How to Crush the CFA Exams On Your First Attempt: Part I

My friend Jess Bost cleared her CFP® exam in September of last year. She wrote about her experience here and here, and inspired me to write this post talking about my CFA® exam experience. Thanks Jess (and sorry for copying your title)!

The CFA designation has for long been recognized as the gold standard for investment analysts. But like anything that is worth pursuing, obtaining the charter is no easy task. 

Candidates must pass three half-day exams, complete professional hour requirements and submit references in order to be considered for the charter. The exams in particular are known for their level of rigor and difficulty. 

According to 300 Hours, as of the day of writing, 10-year average pass rates are 39% for Level I, 45% for Level II, and 50% for Level III. The percent of people who pass all three levels on their first try may even be in the single digits, though there is no official stat. Although passing all three levels can be an arduous task, it is by no means impossible. These numbers don’t adjust for alpha, so let’s go get some alpha!

I had no quantitative background in college, worked as a teacher and freelance filmmaker before undertaking the Level I exam. Yet, somehow, I was able to clear all three levels on my first try. I also don’t consider myself to be that much more intelligent than the average CFA candidate. So how was I able to do this?

What I want to give you here is three tips, not often discussed in the CFA community, that I believe were my saving grace. In this first blog post, we’ll start with the general “big picture” tips that apply for every level and in the following post we’ll get to level specifics.

Let’s begin!

1) SLOW AND STEADY WINS THE RACE

In most candidate forums, candidates and charterholders recommend you start studying 3-6 months before exam day. I think that’s absolutely crazy! For each level, I studied for a minimum of 9 months. 

It may be that I needed the extra time because I didn’t have a quantitative background, but that only really applied at Level I. Once you have “the basics” down, one is arguable on par with the rest of the candidate field. 

The content needs to “sit” in one’s head. It can be dense and confusing, so letting the hard topics simmer for months at a time, revisiting and reviewing, and applying the concepts to real life are all paramount to truly grasping them. In my opinion, there’s more value in studying for 1-2 hours a day for 9 months than there is in pulling 12 hour days on weekends right before the exam. Would you rather spend 9 months slowly studying and increasing your chances of success, or take the same level twice in the same time span? Not to mention that the content builds up level over level, so you want to build a rock-solid foundation because Level III requires it.

More on that later.

2) REVIEW MOCKS

Most candidates leave a month for review before the Level I and II exams, and about forty-five days of review for Level III. This is about right. But a huge part of this review time is hitting mock exams, and knowing how to tackle these can truly make the difference. 

Here’s my tip: review mock exams extensively. Take a blank sheet of paper and write “What I Learned in Mock #x” at the top. Go over the mock, jot down everything you learned, forgot about, or deem important to remember. Return to the curriculum to fill in knowledge gaps, tackle practice questions related to those topics, and, in general, make sure you can crush that same mock if you were to retake it.

Three days or so before the exam, compile all those notes and create a “cheat sheet.” It should be a condensed version of all the things that you need to remember for the exams – a sheet you wish you had with you while taking the exam. Then, on exam day, review it right before leaving for the exam center. 

This strategy in particular has worked wonders. 

3) REST

There’s a reason I believe tip #1 works well: it allows you to step away from the content and gives your brain time to rest and make connections. This is especially true on the day before the exam.

Look, you can go crazy a week, or even a month, before exam day. Ask for time off at work, hit 16-hour days, stay in solitary confinement, and burn your brain making sure you know this stuff. But the day before the exam, it’s time to let go. Your brain needs rest.

Think of exam day as marathon day. If you were a runner, you are not running 10 miles the day before. On the contrary, you are eating carbs, stretching, maybe doing a quick jog at most. You do not want to break your personal record the day before. That’s just foolish. 

You also do not want to study during breaks. For my Level III exam, I was fortunate to take it with all CFA Level III test takers in the same exam center. I was astonished by the number of people who were reviewing their study notes during the breaks! As for me, I was snacking and walking around the school grounds, getting some fresh air.

The exception might be reading your “cheat sheet” either the night before or the morning of the exam. But in general, the beneficial payoffs of continuing to study when your brain needs rest are not symmetrical. The amount of knowledge you learn is marginal compared to how much more you gain if you were to just rest.

As a bonus, here are other tips that I find helpful, but that are more widely known in the CFA community:

1. Memorize formulas: Make sure that as part of your review you absolutely nail the formulas. You do not want to miss easy points because you failed to memorize simple formulas. To memorize them just write them over and over and over.
   
2. Topic order: Start your studies by tackling the hard topics first, then move on to the easy ones, always leaving ethics for last. This ties back to my first tip: let the hard topics “simmer” in your mind for longer.
   
3. Ethics: This is generally an easy topic, but it’s heavily weighted in the exams. Pay extra attention to it!

In the next blog post, we’ll go over level-specific tips.

For now, Godspeed!