Preparation for all three levels of the Chartered Financial Analyst (CFA) exams require a serious commitment to following a structured study plan. According to the CFA Institute, the average annual pass rate for the last 10 years for the CFA Level I exam is 41%. This statistic shows that only dedicated candidates are likely to pass the exam, so be prepared to make the necessary sacrifices and put in the required effort.

Key Takeaways

  • Passing the CFA Level 1 exam, which has a 42% pass rate over the last decade, requires following a solid study plan.
  • Successful Level 1 candidates spend roughly 300 hours prepping for the exam.
  • The best strategy is to leave at least 4 months (approximately 17 weeks) to finish all the reading material.
  • Don't neglect end-of-chapter questions, however, which will help reveal weak points.
  • Allow four weeks prior to the exam date to review questions and have practice sessions, while also setting aside at least one day to simulate exam conditions at home.

Your biggest investment in the CFA is your time, so spend it efficiently. According to the CFA Institute, successful candidates on average report that they spent approximately 300 hours preparing for the CFA exam in total.

The required preparation time can be greater for those with a poor background in the subject matter and less for those who have a strong background in the subjects that the CFA curriculum covers. As a guide for a study plan, let's use this estimate of 300 hours of reading and practice hours as a benchmark.

1:24

Pass Your CFA Exams on the First Try

Reading Material

The CFA Level I exam covers 10 topics, 19 study sessions, and 57 readings. Each subject carries a different weight in the exam. A good way to manage your study time is by allocating study time based on each topic's weight. The table below summarizes the distribution of 300 hours of reading on the different exam topic areas.

Image
Image by Sabrina Jiang © Investopedia 2020

On average, it's best to leave at least four months for readings and leave the last month for revision and practicing. If you read two hours per day on weekdays and eight hours on the weekends, it will take about 17 weeks (four months) to complete all of the readings.

Weekends and non-working days are the best time to study for the CFA. During the week, you will likely not have time for practice questions, in addition to end-of-chapter questions. Therefore, plan to spend an additional two to four hours during the weekend on practice questions. Do not forget—the more you practice, the higher your chances of being successful on the exam.

End of the Chapter Questions

Do not forget end-of-the-chapter questions and always write down your results to track your progress. End-of-chapter questions will give you an overview of what areas are tested on the exam, so you can be more focused on these areas. Additionally, these questions will reveal the weaker areas that you must focus on to improve.

The following table summarizes how to allocate best your study time for the various CFA exam topics if you were to give yourself 300 hours and four months (120 days) to study. Use this table as a benchmark and customize your study routine to suit your circumstances.

 

Topic Area

 

Weight

 

Hours based on 300-Hour schedule

 

Days to allocate

 

Ethical and Professional Standards

 

15–20%

 

50

 

20 days

 

Quantitative Methods

 

8–12%

 

29

 

12 days

 

Economics

 

8–12%

 

29

 

12 days

 

Financial Reporting and Analysis

 

13–17%

 

43

 

17 days

 

Corporate Finance

 

8–12%

 

29

 

11 days

 

Portfolio Management

 

5–8%

 

19

 

8 days

 

Equity Investments

 

10–12%

 

31.5

 

12 days

 

Fixed Income

 

10–12%

 

31.5

 

12 days

 

Derivatives

 

5–8%

 

19

 

8 days

 

Alternative Investments

 

5–8%

 

19

 

8 days

 

Total

 

100%

 

300

 

120 days

The Last Four Weeks 

CFA exams are changing to computer-based exams. The last paper-based exam for all levels will be in December 2020. Starting in 2021, the level I exam will be offered in February, May, August, and November. The level II exam will be offered in May and August, and the level III in May and November.

Taking these dates into account, allow yourself four weeks prior to the exam date to review questions, and have practice sessions. During this period, you should practice more intensively than in previous periods. The CFA Institute will give you mock exams.

It's recommended that you set aside at least one day to simulate exam conditions at home with the mock test. For the paper-based exam, a three-hour morning session and a three-hour afternoon session with a break in between is recommended. For the computer-based exam, two 2.25-hour sessions with an optional break in between are advised. The mock exam will help you to be well-prepared for the exam physiologically.

It would also be worthwhile to take a two to four-week study leave from work during the final phase of your preparation.

The Bottom Line

The key to preparing for the CFA Level 1 exam is to study in a structured way over a period of at least 300 hours. Hopefully, after studying in a structured way for the exam, you won't have any issuing passing it.