groups require their teachers to take the newest exams after they have been published so that they are always on top of new trends and the evolution of the test design. These teachers are an invaluable source of information on how to take the exams, what information the exam preparers may be concentrating on, and types of information that have a high probability of recurrence. In addition to keeping students on track, and teaching them the information necessary to answer test questions, it is this additional information about the exam design and how to take the exam that allows certain students to break out of the pack.

If you've gotten information from a few different courses, compare how much time they each spend on the course topics provided. You can choose the course which best covers the topics you know least with the most amount of time. Below is a list of the different topics and the approximate percentages devoted to them in the CFA program's three exams:

CFA Exam Topic Area Weights

Topic Area Level I Level II Level III
Ethical and Professional Standards 15 10-15 10-15
Quantitative Methods 12 5-10 0
Economics 10 5-10 5-15
Financial Reporting and Analysis 20 15-20 0
Corporate Finance 7 5-15 0
Equity Investments 10 15-25 5-15
Fixed Income 10 10-20 10-20
Derivatives 5 5-15 5-15
Alternate Investments 4 5-10 5-15
Portfolio Management and Wealth Planning 7 5-10 40-55
Total 100 100 100

Source: The CFA Institute (Note: These weights are intended to guide the curriculum and exam development processes. Actual exam weights may vary slightly from year to year. Please note that some topics are combined for testing purposes.)

Another very effective strategy to find ways to gain marginal points on the CFA exam is to seek out as many CFA charterholders as possible to get a better understanding of how to take the exam. There are many CFA charterholders in every local society that are actively involved in some aspect of the exam process. All CFA charterholders are invited to be part of the grading process after the exams have been taken. Although some may only have graded exams once, if at all, there are some that do it religiously year after year. CFA charterholders that do grade usually work with the sections of the exam in which they have a particular interest or expertise. Here are some tips from those who have already taken the exam:Talk to Other CFA Charterholders, and Candidates

  • For essay questions, legible writing is key. Graders scan the answers for certain words or phrases and then give points accordingly. If a grader can't read your writing, then you won't get points even if you have the correct information in your essay. If you can do it efficiently, print your essay answers.
  • Start each question with an outline and then write the corresponding answer below it. In many cases a good, thought-out outline is enough to get all the points for the question and will make your grader happy that the entire essay didn't have to be read.
  • Never leave an essay question blank. If you don't know the answer, put in buzzwords that relate to the subject. Write about the process for getting the right answer. In many cases this will gain you some points and over several answers can make the difference between passing and failing.
  • Know your ethics information. Ethics is used to determine the outcome of exams that are on the fringe between passing and failing. If you have done poorly on the ethics section then you will most likely fail; ace ethics and you will be given the green light.

These examples are timeless, but there are many others that change as the exams evolve. New trends, tools and methods are introduced and given greater weight in the exam as that information becomes the standard. In order to create a competitive advantage over other program candidates, it is imperative that you seek out sources of the most current information.

Each local society periodically puts on luncheons that feature speakers on various investment-related subjects. Contact your local society for a schedule of these events and how to register to attend. In addition to being an excellent networking source, there are many members who would be more than happy to help a CFA candidate pass their exams in any way that they can. They have all been through the process and understand the importance of gaining the greatest competitive edge possible.

The Bottom Line

Due to the length and rigor of the CFA program, passing any of the three exams in the CFA program not only requires a passion for the material and a commitment to studying, but also requires understanding how to take the exam and to forecast what information will likely appear as exam questions.

In addition to some introspection in assessing what topics are strengths and which are weaknesses, candidates must develop study and exam-taking strategies that will allow them to outperform the average, that large set of exam participants that straddle the fine line between passing and failing. In addition to study guides and instructors, CFA charterholders, especially those closest to the exam development and grading process, should provide the best source for developing the competitive edge necessary to ensure success and the shortest road to receiving your CFA designation, and opening up many new job possibilities.

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