L3 vs L2

I feel as if L3 has now officially become the toughest exam. Which could kind of make sense - as you progress through the levels it should get tougher, not easier.

How many feel the same way?

Level 2 may still be tougher, but now I laugh at all the older people at work who say “Level III might be the easiest.” Maybe in your day old man, maybe in your day…


One more thing I noticed - more calculations this year than usual?

I truly believe it depends on your background… I have an initial background in accounting and transferred over to finance (Mostly derivatives; Swaps mainly) a few years after college. I found Level 2 very accounting intensive… (Foreign subs acct treatment, accounting for gain/loss in translation, Pension benefits accounting… etc. ) Level 3 may be a little easier for you if you are actually doing legitimate Port. Mgmt. If you’re writing IPS’s day in and out, I have to imagine Level 3 is a little easier since you are constantly situational profiling and dealing with the multiple types of investors you will be tested on. Anyhow, just my 2 cents. I truly believe though that Level 3 isn’t the easy out it is thought to be.

maybe CFAI will shake it up a little…testing L2 material in L3 format

Depends on your background. If you studied accounting you’ll probably find L2 easier. If you work as a PM L3 would seem easier.

if you are neither?..a blank slate as it were?

They used to, there’s no way they are going back.

i have an accounting background but still found L2 slightly more demanding overall, but not by much

I think L3 is tougher, or at least has much more volatility. If you put a lot of time into it, L2 is a lock. L3 may still get you with ambiguous questions that are worth a lot of points.

Spot on. Volatile is the best way to describe L3. Could’ve done like 3 masters degrees by now…

I passed L1 Dec 09, L2 June 10, then failed L3 last year.

L1 - everyone knows it’s relatively a joke

L2 - i never sniffed CFAI curriculum, just read schweser and did 1.5 schweser practice exams, passed no problem

L3 - f’ing brutal. Failed first try band 7, biggest shock of my life.

My take is that L1 is plug and chug, L2 is harder but can be “gamed” if you’re intelligent and know test taking strategies (it is multiple choice after all). L3 has crossed into the territory of “too difficult”. Anyone who passes L2 and puts more than 200 hours into L3 should pass. The pass rate should be ~75%, in my opinion. Based on the majority of the comments here, many people who got “wrong” answers actually had deep understandings of the topic and just didn’t recall one tiny element, or overlooked that tiny element, or felt the question was subject to interpretation. As someone who will shortly have an elite MBA degree and doesn’t “need” the CFA designation for his career, my feeling is that they are losing a lot of great charterholders by tricking up the L3 exam.

L3 is harder.

L2 = learning a LOT of material, but you can easily hobble through cuz of the multiple choice structure.

L3 = learning less material to a higher degree of perfection while simultaneously learning to take a different test structure (double jeopardy, essay format, ambiguous/intentionally poorly written vignettes etc.).

I agree w/ the above posters comments that pass rate on tests should be higher. It should be 70% at a minimum across every test. They should get rid of Angoff method entirely, it cuts down on the credibility and adds a layer of obscurity to the process @ CFAI.

It has been several years now, but I found L2 to be much easier.

No one who studied with me for Level III (there were 8 or 9 of us) wished that this was like Level II. Level II is a lot harder to get your arms around, and I think we were all glad not to be there again.

In Level III, you don’t have to reprice a swap, no time series analysis to sweat over, no remembering 75 different ratios, and no business combinations to do. Instead, you have compute a return requirement for a mega-rich business owner who lives somewhere in Europe, or explain why an endowment can invest in private equity but a pension plan probably cannot. And then of course there’s GIPS.

The trick about Level III is that the material is much more about concepts and ideas, and you have to know it much more deeply to perform well on the morning exam.

The thing also is that by this point you’re generally pretty annoyed and pissed off at CFAI for what amounts to a giant hazing exercise. They will work you to death on vague little details with no clear set of rules and that make little sense in the practical world.

For me the difficulty is that with level 3 you are competing with people who have passed level 2. For level 2 you are only competing with people who have passed level 1.

I think I can add a unique perspective to compare level 2 vs level 3 (hopefully without sounding too arrogant).

I don’t have work experience in finance or accounting but did study finance at uni. I’m a member of Mensa (high IQ society) and pretty good at guessing and connecting the dots. I aim to have a basic knowledge of all concepts (as opposed to knowing everything to the nth degree), to rely on moving quickly in exams and applying logic if the question is more complicated.

I’d say that Level 2 was much harder compared to Level 3 (results pending).

The Level 2 curriculum is longer and the concepts are more difficult to grasp. There are significantly more formulas to memorise and the types of calculations to perform. Accounting is a beast (0% weighting in level 3) and derivatives/international finance calculations has a very steep learning curve. Not to mention it has a lower pass rate.

Also, I would imagine failing Level 2 to be significantly more painful. You would have studied at least 750 hours before you go pass half-way. Candidates that fail once would likely have failed Level 2.

There are 2 advantages I see with Level 2:

  • You can get away with quickly guessing ~5-10 difficult calculation questions in the exam. At least a third of them will likely be correct anyway. You’ll also save 15-20 minutes working on cementing the other questions you do know.
  • The answers are in front of you. In Level 3 short answer, you sometimes have to know both the name and definition of a term, rather than just the definition.

In my mind, Level 3 is easier:

  • Shorter curriculum and depth. No accounting/quant, significantly less economics. Third time learning Ethics (which is the same). Plenty of new concepts but not as many as Level 2.
  • Short answer past exams are published.
  • Short answer section allows consequential marks compared to Level 2. Not being 100% right is okay.
  • You might get away with not knowing the first question in double jeopardy questions in short answer. There was a 2-part question in the recent exam. First question asked something like the intrinsic value using some complicated formula. Second question asked whether it was over- or under-valued. I forgot the formula but just made it up. For the second question, just stated it was higher than 1 and therefore over-valued. Probably not right but I can at least move on.
  • The pass rate is higher. Yes I know you have to beat Level 2 to get there but Level 3 has a higher turn-up rate. There are plenty of candidates who didn’t study but wanted to get a feel for what the exam is like.

I think people overestimate the concepts of ‘synthesising’ level 3 concepts and applying everything you learnt to answer a single question… all questions came from somewhere in the curriculum and vignettes are still logically categorised.

The short answer section is much easier than the multi-choice section if you just move quickly. I think most people don’t feel good with either writing less (or guessing) and quickly moving on - especially since it’s the first exam. But if you compare the complexity of the short-answer questions vs vignettes, the former is much tighter and the appropriate data sectioned off quite clearly. Vignettes are designed to trick and confuse you with 2 pages of condense information. Short-answer section does not have its primary aim to trick you.

That’s just my 2 cents.

L1 is probably the biggest beast of them all