What to Expect on CFA Exam Day

The day of the CFA exam is quickly approaching and I am getting questions from candidates about what to expect on that first Saturday in June. The CFA Institute has a page on its website that outlines the day’s structure but I thought I would walk you through it and provide some additional insight.

Your CFA Exam Day Begins

The day of the CFA exam is fairly straight-forward and simple. Most testing sites open their doors hours before registration begins. Getting to the testing facility early is a great opportunity to sit back and relax, study your flash cards or get to know some of the other candidates. Don’t overlook this networking opportunity!

Wear comfortable and layered clothes for the CFA exam. This is no time to impress people by wearing a three-piece suit. You do not know how warm it will be in the exam room. Many will have the air conditioner working and some will have it turned up too high. Dress in layers that can be removed depending on the inside temperature.

Before 8am, you will be allowed to check-in for the exam. This is basically just telling them you are there and presenting your identification. You will still need to present your admission ticket and ID to get into the testing room later.

At 8am, candidates will line up to enter the testing room and find their seats. You will leave all your personal belongings outside the testing room so either don’t bring anything valuable or leave it somewhere safe. Check the CFA Institute website for what you can and cannot take into the testing room.

The exam rules will be read at 8:30 am. It is extremely important that you pay attention and be patient. Do not open your exam book or do anything until told to do so. You will be given a candidate pledge and reminded of the CFA Institute’s strict code of ethics, after which you will sign the pledge.

At 9am, testing will begin. You are allowed to use the restroom while testing but it will still count against your time. Better to use the restroom before the exam begins, especially if you are a coffee drinker.

Do not ask the exam administrators any CFA-related questions. They have been hired to proctor the exams and most likely know nothing about the CFA other than how to conduct the exam.

If you finish the session early, you are allowed to leave the testing room. If you are still testing at 11:30am, you must stay until everyone is dismissed at noon.

The exam administrators will verbally notify the room when there are 30 minutes and 15 minutes remaining. In addition, they may note the time remaining on a whiteboard at 30 minute intervals.

The afternoon session is exactly like the morning session. You will begin the check-in at 1pm and the announcements will begin at 1:30pm. The test will begin at 2pm and go until 5pm.

Remember, you must sit for both morning and afternoon sessions for your exam to be valid. You are allowed to leave the test site for lunch but do not go too far. Eat a moderate-sized lunch so you are not too hungry but not too full for the afternoon session.

While you will want to talk to other candidates, resist the urge to talk about specific exam details. There are plenty of other things to talk about besides the exam and many candidates will be nervous enough without discussing it anyway.

By this time in your life, you have sat for countless exams. The CFA exam is really no different other than perhaps a little longer. The best thing you can do for exam day is try to relax. Staying calm and confident will actually help you recall the curriculum and pass the exam.

Being ready for CFA Exam Day Problems

We posted an article last November, what you need in your CFA Exam Emergency Preparedness which is definitely worth your time to look over. Most candidates have their basic exam resources ready but fail to have what-if resources available. It is unlikely that you’ll ever need any kind of emergency resources, I didn’t in the three years I took the exams, but that worst case, what-if scenario should be enough to convince you to take the time.

  • Admission tickets are now available on the CFA Institute page linked above. I always printed out two copies in case something happened to one of them.
  • Bring at least three or four pencils, all pre-sharpened. You probably won’t need more than one or two but it is nice to have them ready and not spend time sharpening.
  • Bring an extra calculator battery and screwdriver. Better yet, just bring an extra calculator to save yourself the time of changing out a battery.
  • Bring ear plugs just in case something threatens to distract you at the test site.

Don’t wait until the day before or even a few days before the CFA exam to plan your day. This day is too important and you cannot afford to let anything go wrong. Besides making sure you get to the exam as planned, putting everything together will really help to lower your stress level on the day of the big test. You are going to be nervous enough with the CFA exam itself, don’t add to it by worrying about logistics.

‘til next time, happy studyin’
Joseph Hogue, CFA

100 hours of CFA Study in 3 Weeks!

I took an informal survey of my CFA candidate contacts recently and was pretty happy with the outcome. Of the nine candidates I talked to, most had started studying for the 2015 CFA exams sometime between late January and early March. Candidates reported spending around 10 or 15 hours of studying and had just over 200 hours total on the CFA curriculum.

There were a few outliers in the group. One candidate had started studying in December and had been over the curriculum for more than 400 hours so far. She was very confident she wouldn’t have a problem on the exam.

Another candidate though was not as confident. He was one of those starting later and had not devoted as much time. He estimated that he had only spent about 150 hours studying and wasn’t quite through the entire curriculum yet.

Asked if I thought he could still pass, I told him that I would not feel confident going into the CFA exams without at least upwards of 250 hours of studying under my belt. To which he replied, “How do I get 100 hours of studying in just three weeks?”

CFA Study-thon Weeks One and Two

Studying 100 hours for the 2015 CFA exams, or even more, in three weeks may not be a problem for some candidates. If you can put other classes or responsibilities aside for a few weeks while you cram for the exams, then it doesn’t even amount to a full-time schedule.

Other candidates are not as fortunate. Devoting all your time to the CFA exam isn’t possible when you have a full-time job, a family or a full schedule of college courses.

But you can still get in another 100 hours of studying before the exams, picking up a ton of additional points and maybe putting you over the pass-no pass level.

Many candidates are expecting to take the last week before the exams off to study but would find it hard to take the whole three weeks off work. It is still possible to spend around four hours a day studying over six days a week. This would accumulate 48 hours of study time over the next two weeks.

I wouldn’t recommend you study all seven days of the week. You need time to relax and studying every single day is just going to leave you strained and not retaining information. I would take one of the weekend days off from studying. It may be tempting to take a workday off from studying but it is much more relaxing if you have one day where you don’t have to work or study. You’ll come back to your schedule much more recovered.

We’ve talked about ways to find more time to study for the CFA exams here on the blog before. With just a few weeks left, you will need to find more time and use that time as efficiently as possible.

Start your week with a full-length mock exam or a full set of questions, hitting every topic area from the curriculum. After working through the questions you missed, remember to review the ones where you got lucky guessing, you will review the percentage score in each topic to guide your studying over the week.

If you are consistently scoring less than 50% on any topic area, you will need to go back to the curriculum or summary sheets to review. Even on the non-core topics, scoring less than half of the points available will severely drag your overall score down.

For those topics in which you consistently score above 80%, I would review a one-page summary once or twice a week just to keep the material fresh.

In those topics where you are scoring between 50% and 80%, you will want to work out a schedule of flash cards, summary sheets and practice problems. Time spent on these three resources is about as effective and efficient as you are going to find. Use all three resources and cover a topic area each day, finishing up with a small set of practice problems. Do another set of practice problems on the following day, before you start the new topic area, to make sure you retained the information.

You might have to stretch it a little and get a little less sleep, but studying four hours a day should not be impossible for most people.

Your CFA Last Week Study Plan

Longtime readers of the blog will know that the last week before the exam was my favorite time of the year when I was a candidate. Not only is the excitement of the upcoming test like chugging a keg of coffee, but really devoting the week to the curriculum is a lot like being a professional analyst.

You are going to be spending around half your time as an analyst researching and reading information about your coverage universe. Really digging into the curriculum and studying for eight or ten hours a day is a lot like that and you may be surprised how excited you feel to get started every day.

I’ve covered study schedules for the last week before the CFA exam as well. There are really two key points you want to build into your schedule.

  • First, treat your study schedule like a job. If you can take the time off work for that last week then the CFA exam will become your job. Put in at least an eight-hour workday, stopping for a five minute break each hour and half an hour for lunch.
  • Second, don’t stay home to study. There are too many distractions at home and you need a more test-like environment. The public library is usually a good place to study since it is fairly quite but has some background noise that will simulate the actual exam noise.

Start each day with an hour or so of practice problems. Too many candidates put practice problems off until later in the day and end up either not having the time or are too tired to really do their best. Do a few sets of practice problems early to review the previous day’s information and to make sure you get them in. You retain much more information when you use active learnings strategies and practice problems are some of the best.

The rest of the day’s studying will be a lot like your previous schedule, just at a longer interval. Try hitting one or two topics in detail each day and review another one or two topics. You don’t necessarily have to review every study session over that last week but should cover at least 12 to 15 of the sessions.

If you studied for four hours a day, six days a week during the previous two weeks then you’ll need about 52 hours to meet your 100-hour study mark over the week to the exam. That amounts to just under nine hours a day over six days. These will be long days, especially towards the end of each day but you have to stay focused. Just keep telling yourself that it is only a few days to one of the biggest exams of your life.

This is only an example of what you might do to prepare for the 2015 CFA exams over the next three weeks. Your own plan may differ and you may find it easier to do more or less studying. Spending 300 hours isn’t a formal rule for the CFA exams, just an average we’ve seen across successful candidates. More important than the total time you spend is how well you do on practice and mock exams, so use them as a guide.

The countdown is on! Just 26 days left to the 2015 CFA Exams! Good Luck!

‘til next time, happy studyin’
Joseph Hogue, CFA

Which Level of the CFA is Most Difficult?

Logging in to the CFA Program Candidates group on LinkedIn last week, the first post I saw was a common question I get from candidates. The candidate had been preparing for the Level 3 CFA exam and was wondering how it compared to the first two exams.

I get this question, or variations of it, quite a bit. Candidates want to know what they’re up against with the next exam and everyone wonders which is most difficult.

As usual, candidates on the LinkedIn Group came through for their peer and the post had 21 replies in about a week. I thought I would address the question here on the blog as well.

Are the CFA exams as easy as 1 -2 -3?

My own experience was that the first CFA exam actually seemed fairly easy. The second exam, living up to what I had heard from most other candidates, was much harder. The amount of formulas and detail you are expected to remember seems to increase by ten-fold from the first to the second exam. Unlike the third CFA exam, where you know some topics will appear in the morning section, you really have no idea what will be on the level 2 exam. This means you really need to spend a lot of time covering as much of the curriculum and in as much detail as possible.

I’ve heard a lot of candidates say that the level 3 CFA exam seemed more difficult than the second exam. I think this depends greatly on your preparation and comfort for the essay section of the exam. The afternoon section of the level 3 exam is no different than the second exam in format or difficulty (in my opinion). As for the morning essay section, I was actually surprised how easy it seemed after studying prior years’ exams.

You’re experience may be different but I would say the second exam was clearly the most difficult for me. The level 1 CFA exam was the second most difficult but only because you have no idea what to expect so you’ll need to study more to cover the uncertainty. The third exam can actually be relatively enjoyable if you study the prior years’ essays.

Do you need the same amount of studying on each CFA exam?

When it comes down to answering how much time is needed for each exam, it’s not really about time but about how you study. Each exam is a little different and requires a different approach to studying.

I spent way more time than was necessary studying for the first CFA exam, but then it is always hard to say how much is going to be enough. Between reading the curriculum, study notes and watching videos, I covered the material seven times and that’s not counting practice problems. When I got to the exam, I was surprised how easy and generalized the questions seemed. Knowing now that the CFA level 1 exam focuses on general concepts, I would suggest that you cover everything multiple times but don’t worry as much about the details. Understand the idea behind each LOS and broad concepts in each section.

The CFA level 2 exam is very different from the first. You will need to know deep details in the LOS to do some of the longer calculations and process. For this exam, I would concentrate on really mastering the more important topic areas. Using the topic weights for the exam, make sure you are scoring above 80% or higher on the most important topics. To get to this level of mastery, you might have to spend a little less time on other topics.

Responses from CFA level 3 candidates on the forum post were typical of what I usually hear and easily remedied with a smart adjustment to your study plans. More than a few of the candidates ran out of time or did really poorly on the morning essay section of the exam. While I thought the CFA level 3 exam was much easier than the second exam, it would have been impossible if I hadn’t spent so much time practicing prior years’ essay questions. This is something we talked about in last week’s post and absolutely critical to your success on the last CFA exam. If you spend your time studying the essay questions from prior exams, you can spend less total time than on other exams and still do well.

Last month ahead of the exam. You’re almost there!

‘til next time, happy studyin’
Joseph Hogue, CFA

Passing the Essay Section on CFA Level 3

In past years, we’ve posted quite a few reviews of previous essay questions from the CFA Level 3 exam. The CFA Institute makes the last three years’ morning section available for download and review on the website. The three downloads include the morning section of the exam as well as the guideline answers provided by the Institute.

I highly recommend you click through and download the 2012 through 2014 Level III CFA essay questions for review. Studying and working these questions is the best way to practice for the Level 3 essay section.

Instead of working through the 2014 questions, I thought we would highlight prior essay questions this year to give you a good resource of practice problems.

There doesn’t really appear to be much in the CFA Level 3 2015 changes that would affect your morning section essays. I posted a review of the Level 3 changes last August. Only one new reading was added (Market Indexes and Benchmarks) while two readings (International Equity Benchmarks – Corporate Performance, Governance and Business Ethics) were removed. A few of the topics have been shuffled a little but the readings have stayed largely the same.

A post last year looked at topics that typically show up on the morning section of the CFA Level 3 exam. There is no guarantee that these will show up on this year’s essay exam but you can see a pattern by studying the prior exams. Having an idea of what to expect can really help drive your study plans and give you the confidence you need going into the exam.

Individual Portfolio Management

This post works through Question #2 on the 2013 CFA Level 3 exam, an individual portfolio management question. The morning section ALWAYS starts out with at least one question on individual portfolio management. You need to work as many of these as you can before the exam to really get confident about the topic. Doing really well on the very first question of the exam is going to give you a huge confidence boost for the rest of the test.

This post works through Question #1 on the 2013 CFA Level 3 exam, a single-period return calculation. There are two main types of return calculations you could see on the individual portfolio management section (you will always see one of the two, so be ready). A single-period return is usually what is needed or earned for the next year to a stated retirement date. A multi-period return is usually something like the necessary return over remaining years to retirement.

This post covers Question #2 of the 2011 CFA Level 3 exam, an individual portfolio management question with a single-period return calculation.

Institutional Portfolio Management

While exam year’s prior to 2012 are no longer available to download from the CFA Institute, you can contact Finquiz for copies of exams used in blog posts. The post from April 5th of last year covers Question #3 on the 2011 CFA exam. Like individual portfolio management, you will always get at least one question on institutional portfolio management and it will always be directly after the individual PM questions. So if you are well-prepared for these two sections (indiv. and institutional PM) you can bank a lot of time and may be able to get easy points on up to a fourth of your exam score.

Another post covers Question #3 on the 2009 CFA Level 3 exam, an institutional PM question covering a company and a foundation.

This post covers Question #3 on the 2009 CFA exam, an institutional PM question for a defined benefit pension plan.

Behavioral Finance

The material in behavioral finance has changed a little over the past several years so it’s a good idea to read through the questions quickly to make sure the content is still relevant to this year’s curriculum. This is a good idea when working through any of these questions, not just those in behavioral finance. This post covers Question #4 in the 2012 CFA Level 3 exam on biases and cognitive errors. Behavioral finance often comes up in the morning section so make sure you are ready to select and explain answers.

Economics

Economics is also often tested in the morning but fortunately a few concepts seem to come up frequently. Learn the various production functions and models in the curriculum and you should be ready. This post works through Question #4 on the 2011 CFA Level 3 exam.

Asset Allocation

The asset allocation material on the exam is mostly conceptual but there are some basic calculations you’ll need to know and may have to perform on an essay question. This post on Question #5 of the 2011 CFA Level 3 exam covers conceptual material on different allocation models as well as the ALM.

Derivatives

This next post covers Question #9 on the 2012 CFA Level 3 exam, a question on options with delta hedging and conceptual material on how gamma changes closer to expiration. I included an important point in the article, budgeting your time on the morning essay section. This particular question is worth 12 points from three parts, or about 3% of your total exam score. That is significant and not something you want to skip over but you have to be realistic about your time as well. For each essay question, the time you spend should correspond to the number of points available, i.e. 12 points equals 12 minutes. If you can do the question in less time it will allow you to spend more time elsewhere. If you haven’t saved up a lot of time on other questions, and feel like it is going to take you a long time to answer one particular question, you may want to move to another questions and come back to the more difficult one.

The worst thing you could do is spend all your time struggling through one or two questions and not have time to get to later questions where you could have easily gotten the points.

Notice that I spend more time on the blog working through the essay questions for individual and institutional portfolio management. Again, it is extremely important that you work as many of the questions from these two topics as possible. Not only will it mean picking up around a fifth of your total exam score, it will give you the confidence you need to do well through the rest of the exam. Being able to complete these two topics quickly will save all the time you need to get through some of the more difficult essay questions.

Contact Finquiz for copies of the 2011 and 2009 Level 3 exams needed to complete linked posts here. The 2010 exam is also available for review.

Good luck, just six weeks left to the 2015 CFA exams!

‘til next time, happy studyin’
Joseph Hogue, CFA

Value of the CFA Charter and Why you Need to Keep Studying

Many of you have been studying non-stop for the CFA exams for months and are feeling a little overwhelmed and maybe even questing if it is all worth it. I thought I would share some of my own experience having the CFA charter as well as testimonials from around the web from other charterholders.

Your own reasons for taking the CFA exams and reaching for the charter may be different but there are some really strong reasons to stick with it. We covered a couple of reasons last week why you should keep studying for the CFA exams even if you fall behind. The biggest reason is that studying for the exams is really no different than the research and professional development you are going to be doing throughout your career. You will need to constantly update your skills and stay on top of recent news to be a good analyst. Mastering the CFA curriculum is one of the best sources you’ll find for professional education.

Three Perspectives on the Value of the CFA Charter

The CFA Institute posts six chartherholder profiles on the website and some really interesting stories of how others have found value in the CFA designation.

Rana Atallah, CFA of Kuwait points to the fact that many jobs are requiring the CFA charter as a prerequisite or at least a preferred status. Something that has been extremely important during recessions, Rana says she has had more flexibility and the charter provides her with more choices in terms of employment.

During the financial crisis, a lot of people found that having the charter meant the difference between keeping your job and being one of those cut. For those looking for a job, having the charter can make you more competitive though you’ll still need to prove yourself through experience and results.

Maria Kahane, CFA of France credits the tough CFA curriculum with helping to keep ahead of the fast­-paced world of global finance. She speaks to the global acceptance and reputation of the charter with, “The charter is applicable wherever you are in the world; it’s the same questions if you’re in Hong Kong, if you’re in New York, if you’re in Paris. An it’s the only certification I know that has this global positioning.”

David Wellinghoff, CFA of Boston was able to use the CFA program to make the move from software engineer to a job in the financial industry…and he was able to do it in one of the most competitive times for employment, 2008. Besides helping to get his foot in the door by showing that he had the technical knowledge for a job in asset management, employers with the CFA designation understood the commitment it took to sit for the exams.

My own experience as a CFA Charterholder

My own experience as a CFA charterholder has been similar to some of the testimonials you’ll read on the internet. I earned the charter in 2011 and have worked as an independent analyst and financial writer since 2012.

It’s tough being an independent analyst (working on your own and selling research independently) and I’ve no doubt that having the CFA designation has helped me get assignments. I’ve had at least four clients over the last few years specifically tell me that they were interested in talking to me when they saw the designation.

Besides the credibility the charter has with employers, I benefited greatly from the breadth of the curriculum. Being able to talk on a variety of topics across different asset classes and investments helps me secure more projects and deliver on the task.

So even if you are struggling with the Level I CFA exam and that light at the end of the tunnel is just a distant speck, keep at it and you will see the benefits. Passing the CFA exams is no easy task but then we wouldn’t be doing it if it were easy. I’ve seen my share of easy certifications in the industry and the money ends up being a waste because they don’t have the same credibility as the CFA charter.

Stay strong, less than two months to the exam!

‘til next time, happy studyin’
Joseph Hogue, CFA

What to do if you fall behind in studying for the CFA exams

A question I start getting a lot this time of year is what should a candidate do if they fall behind in their CFA exam study schedule. There are now eight weeks before the June exam and time is running out to put in the average 300 hours most candidates need to prepare.

Whether you started with plenty of time but ran into challenges or whether you just procrastinated starting your CFA study plan, you may be questioning whether it is worth it to continue from here.

The answer: YES! Keep going!

We’ll hit on a couple of reasons why you should push through even if you don’t think you’ve got a chance of passing the exam. Then I’ll try to suggest some ways to change up your schedule and possibly still pass the exam.

Never stop studying for the CFA exam

The biggest reason to keep studying for the CFA exam, even if you don’t think you’ll pass? Because you are not REALLY studying for an exam, you are studying to be a better analyst and a better professional. You are not going to stop studying once the exams are over. You’ll still need to keep yourself updated on how to analyze and manage assets, it’s just that after the exams you’ll call it “professional development.” The material in the CFA exam curriculum is some of the best you’ll find in the industry. There is no such thing as wasted time studying your curriculum books.

Another reason to keep studying is that you never know how well you will do on the exam. I have seen a lot of candidates struggle and then rationalize putting the books away because they, “probably won’t pass anyway.” This is one-part fear and one-part laziness. If I have to play the part of tough love here I will, “get your butt back in there and keep studying!”

How to change up your CFA study schedule to make up for lost time

So what do you do if you’ve lost some valuable time studying for the exam? First, don’t assume that you can’t still hit that 300-hour study target. With eight weeks left, you could start now and spend six hours a day, six days a week and still make it. Even if you cannot devote that much time every day, you could easily put in 50 or 60 hours in one week if you took it off from work.

Don’t let the time crunch be an excuse to study less or to only hit certain sections.

If you truly can’t get in the time between now and that first Saturday of June, there are still some ways to try getting enough points to pass the exam. The most obvious strategy is to focus on the topics that will get you the most points on your respective CFA exam.

The graphic shows the new CFA topic weights on each exam, updated last July. Topic weights leveled out a little so a few topics no longer dominate the tests but there are still places where you should spend more time.

2015 CFA Exam Topic Weights

2015 CFA Exam Topic Weights

Ethics is still extremely important because it is basically the same across all three exams. Master it on the first exam and you’ll save study time later. It is also used by the CFA Institute to determine a pass decision for candidates that are close to the minimum passing score. Don’t assume you know ethics, make sure you study the questions at the end of the chapter and get a feel for how questions will be asked on the exam.

Balance your time between the “core” topic areas and everything else. Do not completely neglect secondary topics but you should be aiming for at least a 75% pass rate on questions within the core topics. Make use of question banks and chapter questions to gauge how well you are doing. If you haven’t been doing many problem sets yet, you really need to get on it and use these to help guide your study plan.

Besides concentrating on core topic areas, shift your studying to active learning-type activities. They are harder than passive activities like reading or watching a video but you will remember much more of the material that you cover doing problem sets and writing things out.

Designate one day a week as your hardcore study day where you will do nothing but study. Go to a secluded spot, maybe the library, early in the morning and study for at least 10 hours. You can take 5 to 10 minutes off each hour to rest and 30 minutes for lunch. Turn off your phone and the wifi connection on any devices. This will get you upwards of 60 hours of actual studying over the next eight weeks (excluding break time). Putting in another two or three hours for each of five days will get you upwards of another 80 hours. As long as you’re not starting from scratch, that should get you close to the 300 hours.

Remember, 300 hours isn’t a hard and fast rule that you must achieve to pass the CFA exams. It’s just an average amount of time candidates report spending. The important thing is to put in the effort to learn the material. If you master the curriculum, you will pass the exam whether this year or next.

Evaluate why you’re running behind, change up your schedule if you need to and go pass that exam!

Good luck.

‘til next time, happy studyin’
Joseph Hogue, CFA

10 Weeks and 10 Goals for the CFA Exams

Ten weeks left to the 2015 CFA exam and it is time to start really defining what you are going to do to get there. As CFA candidates, most of us are driven and goal-focused people so I thought I would set a challenge for you. Give yourself 10 goals to accomplish over the next 10 weeks to make sure you pass the CFA exam.

Study Goals

1) Read through the six most difficult study sessions of the curriculum, one last time. You may not have time to hit every page of the curriculum again, but you should try to cover your sticking points. Candidates typically do really well on a third of the material, o.k. on another third and then not so well on another third of the curriculum. Figure out where you are having trouble and really hit it hard so you can get at least some of these points.

2) Read the study notes one last time. You should be able to get through the condensed study notes one last time to review all the study sessions. This is going to keep everything fresh so you don’t go into the exams with a long lag between the test and covering any specific material.

5) Master 10 concepts or problems with which you’ve really struggled. Even if you’ve avoided them, you know which parts of the curriculum are giving you real problems. These are the problems or LOS that you have basically given up on and that you’re just hoping do not come up on the exam. Pick one a week to finally master.

6) Do 2,000 more practice problems. Whether from the end of chapter sets or from a question bank, practice problems are one of the best ways to study for the exam. Make sure you really read through the answer to make sure you didn’t just guess correctly and really understand the material.

7) Take at least 6 mock exams. Sit down for a practice run at least six times, using either test bank questions or actual mock exams. Building an average across the six mock exams will help to see where you are on each topic area. Besides helping you learn the material this is really going to put you in shape for the real exam. Sitting for a six-hour exam can be physically taxing and you need to be prepared.

8) Spend a week super-studying! Believe it or not, this was always one of my favorite weeks within the CFA study schedule. Spend a whole week devoted only to the CFA exam. Go somewhere on a study vacation for the best vacation you ever had, something I detailed in a prior post.

2) Spend less time worrying about the exam and know you will pass. The stress leading up to the exam is a killer. Resolve to worry less about passing the exam. Whenever you feel the anxiety building or find yourself questioning how you’ll do, just take a deep breath and relax. Remind yourself all the hard work you’ve put in studying and know that you will pass the exam.

8) Put all your test materials together a week before the exam and check your route to the testing facility days before the exam. Being prepared for the exam doesn’t just mean knowing the material. Have everything ready and know your way to the testing site well before exam day. It’s rare but there are candidates every year that miss the CFA exam because they were late or couldn’t find their identification.

Networking Goals

Anyone that has read the blog for a while knows that I am a big advocate of networking and using the CFA exams to reach out to the rest of the financial community. You can pass all the exams but if you’ve been in a shell for three years, you’re still going to have trouble getting a job if you don’t know anyone.

9) Answer at least 10 questions from other CFA candidates. Getting help when you need it is about being ready to give someone else a hand when they need it. The CFA exams are a great time to help out your fellow candidates.

10) Attend at least one local CFA society event or CFA Institute event. These last few months before the exam are a great time to network because the local societies get a little more active with events and people are still sticking with their resolution to be more active in the community. Attend at least one event and get to know a few of your colleagues.

Don’t stop at just 10 goals. Set mini-goals each week that you can achieve if you push yourself just a little harder. Set larger goals for the year that you can really reach for and make a bigger difference. Don’t get frustrated if you miss a goal, just learn from it and push on.

‘til next time, happy studyin’
Joseph Hogue, CFA

Go Old School for Real CFA Benefits

Reviewing the trend to WhatsApp groups to study for the CFA exams in last week’s post brought up something really interesting. Looking through the posts on the LinkedIn CFA Candidates’ Forum, I noticed an almost complete lack of requests for live study groups.

Of the few requests on the page, most got few responses and nowhere near the thousands of comments received on the calls for WhatsApp study groups.

One candidate posting for a local CFA study group even changed course after receiving no responses, saying he could start a WhatsApp group.

Have CFA candidates completely abandoned live study groups and real human interaction???

Why you still need live study groups

I grudgingly accepted live study groups when I was a candidate. We didn’t have as much choice but there were a few online options as well. Live study groups seemed terribly inefficient at times but there are still some important reasons to seek out other candidates for live groups.

Maybe I’m just an old-timer but live study groups just seem easier and more natural. The conversation is more focused rather than a bunch of people posting different questions at once. I’ve participated in a few WhatsApp groups and sometimes it can seem like everyone is talking at once. With live study groups, you establish a formal start and stop time and can get a little better focus.

With live study groups you get an immediate answer to your question and don’t have to worry about it getting lost in the streaming feed of questions and answers. You can also get a sense of who in the group has done their reading and which candidate’s answers might not be exactly correct. Every year that I would join a live study group, there was always at least one candidate that wasn’t prepared and his answers did more harm than good.

The most important benefit to a live CFA study group will always be networking. These are going to be your peers right in your local market. Unless you plan on moving to another state after you pass the CFA exams, you are going to want to know these people throughout your career. Even if you move away, many of these people will continue to be great contacts.

How to blend the old and the new

As with most things, the answer lies somewhere in the middle. Technology can really help to make things easier but don’t forget the benefits of face-to-face interactions.

Take advantage of the ease of WhatsApp study groups but consider a short meetup of a few local candidates in the group. Use this time in a live study group to go over more difficult sections and review any questionable answers you got from the WhatsApp group.

If you can’t put together a live meetup of local candidates, the next best thing is Skype or other video conferencing option. The idea here is to limit the number of candidates to less than seven candidates so everyone gets the chance to participate.

I would love to hear from some of the millennials in the group about their view on live study groups and WhatsApp. Maybe I just haven’t been exposed to WhatsApp groups enough to really get a feel for them. Have you found them easier to manage that live study groups? How about the advantages and disadvantages of each?

‘til next time, happy studyin’
Joseph Hogue, CFA

Using WhatsApp to Study for the CFA Exams

How times have changed since I took the CFA exams. Even though it was only six years ago that I sat through the Level 1 CFA exam, the change in technology has been dramatic. When I first started studying for the exams, online groups were still growing but not widely used among candidates. Now I see that WhatsApp messaging is quickly taking over as a way to group study.

The top three posts on the LinkedIn CFA Program Candidates forum are all WhatsApp study groups and have nearly 2,800 comments, most of them numbers of people wanting to sign up.

But is a WhatsApp group worth your time? How can you use the messaging service to best prepare for the CFA exams?

The Benefits of a WhatsApp CFA study Group

I’m too old for these new software programs so I talked to a few candidates that are using WhatsApp to connect and study for the CFA exams.

The most common response to the main benefits were:

  • The ease of sharing audio recording and pictures of materials. Users really like the fact that they can share short notes they record or a picture of the material they are studying. This really helps those of us that are not as comfortable with typing out text messages.
  • Others like that WhatsApp can easily share contacts around a group. This is one benefit I had never heard of and could be a new networking tool.
  • Users in CFA study groups liked that WhatsApp can be used across different devices so they can transition pretty easily across their laptop to their phone. Being mobile also helps candidates study on the go and when they have time.

Looking through the comments from happy WhatsApp users, I’m a bit jealous that we didn’t have the service to use when I was a candidate. I like the fact that you can quickly share voice recording and add many people to the group. I think the networking aspect could be something that a lot of candidates do not yet fully appreciate.

And the drawbacks of using WhatsApp for CFA study groups?

Using WhatsApp wasn’t all they hoped for some CFA candidates that wrote back that they preferred more traditional study groups.

  • The size of groups and geographic differences annoyed some candidates. They may be exchanging some really good notes with a sub-group of candidates but had to scroll through all the other comments and talk from other members. Candidates also commented that messages to their questions would appear hours, even days after they posted because everyone is on different schedules for when they study and post.
  • Some have reported that WhatsApp was automatically saving stuff to their memory and slowing down the performance of their phone. This should be a relatively easy fix but is still something to think about.
  • The most common complaint was the cross-talk and unrelated conversations that plagued some groups. It is pretty easy for a couple of candidates to start an unrelated conversation that can pull others into it. Pretty soon, everyone is spending an hour gossiping or just texting and not really studying for the CFA exam.

With the benefits and drawbacks in mind, we can start to put together the do’s and don’ts of using WhatsApp for CFA study groups.

  • Try to keep the conversation relevant to studying for the CFA exams. This is a big one for any study group and can save you a lot of time. Getting to know each other and building that relationship is important for networking but you are there for a purpose.
  • Avoid one-on-one conversations with other people in the group. These are just annoying and detract from the efficacy of the group. If you want to talk directly with someone, call them or send them a private message.
  • Understand that WhatsApp messages are public and do not send anything out that you would not want others to see. I’m always amazed at how quickly seemingly private messages go public and hurt someone or the firm at which they work.
  • Don’t assume that everyone understands your texting abbreviations. Most people understand the common LOL and other abbreviations used but there are those of us that are still neophytes to texting and need things spelled out more completely.

WhatsApp is a tool and like any tool, it must be used correctly. Make sure you are using it for all the right reasons and getting the most benefit for your CFA study schedule.

‘til next time, happy studyin’
Joseph Hogue, CFA

Are You Already Too Late to Start Studying the CFA Exams?

As we get further into March, more candidates are going to start picking up their books and putting those long hours into studying for the CFA exams. If you haven’t started yet, are you already too late? How early do you need to start studying for the exams?

It’s a loaded question to be sure. There are numbers and studies for how much time you need to be successful. As a numbers guy myself, I love quoting the fact that successful candidates spend an average of 300 hours studying for the CFA exams. It is going to ultimately depend on your abilities and how well you prepared for earlier exams.

I’m not going to judge if you haven’t started, or if you don’t plan on starting until later in the month. I’d rather take the time to talk through how you can still make it work and get the good news in August.

300 Hours: A Condensed Schedule

We’ve all seen the surveys by the CFA Institute that claim an average of 300 hours is spent by candidates passing their exam. This obviously isn’t a rule but with all the uncertainty around the exam and your outcome, it’s nice to have a numerical objective to target.

If you did particularly well in a prior CFA exam, maybe scoring in the 70% or above in most topics, then you might not need 300 hours of preparation for this exam. The exams build off of each other so if you built a good base of knowledge at previous levels, current material becomes much easier. Of course, there are also going to be candidates that are just naturally smarter than others and won’t need as much prep time. I wouldn’t assume too much here. Candidates are relatively smart in general and it won’t do you any favors to start getting overconfident at this point in the game.

Whether you need 300 hours or not, it will get more difficult to fit all your study time into your schedule the closer you get to June. If you were aiming for 300 hours, 13 weeks left means you need to put in 23 hours a week. Include the fact that you are sure to have a busy week or two at work or with the family and you may need to devote 30 hours a week studying to meet your goal.

Thirty-hours a week studying is an unlikely goal, especially with a full-time job or a family, so you need to start thinking about optimizing your studying for effect. I am a huge proponent of mastering the material to become a better professional but at this point, your goal is to focus on the material that will get you points and get you to the next exam.

Practice problems and question banks are going to be your new best friends. Working through practice problems, an active learning technique, is generally a good part of your schedule anyway but it becomes even more important at this point. Break your reading up into smaller chunks and work through practice problems more often than you might if you had more time to study. Once you reach 75% on a set of practice problems, you can probably put the topic or reading aside and move on to another. This isn’t going to leave much margin for error but it will help you cover the topics quickly and sufficiently.

You are also going to want to spend more time on condensed study notes and less time on the official curriculum. The Finquiz notes are designed to be used along with the curriculum and you will not want to completely neglect your textbooks, but you may want to skim the longer text to pick out the idea for the learning outcome statement. Once you have the general idea from the curriculum, you can reinforce it with a more detailed reading of the notes.

While it’s possible to start studying for the CFA exams later in March or even in April and still hope for a passing score, I wouldn’t push it too far. Even if you’ve got a heavy workload for the next couple of weeks, start studying in small breaks and then ramp up the time when you’re able. The exams take dedication and hard work but the designation is worth every minute you spend studying.

‘til next time, happy studyin’
Joseph Hogue, CFA

Getting a Job Before or After the CFA Exams

With just 14 weeks before the exam, most candidates are getting started on their study schedule. Looking over the massive stack of books and study notes, it’s easy to get discouraged so I thought I would address one of the top issues on everyone’s mind: Will the CFA get me a job?

We’ve covered the question a couple of times in the past from different angles but it always helps to refresh the information and remind candidates that there is a light at the end of the tunnel.

Turns out, there may be light inside the tunnel as well. That’s because just studying for the CFA exams helps show employers that you value continuing education and professionalism, that you’re not afraid to sacrifice a little time to be a better analyst.

I am not going to lie and tell you that the CFA designation is your ticket to any job you want. It will help but you’ll still have to show that you’re qualified and compete against sometimes hundreds of other jobseekers. The CFA is primarily going to help you in three ways:

  • Improve the way you are perceived by employers. Few think that the designation is an easy stamp on your resume and analysts generally have a good reputation in the industry. Studying for the exams is going to help show your dedication and potential. Don’t get overconfident but build that sense of dedication into your pitch. Let people know that you aren’t afraid to put in the work to be an asset to your employer.
  • Improve your skill set. So many focus on the reputational benefits of the designation that a lot of candidates overlook the fact that they are learning some great material. If you are not currently working in the industry, use the material in the curriculum to develop your own sample reports. Put in the time to make them professional quality and have a mentor look it over for critique. If you can’t get formal experience from a previous job, it’s the next best thing.
  • Offer networking opportunities. Be active in your local CFA society and the job opportunities will come. You first need to know what kind of job you want and how your qualifications stack up but once you’ve got this down you can really start targeting contacts. Before rushing into a conversation about a specific job, talk to people about a related topic. Demonstrate your interest and knowledge of the topic through the conversation. More often than not, if the person is aware of the job opening, they will bring the subject up themselves. If they don’t, send an email afterwards thanking them for the conversation and saying that you would like to talk about an opportunity you found with their company.

Know What You Want and Your Qualifications

It all starts with knowing exactly what type of job you want, in which asset class and in which sector or industry. Your answer can be a little more general starting out but you do need a clear vision for your future. Employers want someone with focus and that will bust their butt to achieve a vision.

Don’t just assume you know what you want. Talk to different people within your professional network, preferably people with that job. This is going to do two things, help you really decide if it is the job for you and help you establish a connection with someone that might be able to help.

Honestly evaluate your qualifications for a position. Just because you are working towards the CFA designation does not mean you are above experience requirements for a job. Again, if you have no experience then you need to put in the time to develop informal experience through your own projects.

Persistence

Getting the right job should take months and should not be easy, unless you have already built up a stellar network and credentials. Spend some time to understand the different roles within the industry and the jobs in which you might be happy. You are going to be spending a lot of time doing this job, upwards of 50 – 70 hours a week in the beginning, so you need to be happy doing it just as much as you need to be good at it.

It isn’t quite as hard to get a job in the industry as it was a few years ago but it is still competitive. Don’t be discouraged if the first few interviews do not land you an offer. It may turn out that taking an earlier offer means you wouldn’t have gotten that dream job that you land in the following week.

Good luck with the job hunt and with your CFA studies.

‘til next time, happy studyin’
Joseph Hogue, CFA

Make Study Groups Fun with the CFA Trivial Pursuit Game

I’ve always had a mixed opinion on study groups for the CFA exams. They can be a great resource, breaking up the monotony of self-study and making the time more enjoyable. They can also be time-consuming between traveling and those tangent conversations too many groups fall into.

Talking to a candidate this week about working in a group, an idea occurred to me on how to really focus your study time and make the study session more fun.

Why not make a game out of it?

Introducing the CFA Trivial Pursuit Game

One of the biggest problems for study groups is that it is so easy for conversation to start on unrelated topics and to eat up your study time. By making a game of it, you have a goal to work to and may be able to stay focused.

The idea for the game is based on the board game Trivial Pursuit. In fact, you might want to grab the Trivial Pursuit game so you can use the board and the playing pieces.

In the game, each person gets an empty playing piece with six spots for the wedges. In the original game, the six pieces represent: geography, entertainment, history, arts & literature, science & nature and sports. In our CFA game, each of the wedges will represent three of the 18 study sessions.

The board is divided into colored spaces, with an equal number of spaces for each color. Players roll a die and move their piece around the board. The color of the space they land on will determine the study session for their question. Instead of trivial pursuit questions, you will need flashcards with questions from each study session in the curriculum. You will need at least 15 flash cards from each study session and more if you plan on playing multiple games. Players must answer a question from each of the three study sessions to collect a colored wedge.

Games of trivial pursuit can easily go about an hour with 30 questions or so during the game. You can play in teams or individually and the game is suited for as many players as are in your group. You can fine-tune the game with your own details like how to determine which of the three study sessions to choose when a candidate lands on each color. Play with one die instead of two so the game will last a little longer.

As with normal use of flash cards, work through the problem and make sure you discuss any incorrect answers.

I’m not calling up Milton Bradley just yet to sell the idea but I think it’s an interesting idea to build into your study plans. Studying for the CFA exams is too solitary at times and you need the interaction and support system you get with groups. By playing a CFA trivia game, you help to keep the group focused on studying and it sets a defined goal for the study period.

Try it out and let me know what you think.

‘til next time, happy studyin’
Joseph Hogue, CFA

4 CFA Study Websites You Will Love After Valentine’s Day

One of the hardest things about studying for the CFA exams is that you’ll have to go much of the journey on your own. There are study groups and boot camps but it is still largely a self-study course.

Outside of studying though you will find a really helpful and interactive community of charterholders and candidates. Through the four websites below, you’ll have the potential to meet professionals at the top of their game and establish some great connections. Maybe its because the program is self-study and you can get a sense of isolation that people go out of their way to interact and help out.

So next time you’ve got a question or just need to talk to someone that has been through the same professional struggles, look up one of the four websites and become a part of a great community.

LinkedIn

There are more than 187 monthly unique visitors across 200 countries on the professional social networking site. The general site is a great place to start growing your professional network and thinking about your career post-CFA exams. Of more interest to candidates is the CFA Program Candidates group, a discussion group of more than 125,000 members. You’ll find just about everything in the group, from candidates asking questions and offering advice to service providers and general analysis.

Analyst Forum

The Analyst Forum hosts group discussions on the CFA exams, careers, investments and even a couple of forum groups for the CAIA and FRM exams. Participation is anonymous so you get some wild characters sometimes but the information is generally very good. There are more than 858,000 posts across the four CFA forum groups so you are pretty much guaranteed to find an answer for any question.

CFA Institute

The CFA Institute website isn’t necessarily an interactive community like LinkedIn or Analyst Forum but it is a great website for exploring the larger world of the designation. Beyond the pages for the CFA program, you’ll find a host of other topics and information. Candidates have access to the JobLine which posts opportunities from employers that know the value of the CFA designation. The Career Centre offers individual assistance from consultants as well as resume creation tools.

Regular readers of the blog will know I’m a big fan of the Institute’s Insights and Learning page on the website. As a member of the community, you get access to thousands of articles, multimedia and models in research. In fact, there is so much information available that it can be a little overwhelming sometimes.

Local societies

It always surprises me that candidates do not use their local CFA society more often. Most larger cities have a society that hosts networking events and professional presentations. While it’s not really a website, I had to include local societies in the list because they can be a great resource for candidates. You’ll need a letter of sponsorship from a member of the local society when you apply for the charter so it’s best to reach out now before you come asking for the favor.

It seemed a little self-serving to include the FinQuiz Blog on the list of CFA websites you’ll love, especially considering that you’re already there, but I just couldn’t resist. Over the last three years, we’ve posted more than 433 pages of ideas and advice on how to pass the CFA exams. It’s been a great time talking with candidates and seeing them achieve the designation and I look forward to another three years and beyond.

We’re coming up on just four months before the exam. If you haven’t started studying yet, you’ll need to plan a pretty aggressive study plan to get everything in. Check out our 2015 CFA study schedule to get your plans started.

‘til next time, happy studyin’
Joseph Hogue, CFA

Getting Side Tracked on Your Way to the CFA

Any kind of independent study program is tough but studying for the CFA exams is even more difficult. You are going to be spending upwards of 300 hours studying for your exam over the next four months. A lot of the material is academic or theoretical and it will be very easy to let your mind wander.

Distractions come in all shapes and sizes and it is hard to say really how much time is wasted needlessly. Consider this, if you are studying for 18 weeks and spend a total of 300 hours then you are studying for about 17 hours a week. That is about six days a week at three hours each day. If you let yourself get distracted and it costs you just 20 minutes each study session, you will have wasted more than 100 minutes a week and nearly 40 hours total over the 18 weeks!

Don’t Sweat the Little Things

There are really two types of distractions when studying for the CFA exams. Short-term annoyances that take your mind off the material or put you on a digression, and the bigger distractions that deal with real decisions and sacrifices.

The smaller distractions are usually fairly easy to counter with a change to your studying or making a rule for yourself. The real distractions, the things that really matter in your life but that need to take a back seat while studying, are harder to confront.

If you are as passionate about finance as I am then you always want to know what is happening in the markets and in the financial press. This is a great hunger to have when you are working and integrating news into your analysis, it’s not so great when you are trying to stay focused on the exams. If you are reading from the curriculum then this problem can be limited by keeping away from the internet or a television. Sometimes you have to be at the computer to work a question bank or other digital materials.

If you find yourself surfing around the internet while you are supposed to be studying, there are some applications that might help. The website HackmyStudy shows several applications or temporary changes to your computer that will block certain sites from your browser or disallow the internet all together.

While CFA-related blogs can be a great resource for your exam prep, especially this one, they can also be a huge distraction while you are studying. There are really two problems here. First, the forums and blogs can be a distraction while you are studying. You might be tempted to check on a post to which you replied or to look for an explanation to a learning outcome statement. The problem is that once you are there, it is easy to look around for hours and never get back to studying.

The second problem with CFA-related blogs is called meta-studying. This is studying about studying and the exams in general. You are meta-studying right now by learning about distractions to studying, a little ironic but anyway. Obviously you need to know about the exams and learning how to efficiently prepare can save you a lot of time later, but there is a limit. I have talked to candidates that were so unsure about the exams that they spent all their time reading blogs and hanging out on the forums and very little time actually studying for the tests. Spend an hour a week checking in on the CFA blogs and forums and then get back to real studying.

Noise can be another minor distraction that ends up costing you a lot of time. It breaks your attention and you end up having to review stuff you previously read just to get back into your flow. The best way to handle noise distractions is to find your own private place to study. It might be a pain to go to the local library instead of studying at home but you will save a ton of time by avoiding multiple distractions. Some libraries may even offer private study rooms where you can close the door and won’t be bothered by the general public.

Food was a big distraction for me while studying for the exams. Not because I have any kind of an eating problem but because it is an easy excuse to take a break. You are doing well studying and suddenly the idea pops into your head, “hey, I think I’ll go get a snack.” Even if your intention is to get the snack and eat while studying, you’ve still distracted yourself and lost at least 15 minutes. Those little breaks add up if they happen every time you study. Take a five minute break every hour to stretch and relax, then get back to work. Every few hours, I would suggest taking a longer 15-minute break to refresh yourself. Other than those two scheduled breaks, make a commitment not to stop for anything.

Spend 15 minutes thinking about the minor distractions that waste your time. Don’t spend too long, it could be a distraction in itself. Then make a solid commitment or do what you need to avoid letting those distractions break your attention while studying.

The “distraction” of friends and family is the big one you have to deal with while studying for the CFA exams. I use the quotation marks because those closest to you are not really a distraction but you do need to learn how to juggle the exams with your social life. I wrote a post last year that offered five tips for finding more time without sacrificing too much of your family life.

  • Lunchtime and other quick breaks – Study for the exams when you have short breaks throughout the day like at lunch or while waiting for something. Flash cards are a great resource because you can carry them around and use them even when you’ve got just a few minutes to spare.
  • Travel time – If you have the opportunity to take public transportation, it can provide a solid hour of study time while you let someone else do the driving.
  • Learn to be a night owl – You may just have to learn to sleep less for the next couple of months. I love sleep but cut back to about five or six hours a night while studying for the exams. That extra two hours a night studying after everyone else has gone to bed may be all you need.

Whether you are dealing with little distractions or big ones, take a quick look at how much time you lose while studying and commit to saving that time. It’s a tough four months ahead of you but the right focus will get you to the exam with all the confidence you need and it will all be worth it.

Good luck candidates. Now get back to studying!
‘til next time, happy studyin’
Joseph Hogue, CFA

10 Minute Review of CFA Ethics and Standards

Even with the change to topic area weights on the CFA exams this year, Ethics and Professional Standards remain extremely important. It is a lot of material but fortunately doesn’t change much from year to year and you’ve got a real opportunity to carry over some points to each exam if you learn it early.

Before we get into a quick review of the key points I want to stress one thing: Do NOT underestimate the topic area and the need to work practice problems! The topic is worth between 10% and 15% of your total score on each exam. A lot of candidates scan the readings and then neglect doing any real studying or problems.

The problem is that the Ethical and Professional Standards all seem pretty obvious. Everyone knows you shouldn’t take advantage of clients and trade on inside information. Candidates look at the material and think, “I’m a pretty ethical person. I don’t lie, cheat or steal. The correct answer on the exam will be obvious to me.” Then they get to the exam and have a heart attack!

The CFA Institute is surprisingly good at designing questions where two of the answer choices seem possible, even to someone with a good moral compass. That is why it is absolutely a must to work practice problems in the topic area. Learn how the Institute writes out the vignette and what to look for in the correct answer.

The Professional Conduct Program (PCP)

The PCP is not usually a big focus of the exams but you might get a question. Remember where the complaint can come from: media scrutiny, exam proctors, written notes or self-disclosure. Understand that while your subordinates might not be held to the Code and Standards, a supervisor with the CFA designation is still responsible for their actions.

After an inquiry is started, information is collected and one of three outcomes occurs. There may be no sanctions recommended, a cautionary letter could be issued or the inquiry is sent to the next level for further work. You can accept or contest the outcome and request that it be escalated to a panel.

Components of the Code

I’ve always used the acronym SPAMED to remember components of the code. The truth is that you probably won’t get a question on one of the six codes but will instead see questions on application of the Code and Standards.

  • Subordinate personal interests
  • Promote the integrity of and uphold rules governing capital markets
  • Act with integrity, competence, diligence and respect
  • Maintain and improve professional competence
  • Exercise reasonable care and independent judgment
  • Demonstrate ethical practice and professionalism

I’ve run through the standards below. This is a very brief overview and hits on just the bullet points. You still will need to read through the curriculum to get the detail and make sure to work those problems.

Standard I Professionalism

Remember that you are bound my the most strict law between the code and local laws. If the local law allows something that the code and standards do not, you must still follow the code and standards. Ignorance is no excuse either. If you should have known that an action was breaking the law or was unethical, then you could be punished for it. This is an important concept in the supervisory section.

Know the procedure for informing supervisor, firm and compliance about any activities. You are not required to inform law enforcement, unless the law requires it, but you do need to disassociate from the firm and activities if they are not corrected.

Independence & Objectivity

  • Pay your own expense to meetings and other trips when possible. Do not accept anything more than a token gift from a third-party. The Institute does not put a dollar value on what is considered token but a non-token gift on the exam will probably be something costing more than a few hundred dollars.
  • Issuer-paid research must be disclosed and should only be on an upfront fee. Ratings cannot be tied to the payment or promised in any way.

Misrepresentation

  • No returns can ever be guaranteed unless the investment is backed by the government or an institution backs losses.
  • Informational sources must be directly credited and not listed generically as “analysts” or “experts”

Misconduct

  • You must not engage in something, even if it is legal, that may reflect poorly on the CFA designation or on your firm. Drinking alcohol is the most often used example. You are legally-able to drink but if excessive drinking leads to a loss of confidence then it could be punishable under the code.
  • Civil disobedience is not misconduct, i.e. protesting

Standard II Integrity of Capital Markets

Use of material, non-public information (insider trading) is a big issue and you could see questions on the exam. Remember that the info must be BOTH material and non-public.

  • You can use the mosaic theory to use non-public/non-material information or material/public information
  • You must not ‘cause’ others to use material, non-public information either, i.e. giving someone a tip about the info.
  • Company conference calls and meetings are not a public release and should be made public at the same time.

Standard III Duties to Clients

Remember the chain of priorities for duties: Client, Firm, Self

Fair Dealing

  • All clients must be treated fairly and equally. You can offer different service levels but they must be disclosed and available to everyone
  • Allocations should be on a pro-rata basis and only to suitable portfolios
  • The method of communication is important. You cannot send a traditional mail update to some and make a personal phone call to others. Contact methods must be uniform across all clients.

SuitabilityUnderstand each client’s risk tolerance and return requirements, along with objectives and constraints to determine suitability. Investment suitability should be judged in the whole portfolio context.

Performance Presentation must be (FACT) Fair, Accurate, Complete and Timely

Standard IV Duties to Employers

Loyalty

  • You must not take any records, files or other company property when your contract is terminated with an employer. Besides being punishable under the code, you will also likely be criminally prosecuted. You can reconstruct the material from memory but cannot use any tangible records.
  • Any preparation for another job or information can be made before leaving your current employer but must be done on your own time.

Additional Compensation

  • You must get written consent from all parties before taking additional compensation that could create a conflict with your employer. It must be in writing and from everyone (employer and other third-party).

Supervisor Responsibilities

  • This is another big one on the exams but can be confusing. Understand that supervisors must have procedures in place so they know what their subordinates are doing. Again, not knowing is not an excuse if appropriate policies would have uncovered the activity.
  • You must inform the company in writing of any insufficient compliance policies and decline a supervisory position until the procedures are improved.
  • You are responsible, under the code, for the activities of non-charterholder subordinates as well

Standard V Investment Analysis, Recommendations and Actions

  • You must not rely on outside information unless it can be verified and you trust the reliability of the source.
  • You can be a part of a group and not agree with a recommendation but you should document your disagreement

Communication with Clients

  • You must distinguish between fact and opinion when talking with clients or potential clients
  • A statement of the basic factors and process you used to arrive at a recommendation must be disclosed

Record Retention

  • Keep all records and analysis for seven years
  • Records are the property of your employer and its responsibility if you leave the firm

Standard VI Conflicts of Interest

  • You must disclose any material ownership or ownership of anyone living in your household. The Institute does not put a dollar amount on ‘material’ but it will likely be more than a couple thousand dollars or a significant control over business decisions
  • Remember , disclosures must be made for any actual or potential conflicts

Priority of Transactions

  • Remember the priority list: Client, Firm and then Self. Clients should get all requested (if suitable) shares, followed by Firm and yourself only if there is enough leftover.
  • Family members not living in your household should be treated fairly as clients. Only those living with you are considered related-parties and treated as yourself.
  • Oversubscribed investments should be distributed on a pro-rata basis in priority order (clients first)

Referral Fees

  • Any compensation for referral must be disclosed, including non-monetary benefits

Standard VII Responsibilities of charterholders and candidates

  • The CFA designation can only be used by a person and cannot be used on company letterhead or attached to the company’s logo.
  • Your dues must be up-to-date and you must sign the annual standards compliance to use the designation

Memorizing the Code and Standards is not enough. You need to understand the intent behind each key point and be able to apply it given a situational problem. Again, the best way to learn this is by doing practice problems. It isn’t too difficult once you’ve learned how questions are asked and the reasoning behind the correct answer. The great part is that if you learn this material while studying for the CFA Level I exam, you’ve pretty much got 10% of free points on the other two exams.

‘til next time, happy studyin’
Joseph Hogue, CFA

Your 2015 CFA Study Schedule

The end of January marks the unofficial launch of the 2015 CFA Exam Study Season. You’ve got just four months to soak in all that great information, shunning friends and family alike to get one step closer to the designation.

While many will choose to wait a little longer, despite the considerable risk of waiting too long, the 18 weeks you’ll have starting February is just enough for a low-stress study schedule. Eighteen study sessions and 18 weeks left…seems like an obvious choice to me.

Changing up the Schedule

I posted last week on how the changes to the 2015 CFA curriculum could change your study plans for the exams. While most years do not see enough changes to the curriculum to really make a difference, we saw some big changes to the upcoming June exams. Besides a change to some of the readings at each exam level, the CFA Institute changed the topic area weights as well.

For the most part, changes to topic weights leveled the playing field for the topics in the exams. Those topics that always got a big weighting were mostly downgraded while previously less important topics picked up a few percent of your total score. This may mean that you need to spend less time on any one or two topics and spread your study time out evenly. No longer can you spend all your time on a focus-topic and rely on a big win there to cover a potentially lower score in other topics.

Fight Burnout with Diverse Resources

One of the biggest challenges you’ll face in your study for the CFA exams is burnout. An 18-week study schedule requires around 15 hours per week of studying to even approach the average 300 hours most candidates spend studying. After a full day of work, another few hours of reading and problem sets can seem like capital punishment.

Of course, you’ll enthusiastically dive into your CFA texts for the first couple of weeks. You’ve had months to relax and now you are ready to dive back into the professional course. It’s usually in the fourth or fifth week that candidates start feeling the sting of burnout.

Everyone faces burnout and you’ll need some strategies to control it when it happens but there is one way to delay or minimize curriculum fatigue, mixing up the resources you use in studying.

Anybody trying to read the 1,000+ pages of curriculum every day and doing nothing else is going to get burnt out very quickly. The CFA curriculum is written by some of the best minds in finance but can get extremely dry and academic in some places. You need to be able to put the books down and still study for the exam.

One of my favorite resources for studying is flashcards. I highlighted how to make your own flashcards in another post but the process is pretty easy. The idea in making flashcards is that you first get exposure to the problem by writing out the card, then later by working the problem. Make sure you write out a full question problem just like you’d see on the exam. Flash cards are great because you can carry them around and get some valuable study time in whenever you’ve got a couple of minutes.

Study groups are another good resource to break up the monotony but can be time-consuming. Keep your group small, less than five or six people, and make sure you stay on task. Talking about your job or other things is fine but save it for after the study session. Online study groups have been popular lately but I still prefer in-person groups. They are easier to manage and you get the chance to network with other professionals in your community.

Studying for the CFA exams is all about working practice problems and they are a great way to break up your time from reading. Stop to do some practice problems for every 30 minutes of reading. It will help reinforce the concepts and avoid going into that zombie-like reading trance where you really don’t remember what you read.

Videos are a great way to use another medium to help explain tough concepts. Almost every concept on the exams has a YouTube video that will help walk you through it. I would look for shorter videos that just help with the general idea. You don’t want to waste 20 minutes on a video that really wasn’t worth watching.

FinQuiz offers condensed study notes for each CFA exam. The study notes are unique from other providers because they are meant to be used in conjunction with the curriculum instead of replacing it. Don’t expect study notes (from any provider) to be able to cover all the curriculum material. Read the curriculum and use study notes for review.

CFA Study Schedule Blueprint

After six years, three as a candidate and three writing about the exams, I’ve crafted a pretty good blueprint for a CFA study schedule. You’ll want to modify your own schedule to fit your needs but this blueprint works pretty well for most.

I’ve found that a five- or six-day schedule is the best since it allows for at least one day of rest and doesn’t require long hours of studying. If you plan for a five-day schedule, stagger your days off so they are not together.

I always like to make one study session the focus each week and another study session a secondary review. By including the secondary study session, you get a chance to review the material you studied in the prior week. I’ve seen a lot of candidates go the entire 18 weeks studying one session per week and never reviewing, only to find in June that they’ve forgotten the material from the earliest study sessions.

A good plan might go something like:

Day 1: Reading curriculum
Day 2: Review study notes for the previous day’s curriculum and practice problems
Day 3: Make flashcards of most difficult material and review the focus study session
Day 4: Practice problems on focus study session and review study notes on secondary SS
Day 5: Practice Problems on secondary SS and study notes for focus study session
Day 6: Take a practice test on both study sessions from question bank or practice problems

This format gives you exposure to each study session twice and helps emphasize actually working the problems and testing yourself. A review of your flashcards is not included in the schedule because they can be reviewed during the normal course of your day. Make it a point to carry some flashcards around with you and review them quickly when you have a minute or two.

I’ve gotta say, even though I’m not a candidate anymore, I am excited to get the 2015 study season underway. It is going to be a tough road along the way but it is so very much worth it. You are going to be opening yourself to a whole new level of professional knowledge. Stick with it even when you feel burnout creeping up behind you and you’ll make it through to June. Start early enough and stick to a sensible plan and you’ll go into the exam with the full confidence that you’ll pass.

‘til next time, happy studyin’
Joseph Hogue, CFA

How do Curriculum Changes affect your CFA Study Plan?

For the most part, your CFA study plan probably hasn’t changed over the last few years. The curriculum usually only changes by minor details from year-to-year and the format of the exams remains the same. This year brought the biggest curriculum changes I’ve ever seen as well as changes to topic weights.

Is it time to reassess our basic study strategies?

Changes to the 2015 CFA Curriculum

We detailed changes to the CFA curriculum across each exam in August of last year. The Level 1 CFA curriculum saw six readings dropped and added three new readings. Ten readings were dropped from the Level 2 CFA curriculum while six were added. The Level 3 CFA curriculum saw relatively minor changes with two dropped readings and one added reading.

While these changes will certainly affect your study plans, especially if you are repeat tester, it is the change in topic weights that will drive the biggest transformation in your study.

In the Level 1 and Level 2 exams, almost all the changes made bring the topic weights closer together. The topics that have historically been core areas for focus had their weightings come down slightly while secondary topic areas rose in importance.

On the Level 1 CFA exam, Fixed-Income (one of the most heavily weighted topics in the past) dropped to 10% of the test while historically less influential topics on the exam like Portfolio Management and Alternative Investments both increased in importance.

On the Level 2 CFA exam, Financial Reporting and Equity Investments (the two most important topics in the past) both saw their potential weightings decrease. Fixed Income and Ethics both increased in importance while Alternative Investments decreased in weighting.

The topic weights for the Level 3 exam did not change much either so there will probably not be much need to change your study strategy.

2015 CFA Exam Topic Weights

2015 CFA Exam Topic Weights

Changes to our Basic CFA Study Plan

The format of the exams has not changed. The CFA Level 1 exam is still 240 multiple choice questions, each with three possible answers. The CFA Level 2 exam is still 20 vignettes of six multiple-choice questions each for a total of 120 questions. The CFA Level 3 exam is still an essay in the morning followed by 10 vignettes of six questions each in the afternoon.

The change to your study plan will come from the fact that you may no longer be able to focus on just a few topic areas. Portfolio Management, Alternative Investments, Derivatives and Corporate Finance are still secondary topic areas in the Level 1 exam but now there are six topics that each account for a tenth or more of your total score. Every topic in the Level 2 exam has the potential of being a tenth or more of your total score and you’re guaranteed to see at least 10% of the questions in four topics.

Ethics continues to be a very important topic area, especially since the readings really don’t change for each level so you can really get a head-start by focusing on it for the first exam. Financial Reporting continues to be an important topic as well though a topic weight isn’t given for the third exam. While their importance may be lower in the first exam, Equity and Fixed-Income Investments continue to be relatively important to the final two exams.

The CFA exams saw some of their biggest curriculum changes in years for 2015 and you should take it into account when planning your study schedule. While many of the important focus topics are still relatively high-value, you might have to spend a little more time on other topics. Check out the changes to readings in our post for each specific exam for clues on what subjects within the topics are being favored.

‘til next time, happy studyin’
Joseph Hogue, CFA

The Ultimate Guide to the CFA Exam

I talked to a candidate the other day that was a big fan of the Finquiz blog but had one complaint…there is just so much posted that it’s difficult for new readers to look at everything.

I heard him loud and clear and decided to post this roundup of some of the best posts we’ve ever written on the blog. Some of the posts are specific to different levels of the exams but most will apply to all candidates. The posts cover the range of things you’ll need to be successful on the exams from basic strategy to general how-to and motivational.

Where to Start

Our basic strategy posts are always a good start when first coming to the blog. I usually update these posts every couple of years but the basic strategy for passing each of the exams does not change much. I posted a basic strategy for passing the exams in general that is a great overview to get you started.

For passing specific levels of the CFA exams, check out our strategy on passing:

Our most popular posts over the last year have been those detailing the changes to the 2015 CFA curriculum. This year, the curriculum has undergone the most drastic changes I’ve ever seen in more than six years. Not only have readings been added, deleted and modified but the topic weights in the exams have changed. Different topic weights mean a different study strategy because you’re more likely to see questions from different topics than you saw in previous years.

Check out the changes to the 2015 CFA Level I Curriculum
Check out the changes to the 2015 CFA Level II Curriculum
Check out the changes to the 2015 CFA Level III Curriculum

Most Common Candidate Questions

There are some questions that every candidate has and they are the most often we get here at FinQuiz. Below are some of the posts I’ve written to address your most common questions about the CFA.

Probably the most popular question surrounds the idea of using the CFA designation to get a job. A lot of candidates incorrectly assume that the exams and the designation is a golden ticket to any job they want. Nearly 11,000 candidates have viewed our post, “I’ve passed the CFA Level 1 Exam, Why don’t I have a job?” You can certainly leverage your CFA progress into getting a job and it will help but you have to follow traditional steps like networking and outreach.

Candidates are always asking which CFA exam is the most difficult. I fully understand the question since I asked it myself but does it really matter? You have to take all three exams anyway but I guess it helps to know what is coming in each exam. For me, it was the second exam but many have more difficulty with the third exam.

After the exams each year, I often get a lot of questions about the passing score. The CFA Institute does not publish the minimum passing score needed but there are guidelines you can use. There is also one key trick that I use to work my scores into a personalized study strategy.

General Advice on How to Pass the Exams

Many of our most popular posts are those that offer general advice that covers passing all three exams. Many of these posts address emotional and mental roadblocks to passing the CFA exams.

I showed candidates how to remember 90% of what they studied in one of our very first posts, viewed by nearly 8,000 candidates. Active learning techniques are not as easy as passively reading the curriculum but they are an absolute must for your exam prep. Another post on active learning included some specific action steps that you can follow to pass the exams.

Read this if you absolutely must pass the CFA exams! This was a short post but included four of the most important points to passing the exams and sums up the key things to remember.

Another of our first posts revealed the person that is most likely to keep you from passing the CFA exams. Resist the temptation to second-guess your commitment to being a better professional and follow these steps to stay on the right path.

I offered a tortoise and hare study plan for passing the exams a couple of years ago and candidates really appreciated the two different perspectives. I prefer the slow-and-steady approach to studying but some like a short-and-sweet approach.

Motivational

Some of the posts that I have had the most fun writing are those where I talk directly to candidates about the exams and help them get through this tough challenge.

Having passed the CFA Level III exam more than three years ago, there are things I wish I could do differently and things I wish I knew before starting the CFA exams.

Easily my favorite post was written when proctoring a mock exam in 2012. I realized that there is an overlooked benefit to the CFA exams that most people don’t realize. The CFA exams are truly the great equalizer in our industry and give everyone the opportunity to succeed.

If you’re looking for a specific topic or idea, remember that you can use the search box at the top-right of the screen to find posts. Check out the Popular Posts on the right-side of the screen for more of our most recommended articles.

Just a few weeks until the 2015 CFA Exam Study Season kicks into full gear, get ready!

‘til next time, happy studyin’
Joseph Hogue, CFA

CFA Level 1 Exam Results and How to Deal with a Fail

The time between taking the CFA exam and the release of results can be excruciating. The CFA Institute has not yet released the estimated date of December exam results yet but you’ve likely still got a couple of weeks to wait.

Results of the December CFA exam are usually emailed to candidates later in January, around the second to last week. For some reason, the Institute generally releases results on a Tuesday so I’m guessing that results will be out on the 20th this year. Emails will start going out at 9am eastern standard but it may take several hours to receive your email.

How can you use the exam results to prepare for your next exam? How could you possibly deal with the results if you end up in one of the fail bands?

Decoding Exam Results

Results will look like the graphic below with your percentage range in each topic within one of the three ranges. The graphic is actually from my Level 3 exam results but the format is the same for all three exams (I didn’t save my exam results for the Level I which seems a million years ago).

cfa exam resultsThe asterisks mark the range in which you scored. The CFA Institute does not release an exact score or a minimum passing score for the exam but you can still use your results for some useful information.

I scored greater than 70% in five of the eight topic areas on the item-set portion of the exam and between 51% to 70% in the remaining three topic areas. If these were results of a Level I exam, I would look closely at the three topic areas and their relative weight on the Level II exam.

For example, I know that Equity Investments is a very important part of the second exam and is worth between 15% and 25% of your total exam score. I might want to consider spending some time before my CFA Level II studies to review some of the Level I equity material to make sure I have a good base of understanding.

Check out the curriculum changes to the CFA Level II 2015 exam for a review of topic weights and changes to the readings. This year marked an uncharacteristic change to the topic weights across the exams so you’ll want to pay special attention to the importance of each topic area. We published a basic strategy for the Level II CFA Exam which you might want to review.

How to deal with a CFA Exam Fail

Getting the email from the Institute saying you failed the exam is like getting punched in the gut. Your stomach sinks, you start to feel queasy and some even break down into tears.

You will hear all kinds of excuses and complaints about the designation and the CFA Institute after results are released. Some blame the questions, others try to make themselves feel better by saying that the designation doesn’t matter to their segment of the industry. These are all common coping mechanisms to deal with the results but you need to resist the urge. Your reasons behind taking the exam and the value of the designation have not changed and neither should your attitude.

Resist the urge to get mad at yourself or at the CFA Institute. Half or more of the candidates that take any given exam do not pass. The exams are tough and that is what makes the designation so valuable and will be a source of pride when you do pass.

Take an honest look at how you prepared for the exam and ask yourself where you could have improved your efforts. For most candidates, it is a matter of simply not devoting enough time to study the curriculum. Others may have done really well in a few topic areas but so poorly in core topics that it put them in a fail band. Either way, use the information in your exam results to see where you need to improve.

On the bright side, having taken the December exam means you are still able to register for the June exam and have a good chance at success. The Institute does not publish pass rates for repeat test takers but I have to believe that it is much higher than the general pass rates.

Contrary to what you may be thinking, it is not really too difficult telling friends, family and coworkers about the exam results. If not passing an exam is the worst thing to happen in your life, you are either very sheltered or not challenging yourself enough. Your friends and family understand that the CFA is important to you and will go out of their way to empathize.

If others in your office have taken the exam, they will know full well how difficult the test is and will not hold it against you. Unless you completely blew off studying, there are bound to be some topics in which you did well and can highlight your success in those areas. Take an honest approach and admit that you just have to work a little harder in the topics where you didn’t score as well.

We’re always excited to get word from candidates on how they did so drop us a note or a comment on the blog when you get your exam results. We’re going to be kicking the June 2015 study season off pretty soon and getting back into the curriculum. Let me know if there is anything in particular you want to see covered.

‘til next time, happy studyin’
Joseph Hogue, CFA

Happy Holidays and a Prosperous 2015 from FinQuiz

Another year has almost passed and I just wanted to wish all of our readers Happy Holidays and a prosperous new year. We’ve been running the FinQuiz blog for nearly three years now and the support from candidates has been amazing. Hundreds of thousands of candidates have clicked through to the FinQuiz blog and we’re looking forward to continuing that success with great CFA exam advice that will bring hundreds of thousands more to the blog over the next couple of years.

Our Community of Candidates is the Best Holiday Gift

Since 2012, more than 200,000 people have clicked through to the Finquiz blog and viewed more than 600,000 pages of CFA study tips and curriculum notes. That loyal and regular support by candidates like yourself is the best holiday wish we could imagine.

Almost as great as the sheer number of candidates that have visited the blog has been the reach to all corners of the globe. The blog has been accessed from 201 countries from Albania to Zimbabwe.

The feedback from CFA candidates has been great and has really motivated me in our weekly blog posts. Not only have candidates shared their success on the exams but have also provided valuable feedback that helped us improve the notes and question bank.

“I managed to pass my Level 3 exam this round and the team at FinQuiz was instrumental to my success. Thanks to the wealth of questions available in your question bank, my item set scores are significantly better in this attempt. Joseph’s blogs are not only a source of inspiration, they also helped me in pacing the materials week by week.” Kah Juay Lee, CFA (Passed CFA Level III, 2013)

Of course, the blog is our way of communicating with candidates and putting out the most important information on the exams but it all is in support of our unique system of curriculum notes and exam prep packages. The unique system of notes rather than curriculum substitution has helped candidates beat the abysmal pass rate across the exams.

“Without the help of FinQuiz, I do not believe I would have scored >70% in 8 of 10 areas. FinQuiz tested the difficult areas that other question-banks will not cover. This boosted my confidence and clearly helped me on exam day.” David Young (Passed CFA Level II, 2010)

Upward for 2015

We’re not resting on our past successes. We have some great plans for 2015 and ideas for tips and products that will help every one of our candidates pass the CFA exam. We will start leading up to the June 2015 CFA exams in June with a recap of the curriculum changes and your basic strategy on the exams.

Each week on the blog, you’ll find all the best advice and tricks to get the most points possible on the CFA exams. We’ve tried to make the blog relevant to candidates even beyond the exams with regular posts on career advice, networking and using the designation to the fullest.

We’re always here for you and love to hear from candidates. Send a note if you have any questions or comments and keep clicking through each week for more blog posts.

‘til next time, Happy Holidays!
Joseph Hogue, CFA