Level I CFA Exam Strategy
I usually start posting on a site with an introduction of myself, what I expect to cover and how I am going to help you pass the CFA exams. With about nine weeks to exam day, we have little time for the touchy-feeling welcome aboard.
The quick and dirty: I passed the level 3 CFA exam last year and EARNED the right to the designation in September. I am the Communications Chair on the Board of the CFA Society of Iowa and an economist for the state.
Over the next nine weeks I am going to spend most of the time on specific topic areas and things you can do to pass the CFA level I exam. We’ll spend some time with general strategy and things you need to consider for all three exams as well. To do this, I need to know about you as the candidate. How long have you been studying? What resources and study methods are you using? In which topic areas or study sessions are you the weakest? Reply to these in the comment section so we know what we need to do to get you over that first exam!
Within the rest of this post, I am going to cover a general strategy for the level 1 CFA exam. This is the strategy I used. It worked for me. You need to decide if it will work for you, whether pieces of the plan or the whole thing.
You need to be the Tortoise AND the Hare
There’s no time left for slow and steady. It’s April and that light at the end of the tunnel is a six-hour freight train coming towards you. If we were earlier in the season, I would say hit everything. This is stuff that will make you better at your job and you will need it in the CFA level 2 and 3 exams.
At this point though, you need to focus on exam points.
The graphic above is approximate topic weights posted on the CFA Institute website. A few things should become incredibly clear looking at the table.
- The Institute wants you to learn Ethics! It’s a big chunk of the first exam and the material is basically identical through the other two levels. The sooner you learn the Ethics material, the easier these exams will be.
- Ethics, Financial Reporting & Analysis, Equity, and Fixed-Income are more than half the test. These are also the most heavily-weighted topics in the level 2 CFA exam. These are your ‘core’ topics.
- While it is not evident from the pic, the level 2 curriculum for quantitative methods builds heavily off of the level 1 material. It may not be worth as much as FRA but you need to pay attention here as well.
Five of the ten topic areas are worth more than two-thirds of the exam! Here’s how to use that:
- Mock exams are extremely important. You might not sit down to a full six-hour practice, but do at least one half-exam each week. Most question bank programs will randomly generate an exam with the approximate topic weights. After each test, dump the results into a spreadsheet so you can follow your progress overall and by topic.
- The Institute has said that no candidate with a score above 70% has ever failed the exams, so that is your MINIMUM goal. Aim for at least 80% in the core areas (Ethics, Quant, FRA, Equity, Fixed-Income) and for at least 70% in the other topic areas. With around ten or more half-tests worth of scoring data, you will be able to put a confidence band around your score for the exam (gotta love that quant methods). Use this to see where you need to focus your studying the next week.
- Always do at least 30-minutes of practice problems after reading a section. Then do another set of practice problems on the same reading the next day. This is going to force your mind to recall the information and turn it into long-term memory. Ever get somewhere in your car and not remember the trip (from zoning out, not from beer)? The same thing can happen with just reading the material. You HAVE to test your recall with practice problems.
- If you miss a problem, read the solution. If it seems completely foreign then you need to hit it until you understand the material.
- Try to hit the material through different medium (i.e. reading, watching, writing, listening). Some people are visual learners, others are auditory, but everyone can benefit from having the material presented in different ways. This can be some pretty flat stuff at times, you need to mix it up and keep it fresh.
- My schedule was always:
- Watch Videos on Monday
– An easy beginning to the week
- Read the study guide on Tuesday
- Sometimes this is Tues/Wed for long sessions
- Skim through the official curriculum on Wednesday
- Thursday, I do the end-of-chapter and blue-box questions from the curriculum
- Friday was my day off (I earned it)
- Saturday is for mock exams
- Sunday meant reviewing all topics (in order of weakness on exams) through flashcards, summary sheets, practice problems, etcetera. Anything that would help me review a section in an hour or two.
*Keep in mind, I am doing practice problems after studying each day. You’re not done until you’ve hit some practice problems. It’s a tough schedule but only for a couple of months. Hit it hard now and you won’t have to be the 50% that will have to repeat it next year!
Wednesday, we’ll review the Ethics material and how to ‘understand’ some of the issues presented. Despite going through three years of basically the same material, the topic gives candidates problems because the Institute can be incredibly vague with their questions.
Let me know where you are at in your study plan and what topics are giving you problems. ‘til then, happy studyin’.
Joseph Hogue, CFA