Everyone knows that it’s not easy to become a Chartered Financial Analyst (CFA) charterholder. Passing the Level I exam is hard enough – 42% of the 51,134 candidates who took the Level I exam in June 2015 and 43% of the 52,315 candidates that took it in December passed.
Peter Mackey, the head of CFA examination development at the CFA Institute, manages a team of 23 people who develop the CFA exams, as well as the Certificate in Investment Performance Measurement (CIPM) and the Claritas qualification.
Here is his advice for passing the CFA exams:
1. Focus your efforts on the CFA Institute’s curriculum
While other materials and courses may help, it’s important to realize that everything you will see on the exam comes directly from the curriculum that the CFA Institute provides. Look at the exam prep materials and study tips on the institute’s website thoroughly. It sounds basic, but not everyone does it.
“A lot of candidates make a number of mistakes, for example, they rely on too many sources of information rather than focusing on the curriculum,” Mackey said. “It’s hard enough to master in the six months we recommend that you take to learn it – it’s all there for you in the curriculum, so take the time to absorb it.
He touts the fact that, unlike some other qualification programs, his team develops and produces its own curriculum every year.
“In my view it makes it easier and fairer for our candidates, because we will only write a test question based on our assigned curriculum – they won’t get asked something outside of that,” Mackey said. “Writers have to prove that all of the content that the candidate needs to answer the question is in the curriculum.”
2. Keep up-to-date with what’s changed
In the very early days, passing the CFA exams required writing excellent open-ended essays, but it has evolved to become more and more weighted toward the multiple-choice portion. In the early 2000s, Level I went to 100% multiple choice.
“Don’t underestimate Level I; it’s going to be tough,” Mackey said.
Another big change: In 2009 the CFA Institute changed all of its multiple-choice questions to have three answer choices, one correct answer and two distractors, instead of four choices.
“That’s led to a big improvement in the quality of the exams,” Mackey said. “The hardest thing to do is to come up with good distractors, answers that are plausible to a not-well-prepared candidate but not tricky or confusing to a well-prepared candidate.”
3. Know the format
The morning session of Level I lasts three hours, with 120 multiple-choice questions, followed by a two-hour break for lunch, then another three hours to complete an additional 120 multiple-choice questions,
Level II consists of “Item Set” questions, one- to two-page cases of data and information about an institutional or individual investor, then attached to each case are six questions based on that case drawing from the curriculum.
“Level II is similarly structured, but requires a lot more reading, with 60 questions in morning and 60 in the afternoon,” Mackey said. “It’s a bit more complex, with higher-level questions that require comprehending the case information in order to answer them.”
The morning session of the Level III exam has short-answer essay questions that require candidates to make calculations. The afternoon is Item Set questions.
“Level III is more structured than most essay exams might be,” Mackey said. “If you’re trained to take a multiple-choice test, the Level III morning session is not that.”
4. Practice the lost art of penmanship
Keep in mind that you have to write down your answers by hand, which presents a number of challenges in an age of computers. Practice writing for long stretches using a pen or pencil to exercise those hand and finger muscles.
“Most of us don’t write by hand much anymore, so the act of writing for three hours is tough,” Mackey said. “We encourage candidates to practice writing manually in the months before the exam.”
5. Practice makes perfect – but don’t go overboard in any one area
Some candidates spend way too much time on practice questions, drilling and drilling, rather than really taking the time to memorize the curriculum and understand the concepts, Mackey said.
Also, don’t focus obsessively on certain parts of the curriculum that you think will make up the bulk of the test while neglecting others.
“It’s a dangerous game to try to figure out what’s going to be on the test, to the extent that you’re skipping chapters,” Mackey said. “That’s reducing the probability that you’re going to be able to handle the questions you’ll actually see on the exam.”
6. Take care of yourself
Candidates are tempted to cram in as many last few hours of study as they can. But don’t sacrifice time usually spent on exercise, eating well or sleeping a full night for studying – especially in the days just before the exam. If possible, candidates may consider putting in a request now to take some personal time off work for review and rest right before the exam. You want to perform your best, and that means caring for your physical well-being as much as mental preparedness. If your body isn’t ready, then hundreds of hours of prep won’t mean anything.
“You want to perform your best, and that means caring for your physical well-being as much as mental [preparedness],” Mackey said. “If your body isn’t ready, then hundreds of hours of prep won’t mean anything.”
7. Plan the logistics of exam day
Scout the exam location ahead of time. Learn the route, look at parking, plan what you will eat for lunch and where, and have a general notion of what you’re going to walk into.
“You don’t want to be tripped up by little things like that,” Mackey said. “The fewer last-minute decisions to make, the better.”
8. On exam day you’ll want to…
Make sure you have your valid passport, ticket and approved calculator – and leave the personal belongings at home.
“Pay close attention to all the instructions provided to make sure you’re following the procedures properly,” Mackey said.
9. Time management is key
For Level I, you have to complete 40 questions per hour, meaning you can spend an average of 90 seconds on each question.
An important point to remember is that there’s no penalty for a wrong answer. You obviously won’t get credit for a mistake, but it’s important to try to answer every question.
“If you’re not managing your time well, you can really mess yourself up,” Mackey said. “You want to turn in a fully completed answer sheet to give yourself an opportunity to get credit for every question.”
Levels II and III get more complicated. Level III has 12-minute and 23-minute questions, many with multiple parts.
“For Level III in particular, it’s really important to focus on time management,” Mackey said. “Some people write us a treatise on a topic they know well but take twice the allotted time to do it.”
10. Don’t sacrifice attention to detail by rushing
While you have to keep your eye on the clock, some people work too fast. There are a lot of key directions in the pre-exam instructions.
“Candidates fly into this without paying attention, they miss questions, misread them, or they don’t follow instructions and write on the wrong page,” Mackey said. “You have to calm yourself down and work at a steady pace without rushing.”
Despite the fact that the test is timed, read all questions thoroughly. The test-question writers intended for you to read the content entirely, think carefully and do whatever calculation you need to answer it correctly.
“Some candidates read a question too quickly and they think they know the answer, they see one choice that seems logical and they fill in the oval and move on without reading the other options,” Mackey said.
11. They’re not trying to trick you – really
Some people tend to overthink a question, convinced that it’s a clever trap designed to ensnare unsuspecting saps, but they end up outsmarting themselves or taking too much time per question.
“Certain candidates have a view that every question is a trick – that we’re sitting here rubbing our hands thinking ‘How are we going to get them on this one?’” Mackey said. “Candidates can overthink or overcomplicate it by making an unnecessary assumption, ‘I’m sure these guys are trying to trick me,’ which can do more harm than good.
“Take the material we’ve given you – that information is sufficient to answer the questions,” he said. “Don’t bring in other sources of info or make something up – keep it simple and you’ll do well.”
12. Take a deep breath
Stress management is an overlooked element of test-taking. Everyone goes into the day of the exam extremely high strung.
“There’s good stress that can help you and bad stress – if you panic, it will hurt you,” Mackey said. “You’re not going to know all of the answers to all of these questions – nobody gets 100%; if you get 70% you’re doing pretty well.
“If you don’t know an answer, move on,” he said. “The brain is an amazing organ, and research has shown that if you calm down, answers will start to come to you more readily.
“And, once you complete the exam, go celebrate and relax! You earned it. ”
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