Is the CFA Hard? Decoding all the 3 Levels for You

Is the CFA hard? Well, if you have given thought to sitting for this prestigious exam, you must have asked this question a lot.

The truth is that the CFA exam demands strong discipline, rigorous hard work, and consistent practice. Hence, making it one of the toughest exams to pass.

With an overall passing rate of about 50% across all levels in India, the CFA exam requires persistence, thorough preparation, and unwavering determination.

Before you start preparing for the CFA exam, here are some important points to consider:

• Understanding how many levels the CFA has is crucial, as each level is progressively more difficult than the previous one.
• Success in these exams requires a personalized learning roadmap.
• The questions are challenging and require extensive practice.

So, how difficult could this three-year finance course be? Let’s find out.

How Many Levels Does CFA Have? 

The Chartered Financial Analyst (CFA) exam is renowned as one of the most challenging exams in finance and happens in 3 levels. 

CFA pass rates have been below average for several years. However, the February 2024 Level 1 exam unexpectedly increased to 44%, likely due to the rescheduling of the exam.

In November 2023, 44% of the 14,585 candidates passed whereas, the all-time average pass rate for CFA Level 3 is only 56%, with 2023 pass rates being even lower. 

In India, the CFA exam maintains strict standards. One of the rules is that if you fail, you cannot retake the exam for at least six months.

Let’s break down these 3 levels one by one:

Preparing for CFA Level 1

Level 1 of the CFA exams is your entry point toward becoming a CFA.

Even though this level is challenging, you can crack it if you dedicate enough time to prepare.

Here are the CFA exam topics, segregated into calculations-based and theory-based subjects:

As you consider pursuing the CFA Level 1 exam, here are some strategies to increase your chances of success:

1. Start Early

It allows you to:

• Review the material thoroughly
• Regular practice will help reinforce important topics and improve your speed.

2. Take Mock Tests

Mock tests are invaluable for several reasons:

• They introduce you to various question types and scenarios you might not encounter during your regular study sessions.
• They help you gauge your preparedness and identify areas where you need further study.

3. Enroll in a CFA Training Course

At CFI Education, we offer our signature course for CFA Level 1. 

Our courses offer several benefits. These include: 

• You get to learn from experienced professionals who can provide deeper insights. 
• The course structure ensures that you cover all necessary topics systematically.
• Our practice exams, additional study materials, and group discussions help you to improve your understanding and performance.

4. Focus on Key Topics

Getting a head start on certain challenging subjects can make a significant difference. For instance, you could begin your preparations by focusing on the sections that are hardest for you. 

• You can identify these areas by assessing your background.
• Concentrating on these areas early can build a strong knowledge base that will make it easier to grasp other related subjects.

Implementing these strategies will enhance your preparation and increase your chances of successfully passing the CFA Level 1 exam.

Preparing for CFA Level 2

Congratulations, buddy! 

You’ve cleared the foundation of one of the world’s toughest exams. You deserve a round of applause!

But is this all? I’m afraid not. 

You still have two more levels to pass to become a CFA charter holder. 

By putting your heart into your studies and following the guidance in this blog, I’m confident you’ll tackle the upcoming levels with even more ease than the first one.

So, are you ready?

The next level of the CFA exam, Level 2, has the same topics as that of Level 1.

The CFA exam represents a significant step up in both breadth and depth, but with content that is 4 times more extensive and challenging to master. 

The exam format includes 88 multiple-choice questions presented in a vignette style.

This format emphasizes more applied questions, requiring a deeper understanding and practical application of the material.

Most candidates aren’t able to clear the CFA Level 2 exam because of the complex curriculum and sections that the students need to learn.

The following factors make the CFA Level 2 exam more difficult:

• The complexity of the curriculum.
• The challenging questions require skills and deep knowledge in a candidate.
• The time duration of the exam – is precisely 4 hours and 24 minutes.

However, we have presented some strategies that will 4X your chances of success:

1. Thoroughly understand your subjects 

You can consider following these tips:

• Some subjects, like Fixed Income and Equity Valuation, can be studied together because they share similar concepts revolving around valuation. These are relatively simple to understand. In contrast, subjects like Corporate Finance, Economics, and Alternative Investments require more memorization due to their unique concepts.
• Make a Cheat Sheet of Formulas, this will help you quickly reference important equations during your study sessions.
• Familiarize yourself with the functions and operations of your calculator to save time during the exam.

2. Manage Your Exam Time

You have a total of 4 hours and 24 minutes to complete the exam. 

To finish within 4 hours and spare 20 minutes for revision, do this:

• Improve your reading skills
• Practice with mock exams.

3. Follow These Learning Techniques

• Make a list of topics and organize the subjects you need to study.
• Identify and note down areas where topics intersect, establishing cross-connections.
• Use the Feynman Technique.

4. Exam Techniques

• In vignette-style questions, read the questions before the passage to understand what information to look for.
• Manage the time pressure in Level 2. If you get stuck on a question, flag it and move on. Aim to complete 50-60% of the exam first, then return to the flagged questions.

Level 2 of the CFA exam focuses on asset valuation and applying different investment tools. 

If you use these or stick to any strategies that work the best for you and focus on the 3 P’s 

• Practice
• Perseverance 
• Patience

Then nothing can stop you from passing this level with 90+ percentile.

Let’s move on to the final level.

Preparing for CFA Level 3

One of the most distinctive factors about the CFA Level 3 exam is that it focuses on applying the knowledge and skills gained in the earlier levels to real-world investment management scenarios. 

A few important things to consider:

• The Level 3 exam focuses on portfolio management and wealth planning.
• You require a great understanding of asset allocation, investment strategies, and risk management. 
• The exam consists of 77 questions and lasts 4 hours and 24 minutes, divided into two sessions of 2 hours and 12 minutes each. 
• Unlike traditional multiple-choice exams, you need to type your answers, with the format split between 50% MCQ and 50% structured response questions. 
• This vignette-style exam is more qualitative. It involves fewer formulas, focusing on applied knowledge. 
• The requirement to type responses adds a whole new dynamic that you might not be used to, challenging your ability to articulate and structure your answers effectively.

You don’t get to know your pass percentage when you pass the 3rd level, you are just notified that you have passed the exam. 

Before we delve into strategies to help you ace this level, we have a surprise for you.

Are you ready?

In Level 3 of the CFA exam, you don’t have to worry about:

• Quantitative Methods
• Financial Statement Analysis
• Derivatives

These three subjects are eliminated from the syllabus. Isn’t that exciting news?

However, you still have 7 subjects to master, each with increased pressure and depth of concepts. 

But don’t worry, we’ve got you covered with tips and strategies to help you succeed.

If your concepts from Levels 1 and 2 are clear, Level 3 will be comparatively easier for you. 

Here are the 6 strategies you can use to ace your Level 3 with grace:

1. Start Early

Begin your preparation well in advance to give yourself ample time to cover all topics thoroughly.

2. Follow a Study Pattern

• Switch subjects regularly to avoid boredom and maintain engagement.
• Develop a study schedule that fits your routine and ensures consistent progress.

3. Time Management

• If you are a working graduate, appearing for the CFA, you need to balance your study time with your job.
• Focus intensely during study sessions: Even if you can only dedicate 3 hours a day, make sure you give 100% of your attention and retain as much information as possible.

4. Practice with Mock Tests

The CFA Institute provides 2 mock tests, and Schweser offers 4 additional ones. Choose the ones that challenge you, to build confidence and prepare for the real exam.

5. Stay Motivated

When you feel like tearing your books apart, remember your ‘WHY’, and remind yourself of the reasons you are pursuing the CFA.

6. Do it at your pace

Doing at your pace does not mean that you would study the entire syllabus a day before the exam, that’s the recipe for absolute disaster.

Studying at your pace implies:

• Not comparing yourself to others
• Taking adequate rest
• Enjoying the process
• Following the study methods that suit you the best

Or you could always follow the strategies mentioned above.

By implementing these strategies, you can enhance your preparation and increase your chances of success in Level 3 of the CFA exam.

We wish you, the best of luck!

Is the CFA hard?

After reading this, you might be wondering, “Is the CFA hard?”

Well, if you are:

• Rigid with yourself
• Pressuring yourself to do it all
• Constantly studying without taking breaks

Then, of course, you are setting yourself up for failure.

While appearing for the exam, make sure you approach it with the right mindset.

To succeed in your CFA exam, it’s crucial to start by:

• Clarifying your goal and understanding why you want to achieve it.
• Self-awareness is key, as your success depends largely on your grasping power and study habits. 
• Effective time management is essential, so use proven exam techniques and familiarize yourself with the exam software features. 
• Regular mock test practice will help you build confidence and improve your performance.
• Throughout your preparation, remain patient and calm. 
• Establish a consistent study routine, avoid wasting time, and prioritize rest and breaks just as you do with your study time.

Follow these strategies, and 10X your chances of success and achieve your goal with ease.

All the best, future CFA!

Conclusion

We believe we have, if not completely, at least substantially answered your question: “Is the CFA hard?”

Undoubtedly, The CFA exam with all its levels combined could be a tough nut to crack.

However, you can very well increase your chances of cracking it by dedicating enough time to 

• Read this blog by heart and put it into practice
• Understanding how many levels does the CFA have
• Utilizing the right resources to study
• Practicing as much as possible.

Passing the CFA exam could be very rewarding and can open multiple opportunities for you in your career.

We have compiled a list of strategies and preparation material to help you crack the CFA exam and learn from professionals who know what it takes to make it through.

If you wish to take your CFA preparation a step ahead, we would love to welcome you to our CFA course. Here are all the details you would require to enroll in it.  

May all the light and success in the world be with you.

Good luck!