The Chartered Financial Analyst (CFA) exams are considered to be one of the most challenging exams in the finance industry. The CFA program consists of three levels and requires a great amount of preparation and dedication.
Many candidates wonder: How hard is the CFA exam?
The answer to this question is not simple, as it depends on various factors, such as the candidate’s background, their level of preparation, and their ability to manage time effectively.
We will discuss some tips and strategies that can help candidates increase their chances of success. So, if you are considering taking the CFA exams or are already preparing for them, this article is for you!
Obtaining the CFA designation is a challenging feat that can take more than 2 years for most candidates. Here are some key points to consider:
Overall, the CFA exams are tough, but with proper preparation and dedication, it is possible to pass them and obtain the CFA designation.
The level 1 exam can be considered the hardest of the three exams as it has the lowest pass rate. It is the most comprehensive paper and sets the standard high for the coming exams.
The pass rates of the Level 1 exam need not always indicate the difficulty of the exam. Since it is preliminary, candidates might not give it as much importance. The lack of proper preparation could be one reason the exam has poor pass rates.
The CFA Level 1 curriculum is extensive. This is a highly subjective aspect, as all topics are given due importance. However, the competence of the candidate determines whether or not one topic is more difficult than the other. Candidates who have a better understanding of theories and concepts may find it easy to clear topics like Ethical and Professional Standards over others.
In the Level I exam, to do well, candidates should aim to get more than 70% in most topics. It's okay to score less than 50% in one or two of the less important topics. The CFA Institute doesn't give regular scores. Hence it is a matter of percentages rather than absolute marks.
Level I and Level II exams have a major difference that can make one seem harder than the other.
The CFA Level 1 syllabus 2024 is more about the fundamentals and theories. However, level 2 differs in that it is more application level. Candidates would have to flex their brains and apply the theories they have learned to tricky questions.
Ultimately it depends upon the competence of the candidate on how they perform for each exam.
Familiarise with the CFA Curriculum: Candidates should begin by becoming acquainted with the CFA curriculum topics covered in the CFA Program.
Assess Strengths and Weaknesses: Utilise a CFA prep package or resources to identify personal strengths and weaknesses in various subjects.
Focus on Weak Areas: Once weaknesses are recognized, candidates should concentrate their efforts on improving those areas by dedicating more study time to them.
Create a Study Schedule: Develop a well-structured study schedule that gives priority to the identified weak areas. This schedule helps candidates stay organised and on track with their preparation.
In Level II of the CFA Program, candidates are expected to delve deeper and showcase their skills in using the fundamental knowledge acquired during the Level I exam. They will have to tackle more intricate subjects within the program's syllabus.
A new question style, called vignettes (case study based questions), are introduced in Level II. Interpreting these can be challenging as they often involve long passages. To answer a set of questions known as "item sets," candidates must be able to scan multiple paragraphs, extracting the relevant info from the text.
The Level II exam presents varying challenges to each candidate based on their individual background and the knowledge they gained while preparing for Level I. Different people might find different topics particularly difficult due to their prior experience and learning.
One notable change in Level II is the increased emphasis on portfolio management and wealth planning compared to Level I. If a candidate received a low score in this area during Level I, they might find it difficult in Level II.
It's important to note that all CFA Level II exam topics are designed to be demanding. Those who aren't adequately prepared will find it difficult to showcase a deeper understanding of the topics. It is important to grasp the concepts so as to crack the exam thoroughly.
Achieving success in the Level II exam requires candidates to show that they have a strong understanding of the topics. One can do this by scoring 70% or above in several subjects. Candidates can afford a score ranging from 50% to 70% in one or two subjects that hold less weight.
However, it's important to note that the Level II exam evenly distributes weight across most topics. This means that performing below 50% in just one topic could potentially jeopardise the entire exam outcome.
Thus, maintaining a well-rounded performance across all subjects is paramount for success.
The difficulty of the CFA Level II exam compared to other levels is a topic of debate. Some candidates find Level II harder than Level I, while others find it easier.
However, many candidates agree that Level III is the hardest of the three levels due to its focus on portfolio management and wealth planning and the inclusion of a constructed response section.
Ultimately, the difficulty of each level varies depending on the individual candidate’s background and preparation.
Here are some steps you can follow to prepare for the CFA Level II exam:
Assess your performance on the Level I exam: Start by reviewing your performance on the Level I exam. Use the analytics your CFA prep package provided to determine which topics you need to focus on.
Read and work through the Level II Learning Outcome Statements: Begin your preparation by reading and working through the Level II Learning Outcome Statements of the CFA Program.
Prepare for vignette questions: When you are ready to start preparing for the vignette questions, keep in mind that quantitative methods can consist of one or two item sets.
Compared to CFA Level II and Level I exams, Level III has a higher pass rate. But don't let the numbers mislead you. While the overall average pass rates are slightly higher than Level I, Level III is by no means easy.
The Level III exam involves time management and dealing with a new kind of question format called "constructed response questions."
Also, the Portfolio and Wealth Management topic holds a significant 35-40% weighting of the total exam. This emphasises the need to show strong writing and judgement skills when addressing questions in this area.
More than the level of difficulty, the Level III exam poses the challenge of focusing excessively on one topic. The performance in Portfolio and Wealth Management accounts for 35-40% of the total weight on the CFA Level III exam.
Some past candidates have found Derivatives to be the hardest topic on Level III, but this can be entirely subjective.
A candidate’s interests and previous work experience can play a big role in determining which topic they find the hardest on Level III.
It is generally considered that if a candidate is able to score 70% or higher in all seven topic areas, they may have a good chance of passing the exam.
It’s important to note that this is not a guarantee, as the passing score is determined by the CFA Institute and can fluctuate. It’s always a good idea to aim for the highest score possible to increase your chances of success.
Here are two most important things to remember when preparing for the CFA Level III exam:
Start studying early: Candidates preparing for the CFA Level III exam should try to start studying as early as possible. On average, CFA candidates spend the most time studying for the Level III exam compared to previous exams.
Practice constructed response questions: When practising constructed response questions, make sure to demonstrate your understanding of the basics in your written responses.
Is CFA tough? Yes, it is. Is it impossible? Definitely not.
With proper preparation and dedication, it is possible to pass them. CFA practice questions and mock exams are designed to be similar to the actual exam questions and can help candidates gauge their level of preparedness. Overall, you need to have a good idea of the Chartered Financial Analyst course details before you set out.
If you experience difficulty with practice questions or mock exams, it may be a sign that you need to spend more time studying or managing your stress and anxiety.
For better chances of winning and proper guidance, consider getting structured training from IndigoLearn. IndigoLearn’s 1FIN, in partnership with Kaplan Schweser, provides actionable guidance to crack the CFA exam.
Ready to join us for a rewarding journey in your CFA preparation? Get in touch with us!
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