Chartered Financial Analyst (CFA) Definition and Exams

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 the first half of 2022, more than two million candidates have sat for the Level I exam, with 291,500 candidates ultimately going on to pass the Level III exam, representing a weighted average completion rate of around 11%. In the last 10 years, the completion rate was slightly lower at 9.6%.

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

  • 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. 
  • There are more than 160,000 CFA chartholders worldwide in 164 countries and regions.
  • The designation is handed out by the CFA Institute, which has nine offices worldwide and 156 local member societies.

What Is A CFA?

The Basics of Becoming a Chartered Financial Analyst (CFA)

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 nonprofit professional organization of more than 164,000 charter holders, portfolio managers, and other financial professionals in over 151 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, they must sign off annually that they are 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.

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 79,000 people sat its Level I test in June, an increase of 25% from 2017. The increase in test takers came primarily from Asia. The Institute now has test-taking centers in 43 countries around the world.

Level I Exam

The CFA Level I 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 six hours.


The pass rate for the Level I exam over the past decade has averaged around 41%, with the February 2022 Level I exam seeing just 36% of test takers pass, allowing them to proceed to Level II.

CFA Level I Exam Topic Weights.

Level II Exam

The Level II 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 21 item sets (mini case studies) with six multiple choice questions for each set (120 questions total).


The 10-year weighted average of CFA Level II pass rate is 45%. In August of 2021, only 29% of Level II test takers passed, allowing them to proceed to Level III.

CFA Level II Exam Topic Weights.

Level III 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 eight to 12 multi-part structured essay questions and ten multiple choice questions to be completed within six hours. The hand-written answers are graded by hand.


The 10-year weighted average pass rate for Level III is the highest at 52%.

CFA Level III Exam Topic Weights.

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.

How Long Does It Take to Pass the CFA Exams?

The CFA exams are difficult and have a high failure rate. Each exam requires at least 300 hours of study, on average. Successful candidates take an average of four years to earn the designation.

How Much Do the CFA Exams Cost?

Each of the three levels of the CFA exam cost $1,000 (which is reduced to $700 if you register early). In addition, there is a one-time enrollment fee of $350. With early enrollment, you would end up paying a total of $2,450.

Are the CFA Exams Multiple Choice?

The CFA Level I exam is entirely multiple-choice, with 180 questions. The Level II exam consists entirely of item set questions. Level III consists of constructed response (essay) items during the morning session and item set questions during the afternoon. Constructed response items typically have several parts related to a case study that describes one or a series of investment challenges.

Are CFA Charterholders Paid More?

Industry reports indicate that CFA charterholders are paid more than those who have not completed the program. According to test prep provider 300 Hours, a CFA charterholder earns, on average, 53% more than a Level I candidate when controlling for years of work experience.

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