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 studying
Joseph Hogue, CFA