I passed the 2017 L2 exam with 175-200 hours of study. I am thrilled to have passed the exam, but I think I would have been a lot less stressed had I actually logged the 300 hours most people suggest. Several unexpected and difficult things happened in my life during the period in which I had planned to study that sapped a lot of my focus, but I didn’t want to give up and needed to give the exam my best shot and leave it all on the field. I acknowledge that there was definitely a good amount of luck that played into my result, but I also wanted to chronicle my story for future test takers to let you know that if you’re short on time next year, there is still hope, always!
DISCLAIMER: I did have a couple factors working in my favor. I studied economics in college, and I work in finance, so some of the subjects, like FRA and Equity came easier to me or it wasn’t the first time I had seen them. That being said, L2 has lots of tricks and twists that require much more than just a cursory understanding of the material. If I could start again today, I would have made sure I spaced out 300 hours over a 6 month period to study. I’m just explaining why I felt incrementally confident that my plan might actually work and suggesting that it’s not an ideal study strategy if you can avoid it.
TIPS:
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Use the CFAI material and make sure you do every single EOC question and Topic Test. Even when there were cases where I didn’t have time to read every page of the material, I made sure I looked through that section’s EOC questions and made sure if I couldn’t do the question yet, I at least understood the answer. Additionally, the topic tests that the CFAI puts online are invaluable. I also made sure I went through every single question and understood the logic behind the answer. I had the Kaplan books, but only used them for a few sections and topics, and didn’t spend much time on their practice problems or mock exams. There are ~80 item sets online in the topic tests, close to 500 multiple choice questions, written by the CFA Institute. That’s more than 4 full CFA L2 exams worth of questions. Don’t underestimate them or be bothered by the fact that they’re online. The EOC questions are also valuable (a reason to get the CFAI books in print rather than just getting them online). Between TT and EOC, that’s 1000s of questions written by the same people who write the exam. Kaplan and the others make great resources, but to me, for L2 specifically, there’s nothing like CFAI questions.
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Don’t feel bad if you don’t have time to sit for a full mock exam. I didn’t have time to sit down for a full one because I needed to use that time to get through the course material. Time seems to be less of an issue than in L1 because there are 120 versus 240 questions, but understanding a concept very well can turn 6 minutes on a question into 30 seconds on a question. I knew if I didn’t get through all of the course material and do as many practice problems as possible, I would put myself at risk of losing an entire item set.
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Remember that there is a reason to study everything on the exam and that someone somewhere is really passionate about that reason. For almost all candidates, you’ll be studying at least one area that is very difficult for you and seems extremely arcane. But the fact is, someone is using it for their job. Pensions, for example, are difficult to understand even for everyday users of financial statements. But if you think about why someone might need to understand them (projecting future costs associated with caring for employees and retirees in order to get a better sense of a company’s ongoing free cash flow), the topic can be easier to “connect with” if that makes sense. I personally found Derivatives to be very difficult, but once I really appreciated and internalized the fact that the value of a contract generally is the difference between the future price and the spot price, it was almost like a whole bunch of dominoes fell down and every question became more accessible.
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Start FRA early and take your time on Equity. And don’t avoid Fixed Income. If you can start on the FRA stuff early and gain confidence early in the toughest and most complex areas of the material for you, the rest of the FRA material will seem will seem much more doable. It’s hard to pass the exam without a decent score in FRA. Additionally, the CFA curriculum includes a lot of similar models related to firm valuation in the Equity section, and they’re very easy to confuse. Knowing how to apply each model will make doing practice problems much easier. Finally, if you can manage it, don’t avoid Fixed Income. If you are really, really pressed for time, Fixed Income is not the one to give up. The topic weight on the CFAI website is 10-20%, one of the highest. Unless you’re a fixed income analyst or trader, fixed income might not be intuitive to you, but if you spend some time with it going through problems and trying to figure out what the CFA Institute wants you to know, understanding Fixed Income could be a really high return investment for you in a short amount of time.
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Don’t abandon any single area. If you’re really pressed for time, you may have to do this, but you never know what’s on the exam. If you’re lacking time to really understand the readings, read the solutions to relevant EOC questions and topic tests and make yourself some flashcards. When you’re there on exam day, some recollection is better than no recollection for a multiple choice question.
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Identify your weaknesses early. If you made it to L2, you must be good at least some area of the exam, and there are probably some areas that you find difficult. It doesn’t help you to repeat questions you get wrong. What’s most valuable is making mistakes before you actually take the real exam and understand why you’re wrong. That’s how you capture points.
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Take time off before the exam (if you can) and try to get yourself in the zone in the days before the exam. I was fortunate to have a week off before the exam. Know your testing site. Print your admission ticket. Visualize success. Keep thinking about questions and why the answers were the way they were. Try to avoid other distractions. Get good sleep. Eat healthy. Make it to the gym. Turn yourself into an item set machine. Being comfortable with and getting excited about the idea of taking a 6-hour broad ranging finance exam on a Saturday in June will only help you more when you’re actually sitting in the room answering questions.
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Make note cards or a review sheet toward the end of your studies to cram formulas / things you’re having trouble remembering. You could get through 200 hours of study in 2 months, but that’s a lot of information to learn. You’ll retain some of it, but using some visual aids will help you retain as much as possible. Sometimes all you need on the cards are key words to remind you of the concept or theory.
These are my biggest tips. I’m happy to answer any questions about my experience. If you’re short on time, take the exam anyway, and if it doesn’t work out, don’t despair. I was fully prepared to take L2 again next year before I got my result today. It’s a worthy commitment though, and if you’ve made it this far through L1, you certainly have what it takes to make it through L2, even if time is constrained.
Whether you’re looking towards L2 or L3 after today, congrats on making this investment in yourself, stay strong, and enjoy the rest of your summer!