159,889 candidates from 174 countries have registered to take the CFA exam this year. Around 20% won’t turn up. At least 40% of those who do turn up failed. Level III is the only CFA exam which a majority of candidates typically pass – and even then, the margin is small – just 54% passed CFA III in June 2014.
Why do so many CFA candidates squander their chance? Clearly the exams are hard. Clearly the CFA Institute wants to preserve the mystique – it wouldn’t be quite the same if 80% of candidates sailed through. Nonetheless, if you don’t want to crash and burn, there are things you can do about it – although, admittedly, it may be too late to make much of a difference now.
1. Haven’t studied at least 300 hours for each level:
It’s become a cliché to say that you need to study for 300 hours if you want to pass each CFA exam. But it’s true. The CFA Institute issued the following handy graphic after the June 2014 exams showing how long students had studied for.
Anecdotally, however, 300 hours may not be enough. Speaking on forums, past CFA exam candidates say they only passed when they increased their study time considerably. “The first time I studied about 300 hours. The second time I increased it to around 400,” says one candidate who was successful on round two. “I spent more than 800 hours studying and I’m not sure I can do better next time,” says another candidate who failed.
Naturally, there are always people who claim to have studied less. One successful candidate told that he passed CFA Level I after studying for just 30 hours and using half the allocated time in the exam. “It’s not hard if you’re decent at math,” he says.
2. Rely Upon the CFA’s own Study Materials:
The CFA’s own study materials are a necessary but not sufficient source of information for passing the institute’s exams. 89% of respondents to the CFA’s June 2014 candidate survey said they found non-CFA Institute study notes useful for passing the exams. This compared to just 81% who said they found the CFA’s own materials helpful.
“The CFA’s books are just too much information,” says another candidate. “Something like Schweser condenses things and makes it all more palatable.”
3. Have a Personal Life:
Do you have a family? A job? A hobby? Are you prepared to put all of this aside while you study for some fiendishly difficult exams which you may not pass. If the answer is no, you might not want to bother. “This is a juice worth the squeeze for some, for others not so much.
Anecdotally, it gets harder to handle the demands of the CFA the older you get. The CFA exams are becoming a rite of passage for people in their 20s who have nothing going on. Once you have a wife and family, a house and kids, there are just better ways of spending your time.
Nonetheless, one 62 year-old says he passed the CFA last year: “If you can do it, you can do it.”
Better Luck next time CFA candidates!