All About the CFA® Exam

Your Complete Guide

Considered a professional launchpad into the finance/investment management industry, the CFA Exam is a series of 3 tests administered by the CFA Institute® (CFAI) that enables candidates to become a Chartered Financial Analyst (CFA®) charterholder: The CFA Charter is the absolute gold standard of financial certification, thus making it lucrative for investment professionals, portfolio managers, and wealth managers in general.

CFA Exam Levels

To earn the charter, candidates must pass all the computer-based tests, divided into three levels of increasing difficulty:

  • The CFA Level 1 exam assesses a candidate's fundamental knowledge of the topics tested and their analytical abilities. The test assumes no prior understanding of finance and introduces candidates to various terms and ideas.
  • The CFA Level 2 exam expands on the foundation of the CFA Level 1 exam, emphasizing asset appraisal and the proper application of investment techniques. As part of the procedure, candidates must read a case study and respond to questions based on the research.
  • The CFA Level 3 exam tests the candidates' practical abilities. The test also aims to assess the test taker's portfolio management and planning abilities.

What Is the CFA Exam Format and Structure?

As difficult as it is, knowing the exam structure is the first step in preparing for the CFA exam. The only difference between each level is the topic weight and type of questions. Each level is administered for approximately 4 hours and 24 minutes.

  • Level 1 format: The CFA level I exam has 180 multiple-choice questions, divided into two 135-minute sessions (session times are approximate). The questions assess the candidate’s basic finance and wealth management knowledge.
  • Level 2 format: With about 88 multiple-choice questions, the CFA level II exam consists of item sets testing candidates on the application of investment valuation concepts, also in two sessions.
  • Level 3 format: The final CFA level III exam comprises 44 item-set multiple-choice-questions, again split into two 2 hour and 12 minute periods with an optional break in-between. This level focuses on wealth planning and portfolio management, with many of the questions posed in an essay format.

Please note that to receive an exam result, candidates must attend both sessions at each level.

Why Should You Study for the CFA Exam?

The fleeting factor of 'why this?' always drives one's motivation and willpower before any significant undertaking, especially when deciding whether or not to take the CFA exam. The CFA tests have graduated over 175,000 applicants into CFA charterholders in the 59 years since their commencement.

Charterholders not only work with practically every central investment bank, asset management firm, hedge fund, and consulting firm in the world, but they've also established a standard for investment decisions and management.

Still not convinced? Here are some considerations that just might help you see the value of the CFA Charter:

  • Globally Recognized

    With almost 60 years of legacy, the CFA Charter is one of the most respected investment credentials worldwide. At any point in time, you will have access to networks and resources that can guarantee you jobs and career opportunities that require a CFA Charter. Having the assurance of a job anywhere under the sun is a privilege CFA charterholders have earned.

  • Better Job Prospects and Career Advancement

    Given how the entire program has been structured, a candidate who successfully braves through the entire course has a golden opportunity waiting for them. With an in-depth focus on portfolio management, financial modeling, and market research, the CFA candidate is tailor-made for leading investment firms, asset management, and hedge funds that value this knowledge base.

  • Affordability

    First and foremost, the CFA Charter can be pursued while maintaining your professional obligations. Whereas many management courses can cost up to $150,000, the CFA exam costs anywhere from $2,000 to $10,000, depending on the enrollment date and selected study materials. It's just icing on the cake if you end up with far better pay and career possibilities while only investing a small amount of money.

  • Esteemed Profile

    Because one of the critical pillars of a CFA Charter is professional ethics, the applicant receives the seal of quality and confidence. As a result, CFA charterholders are in high demand, whether in Fintech, Foreign Exchange, or the big Wall Street firms. And, because the training emphasizes honing students' practical skills, they are the first choice for tactically addressing real-world problems.

  • Higher Salaries

    CFA charterholders earn higher incomes because they are engaged by top-tier financial organizations willing to pay a premium for their services. With a CFA Charter, you can work on better projects and earn more money. A 2019 CFA Institute compensation study found that the average self-reported total compensation for portfolio managers, one of the most common roles for CFA charterholders, was $177,000 ($126,000 base salary).

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CFA Exam Difficulty: How Hard Is the CFA Exam?

The qualifying tests are expected to be tough, given the 'gold standard' that the CFA charter has maintained over the years. Regardless of how many times you take the test, each one demands a 300-hour preparation period and commits reading and study time. The CFAI tweaks the exam's framework with each passing year, and the level of difficulty is then assessed based on CFA exam scores and pass rates for that year.

As of May 2022, the average passing rates over the previous ten years were 41.1% for Level 1,  45.7% for Level 2, and 52.3% for Level 3.

  Level 1 Level 2 Level 3
2013 41% 43% 49%
2014 43% 46% 54%
2015 43% 46% 53%
2016 43% 46% 54%
2017 43% 47% 54%
2018 44% 45% 56%
2019 42% 44% 56%
2020 49% 55% 56%
2021 31% 41% 42%
2022* 37% 44% 49%
Average 41.10% 45.70% 52.30%
 

* 2022 includes only the February and May test windows

With each level, the passing percentage shoots up. The low performers are automatically turfed out because the Level 2 exam is only taken by those who passed the Level 1 exam. This is also why, in comparison to Level 1, more people clear the subsequent levels.

So, if a candidate maintains a dedicated strategy for passing Level 1, more chances they have to earn the CFA Charter. If experts are to be believed, having the right plan, a clear knowledge of the CFA exam, and proper CFA exam study materials are also critical to acing the tests.

What Are the CFA Eligibility/Registration and Fees?

Once you have decided to appear for the CFA exam, here are some CFA exam requirements or eligibility criteria you need to keep in mind:

  • Must have a US bachelor's (or equivalent) degree or select a window 11 months before your graduation month for your bachelor's degree. You must complete your degree before sitting for Level II.

    (or)

    Must have 4,000 hours of work experience, or a combination of professional work experience and education totaling 4,000 hours. You should fulfill the criteria by the time of your Level 1 registration.

  • Must be comfortable taking exams in English
  • Must have a valid international travel passport that will be required both for enrollment and registration

Candidates can choose from two payment windows depending on when they register for the CFA test: A $450 one-time enrollment cost (paid once), plus a $700-$1,000 registration charge (for each level or retake). If you need to reschedule your exam within the same exam window, you will be charged an additional $250 fee.

Beginning with the 2023 exam cycle, the price of the one-time enrollment fee will decrease from $450 to $350. However, the costs to register for each exam will increase from $700 to $900 for early registration and from $1000 to $1,200 for standard registration.

Year One-Time
Enrollment
  Early
Registration
  Standard
Registration
2022 $450 + $700 or $1,000
2023 $350 + $900 or $1,200

What Are the 2022 & 2023 CFA Exam Dates?

In response to the pandemic, the CFAI implemented some changes to the CFA exam dates. On November 3, 2021, the Institute announced further changes to the exam cycles for 2022 to 2023, increasing the Level 2 testing frequency to three times a year and decreasing the Level 3 exam to two times a year.

For 2022 & 2023, the CFA Exam dates are as follows:

2022

  • Level 1 exam will be held from August 23 to August 29, November 15 to November 21
  • Level 2 from August 30 to September 3, November 22 to November 26 and
  • Level 3 from August 30 to September 6.

2023

  • Level 1 exam will be held from February 14 to February 20, May 16 to May 22
  • Level 2 from May 23 to May 27, and
  • Level 3 from February 21 to February 23

Updated schedule of Level 1, Level 2, and Level 3 exams as per CFA institute

CFA Exam Testing Calendar
  2022 2023
Feb Level 1 Level 2 Level 1 Level 3
May Level 1 Level 3 Level 1 Level 2
Aug Level 1 Level 2 Level 1 Level 2 Level 3
Nov Level 1 Level 3 Level 1 Level 2

CFA Program Policies and Procedures

The CFA Institute has standards and procedures that candidates must follow when taking the exam. For starters, candidates may take each level (when applicable) of the CFA exam a maximum of two times per year, but not in consecutive or six-month (or fewer) intervals.

To register and appear for the exam, CFAI requires that all CFA Program candidates have a valid foreign travel passport. Even though the test center does not provide calculators, the candidate is only permitted to bring two specific models of calculators to the exam. While the test-taker is granted two unscheduled breaks throughout the exam, any misbehavior may result in removal from the testing center and other consequences. The CFA Institute also permits complete withdrawal from all three exam levels and provides a full refund within 14 days of payment.

Here’s a list of the Program Policies and Procedures as set by CFAI:

  1. Admission and Appointment Policy
  2. Calculator Policy
  3. Candidate Agreement
  4. Code of Ethics and Standards of Professional Conduct
  5. COVID exam procedures
  6. Deferral Policy
  7. Disability Accommodations
  8. Eligibility Policy
  9. Identification Policy
  10. Identification Document Exceptions
  11. Misconduct and Rules Violations
  12. OFAC Compliance Policy
  13. Personal Belongings Policy
  14. Privacy Notice
  15. Refund and Withdrawal Policies
  16. Security Policy
  17. Testing Accommodations Candidate Acknowledgement Policy
  18. Unscheduled Break Policy

To learn more about these Program Policies and Procedures, please visit the CFAI website

CFA Exam Key Points and Takeaways

The CFA Charter's ever-growing popularity has made it an in-demand profession with high earning potential. And with such high stakes, the learning journey is bound to become a bit difficult. Still, there's nothing you can’t achieve with the right strategy.

  • A Chartered Financial Analyst (CFA) is a worldwide recognized professional qualification awarded by the CFA Institute (previously the Association for Investment Management and Research), which assesses and certifies financial analysts' competence and integrity.
  • The CFA exam combines three levels: Level 1, Level 2, and Level 3 (arranged according to increasing passing rates and difficulty).
  • While the CFA Level 1 exam assesses a candidate's fundamental understanding of finance, the CFA Levels 2 and 3 exams further emphasize the application of theories and concepts in the real world (not to mention that the CFA Level 3 exams include essay questions).
  • Each CFA exam level has a minimum of six months between exams, allowing candidates 6-9 months between the testing windows.
  • Some official CFA exam requirements, such as a travel passport, an undergraduate degree or 4,000 hours of proven professional experience, or a bachelor's degree awarded some time before the level 1 exam, are required for an applicant to be eligible for the exams.
  • The exams are all computer-based, and the results are announced within 60 to 70 days of the test. CFA candidates must clear all the levels to earn the CFA Charter.
  • Proper CFA exam guides and CFA study materials, along with your determination, are crucial to ace the CFA exam.
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FAQs

Considering the two sessions that last 2 hours and 15 minutes each, the CFA exam takes about 4.5 hours per level. If you consider the 30-minute break and other factors, the total testing time is nearly 5.5 hours.

If you need to change your testing location, you can request a change by logging into your CFA Institute account and selecting the “Manage Your Exam” link. You must make changes by the rescheduling deadline and pay a $250 rescheduling fee.

All candidates must be seated in the testing center by 8:30 am (local time) for the morning session and 1:30 pm for the afternoon session. The Level 1 CFA exam morning session begins at 9:00 am and ends at noon. The afternoon exam begins at 2:00 pm and ends at 5:00 pm.

Apart from being interested in the topic of finance and seeking a career in investment management, anyone with the following qualifications may take the CFA exam:

  • Must have a US bachelor’s (or equivalent) degree or select a window that is 11 months before your graduation month for your bachelor’s degree
  • Must have 4,000 hours of work experience, or a combination of professional work experience and education totaling 4,000 hours

The CFA exam primarily tests candidates on the broad topics of finance, wealth, and portfolio management.

  • The Level 1 test comprises multiple-choice questions ranging from open-ended statements to data and information evaluation.
  • The CFA exam’s Level 2 introduces a real-life scenario in several paragraphs, utilizing a combination of text, tables, financial statements, and other materials.
  • The CFA Level 3 exam features an open-ended essay question assessing the candidate’s ability to apply and judge real-world scenarios. For this bit, the test-takers must write their response.

Obtaining the CFA Charter opens doors to top-tier investment management firms, serving as an excellent springboard for a candidate’s career. Aside from the higher pay, CFA candidates gain practical knowledge of how theories and formulas function, enhancing their technical understanding of finance and wealth management. Finally, the CFA Charter’s global recognition allows candidates to connect with the world in unprecedented new ways.

Read More About the CFA Exam

The CFAI has some set eligibility criteria that candidates must fulfill to appear for the CFA exam. Review the detailed eligibility criteria and requirements to ensure there are no hurdles or gaps in your application process.

Are you looking for an overview of the CFA exam registration, cost, and fees? This guide contains comprehensive information on the “when, how, and where” of CFA registration and costs.

Searching for the latest information on the CFA scoring and pass rates? Check out the most recent statistics to get a sense of how much study time you’ll need for the exam.

Perplexed about the shifting schedules for the CFA Exam? Here’s a handy list of new dates and frequencies for 2022-2023 to make your work easier than ever.

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