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A brief investigation into the mysterious increase in the CFA pass rate

As we’ve mentioned before, CFA exams are not very easy. More people fail than pass them. This year, however, the balance has shifted in favour of passers.

Bloomberg notes that 46% passed the CFA Level 1 this year, up from a bleakly depressing 35% in 2008.

Does this mean the CFA is now akin to the A level or level one clarinet? No. the CFA Institute points out that the long term average pass rate for Level 1 is 45%, suggesting last year was the anomaly. It also offers various explanations for this year’s rise, chief among them being the fact that students are keener than they used to be.

“We experienced much lower no-show rates at level I this June relative to the past 10 years. This indicates to me that the candidates enrolled are very serious about the exam,” says a spokesman in the UK.

Last year’s retakes may also be a contributory factor. So may the geographic distribution of candidates: Europeans have a greater tendency to pass.

Suggestions of dumbing down are refuted by the CFA’s enormously complicated standard setting procedure. The pass rate varies year on year and is determined using the ‘Angoff method,’ described as follows:

This method involves a large and diverse group of CFA charterholders. The lead psychometrician divides participants into two smaller groups for each level of the examinations. Each participant reviews the entire examination question by question and makes an independent judgment on the expected performance of a just-competent candidate on each question on the examination.

Participants review the entire examination a second time after briefly viewing general impact data and overall actual candidate performance on the exam. In the second round, each participant again records his/her judgment as to the expected performance of a just-competent candidate on each question.

In this way, both difficulty of the examination content and actual candidate performance are considered. The workshops result in MPS recommendations that equate to competence in the subject matter from the perspective of demographically representative groups of charterholders. The size of the group, its diversity, and its reliance on independent judgments contribute to the power of standard setting results.

Longer term, the Institute seems to be expecting pass rates to fall, which is not entirely surprising as candidate numbers seem to keep rising all the time.

CFA pass rate

Source: CFA Institute

Comments (21)

  1. Candidates out of work have more time to study which probably also contributes to a higher pass rate

    On the way to CFA Reply
  2. or to put it another way, the “pass rate” is not a pass rate at all but a purely notional nearly-random number based on a survey group’s sense of self-importance.

  3. I agree!
    There are far too many people out of jobs that have time on their hands to study for the exams. Plus, the teaching for CFA is more efficient.. I think CFA is going to become a very water-down qualification over the next few years.

    CFA = over-rated Reply
  4. Come on Xing – you usually have something to say at this point, about how you are Champion of the World when it comes to passing CFA exams? Waiting for you Xing………

  5. why is everyting in Italics today?

  6. Think the italics have something to do with html coding in the article. Will make amends now.

    Sarah, Editor, eFinancialCareers Reply
  7. Also it could be like accounting, you fail the exams then you’re out

  8. I hate my job and I tried to do something about it today. There is actually nothing out there! I though it was because everybody was really crap but turns out it is what it is! I’m doomed in my crappy job forever..

  9. having passed in december when the pass rate was only 35 i feel pretty annoyed the jokers that sat in june had it so easy. The article references cfa’s comments on more no shows at the december sitting, but these candidates aren’t counted in the pass rate, neither are those candidates that don’t return for the afternoon exam. I was pround telling people the cfa was so rigorous and how so many don’t have what it takes but now i feel otherwise. It’ll be very interesting to see how the L2&3 rates change on results day.

    cfa’s for pussies Reply
  10. I have just passed CFA level 1, don’t forget they changed the exam from 4 multiple choice answers to 3 multiple choice answers, therefore if you selected B all the time, your expected minimum score provided you know nothing would have risen from 25% to 33% that’s an 8% rise in the average score, leading to a higher pass rate. Plus this year’s exam many say was alot easier than previous ones, difficult to prove as the CFA don’t release past papers

  11. CFA has never been hard, only idiots take it and believe it means something.

  12. I heard this year the answers consisted of 3 choices instead of the standard 4 answer choices…seems that may explain it!

  13. cfa’s_for_pussies: seriously, READ that methodology. the “pass rate” is utterly unconnected with the pass rate.

  14. Mic, couple of Qs for you. 70% correct is usually pass. That translates into 168 questions out of 240.
    Probability of getting them correct is X. Can you calculate this X in two situations-1) when there are three choices 2) when there are 4 choices?
    Is the difference between the probability in two situation is significant?

  15. I agree with the first comment, there are more candidates with more time to study and probably more people have tried to do the CFA to add it to their CV and have higher chances to get a job in the current (more competitive) market…

  16. of course Saurya, probability – 168/3x and 168/4x. that’s a big difference, no

  17. I took the level one exam in December and retook it in June. I didn’t notice any real difference in the questions or difficulty. The only real difference is that I was much better prepared for the test. If it was easier it was just because they reduced the number of possible answers. Even then they seemed to have done away with the most obviously wrong answer so I don’t know that it made much of a difference.

  18. know and go cfa is the way to flow yo, the future is bright, the future is white, the future is for those with height, seeing the light, always being right, having fun tonight, cfa aiight!!!

  19. Well I think the level II and III results dispel any notion that the CFA exams are getting easier. I would not get hung up on level I pass rates – there is a long way to go and it only gets harder!! Signed – someone very relieved (and surprised) to have passed level II.

  20. I disagree that the exams were easier this year. I passed level III and was told by some who failed last year that it was just as hard. The higher pass rates are probably a reflection of: (1) reduction from 4 to 3 multiple choice answers; (2) high number of people who lost their jobs and therefore had more time to study for the exam.

  21. Due to the world recessionary environment, people have been put out of jobs or students are not landing into jobs immediately. Most people are treating this as an opportunity to improve their qualifications and putting in more hours of serions study so that they have better qualifications when the world economy rebounds. As a result, an increase in Level I pass rates; Level III pass rates should more or less be stable.

    Akbar Ayub Khan Reply

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