The pass rate is down, the cheating is up, is the CFA worth the work?

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Results to the December 2011 Level 1 CFA exam are out: 38% of people passed. This is a significant minority and a little depressing in light of the fact that as recently as 2009, 46% of December Level 1 candidates got through.

Why do so few people pass? Maybe they’re just not good enough. Ed Bace, head of Education for EMEA at the CFA Institute, told us: “The pass rates reflect the ability of the candidate cohort and their preparation, and what it takes to practice in today's financial marketplace."

The CFA Institute's transparency with regards to pass rates is notoriously opaque: it doesn’t actually tell candidates how they scored, and - as it states (in bold), “Neither the MPS nor individual candidate scores have ever been released.”

Instead, the CFA Institute informs candidates of their success, or lack of it, using a scorecard, such as that displayed here. The Institute insists that even this scorecard can’t be, “used to determine approximate scores or pass/fail status. The “≤50%” range is considered poor; “51%–70%” is considered poor to average; “>70%” is considered average to above average.”

In the circumstances, the 60% of candidates who fail often feel a little bemused. Last year, a candidate allegedly used the UK’s Data Protection Act in an attempt to elicit fuller information on his/her results - although it’s not clear whether this was a success.

Figures from the Institute indicate that the number of candidates taking the CFA exams globally has risen 20% since 2008. The US market is stagnating (3% growth), EMEA is growing (16% growth), but Asia Pac is the real success point: candidates there have risen 29% since 2008 and are now the largest cohort. In 2011, there were 91,000 candidates in Asia vs. 74,000 in theAmericasand only 45,000 in EMEA.

The cheating

As candidate numbers have risen, exam-related disciplinary issues appear to have risen faster.

According to the CFA’s most recent figures, January 2011 was a highpoint for nefarious goings-on: 696 people were involved in professional conduct cases, versus 405 in January 2010 and 235 in 2009.

339 of the people disciplined last January were trying to look at other candidates’ exam papers. Back in the naïve old days of December 2004, only 9 people were found guilty of a similar offence.

Is it worth it?

Is it worth pushing on through all 3 levels of the CFA programme? A candidate writing on our Asia Pac sites today argues yes – and no,

“The journey is nothing short of plain agony,” she says. “A typical day for me while I was juggling work with the CFA was: getting up at 6.00am to study for a couple of hours, revising some more during my commute, working for the next nine hours or so (stealing a little bit of CFA time whenever I could), and then back to studying at home again.

Weekends weren’t exactly something I looked forward to because most of my time was spent pouring over notes and end-of-chapter assessment questions, and of course trying to recall the concepts I had learnt during the week, least they got lost alongside the new chapters I was concurrently feeding into my brain.”

She says recruiters seem to have responded more quickly to her applications since she’s been able to say she’s passed all three levels of the CFA, and that “completing the exams shows a certain level of technical understanding and the perseverance to see things through.”

However, she concludes that:

“If you are looking for a broad understanding of finance, then it is the perfect course to take. If you are looking for something specialised, then it is just a touch-and-go syllabus that you can do without.

Looking back with the benefit of hindsight, would I choose to take the programme again? Probably not. It simply doesn't justify the effort.”

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