Those in the finance industry understand the prestige and expanded job opportunities that come your way after becoming a Chartered Financial Analyst. In order to get this designation, qualified individuals must dedicate themselves to passing the financial analyst examination, called the CFA Exam. The CFA Institute runs the Chartered Financial Analyst program and teaches professionals in the fields of investing and finance a particular curriculum. This knowledge is called the CBOK, or Candidate Body of Knowledge.
Becoming an expert in the specified topics is essential for passing the exam, but these topics are wide ranging and the exam can be extremely difficult. With its difficulty, it may be surprising that professionals continue to take and retake the various portions of this test each year. However, achieving this designation and receiving your charter means advancing in your career, finding better salary thresholds, and proving your acumen in specific financial aspects.
The Nitty Gritty of the Exam
Before sitting for the exam or even beginning your studies, it’s important to understand what you’ll face. The CFA Exam is notoriously difficult; pass rates in 2015 saw only 42 percent of candidates got a passing score on the first level of the exam during June session. In December session, only 43 percent passed. Because the exam covers so many topics and goes in-depth into a variety of disciplines regarding finance and investing, many candidates find themselves forced to take the various parts of the exam over and over again before passing. These retakes often mean that acquiring your degree can take numerous years. According to the CFA Institute, the average test taker will need four years to complete the entire program. Because certain parts of the test are only administered once or twice a year, it’s important to focus on time that you have at your disposal.
The exam is divided into three main portions: Level I, Level II, and Level III. While Level I is offered twice a year, in June and December, other levels are offered in June only. The first level of the exam is focused on professional and ethical standards. It covers a wide range of basic knowledge and comprehension. Some of the questions are straightforward, while others call for detailed analysis. The second level of the exam delves more deeply into complex themes and analysis. Candidates are tested by putting them through contextual situations, and then they are asked questions to understand how they would make investment decisions. This portion of the exam is designed to test a candidate’s ability to value assets correctly. The third and final portion of the exam tests all of the topics from the first two tests in an application study; candidates must apply various standards to contextualized portfolio management systems.
Give Yourself Enough Time
If you decide to take the exam in April and want to sit for the test in June, think again. Even finance professionals that went to the most prestigious universities find this exam difficult to pass. The CFA Institute recommends that candidates give themselves six months of dedicated study time before sitting for the exam, especially for the first round. The institute offers plenty of study materials, but some may find that they must supplement these free materials with purchasable study courses. Companies like Crush the Financial Analyst Exam provide study resources, mock exams, and numerous test-taking tips. Taking advantage of a course like this can leave you better prepared for the exam.
Practice Makes Better
There’s no better study technique than to take mock exams. The more mock exams you take, the less stressed you’ll be and the more experience you’ll have with the types of questions you’re going to face during the actual exam. For candidates that don’t consider themselves great test-takers, this strategy is non-negotiable. Taking practice exams can help you structure your studies, and give you an idea of the time you’ll be allotted for each question. Practice doesn’t make you perfect when it comes to the CFA Exam, but it definitely makes you better prepared.
The CFA Exam can be intimidating, but with the right preparation and studying tactics, candidates have a better chance of passing the first test on their first try. Keep these strategies in mind and pursue your CFA to open up the opportunity for a better career in finance.
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