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

Will the CFA Charter Get Me a Job?

Probably the most pressing question on candidates’ minds during those three years of studying for the CFA exams is, “Will the CFA charter get me a job?” It’s definitely the most common question, in its various forms, I get from readers.

There are a lot of things that being a CFA charterholder will help you to do and the benefits go well beyond landing a job but the question itself is a tricky one. Asked outright whether you will get a job solely based on being a charterholder or having passed one or more of the CFA exams, the answer is obviously in the negative. But if you rephrase the question a little or ask what the CFA can do for you, then I think you’ll find the answer much more positive.

What the CFA will Not Do for You

First, the charter or having passed any of the CFA exams will not guarantee you a job. After all the time and dedication it takes to pass the exams, I think a lot of candidates are disappointed that the charter is not a golden ticket that opens all doors. You have to remember a couple of things, even being a charterholder only means you are one of more than 125,000 others around the globe. Your hard work and dedication sets you apart from many but does not make you unique.

While you and other charterholders know exactly what kind of rigor goes into earning the CFA charter, others may not have the same appreciation. The CFA Institute does a good job of supporting the CFA brand and marketing it to organizations but employers will not stand up in awe over your accomplishment.

So, unfortunately, just being a charterholder is not going to get you a job in analysis or asset management.

What the CFA will Do for You

Holding the CFA charter or having passed the exams will help your job prospects. Given two candidates with relatively similar experience, most employers I’ve talked to have said that they would prefer someone with some study in the CFA curriculum. Many employers have told me that they would even choose a CFA candidate or charterholder over another job candidate with slightly better experience on the basis of what the charter implies.

Holding the charter or being a candidate for the exams opens up a network of comradery as well. Other charterholders are not going to jump through rings of fire to help you but you do share a sense of accomplishment and that counts for something. I would say that I generally trust other charterholders a little more than other analysts and that I feel they are more reliable in their analysis. Of course, all this is my own opinion and I’m probably a little biased as a charterholder.

Let’s not overlook the most important aspect of being a CFA charterholder, affirming your commitment to being a better professional. Putting more than a thousand hours into earning a professional designation is no small accomplishment and is a decision that needs to be based on more than just, “Will it get me a job quick.” Spending half that time networking would land you several job offers so pursuing the CFA charter means more than just the job prospects it brings.

Wondering the value of all those hours spent studying is a legitimate concern and a necessary question before you begin studying for the CFA exams. There are a lot of benefits, both tangible and intangible, but it is not for everyone. Do you need the CFA charter to be successful? No. Will the CFA charter guarantee you success? The answer here is also no.

Will the CFA charter help make you a better professional and open up a world of opportunities to your career? Yes, if you put in the time to master the material and use the charter for everything it can offer. After you’ve made the decision to pursue the CFA charter, commit to finishing it. Don’t let doubts and naysayers get you off course. When you’re ready to use the charter to improve your career choices, understand exactly what the charter can help you do and use other resources within your search.

Ask the right questions and do a little networking and I think you’ll find all the answers are very positive.

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

Studying for the CFA Exam without knowing your studying

It’s not even January yet and the last thing many of you want to think about is studying for the CFA exams in June. I always liked to start early and set a relaxed study schedule but I’m not going to tell you that you need to get busy studying immediately.

What I can tell you is that there is a way you can actually keep your skills fresh while waiting for later to really start studying. It’s a little thing I like to call stealth studying and everyone should work it into their daily routine.

CFA Institute Resources

Your first stop will be some of the great resources on the CFA Institute website and the Enterprising Investor blog. The Institute’s Publications & Multimedia page sports a seemingly infinite amount of research and resources. Resources are indexed by asset class and topic area with separate sections for career advice like networking, management and current topics. A lot of the resources are quick presentation-type material so you can look through it within a few minutes to get the general idea. It’s a great way to generate ideas for your own work.

Must Read Books

The Enterprising Investor blog also offers regular reviews for books related to the industry. Within the reviews, you’ll find a mix of educational books to further your skills and books that will entertain. I just finished Alan Blinder’s, “After the Music Stopped,” after reading the review on the site and really enjoyed the insightful analysis of the financial crisis.

Of course, Graham’s timeless book, “The Intelligent Investor,” is always a good start for those that haven’t yet read it. After months of detailed and rigorous study of the CFA curriculum, it’s nice to sit down with a relatively straight-forward and simple tome.

Networking with colleagues

Readers of the blog will know that I’m a big advocate of active involvement in your local CFA society. Most likely, you are going to want to approach these people for a job opportunity in the future so it’s best to get to know them first. Networking with other candidates and charterholders serves another function, getting some of the best insight from some of the best minds in the business.

So stealth studying isn’t really anything new, it’s just keeping involved in your industry. Reading books, whether for information or entertainment, watching presentations from other professionals and connecting with others in the field will all help to keep your mind sharp.

Whether you are working in investment analysis and management yet or not, it’s best to start thinking of yourself as a professional. You’ve committed to one of the most difficult professional designations out there and just the Level I CFA curriculum puts you well on your way. As a professional, it’s also best to stop thinking in terms of a period to study for the exams and the rest of the year in which you get to relax. Being a professional is about constant improvement and keeping up to date with the industry.

The resources above will not only help you prepare for your next CFA exam but will help you become a better professional.

‘til next time, happy…studying?
Joseph Hogue, CFA

Relaxing after the CFA December Exam – but for how long?

Congratulations to all the candidates that sat for the CFA Level 1 exam last Saturday. As I wrote in last week’s post, you’ve already shown your worth in the perseverance and dedication to professionalism and I welcome you to our group of CFA candidates and charterholders.

Many of you are now looking to the next step, the CFA Level 2 exam in June and wishing you had enough time to relax and reconnect with friends and loved ones.

There are advantages and disadvantages to jumping right back into the curriculum and you might just decide that you have more time to relax than you thought.

Sitting for the June exam after December’s Test

As December candidates, you’ve got a pretty unique opportunity to finish up the CFA exams earlier. Trying to think back on my own experience, I had not decided to pursue the designation until November so really didn’t have the option. If you’ll have the experience requirement fulfilled by late 2016 then you could potentially shave six months time off the process compared to peers.

Reasons to take the June exam after a December exam

  • A lot of the CFA Level 2 curriculum builds heavily off of concepts learned in the level 1 curriculum. In fact, many of the sections in the curriculum start off with optional refresher pages to remind you. Going straight into studying for the second exam helps to avoid losing any of that information in a year’s worth of partying and working (ok, partying for the younger candidates, working for the old timers).
  • The level 2 curriculum really gets into the detail of financial analysis and working through a company’s financial statements. A lot of candidates are pumped up about hitting the books, even after a grueling few months of studying for the first exam. The curriculum is also undeniably good for your career and the sooner you learn the material, the sooner you can impress your boss with your expertise in analysis.
  • You could easily wait until late January when December exam results come out to register and being studying for the second exam. This gives you nearly two months to enjoy with your family and friends. Believe me, you’re first few years as an equity analyst will be busier than that.

Don’t forget that the application deadline for the CFA Awareness Scholarship is February 2nd so you may want to get started on that ahead of time. This scholarship is for key influencers in the academic and financial communities and reduces the registration fee to $350, including the curriculum ebook. Check your local CFA society as well, many offer scholarships for local candidates.

The registration deadline for the standard fee on the June exam is the 18th of February though you have until March 18th as a late-register.

What’s the rush?

Whether you’ve considered it or not, there is nothing wrong with taking a year and a half to sit for the CFA Level 2 exam either. I know everyone wants to get through the exams as soon as possible but there are also advantages to taking your time.

  • You can still start your study for the Level 2 exam by borrowing curriculum from other candidates or getting it from the local library. Make sure the readings are up to date but the curriculum really doesn’t change that much so most will still be applicable.
  • Even if you set a study schedule that takes you to the June 2016 exam, you can still sit for the 2015 exam to see how it is. You only pay for the enrollment fee once but will have to pay the registration fee again.
  • Burn out is a big problem for candidates and you might not feel like a couple of months is enough to spend with family and friends after taking the Level 1 exam.
  • The CFA Level 2 exam is, in my opinion, by far the most difficult of the three. The detail and the number of formulas are intense, reasons why the average pass rate is only 44% over the last ten years. Spreading your Level 2 studies out over 18 months means you can really take your time with the material and master it.
  • Many candidates will not complete the experience requirements by late 2016 anyway and will need to wait to use the designation. If you are not working in analysis or asset management now, it might be a good idea to find a job that will move you in that direction. Starting a new job takes time but a relaxed Level 2 study schedule will mean more time to learn your new responsibilities.

I know it is unlikely that many December candidates will consider foregoing the 2015 exam to take the 2016 exam instead but I thought I would outline the advantages and disadvantages of each option. Whichever you choose, make the commitment to do it well and continue being the professional you have shown yourself to be.

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

Last Week to the CFA Exam, Welcome to the Club

Just one more week to the December level 1 CFA exam, can you believe it? The time seemed to fly by every year I was a candidate and as much as I wanted to get through the exams, I always wished for just one more week of preparation.

But win, lose or draw next Saturday you’ve already shown the heart and discipline to make yourself a better professional. For that, I say, “Welcome to the club of CFA Candidates and Charterholders!”

You see, being a CFA charterholder isn’t about passing a couple of tests. It isn’t even about just being able to put those three little letters after your name. Being a charterholder is about being a true professional and being part of a network of professionals.

Through the CFA Institute and your network of other candidates or charterholders, you’ve got access to some of the best minds and information in the industry. Asset management gurus like Bill Gross, Abby Joseph Cohen and Ben Graham, all charterholders!

The Institue also offers a knowledge library on the website filled with some of the best published material and media in the industry. It’s easy to forget so set a regular reminder to check in on the site for new information and professional development. The website is pretty user-friendly. You can browse research by topic or by area of work. There are also some marketing templates for brochures, pitchbooks and mailers that you can use for your job.

Many of you are just starting your careers and will want to login to the Institute’s Jobline. Through the portal, you’ll find nearly 900 current listings from more than 200 employers all looking for CFA charterholders or candidates.

I got an email invitation last week to be a judge in next year’s CFA Institute Research Challenge, an annual global competition in equity analysis. The research challenge is a great way to get that initial experience into equity research and feedback from professionals. At events like this or one of the many networking events through your local society, you’ll find all the opportunity you need for professional development and to advance your career.

I am going to level with you. Your #1 goal in life may seem to be passing that exam on Saturday but at this point, it really doesn’t mean as much as you think. You have taken the first step to becoming a true professional in the field and your score on one test will not change that.

So take the rest of the week to kick it into high gear and get those last few points you’re going to need to pass the exam on Saturday. After Saturday, login to the CFA Institute’s website or your local society’s website and start looking around. You’ve got at least a month before you need to start thinking about the June exam. Use that time to develop your network and really get to know what it means to be a part of this club of finance professionals.

Good luck on Saturday candidates!

‘til next time, happy testing!
Joseph Hogue, CFA

CFA Exam Day Emergency Preparedness Kit

Three weeks to the December CFA Level 1 Exam and you are probably nose-deep in your curriculum books trying to get those last few points. Well, I want to take your mind off of studying for just a second to talk about a different kind of exam preparation, preparing for that first Saturday in December with a CFA Exam Day Emergency Preparedness Kit.

You might not have thought much about it yet but just assumed you would gather up the necessary things a couple of days before the exam and everything would be alright. After all, how difficult can it be? You just need your identification, admission ticket, a calculator and a few other incidentals, right?

Over my three years of testing I saw candidates bring along a lot of things to the exam, from tiny sandwich bag size packs to backpacks full of resources. Every year there was more than one candidate, in fact usually quite a few, that was turned away for lack of the right materials or that left the test center near tears because their lack of preparedness cost them the success for which they had worked so hard.

Emergency Preparedness Kit for Candidates

Most likely you’ve heard of having an emergency kit in the car in case you get stranded somewhere. It’s probably got flares, a blanket, some water and maybe a little food. But do you really need an emergency preparedness kit for the CFA exam?

You’ve just spent 300+ hours of your life over a short period of time, sacrificing a social life and time with your family just to pass this exam. Nearly 50% of all candidates fail their exam any given year and the difference between passing and band ten is razor thin. You tell me, do you think it is serious enough to have an emergency kit?

There are two categories of items that will go into your kit, required materials and emergency goods. The required materials are going to be things like your admission ticket, a calculator and your passport. You won’t even be able to get into the exam or to have any hope of passing without these. It’s not stuff that you would normally put in an emergency kit, but there’s no sense in having two kits for the exam so I’m keeping everything together. The emergency items in your kit are things that you don’t necessarily need and may not even use but you will thank your prospective deity if you end up needing them.

  • International Passport – You must have a valid government-issued passport to get into the testing center. There are no exceptions and I can almost guarantee that there will be someone at your testing center that gets turned away. Physically check your passport; today, no right now to make sure the expiration date is after the exam day and that all your information matches that of your admission ticket. With three weeks left, you should still have time to get your passport changed if you need to but you cannot afford to wait.
  • Admission Ticket – This is another required item and it must be printed on clean, unused paper. Do not mark anywhere on your admission ticket, front or back. The information on your ticket must match what is on your passport so you might as well check it now while you are checking your passport. Admission tickets are now available on the CFA Institute website for printing.
  • Pencils – CFA Level 1 candidates only need to bring pencils to the exam. I have seen candidates forget pencils and I have seen candidates bring boxes of more than 10 pencils. I recommend bringing five pencils, not that you will probably need more than one or two but it could save you the time of sharpening them. Take a manual pencil sharpener as well. This is one of those emergency items. I always had enough pencils that I never used my sharpener but you should definitely take one.
  • Calculator – I always used the Texas Instruments BA II Plus but I know people that swear by the HP calculator as well. It’s your choice just as long as you have one in your kit. I have seen candidates take two calculators, just in case. I never did but it does make sense, especially if you have extras anyway. Changing batteries can take time and you will need to reconfigure the calculator. If nothing else, you should have an extra battery in your emergency kit and a small screwdriver. You will almost certainly not need it but it is much better to have it than need it.
  • Medical products – We start getting into the true emergency items with things like aspirin, cough drops, tissues, wet wipes and band aids. You might not need any of them but can you imagine trying to grind your way through a six-hour test with a throbbing headache? Coughing and wiping your nose on your sleeve for six hours is not going to help your score any either.
  • Wristwatch – Some people like to keep an eye on the time while others feel it is more of a distraction. I would recommend taking a watch even though the proctors post the time left at the front of the test center. Time management is critical and you will want to know exactly how much time is left.
  • Earplugs – You only need to hear stories of loud traffic or lawn mowers outside the exam site to know that earplugs are a good idea. Even if you are not normally distracted by ambient noises, you might as well take a pair just in case.
  • Extra money for a taxi – This one depends on how far you live from the test site and how you plan on getting there on exam day. You need to plan for two ways of getting to the exam, just in case your primary transportation fails. Know the bus schedule or someone that you can call at the last minute for a ride. It only takes a few minutes and can save you the agony of missing the exam completely because you were a few minutes late to the testing center.

Don’t count on putting any of this stuff together the day of the exam or even the day before the exam. Test day is stressful enough without having to worry about finding some cough drops or realizing that you misplaced your passport. There will be an area outside of the exam room where you can store your personal items or you can just leave them in your car if you drive.

We will never know how many candidates miss the exam each year because some unforeseeable circumstance kept them from success. We will also never know how many candidates were too distracted by bad circumstances to be able to think clearly and pass the exam. These things do happen, just make sure they don’t happen to you.

Just three weeks left. Good job, you’re almost there.

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

It’s the Toughest Roads that Make the Best Journeys

First off, I just realized that in all the build-up to the December exam I forgot to congratulate June candidates for their hard work and success. I say success because, pass or fail, you committed to one of the most difficult professional programs in the world and are a better professional for it. I especially want to congratulate the 14,000 candidates that passed the CFA Level 3 exam and are on their way to receiving the charter. You’ve joined a select group in the industry and accomplished what few have been able to do.

Looking over exam results has me reminiscent of my own years studying the CFA curriculum. It’s reminded me of something I heard a long time ago from a teacher in high school. It’s the toughest roads that make the best journeys.

Would you do it all again?

The maxim is absolutely true and this may come as a shock but someday you will look back on those days with your nose buried in the CFA curriculum books with a desire to relive it.

“What?” you say, “No way, I would ever want to go through that again!”

Don’t be so sure. It’s been more than 15 years since I finished boot camp in the U.S. Marine Corps, one of the most difficult mental and physical journeys of my life, and I still remember it vividly. I constantly had to push myself beyond what I thought possible and the challenge was spectacular. I’ve yet to find another road that led to such a feeling of accomplishment or that has been as memorable.

And you will feel the same way about your years studying for the CFA exam. Right now, all you know is the constant struggle of practice problems and learning outcome statements. With every exam, you start to see the bigger picture and how much you’ve grown as a true professional. I still look back at those years and that sense of growth fondly, and I’ll bet that you will too.

No one said the road to earning the CFA charter would be easy. You will be pushed to test your limits of intellectual perseverance and commitment. You will likely question the program’s worth and your own ability to learn.

But you will also learn what it means to push yourself and sacrifice for a higher level of professional pride. The intellectual growth you achieve will only be exceeded by the feeling of emotional growth and the knowledge that you can make it down any road.

So, for you candidates struggling through those last few precious weeks to December or those of you terrified at the thought of another exam season starting soon, I say enjoy this time of your life.

You’ll miss it.

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

We’ll get back to our review of the CFA Level 1 curriculum next week with a list of must know subjects and some study tips for the last couple of weeks. Make sure you are measuring your progress with mock exams and lots of practice problems.

Does a Change in the Curriculum Make it Even More Important?

We started our CFA Level 1 Review post this week with an important message about the curriculum. Candidates studying for the December exam have an extra incentive to do well and move on to the second exam. They are studying from the 2014 curriculum and all levels will change to the 2015 curriculum come June.

If they do not pass in December, they will need to read three new readings in the 2015 curriculum and will have wasted their time with six readings that have been dropped.

That is a pretty big incentive, but what do the curriculum changes mean for other candidates?

More than you may think.

CFA curriculum in flux

While the official CFA curriculum does not normally change much from year to year, the Institute made some sweeping changes this year for the 2015 curriculum. In all, there are 10 new readings across the three exam levels and nineteen readings have been dropped. While some of the readings have shifted from one exam to another, this is still an extremely big change for the curriculum.

But that isn’t even the biggest change. I was surprised to see that the CFA Institute is changing the topic weights in the 2015 curriculum as well. The relative weights for each topic have been the same since before I was a candidate in 2009 and I don’t think anyone saw the change coming. While most of the weights only changed by a few percentage points, if any, it still means a lot on an exam where half the candidates do not pass and you need every point possible.

If you have made it through any of the exams by only reading study guides in prior years, you may want to rethink the strategy if you are taking the exam next summer.

First, there is a lot of new material in the curriculum. The Institute will not say whether it makes a point of testing new curriculum material but the general consensus among candidates is that it is highly testable information. If the Institute thought it was important enough to include the new material, sometimes at the cost of pushing out older information, then it could very well want to highlight it on the exam.

I have been working with third-party providers for more than two years now and can tell you that preparation of study guides after curriculum changes is an insanely detailed and difficult job. Each page of the curriculum has to be reviewed for changing Learning Outcome Statements and changing readings. If some material is missed when preparing study guides during normal years, it is even worse during years where the curriculum has changed so significantly. You absolutely must read the curriculum if you want the opportunity at 100% of the exam material. FinQuiz offers a happy medium with study notes that are designed to complement the curriculum, not replace it.

We went through the changes to the three curriculum levels in prior posts.

Click here for a review of changes to the CFA Level 1 exam.
Click here for a review of changes to the CFA Level 2 exam.
Click here for a review of changes to the CFA Level 3 exam.

We’ll continue next week with our review of the CFA Level 1 for the December exam. For the rest of you, enjoy your break, it will be time to pick up those books again soon enough.

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

A Secret about the CFA Curriculum that You Won’t Believe

There is a secret that many charterholders do not tell candidates. A secret so terrifying that most candidates probably wouldn’t believe it even if we told you.

After struggling through upwards of 9,000 pages of the curriculum over the course of three years, the truth is nearly impossible to fathom.

But even after more than 900 hours of study and countless study problems…
Many charterholders still read their curriculum.

Keep Your Curriculum Books!

Over the three years I studied for the CFA exams, I couldn’t stand the sight of my growing stack of curriculum books. The journey begins innocently enough with your Level 1 books. You may even be excited when that big box arrives in the mail.

But it doesn’t take long for that excitement to turn to despair and loathing as you toil through thousands of pages while your friends and family go out on the weekends.

Ok, so maybe I’m being a bit melodramatic but the fact is that most candidates avoid the CFA curriculum like the plague while studying for the exams. They rely on condensed study guides to get all their information for the exams. Sometimes it works, other times the candidate is left repeating exams because the study guides didn’t include all the detail needed to pass.

After the final Level 3 exam, the candidate breathes a huge sigh of relief and burns his curriculum books in effigy.

And then something odd happens. It happened to me and I can almost guarantee it will happen to you as well. I found myself referring back to the official curriculum in my professional career as an analyst. It starts like this, you will be looking at a company or sector and thinking how a fundamental difference in the group affects its valuation. Maybe the industry typically carries an especially high amount of goodwill on the books or maybe an accounting convention within the industry is different from other industries. It depends on where you work and the exact duties in your role but maybe you do not regularly account for that kind of detail in your analysis.

Then you remember, there was a whole section in the CFA curriculum about just such a practice! You scramble to the nearest library (because you burned your books, remember) to thumb through the curriculum. You read through the section and add it to your analysis.

This isn’t a wild story or something that will only happen to you on rare occasions. Your time spent studying for the CFA will commit to memory the basic idea of the readings even if you do not exactly remember the details. While your job as an analyst will involve going beyond the curriculum’s detail in some sections, there are some sections that you may not use or will only use broader estimates.

For example, while the curriculum goes into great depth and detail to adjust the financial statements in a number of different accounts (i.e. pensions, long-lived assets, inventories and intercorporate investments) you will likely not go into so much detail in your valuation models. That is not to say that your models will not be robust but maybe the level of detail just isn’t always needed. Until that day when you see a particular deal announced or a news release and think, “maybe this changes things and I need to look further into the details.” When you do look into the details, and it produces some real value for your firm, you will be generously rewarded.

The curriculum is your friend, you just don’t know it yet

I know it is tough to imagine how reading 3,000 pages of curriculum is a better option that relying on a 1,500 page study guide. You’ll just have to trust that all the time spent reading through the detail will pay off down the road.

This industry is full of highly intelligent and committed people. Every one of them has a cash flow model and has spent hours (more like years) studying how to analyze companies in their industry. You will only be able to compete if you can find the details that others miss. Reading the whole CFA curriculum when many candidates avoid it may just be your chance to uncover those details.

…and keep the books. It will save you a trip to the library later.

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

I Can’t Believe I Read the Entire CFA Curriculum

I wrote last week about the importance of reading the entire CFA curriculum and that too many candidates miss out of valuable points due to only relying on study guides. If my inbox is any indication, many candidates are still skeptical that they can get through the curriculum in their limited time available and much less with their sanity intact.

Aziz from Turkey writes, “I understand the importance of the curriculum and know deep down that I should read it but just cannot find the time. What if I read a study guide two or three times in the same time it takes for the curriculum? Is that not better?”

Vikas in India points to another problem many candidates have when he writes, “The curriculum is SO BORING! Some of the information is interesting but too much academic writing makes it impossible to get past.”

I completely understand both of these points. I worked a full-time job throughout my CFA studies and was married while studying for the final test. Throw in a social life and who has the time to get through thousands of pages of material?

If you want to pass the CFA exams, then you have to make time. I’ve written a few posts about finding time for the exams. It can be difficult to sacrifice a little more time for studying but we are all investors here and I guarantee you the return you realize for that extra time will be well worth it. As I wrote in last week’s post, you must commit to the official curriculum if you want the max points possible. Studying only the study guides is a sure way to miss important information that is left out. Studying these guides three or four times isn’t going to help if the material is not in there.

I did get some positive feedback from a few candidates on last week’s post. Mark from St. Louis writes, “I tried for two years to pass the Level I CFA Exam with only study guides. I tried two different providers but failed the exam each year. On the third attempt, I committed to reading the entire curriculum and finally made it through. Can’t say that it was only because of the curriculum but I can say that there was information in the books that I don’t remember seeing in the study guides.”

Making it through the curriculum is one thing, making it through the curriculum without falling asleep every couple of hours is another thing. I agree that the curriculum can be a little boring at times. Think of it as exercise for all those company reports you will need to read as an analyst. If you thought 2,500 pages of the CFA curriculum is tough to get through in six months then you have a rude awakening coming as an analyst.

Reading through the curriculum translates to about 400 pages a month. As an analyst, I read through that just about every week! You will constantly be looking through annual and quarterly reports, trade journals and other analyst’s commentary in your daily work routine. Not all of it is going to be compelling material and you just have to learn to push through it. Taking quick notes in the margin of the page helps to stay focused and there’s nothing wrong with a little help from Mr. Coffee.

No one said it would be easy working through the entire CFA curriculum but it is definitely worth your time. It takes determination and sacrifice but those traits will serve you well that first Saturday of June and for the rest of your life. Good luck.

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

Warning: Do Not Neglect the CFA Curriculum

The actual length of the CFA curriculum varies a little each year but it’s generally between 2,500 and 3,200 pages. When you get the books in the mail, or receive the digital version, that may seem like a monstrous task. Over the three years of studying for the exams, I think my upper body strength grew just as much as my financial knowledge just from carrying the books around.

Study guides meant to substitute for the curriculum vary but generally range between 1,400 and 1,700 pages. At under two-thirds the length of the official curriculum, it seems like a no-brainer and I know many candidates who have only rarely even peaked inside their curriculum books.

And many of them are still candidates.

Do Not Neglect the Official Curriculum!

Candidates that have tried to substitute the CFA curriculum with study guides have come to me afterwards with their horror stories. My reply is always the same, “I wish we had talked before because if you do the math then the answer is pretty obvious.” The minimum passing score for the exams is never released but I would guess it is around sixty-five percent. No candidate has failed with a score of 70% or better and I doubt if the Institute would want to charter someone that knows less than two-thirds of the subject matter.

Even the most gifted candidates are going to miss points. If about half the candidates fail the exam every year, I am guessing that most miss at least a tenth of the points and probably much more. We have no way of knowing but it’s obvious that you need every point you can get.

Now, I have seen pretty much all the study guides commercially available. There are some that do a pretty good job of condensing the material but none are able to get everything in a packet that is half the length of the curriculum. It’s impossible and information is going to get left out. Try to fit nearly 3,000 pages of information in less than 2,000 pages of notes and I would say you’re lucky if 20% of the information isn’t lost.

So if you neglect the official curriculum completely, you are already out something like 20% or more of the points. Now you need to remember at least 80% of the material just for a score of 64% on the exam.

Most of you have taken practice exams through test banks or the CFA Institute. How many have scored better than 80% on these? I know reading all those books is a daunting task but you just cannot afford to leave points on the table by neglecting the official curriculum.

I don’t talk about the FinQuiz study notes much here on the blog other than to reference specific sections of the notes and the curriculum. I don’t want candidates to think I am being biased by pushing one particular study provider over another. But I can say, without any bias, that the FinQuiz notes have at least one big advantage over other study products, that they are meant to be used as a complement to the curriculum instead of a substitute.

The FinQuiz notes vary by length as well but are generally around 600 pages, formatted by Learning Outcome Statement. By basing the notes on each individual LOS, FinQuiz condenses the information down to just enough to clarify the curriculum and make sure candidates check and understand each LOS. You will still need the curriculum, but the notes provide a brief explanation on each of the LOS so you can reference if you need additional help. It’s really the best of both worlds, you get 100% of the information from the curriculum and additional condensed explanations where you need them.

Free examples of the FinQuiz notes are available for download on the website. Take a look and compare them with the curriculum. FinQuiz regularly offers discounts on products and packages so you may want to contact the provider to get the best deal possible.

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

Candidate Warning: Use WhatsApp Carefully

I have been amazed at the growth of WhatsApp study groups just over the last year. Six of the top ten most popular posts on the LinkedIn CFA Candidates group are calls for a WhatsApp group, including the most popular post which has 369 comments.

The draw of the application is that users can send text messages without paying the SMS fees associated with most carriers. With over 118,000 candidates across the globe, there is no lack of members eager to connect especially when there is not much of a local group.

I contacted a few candidates that have used the WhatsApp groups for their insight into the phenomenon. The response was almost entirely positive from the group with a few big caveats.

Avoid common problems with messaging groups

The group members I talked to generally said that their experience with WhatsApp groups was positive but had a few warnings for those considering the groups. Some are specific to the CFA exam while other problems are more common to groups in general.

WhatsApp may be a great resource for asking questions and sharing insight into those tough topics, but don’t forget that the best way to prepare for the CFA exams is still through practice problems. I always set a goal for at least 2,400 practice problems, ten times the amount on the exam, for my test preparation. Doing these problems gets you physically ready to handle a six-hour test and helps to convert the material to long-term memory through repetition.

Make sure you are not spending too much time on the WhatsApp group. Studying for the CFA exams can be incredibly isolating and candidates have a tendency to confront this by spending lots of time in groups and searching through forum topics. Spending a little time each week socializing with local candidates can be a great way to avoid this and can also help make connections that will help you down the road.

Make sure you double-check answers you receive with the curriculum or study guides. There is nothing that guarantees the answer you receive from other candidates is correct. Problems with incorrect answers are not generally a problem with larger groups since the consensus usually corrects the misinformation.

Some caveats to groups in general include:

  • Avoid the temptation to use the group for a conversation with one member. Unless you are answering a specific question that is relevant to the entire group, these conversations are best left to private messaging.
  • Make sure you keep the conversation relevant. This is tied to the caveat above but can often envelope several members and steer the group off topic. There are plenty of forums for discussing your love of cheese (or whatever), you are here to help each other pass the CFA exams.
  • Don’t assume that everyone understands your short-hand text messages. Whole dictionaries could be written on the jumbled mix of letters that have come to be used for text conversations. Some users may not understand your use of acronyms or abbreviations.

It has also struck me how freely candidates share their WhatsApp number on the web. I asked a few candidates and no one expressed any concerns with privacy. I imagine the risk to posting on a very specific forum like the CFA Candidates group would be minimal but I am still interested in hearing if anyone has had a problem with the dissemination of their number. Use the comment section below.

We’ll continue our review of the Level 1 CFA exam next week for December candidates. For those not planning on sitting for the December exam, enjoy your break!

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