Reading through the LinkedIn group lately, someone was asking about the difficulty of the Level I CFA Program exam and how it related to another professional exam. A couple of candidates commented how tough the material was and how much there was of it.
I just had to smile.
The challenge of the first exam
Looking back, especially on the first exam, I agree completely with comments on how broad the material is and how daunting it can be for new CFA candidates.
It is hard to say that difficulty of the material in the first exam really isn’t really that tough because I had come from a background in finance and several years of working in investments and accounting by the time I took the test.
For those making their first steps into finance and asset management, I can imagine the books read like another language.
The challenge of the first exam, even for those with backgrounds in the industry, is the sheer volume of material you need to master.
Forget going to the gym, you’re going to get all the exercise you need carrying around those books.
I took full schedules every year of my undergrad and I don’t think my curriculum for any one semester (maybe two) had the page length of the first CFA exam.
We all know how it is to drink from a garden hose. If the water is turned up to full stream, it’s a little challenging. Now imagine trying to drink from a fire hose and you’ve got an idea about the difficulty of the level 1 exam.
Don’t try to catch all the water at once
Just like drinking from a fire hose, don’t expect to get all the material on your first read through the curriculum. Most brains just do not work like that. You are going to remember maybe 30% or so after your first read through the curriculum, and that is if you work the practice problems.
If you just plan on reading through and not working any problems, you may remember even less.
To really master the curriculum, you need to keep going back to the fire hose and getting the water you missed. I made a point to hit the curriculum at least 5-6 times for each exam. I would first read through the books, then work my way through study guides and videos.
Then I would work through the official books one more time making flash cards for the difficult topics. I worked practice problems and test banks through each round of reading to make sure I was progressively picking up more of the material.
This kind of plan takes a little longer but you’ll go to the exam fully relaxed and confident that you will succeed.
Linked here is a graphic published by the CFA Institute showing the exam topic area weights across the three tests. After just a brief glance, it becomes extremely clear what topics are most important for passing the exams.
Don’t misunderstand, you need every point you can get and cannot afford to completely ignore any one subject but with limited time to study you need to focus on the topics that mean the most points.
Use this information to develop a study plan. Let’s say you are doing well on practice exams except for two topics, Alternative Investments and Financial Reporting. Which do you think you need to spend more time on?
Answering 60% of the Alt Investment questions correctly means you only missed about 1% of the total exam points. Answering the same percentage correctly on FR&A means you just lost 8% off your exam score!
Put the two ideas together and you’ve got a good chance at passing the exams. Read through the curriculum once, working the practice problems, then use study guides to work through the material quickly once more.
After that you should have a good idea about which topics are giving you the most problems.
From there, focus on the high point topic areas. Keeping working the practice problems and test banks for the entire curriculum so you don’t slip too much on the lower-point topics.
Less than four months left to the December exam. Good luck.
‘til next time, happy studyin’
Joseph Hogue, CFA