The chartered financial analyst (CFA) exams have always been difficult to pass, with the average pass rates for all three levels at 45% for the period from 1963 to 2021. The COVID-19 pandemic has led to pass rates dropping even further due to multiple factors including exam cancellations and candidate deferrals.
There were record low pass rates for all three levels of the CFA exams in 2021. The pass rate for Level I candidates who appeared for the July 2021 exam was a record low of 22%, while the pass rates for Level II and Level III candidates who wrote the August 2021 exam were 29% and 39%, respectively, also all-time lows. In comparison, pass rates for all candidates over the 1963 to 2021 period were 42%, 46%, and 56% for Levels I, II, and III, respectively.
In a press release announcing the Level I results for the July 2021 exam, the CFA Institute said that it continued "to see the impact from exam disruptions brought on by the global pandemic," with some Level I candidates having had their exam schedules changed more than once. The CFA Institute also noted that it expects the pass rate to approach pre-COVID historical levels in time, as long as pandemic conditions continue to subside. Pass rates have been ticking up in the most recent exams for which pass rates data is available. In the November 2021 exam, pass rates were 27%, 46%, and 43% for Levels I, II, and III, respectively.
Typically, fewer candidates have passed the exams over time. In 1963, the exam's first year, 94% passed, while in the mid-1980s, the pass rate fell to around 65%; from 2000 to 2020, pass rates ranged from 34% to 55%. If you're one of the many who have failed their exam, here's what to do to increase your odds of passing when you retake it.
- The chartered financial analyst (CFA) exam is a challenging test, with the average long-term passing rate for all three levels at 45%.
- The pandemic has led to pass rates dropping even further as candidates' study plans and exam preparation have been severely disrupted by exam cancellations and deferrals.
- If you don't pass the CFA exam, review the exam results and performance summary provided with your score.
- Candidates should re-evaluate their study plan and enroll in a CFA prep course.
- Along with a strategic study plan, you'll need a strategic test-taking plan, which incorporates the structure of the exam.
Step 1: Analyze Your Performance
According to the CFA Institute, candidates who do not pass are provided with their exam results and a summary of their performance in each topic area. Make sure to review this information to gain an understanding of your strengths and weaknesses. You'll put this understanding to use in step 2.
Step 2: Re-Evaluate Your Study Plan
Regardless of how hard you studied the first time around, something about your plan didn't work, or else you would have passed. That's why part of your strategy to pass the CFA exam the next time around should involve re-evaluating your study plan.
Not only is the amount of material to study overwhelming, but CFA candidates might also face the obstacles of unexpected events disrupting study plans. To combat these problems, the CFA Institute offers the full curriculum with study tools called the Learning Ecosystem, and it is available for all levels. It sets up a week-by-week plan for covering all the material before you begin studying. The plan should provide a cushion of several weeks, with a minimum of four, so that you're scheduled to complete your studies well before the exam. This schedule leaves extra time to review difficult concepts and provides a cushion for dealing with unexpected life events that might derail your original study plan.
The CFA Institute also recommends that candidates schedule regular progress testing to get a sense of where they stand throughout their course of study. In other words, don't wait until the week before the exam to discover that you don't understand a topic as well as you thought.
Step 3: Consider Taking a CFA Prep Course
When you've already spent nearly $1,200 to take the test once, bought official study materials, and are about to shell out another $700 to $1,000 to retake the test (depending on how far in advance you register), spending hundreds more on a CFA prep course may not sound great. But if it means passing the test, you'll save hundreds of hours of further study, and you'll achieve any career advancement or pay increase associated with earning your CFA sooner. In other words, an effective test preparation course can easily pay off.
You can take a prep course in person or online. Courses include features such as a final review, practice exams, ongoing quiz questions, and a structured study plan. A class can help you stay on track with your study plan and identify your weaknesses. Look for a class with guaranteed success, in which you'll get your money back if you don't pass the exam as long as you complete the requirements of the study course. Do your due diligence and find the best option for you. The CFA Society of Minnesota has a list of approved providers on its website.
Step 4: Plan Your Test-Taking Strategy
Along with a strategic study plan, you'll need a strategic test-taking plan. If you didn't have a plan the last time you took the exam, this step will give you an advantage. If you did have a plan, you can use your real-life test-taking experience to restructure it, keeping in mind which aspects of the test you found easier and which ones were more challenging.
Here are a few specific test-taking strategies from the CFA Society of Minnesota:
- Understand the exam's 40/50/10 structure, in which 40% of the questions will be fundamental and basic, 50% will be moderately difficult, and 10% will be challenging.
- Plan your exam-taking time around the 40/50/10 structure. Make three passes through the exam, first quickly answering as many of the easier questions as possible, then addressing the more difficult and time-consuming questions on the second pass. Use the third pass to quickly make sure you've answered every question.
- Move on when it is taking you too long to answer a question. You want to manage your time in such a way that you can answer all of the questions before the exam time is up, although you don't want to rush so much that you read the questions carelessly.
- Prepare for exam day by doing a test run. Because all CFA exams are now administered through computer-based testing, make sure you know exactly how long it will take you to get to the exam location; do a test drive if possible.
How to Study for the CFA Exam after a Deferral
You may have already put in the estimated 300 hours of study it takes to become a successful CFA Program candidate. But if you have had to defer the exam due to circumstances beyond your control, how do you pick up the reins and cover that huge body of material again? The CFA Institute has some helpful hints on how to efficiently tackle a refresher study of your CFA curriculum. These include:
General Study: Set aside some time every day. The earlier you start your studies, the better, and make sure you plan to set aside at least the last four weeks for practice testing and review.
Tools: Take advantage of the practice material available in the Learning Ecosystem, and also take time to reflect on the nuances that may apply to different situations. Leverage the mock exam to assess your strengths and weaknesses. Use the adaptive path in the Learning Ecosystem to address your weak points.
If You're Stuck: Join a study group, reach out to your local CFA Society, or seek out an exam prep provider. Prep providers can help by providing access to different mock exams and question banks.
On Exam Day: Read each question carefully, especially the multiple-choice questions, which are designed to stump the unprepared test taker. Only the information provided is required to answer the question, so there is no need for extra information or assumptions. Because there is no penalty for incorrect answers, answer as many questions as possible.
How Long Does It Take to Receive CFA Exam Results?
According to CFA Institute, "exam results are expected to be available approximately eight to 10 weeks after the close of an exam window for Level I/Level II, and about 10 weeks for Level III."
What Is the CFA Exam Minimum Passing Score (MPS)?
According to the CFA Institute, "after each exam administration, the CFA Institute conducts a thorough analysis of exam questions and candidate performance to identify the minimum passing score (MPS) that demonstrates competence in the subject matter. The CFA Institute Board of Governors then convenes to approve the MPS for each level. This approach ensures fairness to candidates across various exam administrations because the difficulty of each test is taken into account when setting the MPS. Note that the CFA Institute does not release the MPS or individual candidate scores."
How Long Do I Need to Wait Before I Retake an Exam if I Do Not Pass It?
From 2021 onward, candidates who do not pass their exam will have to wait for a minimum of six months to retake it.
The Bottom Line
If you don't pass and decide to retake the CFA exam, make sure to register for the exam early so you'll pay the lowest registration fees, and take the steps described in this article to make sure you pass your retake. Make this the last time you have to pay exam expenses and invest hundreds of hours in required study time.