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Earning the coveted charter requires passing a notoriously difficult, three-part exam. But with a clear plan and supportive colleagues, it’s doable and rewarding.
The Chartered Financial Analyst (CFAⓇ) is the most highly coveted certification in the investment profession. Earning this internationally recognized charter offers many benefits, including compensation and career opportunities.
Earning those benefits, though, requires passing the three-level CFA exam. The first two levels of the exam have a pass rate of less than 50%, and the third level is historically slightly greater than 50%. The CFA Institute recommends candidates study for at least 300 hours to pass each level, which is especially challenging for candidates like me, for whom English is a second language.
However, I passed, and you can, too. Here are my four most important tips.
1. Increase your English language competence
The CFA exam does not require listening or speaking skills, but intermediate English reading and writing skills are essential. Due to the complexity of the subject matter, even for a native English speaker, it is challenging. Therefore, especially if English is not your first language, my first tip is to increase your English language competence in reading for all three levels and writing for level 3.
You can better grasp the content when studying by finding the delivery methods or learning style that work best for you. For instance, instead of trying to read a book straight through, use supplemental materials and techniques such as flashcards or questions with detailed explanations of all answer options. Discuss material with others in a group or online setting or view videos to help make the material more intuitive and digestible.
2. Optimize your study time
Before you even begin studying for the CFA exam, you need to understand the scope of what you are about to undertake. A key to your success is having the proper mindset from the beginning.
The CFA exam is a significant commitment that will demand five to six months of your life per level. If you are working while studying for the exam, studying will be like having a part-time job. Managing your work and life responsibilities can be challenging, but working can also be advantageous as some elements can relate to what you are studying, making the concepts more understandable. For example, when I was studying for the exam, I was working with fixed income and derivatives, which helped me because I could relate what I was working on with what I was studying.
Regarding the amount of study time you should plan for, start with two hours a day during the weekdays and double that on the weekends. That is daunting, but having this insight will help you anticipate what is required and preserve some balance in your life, which brings me to my next tip.
3. Maintain a work/life balance
As I mentioned, preparing to take the CFA exam is a long-term commitment. It can be difficult to manage when you factor in the daily demands of work and life, especially in the beginning. Still, it is crucial to establish some balance in your life, not only for your success on the exam but also for maintaining your overall well-being.
When I took the CFA exam, only one exam per year was being administered. My approach was to study hard for five to six months, take the test, and then for the other part of the year, I would balance my life. The administration of the exams has changed since then, but plan for the same five to six months to study for each part of the exam. Depending on your work schedule and other relationship commitments, allocate a day or two each week for family and friends or for doing something you enjoy.
4. Join a study group
One indispensable way to optimize your studying is to join a study group. Getting together with my peers was immensely helpful when preparing for the exam back in the late 1990s; it's the concept of iron sharpening iron. Back then, digital connectivity wasn’t what it is today. Now there are many online forums and discussion groups that will allow you to connect with others and study together. Also, don't overlook those in your immediate work environment or college connections. Let people in your circle know of your intention to take the exam. You may find that others are on the same path and would welcome the opportunity to form a study group.
One last word
After I took the CFA exam, I worked mainly in the finance department of companies, not with investments or research. I thought what I learned for the CFA exam wouldn’t be useful, but I was wrong.
My final tip is this: Even if you are not entirely sure of your specialty, consider taking the CFA exam because its value was more practical and broader than I initially thought. It builds personal confidence, too. After taking those three exams, when I was faced with any new work assignment, I thought, “If I can pass those exams, I can do this.”
Luis Martinez, CFA, is a content developer at UWorld. He holds a master's degree in accounting from the University of Illinois at Urbana-Champaign, a BS in economics from Pontifícia Universidade Católica, and a postgraduate degree in marketing from Fundação Getúlio Vargas, both in Rio de Janeiro, Brazil. He received his CFA charter in 2001 and can be reached at [email protected] or found on LinkedIn.
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
