I’ve been dreaming about this moment since 5 years. Dreaming, really…
Back in 2009 I was looking through the CFA books during a quite boring party while waiting for the food to be served. My friend just applied for the first level. Being a computer scientist by diploma I was also interested in financial markets. At the time I began my career as software developer at an investment bank. My job was developing trading tools, graphical user interfaces, and simple order execution systems. This job was very technical and it didn’t require any financial knowledge, but anyway, this was something I wanted to get familiar with.
The books seemed to cover the topics well, starting with an introduction to finance and ending with portfolio management. The volume of the books didn’t scare me off, by the time I’d finished reading “War and Peace” by Tolstoy. So, I decided to apply. I applied in November 2009 for the first CFA level exam and this changed my life. Since that moment my whole life started to turn around the exam.
It was very tough in the beginning. Without having neither financial nor economic knowledge, even the first level seemed challenging. I’ve been working hard, really hard for the six month that followed, but I remember this feeling after quitting the room on the first Saturday of June. I felt happy. This happiness lasted for the rest of the summer. This feeling of liberation or freedom, if you wish to, was outstanding. I’ve never felt anything like that before. I’ve been partying hard, really hard. Then the results came out. This was a disappointment. The band #10. The worst outcome that can happen on the exam. Your are almost there, but not actually. The following day I applied to the December exam.
On the second attempt I cleared the exam easily. My result was strong, most of the subjects scoring above 70%, but not the Ethics. I’ve never managed to score well on Ethics. Only once on the third attempt of the second level I’ve scored between 50-70%, the rest of time it was below 50%. I don’t know why. Might be because of not being native speaker, I don’t know. For the first and second level Ethics is important and you should not lose your points there, particularly on the level 1, otherwise you would have to score the rest above 70%.
I will not focus a lot on the first level here a lot, since it is quite straightforward. You read, you exercise and you pass. The second level is a whole different story. Even if you have a degree in the financial domain, the second level beast is tough. You have to learn a lot of stuff by heart and perform calculations fast. Without strong knowledge of the financial statements analysis (accounting), you might forget about moving forward. Just, no way. The second level is much more difficult than the first one. The difference is huge. You may clear the first level easily, but on the second one everyone will have to work hard. I cleared the exam only on the third attempt.
The third level is really interesting because the books are written well, except probably of Fixed Income. The subjects are real; you may test the hypothesis and the theory in the field. In contrast to the first two levels, the third one is less numeric and more conceptual. It doesn’t mean that it is easier. There are not so many people who score above 70% on the morning (essay) session. You might notice that pass rate is significantly higher on the third level. Don’t be misguided; people just work harder, because this is the last shot. My bank paid me CFA classes and these were valuable. I’ve cleared the third level on the first attempt. The strategy proposed by the teacher was: we read the program before coming to the class, and then we do past year exams morning sessions. Certainly, this was not enough to clear the exam, and we had to work at home as well. I did plenty of QBANK questions and some Schweser past exams. You cannot go to the exam without practicing morning sessions. Practice to write short, readable answers that exactly reply the question as it has been asked. There was a girl in our group who scored well on the multiple choice questions, but she never managed to write short answers well. Failed on two attempts. I don’t know whether she will apply on the next year. For those who are not natives, writing short texts would be a skill to acquire. I really recommend for those of you who don’t type a lot in English to read and to practice The Elements of Style book by William Strunk Jr. , E. B. White. I’m not kidding.
On the exam date you will have a lot of stress. You have to arrive early, don’t drink too much water, and follow the CFAI instructions. These guys are not serious. If you look left or right, they will file a rapport instantly. Because of these extremely strict rules and the number of the candidates, the tension is high. I had my fours exams in Paris. The experience was awful. There were somewhere like 4K of candidates, so they had to rent a parking to allow all these people to sit the exam. So, you go down to this spot, take small seat at a small individual desk and start listening to the military camp style commands of the chief proctor. This all is very stressful. I had my two successful exams in Moscow and Geneva. This changed a lot. The atmosphere in the room may be encouraging or discouraging. I strongly recommend sitting the exam in the cities with a small number of candidates. It is cooler, you might have a quick chat with guys during the break, you have time to eat, and proctors don’t look like hounds staring at their game.
During the CFA years I met my current girlfriend, bought an apartment, changed my job, tried to start a business, traveled a bit. But you know, I had only 4-5 month every year to live my life.
The CFA charter is cool; you study a bunch of stuff, which is awesome. I assume that you are doing this for your career, but keep in mind that the charter itself will not be a pusher. Being a nice guy, knowing how to build business relationships, performing well on your job are more valuable assets in comparison to the charter. I do not discourage you from taking the exam, not at all. My message is that the charter is not a golden ticket that opens all doors for you. There are other businesses skills that can make your career evolve faster. The program is, however, invaluable if you wish to acquire new knowledge, develop your network, and enter a club of the guys and girls who “ate the same shit” in the financial industry.
What I wish I had known before starting my preparations:
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Start early;
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Do one complete reading of the official books;
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Do one review reading using other support materials, if you are out of time;
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Do as many exercises as you can;
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IMPORTANT: Take a couple of exams. Then, focus on the subjects you’ve scored the worst, then re-do exams. You don’t have to take a lot of exams; 4-5 would be enough. Focus on what you DON’T know instead of repeating what you already know.
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While working the Third Level once you complete a subject do some exercises from the previous years exams. Practicing essays is a MUST.
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QBank for the First and the Second levels is invaluable.
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Blueboxes (now they are grey) are precious: do them first on your own, then read an explanation.
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I cannot overstress importance of doing ALL of the EOC CFAI books’ exercises. You must do all of them at least twice. I repeat, at least twice. These were taken from the previous years’ exams.
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Absolutely have a preparation plan.
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If you have an opportunity to travel, go to the places where there are less candidates. Having a cool atmosphere in the room is important.
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be prepared to fail. That’s ok. “The brick walls are there to filter those who don’t need it that badly”.
This is it. There are some guys who are trying to pass the exams since 10 years; there are others who manage to get it in one year and a half. It depends on you, your skills, how can you manage stress, etc.
All I wanted to say is that, hopefully, one day I’ll pat your shoulder and say: “I know what having the charter means, welcome aboard”.