What Is a Chartered Financial Analyst (CFA)?

A chartered financial analyst (CFA) is a globally-recognized professional designation given by the CFA Institute, (formerly the AIMR (Association for Investment Management and Research)), that measures and certifies the competence and integrity of financial analysts. Candidates are required to pass three levels of exams covering areas, such as accounting, economics, ethics, money management, and security analysis.

From 1963 to first half of 2016, 1,348,103 candidates have sat for the Level 1 exam, with 209,561 candidates ultimately going on to pass the Level 3 exam, representing a weighted average completion rate of 15.5%. In the last 10 years, the completion rate was slightly lower at 12.9%.

Historically the pass rates on each exam have been below 50%, making this series of tests one of the most difficult sets of financial certifications; a minimum of 300 hours of study is recommended for each exam.


What Is A CFA?

The Basics of Becoming a Chartered Financial Analyst

The CFA charter is one of the most respected designations in finance and is widely considered to be the gold standard in the field of investment analysis. The designation is handed out by the CFA Institute, which is a global non-profit professional organization of more than 100,000 charter holders, portfolio managers and other financial professionals in 135 countries. Its stated mission is to promote and develop a high level of educational, ethical, and professional standards in the investment industry.

Before becoming a CFA charter holder, a candidate must meet one of the following educational requirements. The candidate must have four years of professional work experience, a bachelor's degree or be in the final year of the bachelor's degree program, or a combination of professional work experience and education totaling four years. For the undergraduate qualification, the bachelor's program must be completed before registering for the Level II exam. In addition to the educational requirement, the candidate must have an international passport, complete the assessment in English, meet the professional conduct admission criteria, and live in a participating country.

After meeting the enrollment requirements, the candidate must pass all three levels of the CFA program in sequential order. The candidate must then become a member of the CFA Institute and pay annual dues. Finally, he or she must sign off annually that he/she is following the CFA Institute code of ethics and standards of professional conduct. Failure to adhere to the ethics and standards is grounds for possible lifetime revocation of the CFA charter.

Passing the CFA Program exams requires strong discipline and an extensive amount of studying. The three exams can be taken once a year in June, with the exception of level I, which can be taken in December as well. In 2019, the Level I, II, and III exams will be given on June 19th. Level I is also offered on December 9th.

Although the exams can be taken as many times as needed, each exam typically requires candidates to study in excess of 300 hours. Given the considerable amount of time that must be spent studying, many candidates are deterred from continuing the CFA Program after failing one of the levels. To receive a charter, each candidate must pass all three exams and have four years of qualified work experience in investment decision-making.

The exams are difficult. Only 43% passed the level exam in June 2018, which is similar to previous years. Having the right plan and the discipline to follow the plan are essential skills for passing all three exams. Notably, 2018 saw a record number of test takers, according to the CFA Institute. The Institute said more than 77,000 people sat its level 1 test in December, an increase of 13% from 2017. The increase in test takers came primarily from Asia. The Institute now has test-taking centers in 43 countries around the world.

  • The CFA charter is one of the most respected designations in finance and is widely considered to be the gold standard in the field of investment analysis. 
  • To become a charter holder, candidates must pass three difficult exams, have a bachelors degree, and have at least four years of relevant professional experience. Passing the CFA Program exams requires strong discipline and an extensive amount of studying. 
  • As of January 2019, there are more than 154,000 registered CFA charter holders worldwide in more than 165 countries and regions.
  • The designation is handed out by the CFA Institute, which has eight offices worldwide and there are 151 local member societies.

Level 1 Exam

The CFA level one examination is administered twice per year in June and December. It focuses on analysis using the tools of the 10 topic areas of the Candidate Body of Knowledge. These areas are ethical and professional standards, quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, fixed income, derivatives, alternative investments, and portfolio management and wealth planning. The exam format is 240 multiple choice questions to be completed within 6 hours. The June 2018 Level I exam pass rate was 43%.

The 10-year weighted average CFA pass rates for Level 1 is 40%.

CFA Level I Exam Topic Weights.

Level 2 Exam

The level 2 exam is only offered once per year in June. It focuses on the valuation of various assets and emphasizes the application of investment tools and concepts in contextual situations. Exam questions referring to Financial Reporting and Analysis are typically based on International Financing Reporting Standards (IFRS). The exam format is 20 item sets (mini case studies) with 6 multiple choice questions for each set (120 questions total). The June 2018 Level II exam pass rate was 45%.

The 10-year weighted average of CFA level 2 pass rate is 43%.

CFA Level II Exam Topic Weights.

Level 3 Exam

The level 3 exam is only offered once per year in June. It focuses on effective wealth planning and portfolio management by requiring the candidate to synthesize all the concepts and analytical methods in the entire curriculum. The exam format is between 8-12 multi-part structured essay questions and ten multiple choice questions to be completed within 6 hours. The hand-written answers are graded by hand. The June 2018 Level 3 exam pass rate was 56%.


The 10-year weighted average pass rate for Level 3 is the highest at 51%.

CFA Level III Exam Topic Weights.

Successful candidates take an average of four years to earn the designation. Topic weighting on each of the exams across all 10 areas of knowledge range from 0 to 55%, depending on the level. The most current weightings are available at www.cfainstitute.org.

Limitations of the CFA Charter

The CFA charter is widely respected, globally-recognized, and a difficult undertaking to accomplish. However, it is not a guaranteed path to riches and glory. Before taking the plunge, carefully consider several drawbacks to earning one. The CFA is not a quick-fix for an ailing career. If you're enrolling in the program to jump-start a stalling career, you may want to look at other reasons your career is not moving forward first. Perhaps before investing inordinate amounts of time and a substantial amount of money into building your pedigree, you might choose to improve your soft skills, such as work ethic and political suaveness.

Becoming a CFA charterholder is a huge investment in time—a recommended minimum of 300 hours per year over three years—or more if you fail and decide to re-take an exam. You will likely sacrifice time with family and friends and the pursuit of hobbies you enjoy. And after committing all that time, there is no guarantee that you will earn the charter.

While the cost factor may not be a major consideration, it is worth pondering. A level I candidate will pay a one-time program enrollment fee plus an exam registration fee. Level II and III candidates will pay a registration fee as well. There is also the cost of the books and study programs you'll have to buy. Altogether, you should expect to spend several thousand dollars each time you attempt the exams.