Earning the Chartered Financial Analyst (CFA) designation is a significant career achievement. For most applicants, passing the three-part CFA exam is the biggest hurdle to earning the credential. In fact, fewer than 20 percent of all people who begin the CFA process actually earn the designation, and even successful candidates fail one or more parts of the exam on the first try.
While the process may seem daunting, candidates who avoid these common mistakes can improve their chances of passing the exam and moving closer to earning the right to call themselves a CFA.
Remember when you were in college and could wait until the night before or even the day of a major exam to study and still ace the test? The CFA exam is not like that. With the right education and preparation, such as taking courses to earn an MSSAPM degree, you might be able to pass Level 1 of the CFA exam with only a few weeks of study and review. However, even if you have a solid background of education and experience in finance, don’t wait until the last minute to prepare for the exam.
The CFA Institute estimates that successful candidates devote 250 hours to exam reparation, so you need to develop a study plan that allows you to review the test material over the course of several months.
Not Balancing Your Study
As you review topics, it’s easy to spend too much time focused on some topics, only to realize that the test is in a few weeks and you still have two or three study guides to complete. While you certainly want to know as many topics as thoroughly as possible, do not become so focused on taking detailed notes or reading every chapter several times that you run out of time.
Again, developing a workable study plan that allows you to read all of the material at least once, and then spend several weeks focusing on your weakest areas, is the most likely path to success.
Almost every test taker encounters the same two issues while preparing for the CFA exam: First, you already understand the topic completely. Second, there are topics that are just difficult, and no amount of practice and preparation will change that. You might be tempted to skip these topics and focus on other areas.
This approach can hurt you in two ways. First, while the 250-question Level 1 exam may only have a few questions related to a particular topic, Levels 2 and 3 require you to demonstrate in-depth knowledge about all of the topics. Making educated guesses in Level 1 won’t affect your score much, but you won’t be able to hide the gaps in your knowledge so easily in Level 2. Not to mention, the first part of the test lays the foundation for the subsequent tests, so if you skip topics while studying, you could be in big trouble down the road.
Spend some time reviewing all topics, even those you think you know. If you’re struggling, sign up for a course to review the concepts and get a better handle on what you need to know.
Not Practicing the Tests
While CFA mock exams aren’t exactly like the actual tests, taking a few as part of your test preparation can help you prepare for the type of questions you’ll be asked and how to approach the exam. Experts suggest that taking at least four practice exams increases the likelihood of passing the test; some even suggest aiming to take five or six practice exams to get a solid grasp on the formatting of questions, exam timing, the types of questions you’ll face and, most importantly, the areas you need to study more closely.
Not Paying Attention to the Details
Imagine spending all of the time to prepare for the CFA exam, only to discover that the notes you jotted on your exam ticket mean your results will be invalidated. Or you got lost on the way to the testing center and arrived late and couldn’t get in.
Preparing for the test means you need to prepare to physically take the test as well as reviewing the material. This means planning your transportation, knowing where to go, and understanding the rules. It also means taking time to learn to use the tools that are available to you. The CFA Institute only allows test takers to use certain calculators, for example, so take the time to learn how to use it properly if necessary.
Successfully passing the CFA exam requires hard work and commitment to the process, but it’s not impossible. Set goals, make a plan and stick with it, and you’re more likely to be among the 20 percent of successful candidates.