How to Pass & Prep for the CFA® Level III Exam
The Level III CFA exam is a considerable step up from the Level II exam so having a CFA study plan and understanding the differences between Level II and Level III will help ensure you are prepared to pass the Level III exam. To pass the exam, you will need to achieve at least the minimum passing score (MPS) set by the Board of Governors of CFA Institute after each exam. The all-time average CFA Level III pass rate is only 56%, and 2021 pass rates have been even lower. That means you must have a study plan and adhere to it.
TABLE OF CONTENTS:
- Start CFA Exam Level III Prep Early
- How Long To Study for CFA Exam Level III
- Review CFA Institute’s Learning Outcome Statements (LOS)
- Know CFA Exam Level III Weights and Curriculum
- Learn the CFA Exam Level III Question Format
- Recommended CFA Exam Level III Prep Breakdown
- Learn How to Take the CFA Exam Level III
- Apply Level III CFA Concepts to Real Life
- Last-Minute Level III CFA Exam Study Tips
- Can You pass CFA Level III with Self Study
Start Your CFA Exam Level III Prep Early
Starting early to prepare for the Level III CFA Exam means beginning to prepare six-to-nine months before your exam day, and be finished three months out from your exam date. Many successful CFA charterholders credit their study routine for their success in taking the CFA exams. Not only do you need to study the CFA Level III notes and materials, but you also need to be able to apply what you learned to scenarios on the exam. This level of understanding and practical application takes time to develop. Therefore, you must get into a study routine early and stick to it.
How Long to Study for CFA Exam Level III?
Across the six-to-nine months that you should spend studying for the CFA Level III exam, you should plan to devote at least 344 total hours (the average study time) to your Level III prep. If that number seems daunting to you, then consider spreading your studies across nine months instead of six. That way, you would only need to devote roughly 1 hour and 25 minutes per day (on average) to your Level III prep (versus closer to 2 hours per day). Prep for longer periods on certain days to earn yourself an occasional day off from studying.
How Many Study Sessions Do You Need for CFA Level III Exam Prep?
You should engage in 80-100 study sessions across your six to nine months preparing for the Level IlI CFA Exam. We arrived at this range because most CFA Candidates prefer to prep for a few hours, almost every day of the week. If your preference is to take more frequent days off from your prep, you can engage in fewer study sessions than that. However, keep in mind that if you were to only engage in 60 study sessions, then you will need to average 6 hours per study session to meet the minimum suggestion of 344 total hours studying. The more often you sit down for a study session, the less demanding each study session will be.
Review CFA Institute’s Learning Outcome Statements (LOS)
Your focus should be on the Learning Outcome Statements (LOS) from the CFA Institute because they detail exactly what you are expected to do on exam day.
The Learning Outcome Statements (LOS) and core concepts are built from the Candidate Body of Knowledge, developed by the CFA Institute. They have devised study sessions and LOS to help candidates figure what should be gained from each reading. Be sure to develop your CFA Level III exam prep plan around these, as they will help you focus on the right topics for the exam.
Sign up now to receive a Kaplan Schweser CFA® practice question for your exam level directly in your inbox each day! Daily questions will continue until CFA Exam Day.
Know CFA Exam Level III Curriculum and Weights
Level III is a computer-based, 4 hours and 24 minutes, split into two equal sessions of 2 hours and 12 minutes, with an optional break in between. The first session of the CFA Level III exam is comprised of 8 to 11 vignettes followed by several questions that require a written response. There will be some multiple-choice questions in this session, as well. There also may be some numerical entry questions, where only a number is required, with no opportunity to show work. The majority of the questions though will be traditionally essays.
The topics covered, with their exam weights, are:
- Economics: 5–10%
- Derivatives: 5–10%
- Fixed Income: 15–20%
- Equity Investments: 10–15%
- Alternative Investments: 5–10%
- Portfolio Management and Wealth Planning: 35–40%
- Ethical and Professional Standards: 10–15%
Many CFA charter holders have used Kaplan Schweser’s Secret Sauce for a concise review of the CFA Program curriculum and topic-by-topic listings of high-probability exam topics.
Learn the CFA Exam Level III Question Format
The big difference with Level III is the format of the exam. It contains both the vignette-style item set questions seen at Level II, but also includes constructed response (essay) sets. In these question sets, you may be asked a multiple-choice question to select the portfolio (A, B, or C) that meets a particular objective, followed by an essay question to justify that response. Candidates’ responses to constructed response questions require a higher degree of specificity.
The constructed response question sets have a variable number of parts, and each part varies in length. The point of this format is to test your ability to apply and use judgment and follow a prescribed path, which is what CFA charterholders have to do for their clients and firms. No client is going to benefit from your ability to recall factoids from memory; they are relying on you to make the right decisions for them based on their situations and needs and your knowledge of finance and investment.
You might have noticed how much weight is on the portfolio management and wealth planning topic. If you don’t pass it, you aren’t likely to pass the exam. Here’s an important tip to remember for structuring your study: except for ethics, all of the topics relate to portfolio management and wealth management. It means that up to 100% of the constructed response parts of the exam could be portfolio management and wealth management.
Recent Level III Exam Format Changes
Recommended CFA Exam Level III Prep Breakdown
We recommend following the Prepare > Practice > Perform® method of studying. In your prep stage, you absorb information through reading and listening to lectures. In the practice stage, you start working through practice problems. In your perform stage, you simulate exam conditions to assess your level of readiness.
Read more about what exactly your CFA Level III Exam Study Plan should look like.
Level III CFA Exam Prep: Reading & Lectures [PREPARE]
To increase your odds of passing, you should spend up to 40 percent of your study time preparing, which involves absorbing the information by reading and listening to lectures.
Level III CFA Exam Prep: Practice Questions [PRACTICE]
On top of that, you should spend up to 50 percent of your self-study time on CFA practice questions and doing final CFA Level III review activities such as review workshops and mock exams. Research studies have shown that practice is the most effective way to prepare for Level III.
Debriefing Is a Critical CFA Level III Exam Study Strategy
Start your debrief by making sure the questions you got right were correct for the right reasons. Guessing right on exam day is a bonus. Up until then, it’s just another question that you need to review. For all wrong answers and guesses that resulted in a correct answer, it is crucial to find the area of the curriculum that let you down. If it’s a missed calculation, find at least five examples of that type of calculation. CFA Program Examiners are masters of hitting calculations from every angle. Just correcting the single instance which that question hit may not address the deeper issue. Your aim is to repeat the calculation multiple times until you can do it backward (which is incidentally a popular CFA examiners’ trick). Kaplan Schweser’s CFA Level III Qbank is a great way to learn question debriefing.
Different Forms of Level III CFA Exam Question Debriefing
If it’s a narrative point, find the explanation in the curriculum and see if it’s an isolated fact, part of a list, or a piece of analysis on a calculation. Isolated facts need learning. Little and often is the best way. Five minutes a day, squeezed in whilst lining up for your lunchtime sandwich, can make a huge difference.
If you’re using something like the SchweserPro™ QBank, then you’ve got thousands of questions to attempt to cover the whole syllabus. It’s a big ask to do that, but an effective use of the questions should ensure you cover the majority of every CFA exam topic.
CFA Exam Level III Prep: Mock Exams [PERFORM]
The CFA Institute will give you one mock exam, and you can purchase others with exam prep providers like Schweser. The Schweser Online Level III Mock Exam includes an exam sim mode that uses the same interface as the actual computer-based exam. It also includes a multimedia tutorial that takes you through each question and helps you understand where the answer comes from, the calculations required, and what terms they are testing you on. This helps to fill in your knowledge gaps and give you an idea of how you should pace yourself during the actual exam.
Learn How to Take the CFA Exam Level III
There’s a difference between learning the material and learning how to take the exam. Be sure you practice taking the exam in realistic simulated exam conditions in the last four weeks of studying. Mock exams offer realistic simulated exam conditions that can help you in your last weeks of studying.
If you make a mistake, you can use it to your advantage. You can train your brain to recognize that this is the kind of mistake that can be made. Then, you’re less likely to repeat it. Successful CFA charterholders have told us they spent the entire last month working and reworking exams and focusing on the main issues.
Apply Level III CFA Exam Concepts to Real Life
Just knowing the material isn’t enough to pass the CFA exam. You must be able to take the knowledge and apply it to real situations. Most questions are not asking you to regurgitate memorized material. They are asking you to use problem-solving skills and apply knowledge to situations you may encounter on the job.
Many CFA charterholders advise you to always tie back what you are learning to the real world. Saqib Baig, CFA, recommends, “As you are going through the learning outcomes, keep asking yourself questions as to why you are learning this and how you are going to use this in your work.” The more you can make the study material real to you, the easier it will be to remember it.
Last-Minute Level III CFA Exam Study Tips
Use these last-minute study tips to keep you feeling motivated and prepared during the last few weeks leading up to the exam.
1: Practice Constructed Response Questions
If you haven’t already started practicing Level III constructed response questions, now is the time. These types of questions require test-takers to provide longer, written answers vs. multiple-choice answers. It is a unique question format that you will only face on the Level III exam. 50% of the Level III exam consists of constructed response format so this is crucial to your success.
2: Pay Attention To How You Are Feeling
You’ve spent a lot of time getting to this point and this last exam can test your mental stamina in ways you haven’t experienced before. Don’t let your fatigue take control and convince you to start taking shortcuts or lose focus. If you feel this happening, stop, take a day off and do something you enjoy. Allow yourself to reset and remember, that you are almost there.
3: Focus on Time Management
When you start taking CFA mock exams, keep track of how long it takes you to read vignettes and answer questions. If you notice you're taking too long to read the question, try skipping ahead to find one that you understand right away. Answers those ones first and then go back to the ones that were giving you a hard time.
4. Use Mock Exams to Test Your Readiness
Take a CFA mock exam a week out from your actual exam to simulate what taking the exam will be like and what your score could be. If you own the brink of a minimum passing score, pay special attention to Portfolio Management and Wealth Planning. It can put you over the top due to its large topic weight (35-40%).
5: Keep Summary Notes
As you evaluate your practice exam performance, try using a spreadsheet to keep track of the questions and topics you are struggling with. Create a column on this spreadsheet for summaries about what you were thinking that led you to this incorrect answer and use this data to help you identify which topics you still need to work on.
6: Don’t Be Afraid to Ask For Help
It’s understandable to feel overwhelmed and anxious about preparing for the Level III CFA exam. This exam can really test your readiness and stamina. If you don’t understand how to do something or just need some advice contact Kaplan Schweser.
Candidates that take advantage of Kaplan Schweser instructor-led review workshops can get direct expert guidance all the way up to exam day.
Can I pass CFA Level III with Self Study?
Ready To Start Preparing for the CFA Exam?
Free eBook: Before You Decide to Sit for the CFA® Program Exam
Free eBook: CFA® Program Fundamentals, 2nd Edition
Ready to Pass the CFA® Exam?