As somebody who began studying for the CFA exam with zero practical or theoretical experience with finance, I remember being frustrated with the lack of guidance available for how to study for the first exam. If you’re somebody who was in my position a few years ago, maybe you’ll find this helpful. Or maybe you’ll find this to be a detestable humblebrag with no discernable utility – c’est la vie.
On Test Difficulty
For people like us, with no financial background in academia or the workforce, things are a little bit different. A decent chunk of Level I material should be old news to somebody with a B.Comm or BBA. However, for those of you who only have an intuitive sense of what the “time value of money” is, Level I is considerably more difficult. Many people will comment that Level II is a “different beast”, while others will claim that passing Level I doesn’t mean you’re capable of passing Level II. For a person with a business undergrad, I don’t doubt that this is true. But for finance newbs, Level I is quite difficult. In fact, out of my three tests, I likely had the smallest cushion over the minimum passing score of any of the 3 tests. I tallied my “guess” and “confident” answers from all mock tests and the real thing to help me establish confidence intervals for my test scores:
- Level I: Likely between 70% and 75% (studied 350 hours)
- Level II: Likely between 74% and 80% (studied 400 hours)
- Level III: Likely between 67% and 78% (studied 275 hours)
Due to the nature of the Level III essay portion, estimating my score became quite a bit more difficult. Level III may have been my worst score, but I believe I passed fairly comfortably. I am almost positive that I scored better on Level II than Level I.
The takeaway? Don’t underestimate Level I if you’re new to finance. Everything you see you’ll be seeing for the first time, while in Level II you’ll at least be building off of concepts you’ve already learned. I would still agree that Level II is the most difficult, but it’s very close.
I truly believe that anybody who is capable of earning a bachelor’s degree at a halfway decent institution is capable of passing the 3 tests. And if you’re capable of passing the 3 tests, you’re capable of passing them consecutively - however, you need to be serious about what you’re getting yourself into. Ask yourself some hard questions about whether or not you’re ready to take on this kind of work.
- Are you ready for a 5 year commitment? Don’t start the exams if you think you’ll pass consecutively, because you might not…and then what? Study to pass, but plan to fail. I prepared myself to fail at least twice and still keep going, so getting through it unscathed was like a bonus.
- Is the loss of funds (not a big deal) and the loss of time (a huge deal) worth it for you in the long run? Is the shot at a charter worth 1500 hours of your time?
- Is my partner/spouse aware of what type of commitment this is? If you’re living with somebody, they take the CFA exams when you do. For March through May during my Level II prep, my wife essentially treated me like I was in a hotel. I came home, studied, ate, studied, pooped, slept, rinse and repeat. She had to run the house and take care of the kid. She wasn’t happy about it, but she was willing to do it. I wouldn’t have been able to take the test otherwise.
Here was my schedule.
- 6 months out: Create a study schedule, and create incentives to stick to it. When you stick to your study goals, bribe yourself with food or get your partner to commit to some sort of freakiness that you wouldn’t otherwise get to partake in. Pro tip: don’t create your schedule on study sessions or readings. Instead, take the number of pages in each reading, then apportion your time appropriately based on how many pages the reading is. I say this because some readings are much longer than others. This is also the time to do any meta-studying…which is to say, studying how to study.
- 5 months out: Begin studying if you haven’t already. I find that if you start later than this, you won’t have the mental stamina to get really good quality studying done (2 hour daily sessions were optimal for me, but these aren’t possible if you start in March).The order you study doesn’t really matter, EXCEPT, I would strongly suggest that you finish with Ethics. Once you read it you’ll know what I mean. Ethics is all about memorization of rules. It’s also a very, very important subject on the exam. You want to minimize the time between Ethics and the exam. For simplicity’s sake, I start with the first topic after Ethics, then go in order and finish with Ethics.
- 5 weeks out: Begin creating flash cards while going through the 11th Hour or Secret Sauce guides (more on this lower) and schedule in two half mock exams each week
- 3 weeks out: Finish creating flash cards, and start studying from flash cards. Increase the frequency of mock exams.
- 1 week out: Focus on your remaining flash cards, as well as doing lots of practice questions from your trouble spots. Keep doing mock exams.
- 1 day out: Study if you must, but don’t stay up late. Run yourself a hot bath and watch some girly ass movie before bed. Get your partner to whisper confidence inducing platitudes throughout the night while you sleep.
- 1 hour out: Chill. Nothing you can do now. Just make sure you have lunch arrangements figured out (I learned this the hard way in Level I).
Study Materials I used
CFAI Curriculum: This is way too long and way too thorough. Let’s be real here - you’re studying to pass the test. If you study from the CFAI curriculum you’ll be spending too much time on non-testable material. I only went to the CFAI if the other books weren’t explaining a concept clearly and I needed more detail.
Schweser : These guys are the evil empire of the CFA study prep world. They’re big, well run, and expensive. I used Schweser for Level III and borrowed a friend’s old materials occasionally for Levels I and II. I found their stuff to generally be better than the CFAI curriculum, but not as good content wise as Elan.
Elan Guides: Elan was bought out by Wiley, so they may have changed a bit. But, in terms of actual content, Elan was my favorite by far. The material was simple, concise, and included a lot of color-visuals. It didn’t have quite the same polish as Schweser materials (lots of typos), but I didn’t care about that one bit. It also had the benefit of being cheaper. Whenever somebody asks for advice on what to use for studying, I point them to Elan/Wiley.
- Reinforcement is key. Research shows that you are far more likely to retain information if you come back to it a few times, rather than just learn a concept and leave it. This is the same reason that nobody learns 365 new words when they have a “word of the day” calendar - you have to come back to it later if you want to remember it. Because of this, I would always schedule in some time to do some questions from previous readings several weeks after I finished it.
- Create flash cards for review. This was, in my opinion, the MOST IMPORTANT THING I did for studying. CFA material isn’t rocket science for the most part, there’s just a lot of it. At 5 weeks out, I would go through the 11th Hour or Secret Sauce guide and make a flash card with every concept I felt was testable. I usually ended up with around 600 flash cards. I would then go through these cards and only take it out of circulation once I got the answer completely right. Don’t underestimate how long it takes to do this - dozens and dozens of hours to create them, and dozens more to go over them. But, for me, this was an extremely effective way to review. Not great for theoretical understanding, but amazing for formulas and rote memorization (which is a huge part of every exam).
- Lastly, don’t put too much emphasis on advice given over the internet (including this!). Remember that your situation is unique to you, and whenever somebody gives you advice without knowing you first, they’re applying their own unique circumstances to your own, which often doesn’t work. Use forums like these for general guidance, but never, ever make a decision based solely or mostly from a source on the internet. AnalystForum in particular has a decent amount of arrogant assholes (comes with the industry) who spend 80% of their posts shitting on other people. If you’re a regular poster, you know who those people are. It’s very important to take their advice with a gigantic grain of salt, remembering that a good portion of what they say is meant to pad their own ego. Also keep in mind that people can have huge salaries and really powerful roles and still be complete idiots who just happened to get lucky or have good connections. When I asked for advice online, I was told I had little to no chance of passing consecutively with no finance background, that raising my GMAT from 600 to 700+ within a few weeks of study wasn’t possible, and that I didn’t have the right personality or credentials to get into even mid-tier Canadian b-schools. I went on to pass consecutively, scored 730 on my only GMAT attempt after setting aside 3 weeks of study, and was offered large scholarships to every school I applied to, including the best Canadian schools. I’ve learned that career advice online is damn near useless, because people lose their humanity behind a screen. Reach out to people within the industry in person, be polite and grateful, pay for the coffee, and you’ll get considerably better guidance.
If you’re wondering whether pursuing a CFA is right for you, only you can really answer that. It’s not a golden ticket, but it certainly isn’t something to sneeze at either. Be realistic in your expectations, and plan accordingly. If you think a CFA is right for you, but you’re not sure whether or not you’re smart enough – well, you are. It just might take a little more dedication than it does for other people.