Studying for the December CFA exam is over and most candidates haven’t yet started studying for the June exams. What does a motivated CFA candidate do to pass the time when there’s nothing to study?
Around this time of year, we love to look back at the posts that have helped CFA candidates the most and the ones most popular with candidates. Some articles are perennial favorites with candidates and a must read if you want to pass the exams. Other posts might not have gotten as much attention but carry some extremely valuable information and need to be highlighted.
The Finquiz CFA Blog had another record year in 2015. Nearly 280,000 candidates and potential candidates read 427,420 posts from January through November. That’s almost 1,300 pages a day of information helping candidates to pass the three CFA exams.
We’re proud to be able to bring this resource to candidates and will continue to get you the best information for CFA exam success for years to come. Check out the most popular posts of 2015 and of all-time below and get ready for a successful 2016!
Top Finquiz CFA Posts of 2015
2016 Level 1 CFA Curriculum Changes – The articles outlining the CFA curriculum changes for the following year are always the most popular and some of the most important information of the year. The CFA curriculum doesn’t change much from year to year but it’s must-know information if you’re going to pass the exam.
The changes to the 2016 CFA curriculum were relatively light this year compared to the changes last year. No topic weights were changed in the exams so that was a big relief. One reading was added to the CFA Level 1 exam and quite a few LOS were modified or changed. If you’re taking the Level 1 exam in June, especially if you’re retaking the exam, this may be the most important post you read all year.
2016 Level 2 CFA Curriculum Changes – The final study session of the CFA Level 2 curriculum (Portfolio Management) was changed for 2016, making it a must-read topic for next year. Click through to the article and download the changes to the curriculum along with Learning Outcome Statements for review.
2016 Level 3 CFA Curriculum Changes – Two readings were removed and one was added to the 2016 CFA curriculum so make sure you’re up-to-date if you want to pass the final level of the designation.
Top 9 Formulas for the CFA Level 1 Exam – New CFA candidates always get information overload when they first see the CFA curriculum, especially when it comes to formulas. The books are massive and mastering the entire curriculum seems impossible. Focus on the most important material first like these nine critical formulas and you’ll be well on your way to passing the exam.
2015 CFA Study Schedule – We updated our CFA study schedule this year given the changes in CFA topic weights across the three exams. The post includes a great daily blueprint for your study schedule as well as how to use some of the new resources available through technology. Of course, using condensed CFA study notes to complement the curriculum is still a core part of the schedule to save time and get the most critical information.
Top Finquiz CFA Posts of All Time
These next posts have stood the test of time and are some of the most popular on the blog. They cover some of the most common questions we get from CFA candidates and how to really make your study time productive.
The Passing Score on the CFA Exams and How to Use It (2013) – Even though the CFA Institute doesn’t release the minimum passing score (MPS) for the CFA exams, that doesn’t mean there isn’t some very important information you can use. Learn what has been said about the passing score and how to use the information to plan your study schedule.
The #1 Reason Candidates do not Pass the CFA Exams (2012) – This is one of my favorite articles. It covers one of the biggest hurdles for CFA candidates and three ways to overcome it. It’s a short post but one that every candidate should read before beginning their CFA study plan.
How to Pass the CFA Level 2 Exam (2012) – The Level 2 CFA exam is likely the most difficult of the three exams. A few candidates will tell you the first exam was difficult for how the massive amount of material surprises new candidates or that the third CFA exam was most difficult for its essay section. Most candidates agree though that the Level 2 exam is a quantitative monster. You will get into the most minute detail of financial statements and be expected to master a mountain of formulas.
I Passed the CFA Level 1 Exam, Why don’t I Have a Job? (2013) – Using the CFA exams and designation to get a job is one of the most frequent questions we get. Passing the exams will not get you a job but you can use your CFA progress to get your foot in the door. Check out the post to see how to use the CFA to land your dream job and how to get ahead.
There were quite a few great articles that didn’t make the cut. Check out the menu on the right of popular posts and make sure to use the search box above for any questions you have. The Finquiz CFA blog features more than 328 posts on passing the CFA exams and how to get the most from the CFA designation. Don’t miss your chance to get out in front of the rest and jumpstart your career!
‘til next time, happy studyin’
Joseph Hogue, CFA
Less than half the candidates taking the CFA exams each year pass. It’s a statistic most of you know but never ceases to amaze me. How can an exam be so difficult that less than half pass each year?
You could blame the CFA Institute for making it so difficult and adjusting the minimum passing score but the fact that no one with an average of 70% has ever failed takes some of the blame off the Institute’s shoulders. Having to answer about two-thirds of the questions correctly doesn’t seem like too much to ask for a professional exam.
What if it’s something else? What if candidates just aren’t prepared for the exams? Spending upwards of 300 hours doesn’t seem like a lack of preparation to me so maybe candidates just aren’t preparing correctly for the CFA exams.
Each exam can be surprising for its own reason. This specific challenge in each exam catches candidates off guard and leads to a ridiculously-high rate of failure.
Learn what to expect on each CFA exam and how to study for it, and you’ll be better prepared than half the candidates already.
CFA Level 1 Exam: Information Overload
The first thing that surprises candidates on the CFA level 1 exam is the sheer amount of information they are expected to remember. Through undergraduate studies, most of you have been responsible for textbooks of information but you haven’t had to master all the material for one mammoth-size exam.
The CFA Institute doesn’t feed you the information in manageable chunks and then ask you focused questions every couple of weeks. The Institute turns on the firehose and drowns you in knowledge of which you’re supposed to drink every last drop.
Maybe the firehose analogy is a little extreme but it seems that way at times.
The trick to passing the CFA level 1 exam is that you don’t need to know every excruciating detail within the curriculum. Much more important is the basic ideas and concepts around each study session. Understanding the qualitative ideas in the curriculum is much more important than being an expert in one topic. This means reviewing every study session and getting a basic understanding across the entire curriculum.
Understanding the main ideas will help you immediately eliminate at least one potential answer for each question and should help you pick out the most appropriate answer.
It also helps to use multiple resources when studying for the CFA level 1 exam. Getting the curriculum from several different perspectives, i.e. official text, study notes, videos, flash cards and practice problems, helps to build repetition and memory.
CFA Level 2 Exam: A Quantitative Monster
After figuring out that the first exam is all about basics and qualitative information, the CFA Institute throws you a curve ball with the CFA level 2 exam.
The second CFA exam is all about formulas and quantitative detail!
While the CFA level 2 exam includes the same topic areas as the first exam, the topic weights clearly show a focus on three subjects. Financial Reporting & Analysis, Equity Investments and Fixed Income will account for up to 65% of your exam score and a large chunk of that is in quantitative calculations.
Top it off with the fact that you have a different format in the vignette questions, having to read through a story and then answer a set of questions.
Avoid being surprised by the quantitative material on the second exam through understanding the conceptual reasoning in the formulas and repetition.
Try memorizing every formula on the CFA level 2 exam and you could end up in an asylum for the criminally-insane. There are just too many letters, abbreviations and craziness. If WACC = (Vd/(Vd +Vce))rd (1-t) + (Vce/(Vd+Vce))rce) doesn’t make you go cross-eyed you are a stronger person than I am. Think about it intuitively and it makes sense.
The overall cost of a firm’s funding capital is the cost and proportion of equity and debt. The percentage of each funding type relative to the total is multiplied by its cost. Debt is tax advantaged, so you need the after-tax cost.
Understanding the conceptual reasoning behind each formula will help you recall it on the exam and you won’t drown in a sea of math.
The second trick really is no trick at all. You just have to work those practice problems over and over again. Use flash cards to write out the especially-difficult problems so you can review them several times a day until you’ve got it down. Work the end-of-chapter questions for each study session and use a question bank of problems if you’ve got one available.
CFA Level 3 Exam: Essays are a Physical, Emotional and Intellectual Challenge
Most CFA candidates understand that the essay section will be difficult but few realize how difficult it’s going to be until they’re half way through the morning session and sweating through their shirt.
The three-hour morning section of the CFA level 3 exam is a physical, emotional and intellectual challenge for which few really prepare well. It isn’t about just understanding the material, it’s about being able to construct your own answer and being physically able to write for three-hours straight.
There is really no better resource than the old exams provided by the CFA Institute. The Institute releases the last three years’ worth of morning essay questions on its website along with guideline answers.
- Don’t just review these past morning sections, actively work them as if you were sitting for the exam. If you haven’t prepared the muscles in your hand to write for three hours when you arrive at the exam, you are going to regret it.
- Learn how to bullet-point your responses to include all the relevant information. This will save you a ton of time on the exam. See how it’s done in the guideline responses.
- When you’re writing out your answers on old exams, practice writing out your thought pattern. The CFA Institute awards partial credit for the essay portion but you have to demonstrate a certain point within the answer. Writing out your reasoning makes it more likely that you’ll hit on a few of those points and get the highest score possible.
Passing the CFA exams means being prepared for each exam and not being caught off guard by differences on each. Ask other candidates what surprised them most and understand how to study for each exam.
‘til next time, happy studyin’
Joseph Hogue, CFA
Last updated: July 18, 2016 at 16:34 pm
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
With just six weeks to the CFA Exam, you might be feeling pretty confident about your preparation so far and ready to coast through to the June test. You are doing well on question bank problems and are sure you will be able to pass the exam.
Don’t take your focus off of the finish line! This is the time you need to double your efforts and finish strong for several reasons.
Surprised every year
Everyone knows that nearly half of the candidates taking an exam will not pass their level this year yet the statistics are always the same. While the Institue shifts the passing score from year to year, we should see pass rates increase if more candidates were getting at least a 70% or better across all topics. Even after experiencing the exams, candidates continue to underestimate the challenge.
While you may have already put in hundreds of hours in preparation, know that it may take another hundred hours or more to cement your place at the top of the pack. I put in a fairly tough schedule usually from September or October all the way through May each year I was a candidate and was still surprised every year when I went into the exams.
Put in that little extra time and you’ll be rewarded with a huge sigh of relief in June.
Exam, what exam?
One thing I have tried to stress on the blog is the fact that professional development is an enormous part of our industry. Not only is the competition among analyst jobs so fierce but trying to find the best investments in a fairly efficient market among a sea of investors seems impossible at times.
You need every tool at your disposal and the CFA material is the best toolbox around. Try to not think of studying for the exams so much as a one-and-done event but a continuous process in your new career as a true professional.
Obviously, this is tough to do when you are singularly focused on passing your next exam. I understand because I was in the exact same spot just three to five years ago. Keep focused and confident that you will pass the exam but keep the studying in perspective. Don’t stop when you think you are safe to pass the exam. Only stop when you feel you have mastered the material.
Putting it into perspective
While you might feel that the exams are consuming your life right now, putting the time spent in perspective might help a little. That 300+ hours studying for each CFA exam is insignificant over a lifetime.
The Bureau of Labor Statistics reports that Americans 15 years and older spend approximately 7.5 years in front of the television. That’s nearly three hours a day on sit-coms and reality TV.
Surfing the internet takes up nearly as much time with 10,000 hours or about 5 years of our lives. Some of it is time well spent connecting with friends and family or other worthwhile sites but there has got to be a few pointless hours within that total.
Thinking about some of the time wasted throughout the day makes a few hours of professional improvement a little easier. If you spend 300 hours on each exam, that’s just 37.5 days and a little over 11 hours a week over six months. Find that quality time with your family, make sure you get enough time where it counts and then get to work!
Good luck. You’re almost there and I know you can do it.
‘til next time, happy studyin’
Joseph Hogue, CFA
There are just 13 weeks left to the CFA exam and candidates everywhere are getting frantic. Sometimes no matter how early you start or how well you plan out your studies, there just doesn’t seem to be enough time. How many times have you gotten to the end of the week and realized there was no way you were going to get through as much material as you hoped?
Now, another question, how many times have you checked the news, email or stock quotes while you were studying?
While the title of this post claims five reasons why you don’t seem to have enough study time, it really comes down to one – distractions. If you study like I did when I was a candidate, probably spend about half the time devoted to studying as you think you do. The rest of your ‘study schedule’ is filled with digressions and meaningless tasks as a way to procrastinate.
With that in mind, on to the four biggest problems to your study schedule and how you can solve them.
- Disable your internet connection and unplug the television
This was the biggest distraction for me. Most of my studying was through study notes and question banks, available on my computer. It was just too easy to click over to news, blog sites, email or a hundred other things whenever the inclination hit. You start off justifying this as, “Oh, I have studied for an hour and I need a short break,” but you end up spending way more time surfing the net than originally intended. Worse yet, you end up taking these ‘study breaks’ more frequently.
The television is just as bad. Do you study with the TV on? I did occasionally and rarely met my study goals when I did. The material in the CFA curriculum can be extremely complex and detailed. Do you really think you can master the curriculum and still follow what is happening on that episode of 24? Your eyes are drawn to movement, it is just how we are wired and any kind of peripheral movement is going to distract you.
- Turn off your cell phone
Unless you are on-call for your job or expecting to hear from the lottery commission that you won $10 million dollars, you really need to turn off the cell phone. With text messages, internet and phone calls (yes, phones are still actually used for talking as well) these things easily take the number two spot for biggest distraction. You can tell yourself that you won’t answer your texts and set it on silent all you want but the temptation is still going to be there. You’ll peak once and then will be drawn into 30 minutes of ridiculous emoticons and chatting.
- Do something nice for the family, and yourself
My respect goes out to all the candidates with kids. It’s tough and you’re probably just going to have to resolve not to sleep for the next three years. If you are studying at home, then you are not really studying. You are trying to study between tying shoe-laces, cooking lunch, kissing boo-boos and resolving fights over who is kicking whom.
Once a week, offer a fun day at the water park/mall/museum/fill-in-the-blank. It may cost a little more but your time is money and you are just wasting time if you think you can study while there are three other people demanding your attention. Juggling family and studying for the CFA is one of the most difficult problems for many. Put it in perspective, it is only 4-5 months a year for three years.
- Start a diet
This was another tough one for me. Not being on a diet but the constant temptation to break from studying to go get a snack. It doesn’t matter that you are not hungry and like other distractions, that small snack becomes a 30-minute or more digression and you don’t know where the time went.
The easiest answer to distractions is to go somewhere private to study. Most libraries usually have private study rooms though it may be difficult to reserve one for more than a couple of hours. Besides having to spend the travel time to get to the library, or another private location, is that it just isn’t always possible to go somewhere else to study.
When you can’t get out of the house to study, remember the major sources of distractions and do everything you can to avoid them.
‘til next time, happy studyin’
Joseph Hogue, CFA
One of our most popular posts, and probably in the top ten of most important, covered the difference between active- and passive-learning. Available by clicking here, the post separates different studying methods and shows candidates how to remember the majority of what they study. While no method is fool-proof, people typically remember up to 90% of what they study when using active-learning methods.
As a quick recap, though I urge you to read the original post, active learning is any method in which the student takes a participatory approach. This includes doing problems and discussing the material. Passive learning involves non-participatory studying like reading or watching a lecture. Studies show that students are more engaged and remember more when they learn by active methods.
Making passive-learning more active
The problem is that passive learning methods, reading especially, are the primary sources of learning for most candidates. Let’s face it, we would all rather sit down and casually read through the curriculum than grind through hours of practice problems. Preferences aside, you have to read through the material before you can do those practice problems anyway.
So how do you bridge the gap between passive and active learning? You still need to hit those practice problems but there are several ways that you can make passive-learning methods more active.
- Making notes while reading is the most often used but underappreciated study method. Noting important ideas in the margins of the text not only highlights material for your subsequent reviews it also keeps you from falling into reader’s trance. Reader’s trance (also common in driving or other repetitive tasks) is where you perform the task without even thinking and end up pages ahead without remembering what you read. By stopping to take notes, you avoid zoning out.
- After each section or chapter, take the time to explain the material in your own words. This works best if you can explain it to someone else but that isn’t always possible or time-efficient. If you cannot explain it to yourself then you will probably not be able to recall it on the exam.
- While listening to a lecturer or to recorded material, take notes and do not be afraid to ask questions. If you do not understand what the lecturer is saying, there is a good chance that another in the class also needs clarification.
- While watching videos, take notes and pause the video regularly to do a practice problem relevant to the section.
The more methods you can incorporate into your studying, the better you will learn. Seeing the material will most likely remain your primary mode but try to hear it and say it as well. Joining a study group can go a long way to making the learning experience more active. Just remember to keep the group organized and stay on task so you use your time efficiently.
Use the comment section below to share your favorite active- or passive-learning exercises and how you manage a balance between the two.
‘til next time, happy studyin’
Joseph Hogue, CFA
A recent post on the LinkedIn forum is asking how people with children are finding time to study for the exams. We can all relate to the time constraint to some degree but I have a ton of respect for the candidates able to do it while caring for young children.
I worked a full-time job throughout my studies and was married while studying for the third exam but never had to juggle studying with the full-time job of raising a young child.
So I researched some time saving tips online and came up with this list…
1) Is it a coincidence an enlistment in the military and the average time to pass all four CFA exams is four years? I say it’s time to teach the kids the importance of serving their country. Never too young!
2) The average person spends more than 23,000 hours washing clothes and over 300,000 hours getting dressed! Save the time, go naked!
3) Instead of calling your name while making love, ask your lover to call out formulas from the curriculum!
Real Ways to Find Time
Joking aside, there are ways to find time to study even with a full work schedule and kids. It really comes down to time management. We all have to do it, you will just need to sacrifice more and manage your time more efficiently if you have more commitments.
1) Start earlier – You know that it takes an average of 300 hours of studying to accumulate the knowledge to pass any given level of the CFA exams. This doesn’t change whether you have four hours a week or 40 hours a week to study. There are approximately 36 weeks left to the June 2014 exams. That means about eight hours a week studying, a fairly manageable goal even with kids.
2) Take longer – Everyone is laser-focused on passing the exams each year but there is nothing that says you cannot take two years per exam. The curriculum doesn’t really change much from year to year. You should be able to find a recent year’s curriculum through another candidate, the local CFA society or the library. That allows you to study for free until you are confident you can register for and pass the next exam. Just make sure you check the readings in the older curriculum against the Institute’s current year curriculum.
3) Who needs TV anyway – It’s not only TV but we all have little things that we spend time on that could easily be sacrificed. Budget your time carefully and you should be able to find a couple of hours per week.
4) Your support system is everything – Friends and family are a great resource for support and help with time. Can they help watch the kids a couple of hours per week? Can they help run some errands that might save you a couple of hours? Don’t be afraid to ask, they care about you and want you to succeed. That’s why they are your friends.
You are taking the exams for a reason. You are highly motivated and ambitious. Don’t let the lack of a few hours per week keep you from achieving your goals.
‘til next time, happy studyin’
Joseph Hogue, CFA