By Jason Moschella, PhD (ABD), CFA, CMA, PRM
I often joke with my students about their voluntary commitment to deep and prolonged suffering when they sign up for the CFA exams. I remember going through the rigours of the program, including barely scraping through Level 2 in 2006 and failing Level 3 in 2007. At one point in 2008, on my second try at Level 3, the questions all started to look and feel the same as I spent each and every day in May studying for a full eight hours. The exams are certainly no cakewalk and there is no escaping the required preparation time, which can range from 200 to 500 hours per exam; however, this does not mean that the time you invest has to feel like a miserable chore.
In the four years that my colleagues and I have been running our Level 1 CFA® Exam Preparation Course at McGill, we have concluded that much of this suffering is actually preventable! In our view, one of the key success factors is to know yourself, which means learning how you learn best.
How Well Do You Know Yourself?
One of the key tenets of portfolio management is to know your customer. You must clearly articulate the goals, constraints, and unique circumstances they face because the advice you give needs to fit their situation. Why not apply those principles to your studies?
According to a recent survey published by CFA Institute, candidates spend approximately 300 hours prepping for each exam, but the amount of time you will need to invest will depend on your experience and situation. For example, if you are in the final year of your Bachelor’s Degree in Finance, 300 hours for the Level 1 or 2 exams is likely on the high end because there is a large overlap between the CFA Program and the course materials you’ve already covered. Contrast this with a working professional from outside the investment profession who would like to start a new career in finance but has never seen an income statement or balance sheet in their life. Those 300 required hours should effectively be doubled to 600 hours because of the requirement to learn the new “language” of finance.
We are not (yet) at the point where knowledge can be downloaded directly into our brains, like when Neo instantly learns Kung Fu in The Matrix. We also know that there is no one best way to learn effectively. Indeed, CFA candidates use combinations of resources as part of their study plan. Packaging and presentation matter, as some people thrive on theoretical explanations, while others prefer concrete applications of concepts. To boot, some people do well by reading books on their own, while others are more hands-on and prefer more realistic situations such as case studies or lab work. I personally prefer to study alone but appreciate the value in enrolling in a course or study group such as our Level 1 CFA® Program Exam Preparation Course and the structure, solidarity, and accountability that this brings to candidates.
The last bit of advice I can give is to know your product, i.e. what you need to produce on exam day to pass. CFA Institute does not care where you score points on the exam (except for ethics in borderline cases). The only thing that matters on exam day is that you did well enough overall to hit the minimum passing score. Play to your areas of strength and turn your weak spots into places that, at a minimum, do not kill your chances of passing.
Reference: CFA Institute “June 2018 CFA Program Candidate Survey”. Accessed 13 January, 2020.