After reading this post, you’ll learn:
- why the Level 1 exam passing rate is so low,
- how much time you need to prepare yourself for the exam,
- what is strategic vs. tactical study planning,
- how a good study plan should look like.
The upcoming June 2016 CFA Level 1 exam is due in 4 months. If you wish to take part in it, you must have already registered to the exam (if not, make sure that you do not miss the standard registration fee deadline passing on 17 February) and received your CFA Curriculum. Now you are probably considering a purchase of some extra study materials to match with the Curriculum, such as video lectures or a question pool, and you are getting ready for a hard study time.
Before you get down to work, however, stop for a while and ask yourself one fundamental question, which is: “How do I overcome the low 40% or so passing rate?”. To be very specific, we should also add here that this 40-ish passing rate (in %) is a real value calculated for those who actually took the exam (i.e. it excludes no-shows usually accounting for as much as 20-25% of all registered candidates).
Why is the passing rate of the CFA Level 1 exam so low?
Among the possible causes of the low CFA Level 1 passing rate, we would certainly count things like difficult to understand financial concepts, complex or catchy exam questions, too little time that can be approximately spent on one exam question, the minimum passing score set at a high level or even the advanced English, which at times can be a real obstacle for non-natives. Undoubtedly, all this counts but the real culprit here may be still at large.
Why? We failed to mention the bulk of material that every CFA candidate has to dig through. Just have a look at the CFA Curriculum. These are 6 books, hundreds of pages each. To read it all from cover to cover, you would need a lot of time, not even mention learning and understanding what you’ve read.
At this level of the CFA exam, which is more conceptual and verifies your general knowledge and understanding of finance, it may be a good idea to focus on particular concepts required in the exam and to make sure that you get them right. To reach this goal, you may consider taking advantage of numerous study materials available online that will naturally facilitate your uptake of the obligatory dose of knowledge.
Studying for the exam – how much time do I need?
It is said that an average candidate needs around 300 hours to get well prepared for the CFA Level 1 exam. Of course, it is a mean value and it need not apply to you. From my own observations, I can tell that some candidates will be fine with only 150 hours of preparations, but there will be those who will need to spend even 600 hours before they pass the exam.
If, for example, you work in finance, you studied finance at university and you like to test yourself, you will probably find 300 hours just ample. If, however, you define yourself as a finance greenhorn, you barely fancy poring over the books or you wish to change your field of specialisation, of which taking the CFA exam is only a step, you should allow for more than 300 hours of preparations.
It is very important that you are able to estimate the number of hours you’re going to need for preparations. It will allow you to see how much time on average you should spend on studying per month, week and day. For example, if you think that 400 hours is your number it means that you must arrange 100 hours a month for studying.
My advice is that your estimations allow for some extra hours in excess of your staple preparation time. Just in case, you know . I guarantee it will be useful in the most crazy time before the exam. I mean, I haven’t met a person able to say that they are fully prepared for the exam or that the exam is just in time for them. Perhaps you might be the first one if you estimate right .
What is strategic study planning? How about my tactics?
When preparing for the CFA exam, you have to tackle the issue both holistically and atomistically. What it means is that, on one hand, you need to establish how much time overall you’re going to devote to different topics, mock exams, revision, etc. and when. On the other hand, you should be able to systematically adapt your schedule and make plans for shorter periods, usually for the upcoming week. The former, I call general strategy and the later – detailed tactics.
Below, you will find some hints at how to handle strategic study planning. The next post is going to be about tactics. If you feel, though, that you wish to have a go at tactical planning right away, I recommend that you first have a look at the concepts of forgetting curve and learning curve, which may actually come in handy (these are concepts originally stated by Hermann Ebbinghaus in the 19th century).
Before we move on to a sample study plan, there is one more advice. Remember that getting ready for the CFA exam is a long-lasting process. Every such a process requires good planning, execution and supervision. It holds true both for the strategy and for the tactics.
Study Plan Assumptions and Timing
We begin our sample 4-month level 1 study plan on 1 February and end it on 3 June, i.e. the day before the exam. The last three weeks are devoted to revision. During this time, you should try to do as many mock exams as possible.
The study plan is divided into topics and their sequence is identical with the CFA Curriculum. The time scheduled for each topic depends on its difficulty, the number of pages in the Curriculum and the number of questions devoted to the topic on the exam.
June 2016 CFA Level 1 4-Month Schedule
Do You Want to Tailor the Study Plan to Your Needs?
(Note: To use the app and create your own study plan, you need to register first.
We respect your time – it should take you around 45 seconds.)
Thanks to using the app, you'll be able to tailor the study plan to your needs:
- choose the start date and the end date,
- set the deadline reminder if you find it useful,
- assign days to the exam topics you want to study and, for each topic, choose relevant Soleadea Episodes (which generally cover CFA Curriculum readings).
You can also repeat topics and episodes or schedule revision blocks, mock exams and holidays. You can even have more than one study plan, e.g. if you also wish to plan your revision in detail.
Watch this one-minute video to learn how the app works:
Editor's Note: This post was originally published in December 2012 and has been updated for accuracy and comprehensiveness.