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9 Reasons People Fail the CFA® Exam

By: Kaplan Schweser
January 8, 2021
A broken pencil represents the 9 Reasons People Fail the CFA Exam

Whether you’re readying to sit for the CFA exam for the first time or you’re preparing to retake a level, it can be valuable to consider the factors that can lead to an unsuccessful outcome.

Understanding the most common causes for failing the CFA exam will help you develop an awareness of the pitfalls to avoid. Here are the nine reasons students fail the CFA exam, and some advice for overcoming each of these issues to increase your odds of success.

1. Failed to Study Enough Hours

CFA Institute estimates it takes in excess of 300 hours to properly prepare for each level of the CFA exam. It is often hard to manage the work, social life, and study balance. And, of course, the discipline needed to maintain your studies is one of the key reasons the CFA charter is so highly valued by employers.

Level I is a foundation level based on core finance principles and concepts. It contains a lot of standard finance knowledge, and many candidates will have seen at least some of the Level I topics during prior studies. This means that the average time to study for the CFA Level I will differ dramatically depending on the candidate’s prior knowledge and experience. If most of the subject matter was new to you, then the 300 study hours is potentially a conservative estimate. If the number of hours needed to properly prepare for Level I caught you off guard, then the solution is fairly simple—you need to devote more hours to succeed.

At Level II, we find that numerous candidates underestimate the amount of work required to properly prepare for the exam. Those who studied considerably less than 300 hours at Level I and still passed because they had seen some of the topics before studying are most prone to making this error. Many candidates will have seen at least some of the Level I topics, but having prior knowledge of the Level II curriculum is much rarer. As a result, the 300-hour estimate of study needed will apply to far more candidates at Level II.

Of course, there are times when work must come first. No matter how hard we would like to study, we just do not always have the time. If this has happened to you, then hopefully you will have more study time and be able to prepare more thoroughly for the next sitting. A good idea is to start earlier than most candidates, get through the material earlier, do more practice than other candidates, and hopefully get ahead of other candidates. Remember, all you need to do is to improve your weak areas, maintain your strong areas, and ensure that you have accounted for any curriculum changes.

Are you planning to take the CFA® exam? Download the free Before You Sit for the CFA Exam ebook for advice from past exam takers.

2. Knowledge Gaps

Attempting any level of the CFA exams with holes in your knowledge is a dangerous proposition. Remember that CFA Institute does not release past exams and prohibits candidates from discussing the contents of the exam. This means you must have mastery of all LOS to be confident of success. It simply is unwise to base your studies on what you believe will be tested. On top of this, our experience tells us CFA Institute does like to throw the odd curveball at candidates in the exam. Questions appear on what you could consider the more peripheral areas of the curriculum; these will soon sort the fully prepared candidates from those with knowledge gaps.

So, if you did have knowledge gaps, your focus for a retake attempt will be to plug those gaps, while still maintaining your core knowledge. You have three main tools at your disposal:

The approach to take depends on the technical gaps in your knowledge. A failure banding below 8 normally indicates that you did have gaps in your technical understanding, and a banding below 5 indicates they were quite significant.

If your technical gaps were minor, then in years of minor curriculum changes, we recommend using purely CFA Institute texts and prep provider notes. In years when curriculum changes are more significant, it is a good idea to repurchase CFA study materials to ensure you have sufficient practice questions on the new topic areas.

If your technical gaps were more significant, then some form of instruction will help you. If you had knowledge gaps because you ran out of time to prepare fully, then the key will be to start your retake studies early.

3. Inefficient Study

Instructor-led exam prep courses are designed to accelerate your understanding of the core material; however, efficient use of your time when not participating in classes is key. One common mistake is spending too much time taking notes. One often fatal tactic is to try and produce your own set of notes covering the entire curriculum. The sheer size of the CFA Program curriculum means that preparing your own set of notes from scratch is simply too time intensive. The problems will be either you didn’t cover the entire curriculum and, as a result, had gaps in your knowledge, or you did not have time to properly utilize your CFA practice questions and mock exams. The longer you can have to review and practice, the greater the chances of success. We believe that optimally, the entire final month of studies should be set aside for review and practice, which brings us to point 4.

4. Not Enough Practice

The key to passing any level of the CFA exam is to practice as many questions as possible. The major issue is that even with good technical knowledge, if you have not practiced enough questions, you will struggle to apply your knowledge to exam-based questions. The more questions you practice, the more familiar you become with applying your technical knowledge. In addition, attempting exam-difficulty questions also identifies whether you have truly mastered a particular area of the curriculum. There is simply no better way for you to be able to recall the vast amounts of material.

You should attempt and review the solutions of the following questions before attempting the real CFA exam:

Getting questions wrong outside of the exam hall and identifying why you got them wrong, prevents similar mistakes being made in the actual exam. The more questions you can do, the more tricks, tips, and techniques you will be familiar with, which significantly increases the chances of exam success.

The focus for retaking candidates in this position should be to concentrate on as much question practice as possible for their next attempt. So the majority of time is spent on review of the material rather than reading and note taking. If you feel that this applies to your studies, we strongly suggest attending a review course. A good review course gives candidates two key outcomes:

  • By the end of the course, you will know where the key gaps in your knowledge remain.
  • You will benefit from experienced instructors breaking down questions and applying exam techniques to develop your exam strategy.

Sign up for our question of the day and get a CFA question sent directly to your inbox every day to help you practice.

5. Failure to Correctly Pace Your Studies

If you start your studies six months before the exam to get in those 300 hours, you need to study for approximately 15 hours per week. The danger is that as time passes, and the initial study enthusiasm starts to wane, the number of hours studied per week starts to drop. When you factor in social life, family life, and the pressures of a demanding job, it is easy to see why candidates struggle to maintain this commitment.

If you let your studies drift, the backlog of material to cover soon increases, and the number of hours per week starts to climb. The study then becomes too much of a burden. Candidates in this position will often find that they are still trying to cover material for the first time in the final month. As mentioned earlier, the final month needs to be dedicated to reviewing and question practice to give you the optimal chance of passing the exam.

Again, the good news is that if you fall into this category of unsuccessful candidates, it is likely that you have most of the technical knowledge needed. As a result, most of your retake time will be spent on the review of topics and, most importantly, drilling practice questions until applying your knowledge becomes second nature.

6. Bad Luck

As with any exam of this nature, you do need a bit of luck on exam day. Given the length and time limits of the exams, not every topic you study will be examined. Naturally, each candidate has strengths and weaknesses regarding the topic areas and, as a result, an exam one student finds hard, another student may find easier.

Most candidates will be crossing their fingers that certain topics come up in the exam, and even more so that others do not. So, if your worst-case scenario topics were tested this year, you always have a chance of better luck on the next exam. With the extra time a retake affords to review the material, you should have fewer weaker areas and be less dependent on luck.

7. Underperforming on Exam Day

Managing nerves will play a part for every student on exam day. The only thing you can do to combat them is to have a good exam strategy and be properly prepared. The better prepared you are, the less likely you will be affected by nerves.

If you are scoring well on mock exams, then you should pass the real thing. We always suggest candidates work toward a target of 70%. If you can replicate this in the exam, you are more or less guaranteed success, providing you hold your nerve. If the actual exam appears harder than expected, keep in mind that this is likely to be the case for everyone. In fact, candidates who have not properly prepared and have no exam strategy are more likely to be adversely affected by a harder exam. If you are properly prepared, your thought process should be that a hard exam will trip up the weaker and poorly prepared candidates.

In addition, ensure you stick to your exam technique. Do not start questioning your answers because you are nervous about the exam. Normally, your first attempt at answering a question will be the correct answer. It is often the case that when candidates start changing their minds, they move from the correct answer to an incorrect one. Our advice would be that unless you are 100% certain that you have made a mistake, never change your answer.

Some students will run out of time and fail to complete the exam. This is normally due to a lack of exam strategy or panicking in the exam and not applying their exam strategy. If timing was an issue for you in the exam, try breaking the exam up into blocks of 10 questions and giving yourself a 15-minute time limit for that section. Remember, all questions carry the same weighting in the marking guide. Proper exam technique involves spotting the more difficult, time-consuming questions and leaving them for the end. The danger of not doing this is that you get sucked into attempting a question that takes significantly longer than the 90 seconds you have available. This only needs to happen a few times, and completing the exam becomes more difficult, which potentially means you miss easy marks toward the end of the exam.

Another trap you may have succumbed to is slowing down in the real exam compared to your mock exam attempts. This can occur as candidates feel the need to double-check their answers in the real exam. If this applies to you, ensure that you complete the exam before going back to double-check your answers. If you are taking the full three hours to complete a mock exam, you cannot afford to slow down in the real exam.

8. Poor Ethics Score

We know, in the case of marginal students, that CFA Institute reviews ethics scores before deciding whether to pass candidates. If you have a high banding (10 or 9) and a poor Ethics score, then this is likely to have caused you to fail the exam.

Ensure that you leave studying Ethics to the last couple of months before the exam to aid retention. You must study Ethics using the CFA Institute text to be properly prepared. Then, the key is to practice as many Ethics questions as you possibly can. Finally, it is always worth reading the material one last time the day before the exam to aid with short-term recall.

9. Studying Too Hard the Day Before the Exam

There is a real danger that candidates can study too hard the day before the exam. The danger is that a grueling day before the exam, coupled with a poor night’s sleep, leaves you mentally tired walking into the exam hall. Tired candidates make mistakes.

Try to be at your mental peak for the exam. We recommend you use the day before the exam to reread some of the more wordy areas of the curriculum, including Ethics. Do not take mock exams, which can mentally drain you. Few people get a particularly great night’s sleep before an exam, so make sure you get to bed early.

Now that you know the most common reasons people fail, you can develop a retake strategy to ensure you pass the next time.

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