The second big question that you need to answer in order to create an effective CFA® exam level I study plan is how much time are you able to commit to your studies? The CFA institute publishes a number indicating the average number of hours used by candidates in the program. As we covered in step 1. This is not a program that rewards average performance. More than half of the candidates that sit each test fail, and less than 10% of candidates pass all three tests in their first attempt. When faced with these odds it should be obvious that you need to put forward more than an average effort to have a good chance of passing the test.
There is really only three ways to get an edge on the competition: (1) study harder, (2) study smarter and/or (3) be more qualified to begin with.
The peer pressure from joining FEA Elite for the June 2016 exam will challenge you to study harder, the tailored guidance will help you study smarter. The last point we can’t do much about, but it is very important for you to realize if you are at an advantage or disadvantage to other candidates as you set out, so you can adjust your approach accordingly. E.g. if English is not your first language, you have next to no industry experience and you studied history at university your success will require a lot more grit than a native English speaking finance postgraduate with a few years relevant work experience. Remember you are not studying to reach an absolute grade, you are studying to significantly outperform the average competing candidate. And if you are at a disadvantage from the start compared to the average candidate, it stands to reason that you need to work harder/smarter to make up for it and increase your chances of success.
So for today consider the following:
- Is English your native language? If so give yourself 2 points.
- Look through the list of 10 topics covered at the level 1 test. Give yourself 0.5 for each topic that you studied at postgraduate level in university and feel confident that you have a leg up on the average candidate.
- Lastly add 1 point per topic if you feel your work experience in that topic area is going to distinguish you from other candidates.
If you have got less than 2 points you will need to make up for this with extra wit and grit. If you have got at least 4 points you have likely got a bit of a head start on the average candidate, but don’t overestimate the impact, Professional experience will rarely cover more than one or two topic areas in enough depth to provide you a measurable edge. Overlapping university studies are going to help provide context and perhaps a few easy points, but you are going to be tested on every corner of the curriculum. The language advantage is again primarily an issue if you don’t have it. As you will take longer time to process and answer questions.
You will probably have heard people comment that you need about 300 hours to pass level 1. The CFA Institute publishes the number of hours the average candidate have reported to spend on their test preparation. The number was 287 hours in June 2015. A lot of candidates anchor in on the 300 hours, because it is so widely quoted. As a matter of fact one of the best free CFA exam resources out there is named 300hours. If you want to stand out from the crowd you will therefore need to aim beyond 300. 350 hours is a good starting point, but if you are starting out from a disadvantaged position compared to the average candidate you may need even more.
In the 3rd and final step of this series, we will be looking at ways to study smarter than the average candidate.