This is something that all candidates come up against, especially while studying for the Level II CFA exam which is extremely formula-intense. Whether there are in fact ‘unnecessary’ formulas or not, the temptation is strong to ‘game’ the exam and only focus on the stuff with higher odds of showing up in questions.
While the CFA may not guarantee you earn higher returns, I believe it can make you a better investor. One of the most common questions I get asked by friends and family is if the CFA curriculum or having the charter makes you a better investor. To this question, I think the answer is yes but it’s really not the question they are asking. Most people outside the profession really mean, “Does the CFA mean you will earn higher returns?” Of course the answer to this one is no.
We have covered strategies and suggestions for level-specific studying in prior posts. Each level has its ‘core’ topics and should be approached in a way to maximize points. With around 50% of candidates failing any given level each year, you can’t afford to let easy points go by not studying as efficiently and effectively as possible. Fortunately, there are also strategies and suggestions that will carry you through all three CFA exams. Some of these ideas are general ideas for effective studying while others are specific to the CFA curriculum and testing.
Studying 100 hours for the CFA Program exams, or even more, in three weeks may not be a problem for some candidates. If you can put other classes or responsibilities aside for a few weeks while you cram for the exams, then it doesn’t even amount to a full-time schedule. Other candidates are not as fortunate. Devoting all your time to the exam isn’t possible when you have a full-time job, a family or a full schedule of college courses. But you can still get in another 100 hours of studying before the exams, picking up a ton of additional points and maybe putting you over the pass-no pass level.
Which CFA exam level is the most difficult? While understanding why each level is difficult and how to approach each in your preparation is important, the type of question brings us to our first reason candidates fail.
So what do you do if you’ve lost some valuable time studying for the exam? First, don’t assume that you can’t still hit that 300-hour study target. With eight weeks left, you could start now and spend six hours a day, six days a week and still make it.
This post is going to offer the most important advice on HOW to study for the Chartered Financial Analyst exams, or really any exam. Unfortunately, it is the one of the hardest things to get through to candidates. Too bad since candidates that simply read through the curriculum or watch videos will remember about half of the material. Is it a wonder then that half of the students fail each level of the exam in any given year?
The phrase ‘study smarter, not harder’ is thrown around a lot but candidates may not be taking the advice to heart. Studying upwards of 300 hours for the CFA exam is hard enough but even that may not get you closer to the CFA designation if you’re not retaining the information. You truly do need to master the material in order to recall it on the exam and you won’t be able to do that by just reading through the curriculum.
CFA exams are truly the great equalizer! Some of the candidates pulled up in BMWs and Lexus, pulling off their designer sunglasses before entering the building. Others pulled into the parking lot in things that may once have been considered cars, but are now a loose compilation of spare parts. Whatever your economic situation in life, you can’t BUY the CFA charter.
Studying for the December CFA Program exam is over and most candidates haven’t yet started studying for the June exams. What does a motivated CFA Program candidate do to pass the time when there’s nothing to study? Check out the book ideas below to keep your skills fresh and get ahead of the pack while you’re waiting for the next CFA Program study season.
I always liked to start early and set a relaxed CFA 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.
I may be wrong and it just may be my cynical side but most public education seemed to me more about getting grades than learning. You showed up, took the tests and that was it. And the tests really were not that difficult. School was fairly easy, even up to my bachelor’s programs. Sure there were some tough spots when I would put off a semester project but a couple of late nights and it would be easy again. That’s not the CFA exams and most people get this rude awakening in Level I.
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.
Peeling back the cover on your Level I CFA Program books can be a shock at first. Thousands of pages and hundreds of Level I CFA Program formulas sit in front of you and can seem overwhelming. Before you freak out, it’s not really so bad. While formulas become crucial on the CFA level 2 exam and its quantitative focus, the formulas on the first exam are much more about learning relationships and the process. Learn the ‘why’ of the formula and you’ll remember how to work it on the exam easily.
If you are part of the approximately 50% of candidates that do not pass the exams each year, there are a thousand questions and doubts swimming through your head right now. What did I do wrong? Should I try again? Is it worth it? We talked about these questions in another post, but one of the most stressful questions is going to be, “What to tell friends and family?” You have sacrificed so much of your time with them leading up to the exam and they have supported you all the way. How do you face the embarrassment of telling them you failed the exam? Most likely, few have faced anything as challenging as the CFA exams and do not understand how half the candidates taking a test could get washed out.
Your greatest hurdle preparing for the CFA exams is not going to be your new job, your newborn that wants 100% of your attention, or giving up any semblance of a social life. As cliche as it may be, your biggest challenge for passing the exams is YOU. You are going to get in the way of earning the charter by being lazy and by letting fear keep you from doing what needs to be done. Did He Just Call Me Lazy?? By lazy I don’t mean everyone is slothful vagrants, sitting around doing nothing. I mean that it is easy to lose focus and your commitment to the process.
This is probably the question I see most often from candidates. The CFA exams can be extremely demanding and candidates want to know that their efforts will be rewarded. There are two problems with the question though. First, it always seems to get asked most in the months leading up to the exam. It isn’t a legitimate question as much as it is fear of failure trying to give you a reason to give up, something I addressed in detail in a prior post. Ask yourself if you are dedicated enough for the exams before you begin level 1 (and at latest maybe before level 2 now that you know what you are up against), then stick to your decision. Before I address the second problem with the question, we’ll cut to the answer.
The title above is the title from a recent forum post on the LinkedIn group. While the underlying subject of juggling a personal life and family with the CFA exams is a constant topic, I thought the title was interesting and brought back memories of managing my own social life with exam preparation. I thought the forum title was interesting because it is how many candidates feel about studying for the CFA exams and…well, everything else. It seems that preparing for that 6-hour monster in June puts you at odds with everything else; your family, your friends, anything you previously enjoyed.
I get questions occasionally about the CFA Program exam and how the CFA Institute updates the exam to stay relevant in the industry. The curriculum across the three exams does change regularly with the addition of new readings while others are dropped each year. Ten topic areas remain but the emphasis and material within each may change. CFA Institute uses a committee of practicing CFA charter holders and staff to design the curriculum with input from other charter holders through an annual survey. The education advisory council (EAC) provides oversight and guidance to the process of development.
Results for the level I and II 2018 CFA exams are coming up (August 14th) with the level III results out on August 28th. CFA exam results are emailed out with the title, “your CFA Exam Results” and many will be too afraid to open the email immediately. Posts on the results and how to prepare range from the strictly informational to the frantic. I saw one post recently that suggested that the candidate visualize opening the email and seeing bad news!
OK, so it’s six weeks left to the CFA exams and the last thing you want to think about is exam day. You want to hear all the secrets to getting every last point and how to master the material, right? We’ve covered study strategies, the ins-and-outs of each exam and just about every part of the curriculum on the blog. The one thing we have never covered in more than four years of the Finquiz blog may be one of the most important to your success on the CFA exams…how to relax on exam day!
Freelancing is nothing more than working for yourself, finding small projects where you can and not being held to any single employer. There are two great benefits to freelancing for CFA candidates.
Looking at the profiles and stories behind some of the most famous CFA charterholders has not only been a motivation exercise for me in the past but also a guide for my own career path. Check out these five success stories below of famous CFA charterholders and see if you can find any similarities.
I see this question all over the internet. While CFA versus MBA seems to be the most popular, it is followed closely by CFA versus virtually every other financial or business designation (CFP, CAIA, CPA, etcetera). I think sometimes candidates are so caught up with the question of which designation to pursue that they forget to actually study for any of them.
It’s not necessarily the designation that gives CFA candidates the advantage over their finance peers, it may be something far deeper.
The cases are basically just practice for the Code and Standards. Working through them will help you start to see how the Institute formulates questions on the exam. You will not see questions in the CFA exam specific to the cases, so use them as additional practice but do not spend too much time with the details of the case.
A survey of how much CFA charter holders make offers some interesting insight into compensation and the designation. How much do CFA charter holders make? It’s one of the most asked questions here on the FinQuiz blog and one of the most popular among candidates. Makes sense, why would you spend upwards of 1,000 hours studying and make other sacrifices without a little monetary compensation?
I know it seems way too early and every year I bark up the same tree that candidates need to start studying earlier. Every year the majority put it off until later…then much later. Some are still successful, others not so much. I’m not just trying to fill space and there really are some strong reasons for starting early.
It shouldn’t take the holidays to remind us of our responsibility to help each other but it usually does. In the grand rush to learn how to make our clients as much money as possible, and to do pretty well ourselves, it’s easy to lose sight of the truly important things in life. Don’t get me wrong, I am not ready to lay down my financial calculator and devote myself to world peace but maybe our success as charter holders and candidates enables us to do something bigger than just make money.
As candidates put the exam behind them, their minds turn firmly to using the designation to land that dream CFA Level 1 jobs. Some are quickly rewarded but many are just as quickly disappointed that their candidacy in the program does not make them a hot commodity in the labor pool.
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.
Perhaps an unanswerable question but candidates are always wondering if the CFA Program exams are more difficult now than in the past. A common question we get at FinQuiz each year, especially as candidates wait for their exam scores and look at pass rates provided by the CFA Institute for prior years, is has the CFA exam become more difficult over the years.
Study session 12 in the Level III CFA Program curriculum concludes the material on equity investments with three readings (28-30) on governance and international investments. You need to go through the material at least once to get the general idea behind the concepts and pick up the vocabulary but the study session is of secondary importance against the other material in equity investments.
Looking back on the Level 1 curriculum for these posts, it strikes me how effectively the Institute manages to work candidates into a topic with basic concepts and ideas. I’ve heard the Level 1 exam described as a mile wide and an inch deep because of the breadth of information involved but the difficulty is offset by not requiring too much detail.
How times have changed since I took the CFA exams. Even though it was only six years ago that I sat through the Level 1 CFA exam, the change in technology has been dramatic. When I first started studying for the exams, online groups were still growing but not widely used among candidates. Now I see that WhatsApp messaging is quickly taking over as a way to group study.
Study session 4 in the CFA Level II curriculum covers economics for valuation (3 readings: 14-16) and is worth between 5% – 10% of your total exam score. I thought the material was pretty interesting and had to resist the temptation to spend too much time on it. The FRA and Equity material on the second exam is tough and you really need to be spending your time on the core topic areas. Get the concepts and basic formulas down in economics and move on.
Alpha Inc. is embarking on a major expansion in a new market. Management is fully aware that if expansion is not handled well, the whole corporation as well as their own jobs will be in jeopardy. This is an example of presence of strong implicit incentive. Will it help if management is provided with explicit incentives? Not really, as they will put their best any way to save their jobs. Thus strong implicit incentive has substituted explicit incentive. (Substitution effect)
Study session 14 in the Level II CFA Program curriculum begins the material on fixed income with three readings (42-44) on valuation concepts. The material is not as recognizable for many candidates as the stuff on equity investments and can get tough at times. The first reading is fairly basic and secondary to the more practical information in the second reading. The topic is worth 10% of your Level 2 exam and you’ll need the concepts for Fixed Income in the next exam.
Corporate Governance is the attempt to manage the agency problem between shareholders and management. The two primary objectives are to minimize conflicts of interest between the two groups and to ensure that assets are being used productively and efficiently.