Dear forum,
Although by all accounts I am a pretty self-centered dude who only cares for the people close to him, I do believe in giving and getting back. After crushing back-to-back the CFA Level 1 (2018) and CFA Level 2 (2019) exams from the first attempts (top 10% of all candidates in both cases, scroll down to the bottom of this message for the screenshot), I thought I might share with you some non mainstream knowledge. Not sure whether this post will be popular or not but even if helps only one person to pass the exam like I did, I’ll take that.
Now, let me be completely clear on something. This post and threat was not meant to answer WHAT you need to know as in actual knowledge, but HOW you must approach this in order to successfully prepare for and pass the Level 1 exam. I think this is even more important. I do not have ALL the answers but I honestly do believe that I have SOME of the them (and I think the answers I have are pretty damn important).
Below I show my main sticking points which I recommend for everyone to take on board: 1) Do know what you are getting yourself into - the difficulty of the exam is not in its tough questions (most of them are not) but the sheer amount of time that you have to commit because of the quantity of topics and reading you must have at least a basic understanding about. CFAI reports 300 hours on average for successful candidates. While I do think this number is a bit overboard, it gives you a good indication, the exam is no joke. Even if you are a S&P 500 CEO, there will still be material which is new to you (e.g., ethics, lol?) or topics that you need to practice more in (e.g., Q methods).
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Get all the background material for the exam you can before you start studying - exam format, pass rates, difficulty, personal belongings policy, etc. You will be surprised but despite all the e-mails CFAI sends out multiple times during the course of the year, there are still people without approved calculators and passports on exam date. As my uni lecturer once said - the fact that there are stupid people makes me smarter.
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Start early - aside from the obvious reasons, your exam fee is reduced. No brainer, but still, not everyone does it. If you enroll early (e.g., September), more or less you have 9 months to prepare. You don’t have to do it or even start studying intensively at first, but If you spread 300 hours over this 9 month period, which gives you around 8 hours of study time per week, this is completely managable.
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Study time allocation - I work full time in an extremely demanding financial services job (senior associate) yet I manage to find an hour here and there from work to go through some readings during the working week. In the initial months of my preparation (more details below), most of my time is spend on weekends. I try to spend 3-4 hours early on in the morning, but suir yourself here if you are an evening person.
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Have a solid game plan - it should be well thought through and followed but with some room to maneuver where things aren’t going well and need to be adjusted. My plan for Level 1 was as follows: go through the 6 CFA (5 Kaplan) books until January, use February, March and April to go through the materials again and May and June for final preparation (go through my summaries 1-2 more times), mocks, etc. This gives you 1-2 months of flexibility if something doesn’t go as planned.
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If you are studying to pass, get summaries/exam prep. This cuts significantly study time (e.g., 25%-75%) which you could use in other areas of your life. I used Kaplan but I don’t think there is a big differences which (approved) prep you choose.
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Do a correct combination of studying and practicing. You will not pass the exam by only doing one of them so you should strike a healthy balance. Study first, then topic questions to measure your understanding (how many % of the questions you got, whether you knew what were the important areas, etc.)/
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Get 2 calculators. For a negligible price, you destroy the chance of your battery trying to screw you over. Not a high chance of occurring but with devastating consequences if you hit the jackpot. Happened to me once in university, I was not amused one bit. On the more funny note - you never know which hot girl can hit on you asking for a calculator. Anything that eases your mind comes here - if it calms you down to have 10 pencils, get 11 pencils.
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Compare yourself to other candidates - both Kaplan and CFAI have such a tool available. Contrary to what other people say, I’ve actually found it quite useful and a good indicator. It also gives you an extra boost when you are constantly in the top 25%. Now, don’t take it for granted as there will be some deviations, e.g., although compared to other candidates I was a comfortable pass in both Kaplan and CFAI prep tests, I always do well in exams and deliver my best under stress where I have to. So my actual exam score was much better (compared to others) than when preparing. Other people are the opposite, and they blow up on exam date. If you are around the 60th percentile (only 40% of candidates have better prep scores than you), better man up and increase that score!
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Maximize your effectiveness - what I mean here is after going through the material once and comparing yourself to CFA candidates you should know more or less where your strengths and weaknesses are, e.g., if you have 50% and Q methods and 60% at accounting and you find both equally hard, spending more time on Q methods is the right decision (higher chance to success). Most of the topics in Level 1 I found easy with some prior experience. The most difficult ones for me were Q methods, Economics and FRA (accounting).
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Always check your answers whether you marked the correct question number on the answer sheet. Being one behind or after can have devastating consequences. I always check the answer blank 2 times and afterwards I randomly select 10-15 answers again to double check.
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Know the main concepts - as you study through the material and do practice questions, you know more or less what to expect on exam day. Sure, there will be questions on the actual exam which you are not sure about, pick a/b/c and move on (you have 33% chance of guessing!). I was honestly amazed how people run out of time without even answering 20-30 questions when I had 90 minutes to spare in my AM session. Remember. all answers have the same weighting so if it’s hard to calculate or you don’t know how to, move to topics/questions where you have a bigger chance of answering.
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Take a week or two off work before the exam date - some employers allow paid leave to prepare combined with a bit of holiday time. This time if used correctly is a game changer and could pass over the top an otherwise unsuccessful candidate.
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Know the exam venue - what I always like to do is go there the day before to get acquainted - where is my room going to be, the toilets, where can I eat, etc. Have a plan during break - I like to bring my own food (something good for the brain) to avoid stomach problems.
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Enjoy the break - normally the brain gets tired after thinking hard for 3 hours straight. During the 2 hour lunch break (between AM finish and PM starts) take the time to relax. Typically I call my gf, best homie and parents to tell them how I’m owning the exam. Just do anything that gets you in the zone!
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Always go early on exam date - those 30 minutes of sleep will not save you but if something unexpected happens, the stress that you will have will most likely get you to fail. Also, use common sense. I’ve heard of Indians get up at 2 am in order to arrive by car at 8 am on exam day (?!). Where possible, make your life easier - go there the day before, book a hotel near the exam venue. Even in expensive countries, hotel costs are negligible when compared to the fees you paid (not to mention the biggest investment you have made, the time spent to prepare)! Here there is no rule good for all but usually taking the last possible flight is not a good idea. An example - a colleague of mine went with his car to the exam, had a flat tire, then got into a huge argument with the security guard for parking afterwards and because of all this stress, he failed. Don’t do the same thing to yourselves - book a hotel nearby (especially if it’s a foreign city) within walking distance or get a taxi.
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Don’t lose your confidence, no-one gets a 100% of the answers right. Actual MPS is below 70% so even if you are unsure about 5 questions in a row, keep at it (again, don’t spend too much time on hard questions or computation intensive ones).
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If you don’t study, you will not pass. Unfortunately, like pick-up and other areas in life, there is no silver bullet. My tricks can help to get you over the MPS if you are a little bit below but they are not magic.
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Some hard truth - if you studied hard and did not pass Level 1, take your losses and stop. I can honestly say that Level 1 was not only easy for me but is a walk in the park when you compare it to Levels 2 and 3. If you studied for Level 1 and did not pass, I would say that there is an extremely big chance that you will not earn the charter even if you spend more time and money.
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My best strategy - despite CFAI unwillingness to admit it officially, you are graded against your peers. If the exam was hard for you, guess what, it was hard for everyone. My main strategy which I used in Level 1 and Level 2 and without a doubt will use successfully for Level 3 - count on people’s stupidity. Let’s face it, people are morons and I’m sure you see this everyday all around you. You don’t have to be perfect, just better than most. Does not seem impossible, does it? Just look at most of the Chinese people commenting on the public CFA discussions and you will know what i am talking about.
With that, I’d like to finish the first version of my post. I’ve tried to make a mix of strategic (high level) and operational advice, so that it’s useful for a wide audience. If this was helpful, keep an eye out as I might update it in the future. And if you think this was helpful, give me a shout-out so that I know that people who are reading this actually find it useful and I will make a similar thread for Level 2.
Good luck dudes, I’m sure you’ll do well!
p.s. As promised, Level 1 exam results - following the above points, I was not only top 10% but was going to be top 10% in all possible scenarios!
