To be a globally recognized financial analyst, you must pass all three levels of the Chartered Financial Analyst (CFA). The CFA exam will require you to study and master concepts in the following areas:
- Economics
- Quantitative methods
- Financial statement analysis
- Derivatives
- Alternative Investments
- Fixed income
- Corporate issuers
- Money management and wealth planning
- Equity Investments
- Ethics and professional standards
And yes, we know how tough these three exams can be. The August 2022 CFA pass rates for Level one were 37%, Level two 40%, and Level three 49%.
However, this doesn’t mean that you can’t pass the exam. Many have passed the exam and probably employed the tactics we are about to show you.
So, how can you pass the CFA exam?
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How To Pass the CFA Exam
From the first CFA exam in 1963 to the current one, the average pass rate has been below 50%. Successfully passing the exam requires hundreds of hours of studying and the discipline to stay on track.
The CFA exams are held every year starting in February. Level one is held four times, level II three times, and level III is held twice. If you’re hoping to take the CFA in the near future, be sure to start early and set aside plenty of time to prepare.
To maintain the quality of the CFA exam, investment professionals and other CFA institute members set the exam, so there are no shortcuts. These professionals set the exam to test the following skill levels of the candidates.
- Remembering and Understanding skills
- Application skills
- Analysis skills
- Evaluation skills
Since the exam is delivered in three levels, this post will break down what to expect and how to pass each one.
Before diving in, let’s first consider what the CFA Institute itself has to say about prepping for the exam:
CFA Exam Format
- CFA Exam: Level I Format
- CFA Exam: Level II Format
- CFA Exam: Level III Format
Before executing a study plan for your CFA exam, it’s crucial to have an idea of how the CFA exam itself is structured.
Each level of the CFA exam is a little different, so this will help you understand what to prepare for.
CFA Exam: Level I Format
The exam itself has 180 multiple-choice questions. You’ll have about 4 hours and 30 minutes to complete the questions with an optional break.
To answer these questions adequately, plan to spend no more than yourself 90 seconds for each question.
CFA Exam: Level II Format
The CFA level 2 exam includes 22 item sets with a vignette-style questions. They are a total of 88 multiple-choice questions.
The duration of the exam is 4 hours and 24 minutes, split into two sessions of 2 hours and 12 minutes, with an optional break between sessions.
CFA Exam: Level III Format
Level 3 is the last and final exam hurdle before becoming CFA certified. Level 3 provides a much different challenge from the level 1 and 2 exams. On this exam, you’ll see essay questions in addition to the vignettes with multiple-choice questions.
The time for completion of level 3 is 4 hours and 24 minutes. Candidates have complained about a lack of time to finish the essay questions. In response, CFA allocates two sets of questions in each session. E.g., 11 essay sets in the first session and 11 items in the second session.
Some topics are omitted in the CFA level 3 exam, so you don’t have to study them in depth. They include:
- Quantitative Methods
- Financial statement Analysis
- Corporate issuers
CFA Exam: How to Pass
- What You Study – CFA Knowledge and Curriculum
- How You Study – Effective Study Plan
- Time Allocated for Studying – Duration of Study
- Other tips
The underlying key factor is to study to pass the CFA exam series. So it all comes down to three things;
What You Study – CFA Knowledge and Curriculum
Familiarize yourself with CFA topics and modules. They will form the basis of every knowledge you apply on the examination day. In addition, boost your understanding and practice with some mock questions that CFA prep providers give.
How You Study – Effective Study Plan
In each level of exam you study for, you will need to observe a CFA exam blueprint to know the weight of topics tested yearly. Doing this will give you a rough idea of which topics to cover more, especially if you need a bit of polishing up topics that you are weak in.
Time Allocated for Studying – Duration of Study
You will need not less than 300 hours to study for either level of the CFA exam. Balancing this with your normal day-to-day life activities may be complicated. But it would be best if you planned your study time so that you can cover all the needed topics.
Other Tips
- Ensure that you are comfortable using your calculator
- On the day of the exam, make sure that you dress in comfortable clothing
- During the exam, if you encounter any pressing matter, you can make use of the proctors available
- All questions on Financial Statement Analysis (FSA) should be answered according to International Financial Reporting Standards (IFRS) unless stated otherwise.
How Hard Is The CFA Exam to Pass?
Without sugarcoating it, the CFA exam is quite hard. And even the brightest minds complain of its complexity. So far, more than 3.5 million candidates have sat for the exam since CFA started offering it in 1963. Out of these, only 45% have passed the series meaning 55% didn’t pass the three exam series.
However, don’t let this discourage you, as you can pass the exam and acquire financial analyst status.
Which Parts Of The CFA Exam Are The Most Difficult?
While this question may be subjective in that what may be challenging for one candidate may be easy for another, candidates still report some key problem areas. For example;
- Candidates have reported the essay part questions in level 3 to be particularly hard compared to the multiple-choice questions.
- In level 1 and 2 exams, candidates report that derivatives, fixed income, and financial statement analysis as problem areas.
Study Materials To Pass The CFA Exam
- The Princeton Review CFA study materials
- Bloomberg Exam Prep (by Mindojo LTD)
- Kaplan Schweser CFA review course
- Salt solutions CFA review
- Wiley CFA Review Course
To pass the exam, you must study an average of 300 hours, according to reports from candidates who have passed the exam.
To pass the exam, you must study the CFA program curriculum and understand what the exam requires. However, this requires that you learn a lot of content which can be tiring.
You can utilize study material from CFA institute prep providers to help narrow down the possible topics that CFA may cover.
Here are five educational materials you can use in your study plan.
The Princeton Review CFA Study Materials
Princeton covers only level 1 and 2 and offers a traditional way of learning in that you can self-teach yourself. But don’t worry; there are study notes, mock exams, and video lectures at your disposal.
Bloomberg Exam Prep (By Mindojo Ltd)
Bloomberg exam prep adapts to your learning by tracking your progress so that you always work on areas you are having trouble with. However, you will have to pay for the 3 CFA prep courses they offer.
Kaplan Schweser CFA Review Course
Kaplan’s model of prepping you is making you familiar with the experience of taking the CFA exam test. You will get six complete exams and up to 4,000 questions that you can practice with.
Salt Solutions CFA Review
This comprehensive exam prep with levels 1 to 3 offers mock exams and video tutorials.
Wiley CFA Review Course
Wiley’s course makes use of old as well as new learning tools for learning. They offer a more comprehensive Platinum or Gold course that offers much more tools to help you familiarize yourself better with financial analysis.
FAQs
Yes, you can. Many people have successfully done it and passed on the secrets of passing the exam, which is consistent and vigorous studying to get all the necessary knowledge required to beat the exam.
All you need is a good study plan, and you could be on your way to joining the few financial analysts ever to pass the exam if you implement the strategies stated in this article.
A pass in a CFA exam may vary each year according to the overall performance of the exam. It may range in the 60 percentile mark, but scoring over 70% will generally be enough to pass the exam.
