Posted by: Lou Haverty, CFA
Updated: August 11, 2020
Successfully passing all three levels of the CFA® exam is a major accomplishment. When you consider that successful candidates typically have to juggle a full-time job while studying, it’s not surprising that fewer than one out of every five candidates successfully completes all three exams and joins the ranks of the other 150,000+ CFA® charterholders around the world.
In this article, I’ll walk you through the major steps I took in order to pass the CFA exam while working full time as a credit analyst.
Why are you taking the CFA exam and what do you hope to accomplish? This may seem like a simple question, but it’s critical to be honest with yourself when answering the question.
Do you happen to be in a job where everyone else is taking the exam, and you’re expected to do the same? Or, do you have a natural passion and curiosity about the markets and are reading (or are likely to start reading) books about the stock market in your spare time?
There is no question that you can pass the CFA exam if you don’t have a natural passion for the financial industry. It’s just much harder and more grueling.
However, if you have that passion, and you have a clear goal that earning the CFA charter can help you meet, it’s just better. The process of working toward that goal will help you find extra stamina when you’re struggling to stay awake while reading about pension accounting or deferred taxes.
Rather than only thinking about the CFA exam in terms of how many hours you need to study, think about it in terms of what you’re willing to give up in order to pass the exam.
Most of us have busy lives filled with work and other social commitments. Almost no one has a big gaping hole in their weekly routine that is just asking to be used for studying. This means that you need to consider what you need to stop doing so you can spend the time necessary for preparing for the CFA exam.
Depending on your age and commitments, this could mean something as simple as not watching your favorite weekly TV programs. Or, it could require more thought if you have a family and want to spend time with them and study. Whatever you decide to give up, make sure it really is worth it for you.
If you understand what tradeoffs you have to make, and you’re 100 percent comfortable with them, you’re taking an important step in mentally committing yourself for the challenge ahead.
The average candidate needs to spend at least 300 hours mastering the material tested on each level of the CFA exam. In 2020, you can take Level I of the CFA exam in December. But, beginning in 2021, exams will be offered in windows several times a year. You’ll be able to take Level I in February, May, August, and November, Level II in May and August, and Level III in May and November. In 2022, CFA Level II exam windows will move to February and August. (You can find the dates for 2020 and windows for 2021 here.) No matter when you take it, take a look at your weekly schedule and think about what blocks of time you could realistically set aside to prepare for the exam.
Let’s assume that, from Monday through Thursday, you could dedicate two hours a night and you could commit to three hours on Saturday and Sunday for studying. That gives you 56 hours of studying per month. If you stick to that schedule, you would break 300 hours after 5.4 months of studying. To be on the conservative side, you should plan to prepare for a good six months. (If you’d like more details, read this article about making the most of your 300 hours of study.)
When I was studying for the CFA exam, I made sure not to miss a workout at the gym, and I always had a list of non-financial books to read. You may need to find a way to fit your workout in during your lunch break or right after you finish work, but you’ll quickly find out that having a physical outlet will do wonders for keeping your stress levels under control.
Other things to consider would be meditation, yoga, or even a local after-work sports league. The key is to make sure you do that activity consistently throughout your study schedule.
I found that reading was surprisingly helpful. But, the books could not be financial. I ended up reading biographies of all kinds of people—from criminals to CEOs. My mind got a much-needed break when I started to feel numb from all the CFA exam material.
If I started to feel like I was hitting a wall, I stopped what I was doing and picked up a book and started reading for 15 to 20 minutes. Because I was reading rather than watching TV, it kept my brain active and engaged.
What I noticed over time was that my study endurance gradually increased. When I put the book down and returned to studying, my mind was clearer, and I could study more effectively for longer periods at a time.
The material on Level I is a mile wide and an inch deep. Rather than trying to read CFA Institute material from cover to cover, focus your time more strategically. Split each of the main subjects into chunks and focus only on one subject at a time.
Start by reading study notes and then start practicing questions. Keep track of your strengths and weaknesses. When you find more challenging topics, consider reading the original textbooks in full for those sections. Go back and do more practice questions to test how well you are retaining that material. (Doing several mock exams is another effective way to practice.)
The single most valuable study tool that I used was a large database of practice questions. By getting in the habit of practicing questions each day, the most important exam material was gradually ingrained in my mind.
I also started to answer questions faster and more efficiently. And, with mobile devices, you can actually bring your practice questions with you to work. Rather than waiting until you get home at night, you can study during your morning commute or whenever you have a few minutes free during the day.
Kaplan Schweser’s Qbank has over 3,800 practice questions, and it includes comprehensive diagnostics to help monitor your skill level by subject. The companion app also makes it very easy to practice extra questions whenever you have a few extra minutes.
Sooner or later you’re going to feel run down and a little burned out. The thought might even cross your mind that maybe the CFA charter isn’t right for you.
This is a good time to just stop. Take a temporary time out. Maybe for a few days or maybe for a full week. Don’t answer any more practice questions and don’t open a book. Just go to work and keep your gym or any other distraction schedule.
By giving yourself a few days where you don’t study at all, you’ll be surprised at how energized you’ll feel. If you have clear goals and objectives for taking the exam, you’re very likely to find yourself just as strongly motivated to get back to studying, so you can pass.
Lou Haverty, CFA, is the Founder of Financial Analyst Insider, which is dedicated to helping young professionals advance their careers.