Just How Hard is the CFA?

prpyll's picture
Rank: Monkey | 32

I know the pass rates are supposed to be about 50%-ish for each of the three levels... and I have a handful acquaintances who've had to resit levels 2 and/or 3. But a couple of others claim that the exams aren't really that hard and had first-time passes... Anyone here care to share their experiences? Just how hard is the CFA, compared to, say, a degree in finance/econs/whatever or an MBA? (I'm thinking of taking the CFA myself, hence my asking)

CFA exam difficulty?

As with most things, the difficulty of the exam is largely dependent on your background and your preparation. Some can get away with little preparation while others need a great deal of time to prepare. Our users shared their varying opinions below.

Some feel that CFA is very challenging in line with the failure rates...

sayandarula:

Generally speaking, each of the three levels takes from 300-500 hours of studying. For Level I last December, the pass rate was 36%. Keep in mind that this number includes people retaking the exam, and DOES NOT include people who did not show up or left halfway without finishing. Factoring these in, I would imagine the "real" pass rate for first-time takers for Level I is 20% or lower. Pretty low considering most CFA candidates have degrees in econ, finance, accounting, engineering etc...

Unfortunately, Level II has similar pass rates to Level I, though Level III is a bit higher (mid-forties). Obviously, Level II and Level III are filtered to only those who have passed Level I (and include first-time takers as well as re-takers).

However, other felt that the CFA was not difficult with a finance background...

ermen:

CFA is not that hard if you have some finance background. if you have finance and accounting and some knowledge of derivatives, you should be set for levels 1 & 2. Level 3 is a little less technical an d more qualitative - you need to be able to understand and synthesize everything instead of rote learning. I would think though the hardest part of the exams would be finding the time to actually study for it! if you're working 9-6 you should have time to study but if you're pulling 80hr weeks consistently, I do not know how one can cope (this is compounded if you have a family).

What-to-do-what-to-do:

The difficulty of CFA is really exaggerated. It's pretty easy. I didn't spend too much time on all three levels. It's just an excuse lazy people use when they fail the exam. Also, just use the notes. That's all I did and I passed all three levels.

Should I Purchase Third Party CFA Prep Materials?

While the CFA does offer preparation materials - they are lengthy and detailed. Many users purchased outside materials in order to get guides that were shorter and more straight forward.

sayandarula:

The overwhelming majority of successful CFA exam-takers will tell you that they used Schweser or Stalla and hardly/never used the CFAI books. Here's why:

  • The CFA Exam will test your knowledge on "Learning Outcome Statements", or LOS. The material in the CFAI books go above and beyond the LOS while 3rd party-material will focus on the LOS. This may seem trivial, but when the CFA Institute books provide highly detailed calculations when the LOS is only asking you to understand a relationship without calculating, you can potentially waste a lot of time with the CFAI books. I'm not denying that it's possible to pass the exam with CFAI books only, but I've never met anyone who has (from a sample of a few dozen test takers).
  • Any "penalty" you will incur from reading less detailed 3rd party information will be overwhelmed by my first point.

The above mentioned courses are Schweser by Kaplan and Stalla.

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Comments (66)

Sep 3, 2006

If you have the econ/maths background, you should be fine..

    • 1
May 26, 2011

What the Institute gives you is sufficient. External courses may be helpful, but really it comes down to whether or not you read the material. The tests are only really difficult if you don't study, but that being said, studying doesn't guarantee passing either. Certain people may be able to study for a week and pass, but the exams get harder and require a ton of prep. Recommended time is 270 - 300 hours per exam, and I've found that to be accurate in terms of feeling good going into an exam. I came from a finance undergrad and a CFA Partner School MBA program.

In terms of the outside books, no you don't need to purchase them. I think that an undergrad curriculum may help Level I, but it only goes into more depth as time goes on, and some stuff you wouldn't have seen in school.

Any more questions PM me.

Sep 13, 2006

It's not too bad if you're willing to put in the time and work --

Sep 3, 2006

cfa level 1 - 36%
cfa level 2 - 32%
cfa level 3 - 64%

http://www.investopedia.com/professionals/cfa/

May 26, 2011

The reason people purchase 3rd party materials such as Schweser and Stalla is because the books the CFA Institute make you buy are ridiculously thorough and thick. 3rd party materials provide a shortcut on time, and cover what's needed, and you can pass the levels without even referring to the official books (especially level 1)

That said, the exams (format, way of phrase/wording, etc) match closely to material covered in the official books, and people relying solely on 3rd party materials may get "penalized" in a sense that the material in the exam are worded differently or wasn't covered in full detail by the short-cut books. Ideally you would have read some/all of the official books to ensure you've covered everything - but obviously, given the hours some that people work in this field - this may not be an option for all.

CFA isn't so much a test of intelligence as it is a test of diligence (did you study or not). But like golfer said, there are people who can pass with a week's worth of studying, but studying many months in advance still doesn't guarantee you a pass.

Sep 3, 2006

I took L1 twice and will be taking L2 for the second time next June. A lot depends on your education and experience. I have a undergrad business degree which really didnt help. Finance/accounting undergrad would have been much better. I also know someone that passed L1 in June and studied less than 100 hrs., but he also had 18 months auditing experience and an undergrad and masters in accounting.

May 26, 2011

You have two questions and I will try to answer them to my best ability.

1) Just wondering if everything the CFA gives you as part of the study sessions is enough to read and pass the exams.

No. You have to buy additional material from a test prep company (the two big ones are Stalla and Kaplan/Schweser) in order to have a chance at passing. Although it's not theoretically impossible to study using the CFA material only, I have yet to meet a single person who passed any of the CFA levels using the CFA Institute books only. At the very least you need to buy additional books from the aforementioned companies, and if you can afford a live class or video lectures, that will make your life easier.

2) Also, how difficult are the exams; let's say, compared to a heavy Wharton finance undergrad curriculum?

I didn't go to Wharton and didn't major in finance. However if you look at some of the numbers that the CFA institute posts I think you can get a general idea of the difficulty of the exams.

Generally speaking, each of the three levels takes from 300-500 hours of studying. For Level I last December, the pass rate was 36%. Keep in mind that this number includes people retaking the exam, and DOES NOT include poeple who did not show up or left halfway without finishing. Factoring these in, I would imagine the "real" pass rate for first-time takers for Level I is 20% or lower. Pretty low considering most CFA candidates have degrees in econ, finance, accounting, engineering etc...

Unfortunatley, Level II has similar pass rates to Level I, though Level III is a bit higher (mid forties). Obviously, Level II and Level III are filtered to only those who have passed Level I (and include first-time takers as well as retakers).

-

That being said, if you are indeed a Wharton finance undergrad I think you will have a great advantage. You will have likely covered most of the curriculum in one way or the other (at least for Level I), and the good standardized test-taking skills that got you into Wharton will be a huge asset as well.

Money Never Sleeps? More like Money Never SUCKS amirite?!?!?!?

Sep 4, 2006

Lot of breadth to the material, although Level One is not too bad if you have a decent undergraduate background (accounting, stat., econ., some corporate finance).

Accounting is the more difficult part of Level 1 and then the other topics are hit pretty hard on Level 2 like derivatives.

Sep 4, 2006

CFA is not that hard if you have some finance background. if you have finance and accounting and some knowledge of deriviatives, you should be set for levels 1 & 2. Level 3 is a little less technical an d more qualitative - you need to be able to understand and synthesise everything instead of rote learning. i would think though the hardest part of the exams would be finding the time to actually study for it! if you're working 9-6 you should have time to study but if you're pulling 80hr weeks consistently, i do not know how one can cope (this is compounded if you have a family).

May 26, 2011

We are getting some conflicting opinions here on study materials.

May 26, 2011
SDBall22:

We are getting some conflicting opinions here on study materials.

Yes indeed there are.

The overwhelming majority of succssfull CFA exam-takers will tell you that they used Schweser or Stalla and hardly/never used the CFAI books. Here's why:

  1. The CFA Exam will test your knowledge on "Learning Outcome Statements", or LOS. The material in the CFAI books go above and beyond the LOS while 3rd party-material will focus on the LOS. This may seem trivial, but when the CFA Institute books provide highly detailed calculations when the LOS is only asking you to understand a relationship without calculating, you can potentially waste a lot of time with the CFAI books. I'm not denying that it's possible to pass the exam with CFAI books only, but I've never met anyone who has (from a sample of a few dozen test takers).
  2. Any "penalty" you will incur from reading less detailed 3rd party information will be overwhelmed by my first point.

Money Never Sleeps? More like Money Never SUCKS amirite?!?!?!?

Sep 4, 2006

L1 should not be too hard if you have a good understanding of basic finance and accounting. The most difficult part though is actually finding time to study for it!

May 26, 2011

"1) Just wondering if everything the CFA gives you as part of the study sessions is enough to read and pass the exams.

No. You have to buy additional material from a test prep company"

False. I know a guy with no finance background who passed it without any supplementary material. I'm taking it by reading the original material. I bought the Secret Sauce to supplement, but that's all. I do have a finance background.

I would not suggest going in without doing some practice tests though.

May 26, 2011
buybuybuy:

"1) Just wondering if everything the CFA gives you as part of the study sessions is enough to read and pass the exams.

No. You have to buy additional material from a test prep company"

False. I know a guy with no finance background who passed it without any supplementary material. I'm taking it by reading the original material. I bought the Secret Sauce to supplement, but that's all. I do have a finance background.

I would not suggest going in without doing some practice tests though.

Good luck man. Secret Sauce is good stuff by the way.

I once "heard" of someone who passed the CFA LI without studying at all but I can't confirm it. The point I'm trying to make is that the original material provides TOO much detail. Anything is possible if you're incredibly smart, but making a relatively small investment in supplemental study materials is going to improve your chances of passing this thing several times over.

Money Never Sleeps? More like Money Never SUCKS amirite?!?!?!?

  •  Sep 12, 2006

I passed L1 1st try (though barely) w/ less than 100 hrs studying, the majority of it in the 2 weeks before the exam (took the full week prior off (incl. memorial day) to cram), but had only an econ degree and my ibank training. It's difficult due to the huge breadth of topics, but its not impossible.

May 26, 2011

How realistic are the Schweser practice questions in terms of difficulty? I'm talking LVL 1 here.
Which section for lvl 1 do people usually consider to be the most difficult one? I just started studying the Schweser notes (haven't signed up for the exam yet and thus no books) and I feel like it's too easy. But then, I haven't looked at most sections

May 27, 2011
noonies:

How realistic are the Schweser practice questions in terms of difficulty? I'm talking LVL 1 here.
Which section for lvl 1 do people usually consider to be the most difficult one? I just started studying the Schweser notes (haven't signed up for the exam yet and thus no books) and I feel like it's too easy. But then, I haven't looked at most sections

Each section individually is easy. It's just the sheer amount of information that will get to you.

The hardest section, in my opinion, is fixed income and derivatives.

  •  Sep 12, 2006

you have to be committed to it or you'll probably not finish it. I rec'd my charter last year. Studied 200 hrs for L1, 350+ for L2 and 400 or more for L3. Some can get by with fewer hours. But I wouldn't count on that. The '04 L2 and the '05 L3 were ridiculously hard and were the lowest pass rates in each level's history. If you have a strong finance and acctg background it will help, but don't underestimate the test. You have to put in the effort.

May 26, 2011

I wish I had time to read up on some of the stuff that was interesting in the CFAI books.

I passed L1 with Schweser PPT slides, skimming through the Scheweser notes, and a crap load of practice questions and referring back to the notes to understand why something was a certain way.

-Engineering major/Finance minor, self-taught a lot of stuff for interviews before studying for L1.

Sep 12, 2006

Is a CFA designation also good to have if you want to move up the ladder to eventually a CFO and CEO position? How does the CFA designation differ/similar when compared to the CA/CPA designation accountants hold in terms of career progression to a CFO/CEO postion? Thanks

May 26, 2011

Hey guys, a couple questions:

1) If I am registered for the December test will buying the June 2011 Schweser notes and practice exams hurt me in any way? It is much much cheaper.

2) Is it worth while to get any instruction or final exam reviews through a paid company?

Thanks

Sep 13, 2006

Once you're on past associate then do you really need a CFA?

May 26, 2011

People making good points here -- I think the debate over external prep materials really comes down to time. If you plan on knocking out 1 & 2 while in B-school, I would argue to do CFA materials only over a longer period of time, relying on external sources for practice tests, notecards, and final review books (like Secret Sauce from Kaplan). However, if you are going to be working, a combo may be helpful. Just be aware of the fact that you have to rely on them choosing the right material. Anecdotally, at my L1 exam, several people I talked to said "Wow, Kaplan really glossed over that." Fundamentally, like people have said, exam success comes down to time put in. It's not like the GMAT where you have to "learn" how to take the test. You either know the material or you don't, and that's what makes the pass rates so low -- the vast majority of people can't just "skim" by and hope to pass on sheer intelligence.

Dec 13, 2012
divvie:

Once you're on past associate then do you really need a CFA?

It never hurts. Will it be worth committing 300 hours of your life to? Maybe not.

If you want to move to the buy side, I think the CFA is still very attractive. If you want to stick to the sell side and traditional IB, then it may not be worth it for you.

Dec 14, 2012
divvie:

Once you're on past associate then do you really need a CFA?

Well, how can additional knowledge and skillset hurt you? Be it past associate or otherwise.

Dec 14, 2012
Ivan:
divvie:

Once you're on past associate then do you really need a CFA?

Well, how can additional knowledge and skillset hurt you? Be it past associate or otherwise.

Opportunity cost. That's 200-300 hours that you can spend on learning about your industry, making stock pitches, building relationships with senior folks, etc, etc. Hell, that's 200-300 hours you can spend volunteering, reading books, and becoming a more interesting person because god knows finance needs more interesting people.

I'm in equity research and I don't use most of the stuff they teach you on a regular basis. Ethics, fixed income, derivatives, and alternative investments had awful ROI since there's a lot of variation and it's a crapshoot as to the set that you get on the exam. I was hitting 80% on practice tests and STILL failed L2.**

Next year, I think I'll take it again, but I'm competing against international students who aren't working, and, frankly, know how to take tests better than me. For someone looking to break into the industry, it's a useful signalling device. For someone already doing FO investment research, well, it's a hygiene metric more than anything else.

**To be fair, I started covering two completely new (and unrelated) industries around the time that I started studying for L2. About killed myself the six months from Jan-Jun, working overtime and studying. Dropped 10 lbs off a 105 lbs frame. Misery. I passed L1 on the first try, also working full-time, no finance background.

Sep 13, 2006

How long does each test take to complete? And is it true there is only one time a year that you can take each?

May 26, 2011

aaaa

Mar 9, 2011
divvie:

How long does each test take to complete? And is it true there is only one time a year that you can take each?

Comments like this make me lolz, for a few reasons. If this kid would have just googled Chareted Financial Analyst program he could have answered this question. Also it reminds me of the scene in Dazed and Confused when the young kids says "I hear there is going to be a girl at the party with knockers the size of a person's head". Good for the CFA that it is gaining notoriety among the you enough to illicit a legend type statement

Sep 13, 2006

Do you even need a CFA? I was thinking about doing the Series 7...

May 26, 2011

From experience, the Schweser books make it a lot easier b/c it is able to condense the materials to a manageable amount. The CFA books are great for actual learning, but they are incredibly in depth. The material actually tested isn't that difficult in and of itself, but the sheer volume of it makes the test difficult. I know people that passed without studying at all, and I know people that put in an insane amount of time and failed. The questions are worded rather poorly at times and make it somewhat difficult to understand exactly what they're asking.

RIstrading, it wont be much different between June and December. The only differences will likely be any types of rule changes, examples, etc, but nothing material enough that it will hurt you much if you use June.

  •  Sep 13, 2006

www.analystforum.com

divvie,
L1 is given in June and Dec every year.
L2 & L3 are only given in June.

RogueBanker, the S7 is required for just about every sell-side role such as ibanking, research and sales. Its not even comparable to the CFA exams. You can pass the 7 after a weekend of moderate studying.

May 26, 2011

the difficulty of CFA is really exaggerated. It's pretty easy. I didn't spend too much time on all three levels. It's just an excuse lazy people use when they fail the exam. Also, just use the notes. Thats all I did and I passed all three levels.

Sep 13, 2006

So the S7 is extremely easy and needed, what is the point for the CFA, do any ibanks even require it?

May 26, 2011

If saving $500~ is worth spending extra time reading the CFA material then go right ahead with that.

I'm taking the level 1 exam next week and feel confident in passing once I review some FSA stuff. The level 1 exam material is so broad that you're almost better off served by having a great memory than knowledge of the material if that makes sense.

Sep 15, 2006

I went thru the CFA for the heck of it (finished '05). Not so useful unless you're in research/investment mgmt. Studied <100 hours for each section, but have major-league finance/accounting background (MBA/undergrad/et al). I think they raised pass rates a bit in '06 to give people hope. If you're on the cusp of passing, it's luck of the draw as the material that actually appears on the test can be highly variable from test-to-test and year-to-year.

May 26, 2011

If I wanted to study CFA 1 over, say, 12 months, would you guys advise just going through the CFA provided material? I'm probably going to put in around ~500 hours of studying (~10 hours/week) coming from zero finance background

Sep 15, 2006

I went thru the CFA for the heck of it (finished '05). Not so useful unless you're in research/investment mgmt. Studied 100 hours for each section, but have major-league finance/accounting background (MBA/undergrad/et al). I think they raised pass rates a bit in '06 to give people hope. If you're on the cusp of passing, it's luck of the draw as the material that actually appears on the test can be highly variable from test-to-test and year-to-year.

May 26, 2011

I would argue that you're better off spending less time in a more concentrated time period. The level 1 material is extremely broad and unless you have a great memory, the material you covered in the first half of the year will be very easy to forget. Burn out is very likely if you spend an entire year studying. Your time would be MUCH better spent networking for half a year and studying the other half.

Official material might be better for someone with zero finance background but without knowing your specific background, I'd argue that as long as you are not a total dumbass and are capable of performing basic algebra just pick up one of the study guides and drill that shit into your brain.

Sep 17, 2006

I am currently getting my MBA with a major in finance while studying for the L1 exam. Luckily I have found the majority of the material overlaps. I would highly recommend to any MBA student to consider taking the CFA at the same time.

May 26, 2011

Awesome, thanks www

Sep 18, 2006

If you have a decent background in Finance you should be able to pass L1. If you're graduating UG in June, take L1 in December.

May 26, 2011

Everyone at my firm passed the CFA thanks to Schweser/Stella. Rarely do people in the industry open CFAI's books because they are much longer. It's not that one is "better" is just a matter of bang per unit of time.

That said, my friend went through all 6 CFAI books in 1 month and passed level 1 on his first try.

I'm taking level 1 in June. My background is Big 10 undergrad with a finance & accounting major. I went through all the Schweser books in about 25 hours and have spent, so far, another 15-20 hours taking practice exams.

Mar 8, 2011

Only 11% of people who embarck on receiving their CFA Charter suceed. Those that do are the most dedicated guys in Asset Management and Research. If you can pass CFA levels 1, 2 and 3 on your first try, you are a baller. That's all there is to it. Those that tell you how to do it, they never did it my friend.

Jun 1, 2011

Is the IS-LM model really not part of level 1? I'm looking at the schweser notes and can't find anything about it

Mar 9, 2011
HappyMoron:

Only 11% of people who embarck on receiving their CFA Charter suceed. Those that do are the most dedicated guys in Asset Management and Research. If you can pass CFA levels 1, 2 and 3 on your first try, you are a baller. That's all there is to it. Those that tell you how to do it, they never did it my friend.

+1

Mar 8, 2011

Level is not that bad, but you do need to put the time in. Level 2 is hard it is kind of the weeding out level. Level 3 is different than 1 and 2, and I would say somewhere in between the two in terms of difficulty

Jun 1, 2011

I finished all three exams and didnt even refer to the CFAI textbooks once, but there is definately a penalty in that one or two questions an exam you will be like "I have never seen that before"

Stalla from what I hear is more indepth than Schweser, but I did use Shweser and it never let me down.

The CFAI texbooks are very good for one thing, keeping in your office to impress people who look at the size of the books and assume that you read all of them inside out.

Mar 8, 2011

The hard part is finding time to study. If you can study the ~200 hours that you're supposed to for each test you should be able to pass. I studied about 150 hours for Levels 1 and 2; did very well on Level 1 but barely passed Level 2.

Mar 8, 2011

Level 1 is not that bad if you have a finance background, I probably put 125-150 hours into it and was fine. Started studying for L2 a few weeks ago and finding the material more difficult, will most likely have to allocate more time. None of the material is really that bad, but consciously forfeiting what little free time most of have is pretty rough.

Mar 8, 2011

Anyone who says CFA is easy is either a genius or a liar. Lets leave it at that.

Mar 9, 2011

As a CFA charterholder, I would say the following:
Level 1 is nothing more than a screening. Provided that one has studied finance/economics, it should be quite easy to pass Level 1 exam, especially with some preparation.
Level 2 and level 3 are both materially (and i mean, MATERIALLY) harder. Many times harder.

Mar 9, 2011

I found level 3 to be the most difficult, i think the pass rate is much higher because you have the most dedicated individuals writing. When you consider that people who are writing level 3 have an undergrad degree and at least 2 years finance experience (assuming they have been working in finance since starting the program) and still only 50% pass, ouch.

Mar 9, 2011

CFA is largely a function of work, I've yet to encounter a concept on the test that was "too hard" to master, it's just that there are so damn many concepts.

CFA level 1 was not THAT hard (and I didn't study finance or accounting in college.), it was just a lot of material. Level 2 was more difficult and still covered a lot of ground (I failed because of lack of preparation, not because of any one concept that was too difficult to understand, and am taking it again in June.)

Sep 7, 2011

Don't worry about a time frame for taking the exam...enjoy reading the info and take the exam when you're ready...I may never take the exam...but, I intend to know as much as any CFA holder...it's not exactly rocket science...

Oct 1, 2012
Oct 1, 2012

Get some quality study time, it's not GMAT, not a downright tricky bitch.

Just got the charter recently. Given the opportunity cost of the hours I invested, so far the ROI is still negative, will see how it goes...

The Auto Show

Oct 2, 2012

charterholder here, its hard and should not be underestimated.

Oct 2, 2012
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  • berguoa
  •  Dec 13, 2012
Jan 28, 2013