There are many credentials and degrees a financial professional may hold, however, there is no other than Chartered Financial Analyst® or CFA® that earns respect or is so rigorously focused on developing Investment Skills and Knowledge. The magazine The Economist referred to the CFA® charter as the “gold standard,” writing that:
[The] qualification is roughly equivalent to a specialized postgraduate finance degree, including a mixture of economics, ethics, law, and accountancy… Whereas there are tens of thousands of finance degrees available around the world, ranging from the excellent to the worthless, there is only one CFA®, managed and examined by an American association of financial professionals, the CFA® Institute.
My journey towards earning my CFA® Charter has been pretty exciting, enriching as well as challenging. There were lots of ups and downs – I passed the CFA® Level 1 and the CFA® Level 2 at once, however, CFA® Level 3 was a tough nut to crack. It took me 3 attempts to pass CFA® Level 3. CFA® Charter has been especially beneficial for my Equity Research Analyst career. Most recently, I received amazing news that my younger brother Neeraj Vaidya (works along with the CEO of a global firm and lives in Dubai) has also passed CFA® Level 3 examination. He is now looking forward to applying for the CFA® Charter. I am sure he has a great career ahead.
Appearing for CFA® Level 1 exam? – Do have a look at this awesome 70+ hours of CFA® level 1 Training Tutorials
Also, do not miss CFA – Important Dates and Schedules
If some of you are confused between CFA® vs FRM, here is a quick infographic that may help you a bit – CFA® vs FRM
I have trained and mentored hundreds of students for the CFA® exam and am now hoping to spread awareness of this most valuable the CFA® program through my blog. This article focuses on nuts and bolts of the CFA® examination –
What is CFA Exam?
The Chartered Financial Analyst (CFA®) Program, administered by the CFA® Institute, offers a graduate-level curriculum and examination program designed to expand your working knowledge and practical skills related to investment decision-making.
|Roles||Portfolio Management, Wealth Management, Investment decision making, Investment Analysis|
|Exam||The CFA® Program consists of a series of three examinations (Levels I, II, and III).|
|CFA® Exam Dates||CFA® Level 1 – conducted twice in a year (1st week of December & 1st week of June); CFA® Level 2 & 3 conducted once a year (1st Week of June)|
|The Deal||Each of the CFA® program’s three levels builds on the preceding one, and each concludes with a full-day six-hour examination. Candidates must pass each examination before advancing to the next higher level, but are permitted to repeat an examination if they fail to pass.|
|Eligibility||You must have one of the following:
Bachelor’s (or equivalent) degree
Be in the final year of bachelor’s degree program
Have four years of professional work experience
Have a combination of professional work and university experience that totals at least four years
|Program Completion Criteria||Successfully pass the three exams; Have four years of professional work experience in the investment decision-making process; Join CFA® Institute as a regular member|
|Recommended Study Hours||A minimum of 300 hours of preparation per CFA® exam level is recommended.|
|What do you earn?||CFA® Charter|
Why Pursue the CFA® Exam?
Given the time, money and effort, is CFA® designation really worth pursuing? Below are the main reasons why you should pursue CFA® –
- CFA® is the most recognized global designation for finance professionals across the globe.
- Not only employers but also clients consider CFA® Charterholders as experts in Finance.
- Career advancement due to the CFA® designation is no brainer. This program is extremely useful in Investment Banking, Portfolio Management, Investment Research, and Security Analysis, etc.
- A recent survey by the CFA® Institute noted that the CFA® Charterholders are primarily working as Portfolio Managers (22%), Research Analysts (14%) and Chief Executives (7%)
source – CFA® Institute
Additionally, in July 2016, the CFA® Institute conducted a survey of the CFA® candidates and found the below reasons as their main motivation to take this exam –
- 37% are taking this exam because of Career Advancement opportunities that open up
- Another 20% do this to attain a higher level of knowledge
- 10% believe that it improves chances to obtain a job.
You may download the full details of the survey here – CFA® Survey
CFA® Exam Format
Below table showcases important areas of the CFA® Examination.
|CFA® Exam||CFA® Level 1||CFA® Level 2||CFA® Level 3|
|Focuses on||Basic Concepts in Finance||Equity, Fixed Income & Accounting||Portfolio Management Application|
|Exam Format||Multiple Choice with 3 choices||Item Set/ Mini Case Study||Item Set + Essay|
|Questions||240 MCQ||20 Item Sets||10 Item Sets + 12 Essays|
|Morning Session||120 MCQ||10 Item Sets||12 Essays|
|Afternoon Session||120 MCQ||10 Item Sets||10 Item Sets|
|Duration||6 hours||6 hours||6 hours|
Key Highlights about CFA® Exam format
CFA® Level 1 exam
- This exam primarily focuses on developing basic concepts in Finance.
- Multiple choice questions format makes it easier for exam takers, however, one must note that on an average you have around 1.5 minutes per question.
- No Negative Marking
CFA® Level 2 exam
- The format of the exam is mini-cases that are 1.5 pages length on an average
- Each item set or mini-cases have six questions each, answers to each question may depend on your previously answered question.
- No Negative Marking
CFA® Level 3 exam
- The key thing to note that the Morning session is an Essay Type Format where exam takers must solve the case studies and write appropriate answers
- The Afternoon session is similar to the format of CFA® Level 2 where there are mini case studies with Multiple choice question answers
- No Negative Marking
CFA® Exam Weights / Breakdown
Below is the CFA® Topic Areas (2020) in each level.
CFA® Level 1
- The main focus of the CFA® level 1 exam is to create a solid foundation in Finance.
- Please note that Financial Reporting & Analysis, Ethics, and Quantitative Analysis represent close to 50% of the examination weightage. If you score well on these 3 topics, there is a good chance of passing the CFA® Level 1 exam. However, other topics cannot be ignored, some of which are easier and you may be able to score good points in them.
- CFA® Level 1 examination is relatively easier for Finance Graduates and those with prior knowledge of accounting.
- Non-finance graduates (engineers, science, arts, etc) may find Financial Reporting & Analysis a bit challenging. However, you must not worry too much. If you spend the appropriate time on this topic, you should sail through. You can have a look at this finance for non-finance tutorial
- As an Engineer and an MBA Finance, I found Financial Reporting & Quantitative Analysis and Quantitative Analysis a bit easier to study. However, I must confess, I struggled a lot with Ethics and Economics.
CFA® Level 2
- CFA® level 2 is slightly difficult exam as compared to CFA® level 1 because of 2 reasons a) curriculum is now tougher as compared to CFA® Level 1 and b) competition is between serious candidates who have passed Level 1 examination.
- Four topics – Ethics, Financial Reporting & Analysis, Equity Investment, and Fixed Income represent approx. 50%-80% of the weightage.
- The major change in the pattern is that there is a 21 item set (each around 400-800 words) with six multiple-choice questions in each session (Morning & Afternoon Session). These six questions may be dependent or independent of each other.
CFA® Level 3
- The main trick in CFA® Level 3 examination is the Essay Type Question Paper. This is the first time in the CFA® examination that you are expected to write essays.
- The backbone of the Essay Type Question Paper is Portfolio Management (representing 45% weightage). It is common wisdom that the Essay Type Question paper creates a make or break situation. It is found that the Afternoon Exam that consists of Item Set questions is relatively easier for most of the candidates
- I am a typical laptop & a gadget guy and don’t use much of a pen and notebook. For this exam, I picked my pen for serious handwriting after almost 5 years and realized that my handwriting was barely legible. I had to practice handwriting a bit to cross the minimum legibility benchmark. Even then, I recall that my hands were hurting after the Morning session, so better practice (hand) writing.
CFA® Examination Fees
Below is the examination fees for the CFA® June 2020 Exam (Levels I, II, III)
CFA 2020 Exam Registration Fees and Deadlines
|Registration Deadlines||New Candidate||End Deadlines|
|Enrollment Fee||Total:- US$ 700||ends 2 October 2019|
|Standard registration fee||Total:- US$ 1000||ends 12 February 2020|
|Late registration fee||Total:- US$ 1,450||ends 11 March 2020|
- There is a first-time enrollment fee of $700. Also, note that it is much cheaper to register for the exam early. The exam fees of 3rd Deadline ($1,450) costs almost twice that of the First Deadline ($700).
CFA® Results & Passing Rates
CFA® results are usually announced after eight weeks of the CFA Exam date. CFA® Level 1 and 2 exam results are available both on the CFA® Institute website and through as emails. CFA® Level 3 results are available in ten weeks to post the exam day.
Out of every 100 CFA® Candidates, only 15 candidates will finally crack it!
Before we discuss the individual level the CFA® Exam passing rates, it will be interesting to look at the overall completion rate. Completion rate (%) is the number of candidates who have passed cumulatively CFA® level 3 exams divided by the total number of cumulative candidates who have ever attempted CFA® examination. This number provides us a broad idea of how many finally pursued and cleared all 3 levels
- Since inception, a total of 15.4% CFA® Candidates passed the CFA® Level 3 exams
- Most recently (2005-2014A), the total completion rate of 14.6% was observed
- This implies out of every 100 CFA® candidates, about 15 CFA® candidates will finally pass CFA® Level 3, however, the remaining 85 candidates may eventually opt out.
Now let us look at the passing rates for each Level
CFA® Level 1 Exam Passing rate is closer to 45%
- Past 10 years saw that CFA® Level 1 examination passing rate was in the range of 43% to 45%, with an average passing rate of 43%
- The average passing rate for the December examination was 43%
- The average passing rate for the December 2018 examination was 45%
- The average passing rate for the June 2014 examination was higher at 40% (interesting!)
- The average passing rate for CFA 2015 you need Level 1- 42%, level 2- 46% and level 3- 54%.
- The average passing rate for CFA 2016 you need CFA Level 1- 43%, CFA level 2- 46% and for CFA level 3- 54%
- The average passing rate for CFA 2017 you need CFA Level 1- 43%, CFA level 2- 47% and for CFA level 3- 54%
- The average passing rate for CFA 2018 you need CFA Level 1- 43% CFA level 2- 45% and for CFA level 3- 56%
- The average passing rate for CFA 2019 you need CFA Level 1- 41% CFA level 2- 44% and for CFA level 3- 56%
CFA® Level 2 Exam Passing rate is closer to 44%
- Past 10 years saw that CFA® Level 2 examination passing rate in the range of 32% to 56%, with an average passing rate of 44%
- June 2014 examination passing rate was the highest at 46% in the past 8 years
- To clear CFA 2015 you need Level 1- 42%, level 2- 46% and for level 3- 54%.
- CFA 2016 you need CFA Level 1- 43%, CFA level 2- 46% and for CFA level 3- 54%
- CFA 2017 you need CFA Level 1- 43%, CFA level 2- 47% and for CFA level 3- 54%
- CFA 2018 you need CFA Level 1- 43%, CFA level 2- 45% and for CFA level 3- 56%
- CFA 2019 you need CFA Level 1- 41%, CFA level 2- 44% and for CFA level 3- 56%
You have a 50:50 chance of passing CFA® Level 3 Exam
- Past 10 years saw that CFA® Level 3 examination passing rate in the range of 50% to 76%, with an average passing rate of 56%
- The 14-year average pass rate for all three levels of CFA (from 2003 to 2016) was 52%
- The CFA® Level 3 (June 2018) examination passing rate is 56%.
- The CFA® Level 3 (June 2019) examination passing rate is 56%.
CFA® Curriculum vs Schweser?
To answer the above question, let us first have a look at a high-level comparison between the two.
|Attribute||CFA® Curriculum Books||Schweser|
|Cost||$150 + shipping||$649|
|Depth of Coverage||In-depth||Summarized|
|End of Chapter Questions||Yes||Yes|
Please note that there are many packages available at Schweser. For the above comparison, I have included the price of their Essential Self-study package. Before I attempt to answer the above question, the most important question you must ask yourself is how much time you intend (consider reality) to spend for CFA® Level 1 Examination. Your preparation (CFA® curriculum notes vs Schweser notes) will totally depend on the amount of time you are willing to spend.
Below are my set of tips that may prove useful (only applicable to CFA® Level 1 examination
If you have a 5-month Exam Preparation Time?
Let us face the truth, you do not have lots of time to prepare and pass this CFA® Level 1 examination. However, you have just enough time to give your best shot. With this, I recommend the following –
- Forget about the CFA® Curriculum Books. Just going by common wisdom shared on the majority of the CFA® forums, it takes around 200+ hours to go through the CFA® curriculum books (which obviously you are short of)
- Go through the Schweser Video Tutorials. This may take at max 20 hours and these are a good starting point to prepare yourself for the exam.
- Once you have looked at the videos, go through the Schweser notes in detail. Though these are the summary version of CFA® books, however, I feel they are sufficient enough to ensure that you pass the exam. Reading Schweser notes will take around 80 hours or so
- The remaining time (if any), you must spend on attempting as many Mock Papers as you can and concept revision.
- I had only 5 months for CFA® Level 1 exam preparation and used this strategy to pass CFA® level 1 examination.
If you have 200-250 hours for exam preparation?
If you can spend 200-250 hours preparing for the exam, then you will be in a dilemma – Should I touch CFA® curriculum books or should I look at Schweser notes or Both?
- Frankly speaking, you will have to decide either of the two, but not both. Either you can read through the CFA® curriculum books once (yes, only once!) or you can master Schweser by learning from their video tutorials, reading notes a couple of times, practicing mock papers, etc all in 200-250 hours
- My suggestion here would be to yet not touch the CFA® curriculum books and spend time on Mastering Schweser concept as per the time-table is given in the below graph
If you have the luxury to spend 300 hours?
If you have 300+ hours, then I would highly recommend a mix of CFA® Curriculum books as well as Schweser notes.
- The best way is to start with Schweser Video Tutorials and move to Schweser notes such that you ensure you have covered all important concepts from the point of view of exams.
- Thereafter, I would advise you to look at CFA® Blue Box Examples (discussed within the chapters) and then End of Chapter (EOC) Questions. This may take another 80-100 hours.
If you have less than 100 hours
- A piece of brutal advice, Go home! Do not try your luck. You would have already spent more than $1000 on registration of the exam. Why waste this attempt?
- Consider the withdrawal option if you have already registered for CFA® Exam. Withdrawal policy offered by CFA® institute may come handy. Click here for details.
To be eligible to enter the CFA® Program, there are two primary requirements –
- Have US Bachelor’s (Or Equivalent Degree) or be in the final year of your bachelor’s degree program at the time of registration
- or have four years of qualified, professional work experience (does not have to be investment-related)
- or a combination of work and college experience that totals at least four years.
- Please note that Part-time positions do not qualify, and the four-year total must be accrued prior to enrollment
- Have a Valid International Travel Passport – This is required for CFA® Exam enrollment and registration
CFA® Institute provides two types of scholarships –
- This is a need-based scholarship designed for those who are not able to afford the full CFA® program fees.
- In addition to financial needs, there are other factors that are also considered like academic, professional or other accomplishments of the candidate, candidate’s interest in pursuing the CFA® charter, obstacles overcome by the candidate, etc.
- More than 2,600 Access Scholarships are awarded to CFA® Program applicants each calendar year.
- This is given to key influencers in academics and the financial community.
- This awareness scholarship is designed to raise awareness of CFA® Institute programs among key influencers by allowing certain strategically positioned groups and individuals to distribute and/or receive exam registrations at discounted rates.
For further details, you may refer to CFA® Scholarship Page
Useful Resources for CFA® Exam Prep
If you learned something new or enjoyed the post, please leave a comment below. Let me know what you think. Many thanks and take care. Happy Learning!
- CFA® Level 1 Study Plan
- CFA® Level 2 Study Plan
- CFA® Level 3 Study Plan
- CFA® Salary
- CFA® Exam Dates
- CFA® and MBA comparison
- CFA® and FRM comparison
- CFA® vs CFP Difficulty
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