Passing the CFA Exam is no easy feat, especially when the average 10-year pass rate hovers around 44% – and that figure has fallen into the high-20’s in the past year. However, investment and finance professionals know that the Charter is considered the gold standard in the profession and is well worth having. CFA candidates work towards the CFA credential to enhance their career prospects, earn more, and achieve consistent job stability. All of these are laudable motives – especially in today’s uncertain times.
If you are one of those professionals working towards their CFA designation, you might find the following tips encouraging as you start studying for the CFA Level 1 Exam. We curated these tips from CFA candidates who passed Level 1 and hope they will help you as you continue your CFA journey.
1. Have a Plan
Passing the CFA Exam will be one of your most rewarding professional accomplishments—but how do you start? Having a clear plan of attack is critical to CFA exam success. Consider the following steps to get started:
- Start by determining your study goals, accounting for both your personal and professional commitments.
- Outline a study plan and schedule based on what you want to achieve and how much time you can devote to it.
- Figure out your strengths and weaknesses in the curriculum and plan to spend more time on topics that you find more challenging.
- Finally, protect your study time by setting boundaries with people or things that take away from your ultimate goal of passing the CFA Exam.
2. Sharpen Your Study Skills
Study skills are typically learned at an early age, but perhaps it has been a while since you have been in school and learned new material. If your study skills are a little rusty, consider purchasing a book or taking an online course to help you brush up.
Time management is also essential to keep in mind as you create your weekly study schedule. Connect with other CFA candidates for advice if you still struggle to concentrate on your studies or encounter difficulty sticking to a study schedule due to procrastination.
3. Know Your Formulas
The Level 1 CFA Exam requires candidates to memorize several formulas, and each formula is important. However, you need to know only a few formulas by heart before sitting for the exam. According to the BrainHack website, those formulas include:
- Cash Conversion Cycle
- The CAPM
- Weighted Average Cost of Capital
- DuPont and Extended DuPont Analysis
- Arithmetic, Geometric, and Harmonic Means
- Variance and Standard Deviation
- Convexity (and Duration)
- Put-Call Parity
By memorizing the most important formulas for your CFA Exam level, you will set yourself up for success on exam day. Check out UWorld’s CFA Level 1 Exam Formula Sheet.
4. Know How To Use Your Calculator
A critical part of CFA exam preparation involves deciding between the CFA Institute-approved calculators. Both calculators allowed by CFA Institute have some similarities but are very different in operation, so it comes down to preference. CFA Institute approves the use of only the following calculators:
- Texas Instruments BA II Plus (including BA II Plus Professional)
- Hewlett Packard 12C (including the HP 12C 25th anniversary edition, the HP 12C 30th anniversary edition, and the HP 12C Platinum)
It is wise to spend ample time working with your calculator so that when exam day arrives, you’re fully prepared to work through any number-crunching problem you encounter.
5. Work Through Flashcards and a QBank Every Day
Flashcards with spaced repetition technology enhance your study sessions as they repeat difficult concepts in definitive intervals for optimized memory retention. When the merits of daily flashcard review and answering questions from a highly reputable QBank are combined, the result is a highly effective study combo that optimizes success on exam day.
Consistently using the flashcards/QBank combo will facilitate the acquisition and retention of all the investing and financial concepts you’ll need to know, ensuring that you’re not struggling to remember details when you need them the most – on exam day.
6. Spend the Last Month Before the Exam Taking Practice Exams
Practice exams are critical to your CFA exam success. It is also important to take more than one because they are worth your study time. Why? Because CFA practice exams help you get into a rhythm in preparing for the actual CFA Exam.
You will also get a feel for how much time you will need for each section of the CFA Exam by gaining a sense of what the exam questions look like. Most importantly, practice exams help you assess your performance as you study. If you excel in your practice exam, you are more likely to pass the CFA Exam the first time.
7. Start With Ethics
It is important to note that Ethics is the highest weighted topic for all three CFA exam levels. In addition to a Code of Ethics, the topic comprises seven standards of professional conduct, which include:
- Integrity of Capital Markets
- Duties to Clients
- Duties to Employers
- Investment Analysis, Recommendations, and Actions
- Conflicts of Interest
- Responsibilities as a CFA Institute Member or CFA Candidate
Since Ethics can be as much as 20% of the CFA Level 1 Exam, do not take it lightly. Most CFA candidates like to start with studying Ethics to ensure they have a solid understanding before moving on to other topics within the exam. Also, your score on Ethics can be what causes you to pass if the rest of your results put you near the Pass/No Pass line.
8. Don’t Underestimate the Breadth of the CFA Exam
Many CFA candidates make the mistake of thinking they can study for less than the 300 recommended hours or that they don’t have to study a topic if they already work in that area. The CFA Exam covers a lot of material and may address concepts in your current work that you’ve never heard of. Make sure you study the recommended amount of time to ensure exam success. You’ll probably be surprised by what you don’t know.
9. Stay Motivated by Creating a Support System
It is easy to get discouraged when studying for the CFA Exam, especially if you’ve taken (and failed) it before. A practical way to remain positive and stay motivated on your CFA journey is to remember why you are working so hard to accomplish your career goal.
Envision how your life will be once you obtain your CFA credential. Consider the benefits and advantages you’ll gain once you have earned your CFA Charter. Talking with other charterholders or CFA candidates can be enormously helpful to keep your eye on the prize.
10. Prioritize Your Health
Sure, the CFA Exam is a priority, but if you are not feeling well or taking care of yourself during your studies, you greatly reduce your chances to succeed. Make time to exercise, take breaks, spend time with friends and family, drink plenty of water, and nourish your body with healthy foods.
If you are starting to feel like life is one continuous study session with no break in sight, then stop – for a little while. Taking mental health breaks can keep you sane during the process and help you study better and retain more information. Prioritizing your health is an effective way to survive the CFA journey marathon.
As you work through your CFA Level 1 studies, stay focused on your goals. Earning the Charter will allow you to take the next big step in your career, and afford you a better and more secure life for yourself and your family.
Prepare for the CFA Level I Exam with UWorld Finance—click here for a FREE trial of our comprehensive online learning tools.