(Disclaimer: This post is intentionally long. Strategy for passing all three levels on the first attempt cannot be explained in a couple of bullet points. I’ll try to organize, but if it’s too much for you, than you will not enjoy reading over 7,000 pages of CFA material . Also, sorry about ugly layout. Its very difficult to format on here.)
… begins 3 years ago when I was a hungry, motivated recent college grad. I’ve always considered myself to have average intelligence at best (and my test scores proved it :-/) but I had a burning sensation to improve myself. I debated for quite some time between MBA vs. CFA, but it soon became clear to me that the CFA fit my goals perfectly. I knew going in it was going to be one of the toughest test (literally and metaphorically) of my life. Coming out, it was about 3x tougher than I imagined. It’s not easy folks. There will be a lot of pain, a lot of suffering, sacrifice. The things you once loved and the people you once loved will fade in the background. The CFA is not for everyone. Thus, the pass rates. It weeds out the weak (sorry for sounding harsh or conceded but it’s the truth). You’re not a loser if you can’t do it or if you give up. It just means this life is not for you.
Why Did I Do It?
To break into Wall Street. To challenge myself. To deepen my learning about financial topics I enjoy. To silence the ones that said I couldn’t (this is the deep rooted one). I had a fire burning on the inside. To get better, to accomplish, to prove to myself that anything in this world is possible. My fire grew throughout the levels (it’s still elevated btw). I wanted it more and more. But a new motivation was added towards the last parts of my CFA journey; my freedom. You will quickly learn what a true mental imprisonment sentence feels like. I’m not trying to scare anyone away, just telling you how I felt about it.
I am thankful to the people around me that supported me throughout and understood my pain. I am thankful I was lucky enough to pass all three on first try. I am thankful for the ones on AF that were always willing to help. The ones that have been there done that and were willing to take time out of their day to help. Thank you all.
Hold Up. Should You Even Start?
I kind of been implicitly talking about this, but ask yourself a few questions.
- Why do you want it? Make sure you have concrete motives. Don’t begin a long road trip with no oil in your car and gas near E.
- I know you can’t fully predict this, but what’s your life looking like over the next few years? If you know you plan on having a couple kids, or whatever I would really think this decision through and advise caution. The really smart ones I’ve seen failed time and time again is because of things like that going in one’s life. Be realistic with the time allotted.
- See traits below.
The Traits Needed to Pass
- Discipline. I think this is by far the most important trait for passing all three levels. Again, I’ve seen A LOT of very intelligent people fail because they just didn’t put the necessary time in. Did Einstein know all there was about physics when he was 5 years old? Of course not. No matter how smart you are, material not in your brain must be learned through some avenue or at least some of data points to triangulate it. The one’s that think they can outsmart the exams usually get a rude awaking come July/August.
- Vitality. You won’t find intelligence on my list but this one is important. Let me tell you right now, life stuff WILL happen to you during this. It will put you to the ultimate test. Also, the farther you get through it the more and more you’ll want to just say screw it, “I’m not studying this weekend. I’m not doing this practice test (important!!). etc.” You must not cave in. You must be mentally strong.
- Passion (Motivated). Self-explanatory. You must have something you’re fighting for or you’ll have no fight.
How Many Hours?
Probably the most asked question throughout all levels. I was guilty early on as well. Let me say this, you must put has many hours as it takes to get the darn job done. If that’s 200, 300, 400, 500, 600 then so be it. Study more to study less (failing adds another year). The mythical 300 hours target is BS. I always approached that target like this. If the majority of people target 300 and the majority of people fail, all else equal, why would I want to put myself in a position to be average and thus almost a lock to fail at least one level? Give yourself an edge by putting more time in.
Overall Broad Three Level Strategy
- Start at least 6 months in advance
- Make a study schedule, set weekly goals, and track how long it takes you to get through readings and how long it takes to review. This serves two main purposes.
- (1) You’d be awfully surprised how well this works at keeping you disciplined. I always got a feel good feeling every time I hit my number. I like feel good feelings. Thus, I hit my numbers a lot
- (2) This helped me plan when I wanted to do a second review of the material as I got closer to the test. Keep in mind a full review of all the books will take you at least a few weeks to over a month.
- Keep track of scores on end of chapter (EOC) problems and mock exams. Helps to pin point weakness because when the clock gets closer and closer to zero, your time because exponentially precious. This will pay dividends in the last few weeks of preparation.
- I always read the CFA books from A – Z. My thinking from the beginning was, this is the source. The people that write these books are the ones that are writing the test. 3rd party providers are great and some people have used them solely and passed all three, but they cut out way to much important information (especially LIII). If your crunched for time, then get 3rd party books. If not, CFA books.
- So this was my exact reading strategy for each level.
- (1) I read a reading, highlighted text and then wrote important notes in study guide.
- (2) I repeated this for each reading until the end of the session.
- (3) Then, I went back and reviewed my highlighted text and study guide.
- (4) I then did each EOCs.
- (5) Next, I did this same routine for the remaining sessions for each book.
- (6) After I finished a book, I repeated review and EOC. This helps create a moving average so to speak. It re-forced the concepts in my memory.
- (7) After I completed the books, I went back and did one more full review. (This is why you should keep track of your time…to plan).
- Next, videos. Although not necessary, it will go a long way especially for LII. I didn’t watch any videos for LI, but in LII there are so many more concepts and many more difficult ones that you probably haven’t encountered yet (Who to heck manually values arbitrage profits from swaptions??? Like seriously). I watched Elan videos for LII. They were great. Really helped clean up weak areas for me. For LIII, I used Schweser because Elan (now Wiley I think) didn’t have LIII. Please don’t worry about cost. Is $400 or whatever worth saving to potentially put in band 10, which means 1 more year of your life gone?? Think about it like that and you won’t hesitate to get ahead of the competition.
- ***After this phase comes the most critical part of your study session. Mock exams. THIS WAS THE BEST SOURCE OF LEARNING FOR ME. If you don’t do mock exams, I would bet a large sum of money you do not get through all three levels on the first attempt. You can read all you want but you will never learn a copious amount of material until you apply it under time pressure. Do as many as you can. Start AT LEAST 6 weeks before exam. I usually started in 7 – 8 week range. Again I’m always looking for an edge. You will probably fail your first few (especially in LII and LIII). This is beyond normal. Focus on improving. My routine would be to take mocks on weekends then hit weakness during week and repeat. If I were to pick one thing to remember from my article it is this.***
- (1) Where do you get them? The CFAI puts a few on there for you, but I highly suggest outsourcing them. I used Schweser and Elan (Wiley). They are all good. Do as many as you can.
- (2) One caveat for LIII. Schweser wasn’t as helpful for me based on how the morning session is structured, but still helped. All the CFA AM mock exams are public information dating back over a decade. My suggestion is do as many of these as you can. Even the older ones. Yes there are some topics that are no longer in the curriculum…just pass these up and do the ones that are still covered. This is a very critical step in mastering the IPS questions (20 – 40% of AM exam).
- Don’t be surprised if you’re a few weeks out to exam and your still not where you want to be. Remember that you will NEVER be where you want to be. There is just too much darn information. There will be things you know you should know cold but you forget. This is very normal. Try not to pull your hair out.
- The last few weeks is crucial. Not only should be focused on weak areas but make sure your focused on weak areas that matter. If you 1 week out to exam and you still don’t understand derivatives for LII…just give up on it. It’s a small weight (when I took it) compared to the rest and if you don’t get it by then you won’t get it by exam time. Cut your losses and focus on a topic with a bigger weight that you could reasonably improve on until the test.
- A lot of people stop studying a day or two before exam thinking it will only have marginal benefit given many months of studying. WRONG! I vividly remember some things I stuffed in my head the day before that were on the exam. This may seem to contradict my above statement but I’m talking about memory here and not learning new concepts. You’ve studied this long, why let up now?
- Try to go to bed early the night before. I always ran the day before to get some emotions out and also did some periodic meditation. It’s time to get in the zone now. Turn your phone off, take deep breaths and make sure you have everything you need. Also, never forget that although this is extremely important to you and you spent so much time studying, it IS NOT the end of the world if you failed. There’s a lot of worse things that can happen to you. I know it’s hard not to, but the more you think of failure the more you will stress and less quality studying you will get.
I could literally talk about this all day. I could write a book, but I think at this point it’s best to just answer questions. I know some of you have a lot so fire away. I’ll be happy to answer them to the best of my ability. Hopefully some of the AF veterans chime in too because I do not have all the answers and my advice is based off my world not yours, so carbon copying my advice to apply to you may not maximize your efficiencies but I think if you take bits and pieces from it, I hope it will help you. Finally, good luck to you all that have decided to embark on this journey. It is extremely rewarding and not just from a monetary standpoint. I no longer believe in limits. They are just something our own minds tricks us to believe. You shouldn’t be fearing failure, you should be fearing not trying. I think if you’re willing to sacrifice you will not regret it and you will be a more competent finance professional at the end of the tunnel. Good luck everyone and go get it!!!
“Strength does not come from winning. Your struggles develop your strengths. When you go through hardships and decide not to surrender, that is strength.”