How to Prep for & Pass the CFA® Level I Exam
While everyone hears about the difficulty of Level I of the CFA® I exam, very few believe it until they experience it for themselves. 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 I pass rate is only 42%, and 2021 pass rates have been even lower. People who are studying for the CFA exam are smart, driven, and want to pass just as much as you do. That means it is crucial that you have a study plan and adhere to it.
TABLE OF CONTENTS:
Develop and Begin Your CFA Level I Exam Prep Routine Early On
Ideally, the preparation phase of your Level I CFA Exam prep should begin about 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 material, 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, it is crucial that you get into a study routine early and stick to it.
How Much to Study for CFA Level I Exam
Across the five-to-six months that you should spend studying for the Level I CFA Exam, you should plan to devote at least 300 total hours (the average study time) to your Level I prep. If that number seems daunting to you, then consider spreading your studies across nine months instead of five. That way, you would only need to devote roughly 1 hour and 10 minutes per day (on average) to your Level I prep (versus closer to 1 hour and 40 minutes per day). Prep for longer stretches of time on certain days to earn yourself an occasional day off from studying.
How Many Study Sessions Do You Need for CFA Level I Exam Prep?
You should engage in 80-100 study sessions across your six-to-nine months preparing for the Level I 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 5 hours per study session in order to meet the minimum suggestion of 300 total hours studying. The more often you sit down for a study session, the less demanding each individual study session will be.
Review CFA Institute's Learning Outcome Statements (LOS)
Your focus should be on the Learning Outcome Statements from 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 prep plan around these, as they will help you focus on the right topics for the exam.
Focus on the CFA Level I Exam Topic Weights and Curriculum
You should have a solid understanding of the CFA Program curriculum and how each topic is weighted for the Level I exam. The curriculum is updated every exam cycle, and all three levels of the exam focus on the same core topic areas. Exam weights vary by level and can change slightly from year-to-year, so it is good to be clear on what the weights are for the exam you are taking.
The curriculum for Level I of the CFA exam covers 10 topics, each of which is weighted. The topics and weights change regularly, but these are the most recent topics and weights shared by CFA Institute in 2022:
CFA Level I Ethical and Professional Standards: 15-20%
CFA Level I Quantitative methods: 8–12%
CFA Level I Economics: 8–12%
CFA Level I Financial statement analysis: 13–17%
CFA Level I Corporate issuers: 8–12%
CFA Level I Equity investments: 10–12%
CFA Level I Fixed income: 10–12%
CFA Level I Derivatives: 5–8%
CFA Level I Alternative investments: 5–8%
CFA Level I Portfolio management and Wealth planning: 5–8%
Although the weights are variable (which means they are subject to change), you can see that the one with the most weight is ethics, financial reporting and analysis, equity investments, and fixed income. Make sure you are really on top of those four topics. Otherwise, it will be more difficult to pass the exam.
When deciding how much time to allocate to the different topics, each candidate will have strong and weak areas. Dedicate time to each area accordingly, but don’t lose sight of the syllabus weightings. Two topics, Ethical and Professional Standards, and Financial Reporting and Analysis, are worth more marks on the day of the exam than Economics, Derivatives, and Alternative Investments combined. As interesting as the world of derivatives is, you can’t afford to wallow in it for weeks on end for only 6%.
Recommended CFA Level I Exam 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 Level I CFA Exam Study Planshould look like.
CFA Exam Level I 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 information by reading and listening to lectures.
CFA Exam Level I Prep: Practice Questions [PRACTICE]
On top of that, you should spend up to 50 percent of your self-study time on practice questions. Research studies have shown that practice is the most effective way to prepare for Level I.
For too many candidates, this means taking a brief quiz, marking it, and moving on. When practicing Level I CFA questions, you should spend an average of 90 seconds answering the question. However, you should spend significantly more time thoroughly debriefing the question and answer.
Debriefing is a Critical CFA Level I Exam Question 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 backwards (which is incidentally a popular CFA examiners’ trick). Kaplan Schweser’s CFA Level I Qbank is a great way to learn question debriefing.
Different Forms of CFA Level I 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 burrito, can make a huge difference.
Lists are more common. Most relate to a model or a theory. It’s much easier, therefore, to learn them in the context of that model. For instance, low barriers to entry in perfect competition? It means zero economic profits in the long run. Tie facts
together where you can, your brain is wired to remember stories. Cause and effect will stick a lot better than disorganized memorization.
And what if it’s a piece of analysis on a calculation? Go back and find an example of the calculation. Make up your own numbers if you need to. For example, we would recommend always having a simple balance sheet and income statement handy to help
with ratio analysis. If you can’t figure out why the answer was an increase, decrease, or neither, put some numbers through your simple statements and calculate the result. This approach fits with the classic definition of analysis: a detailed
examination of the elements or structure of something, typically as a basis for discussion. You can’t hope to get the discussion questions right if you don’t do the detailed examination.
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 I Prep: Practice Tests/Mock Exams [PERFORM]
When taking Level I CFA Exam Practice Tests, your focus should be on the Learning Outcome Statements (LOS) from CFA Institute because they detail exactly what you are expected to do on exam day.
Learn How to Take the CFA Level I Exam
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 really help you in your last weeks of studying.
CFA Institute will give you one mock exam, and you can purchase others with exam prep providers like Schweser. The Schweser Online Level I 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.
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.
Begin your journey to becoming a successful CFA® candidate! Download Your Free Copy of CFA Program Fundamentals eBook, 2nd Edition
A Concurrent Option: Earn a Masters of Science in Financial Analysis (MSFA) while you Prep for the CFA Exam
Certain Masters of Science in Financial Analysis degree programs like the MSFA offered by the College for Financial Planning®—a Kaplan Company are aligned to the learning outcomes of the CFA Institute’s CFA Program, enabling students to earn an MSFA while concurrently preparing for the CFA exam. The College for Financial Planning's MSFA program also includes access to Kaplan Schweser’s CFA Essential Study Package to prepare for the CFA exam.
Apply CFA Level I Exam Concepts to Real Situations
Just knowing the material isn’t enough to pass the CFA exam. You must be able to take the knowledge and apply it to realistic 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.
Following these tips will ensure you are as prepared as possible for Level I of the CFA exam. Now that you know the best way to study, learn how to prepare an effective CFA Program study plan and pass the CFA Level I Exam. Join Dr. Doug Van Eaton, CFA, as he discusses the CFA Program Level I curriculum and study strategies that have been proven to work.
Looking for more guidance on how to prepare for Level I of the CFA® exam? Enroll in one of our CFA Level I Premium study packages to receive expert instruction, CFA Program study materials, and more. Give yourself the best chance to prepare, practice, and perform on the CFA exam.