Dear Analystforum,
I have been a lurker for the past 4 years or so and finally decided to post. Before I get into the main subject of this post I just want to give people a brief background of my education and CFA history.
I am an economics and accounting major. I am a licensed CPA (USA) and was an external auditor for 6.5 years, so I have a strong core accounting background. Much of my experience during my auditing years was in the FSI industry. I am now employed as a risk analyst - although strictly speaking my work duties are quite varied and don’t actually involve risk management per se, but a variety of accounting and finance tasks which is beyond the scope of this post.
I attempted CFA Level 1 in June 2008 and passed on the first attempt. I failed CFA Level 2 in June 2009 (Band 9), and I passed Level 2 in June 2010. I attempted Level 3 in June 2012 and failed (Band 9).
Many people ask me which level I found more difficult, 2 or 3? The general consensus seems to be that Level 2 is the hardest level. My answer is yes and no at the same time. Let me explain.
When I studied for Level 2, I was exposed to a lot of new material, especially with respect to valuations. I found that the most difficult part of this material was knowing and REMEMBERING, in sufficient detail, the different characteristics of the various securities that had to be valued in order to answer conceptual questions and perform calculations. For a person exposed to this material in this much detail and volume for the first time it is quite an overwhelming task. I especially found the derivatives and fixed income sections to be quite challenging in the sense that I found that knowing such a large volume of new material, understanding it, and letting it stick to my memory so that I can recall it during the exam was quite a challenge.
However, on the other hand, Level 2 was made easier by the fact that a large chunk of the material consisted of FSA, Corporate Finance, and Quantitative Methods, which to me are strong areas in which I always scored +70%, despite the fact that I didn’t normally study them all in much detail. In fact when I passed Level 2, I just glanced at the FSA and Corporate Finance Stalla Lecture notes and don’t remember solving any problems for them. I don’t recommend you do this however if these aren’t your strong areas since I never would have glanced at any of the other sections so briefly.
Having said that, I would say that the material that was new to me in Level 2 was more difficult than the new material in Level 3. However, overall, Level 2 was also made easier because a large chunk of the exam contained areas that I am strong in - especially FSA, and I would assume that ex-auditors would have a similar experience since the FSA section is a Godsend to us.
Moving on to Level 3, there was no FSA, no Quantitative Methods, and no Corporate Finance (although there were concepts taken from these areas in as far as they relate to portfolio management). Overall, I found the Level 3 material that was new to me to be somewhat easier to grasp for a first timer than Level 2’s material, however, the removal of a large FSA, Corproate Finance and Quantitative Methods section took away a big part of the advantage I felt I had in Levels 1 and 2. Furtheremore, there was a larger volume of material that was new to me. It is true that portfolio management was covered in levels 1 and 2, however, Level 3’s portfolio management section is worth 45%-55% of the total exam mark and covers portfolio management in much more detail than previous parts. Furthermore, you can’t really isolate any of the other sections (such as fixed income, economics, equity, derivatives, alternative investments, risk management) from portfolio management. In Level 3, as many people have stated, you are expected to have a more holistic approach in the sense that you will be expected to draw on your knowledge of the various subject areas in as far as they apply to portfolio management. That is also something we were not really accustomed to in Levels 1 and 2 since for the most part most sections were viewed on a stand-alone basis.
I’m not sure if this post is really useful to anyone, but I wanted to give a summary of my experience and perspective, especially as an ex-auditor writing these exams, in the hopes that it might be helpful to people out there in a similar situation. I have to also admit that writing this post has made me feel a bit better after failing Level 3. The last couple of days have been pretty misreable when I remember the fail e-mail and the thought of having to re-do all that studying is really bringing me down. On the bright side though, speaking from the perspective of someone that has failed his first attempt at Level 2, studying for the exam the second time is much easier.
So I’m hoping 2013 will be it. I just want this nightmare that started in 2008 to be over with.
Good luck to re-takers and new candidates.
I am a full time software developer, so I can imagine how tough this is going to be for me!