How to pass your CFA level 1 exam in less than 300 hours of study
Every year around twenty-six thousand brave individuals sit for the CFA level 1 exam. Of the candidate pool who wrote in 2022, only 36% surpassed this first hurdle.
The notoriously low exam passing rates are due to how the exam is scored. The exam is not graded similarly to your typical university, where you usually need to achieve above 50%. The CFA institute uses a customised minimum-passing score (MPS) methodology not disclosed directly to the public. An easy way to think about how to go about passing is that you must be better than the bottom 50% of exam-takers and achieve above the MPS. I always used the neat estimated MPS that the website “300 hours” determines, which you can find here.
This piece aims to give candidates context for the preparation needed to be in a solid position on exam day. Rather than making this a humblebragging exercise, I intend to convey an honest reflection of my takeaways before passing level 1 in February 2022. As someone who has always had to work harder than my peers to attain the same results, I always find ways to optimise my study time with the available resources. I have divided my insights into four main headings:
1. 300 HOURS
Fortunately, I was a finance student for my undergraduate degree, so most concepts were not new to me. This advantage allowed me to take the less timely route of only beginning my full-time studies a month and a half before the exam. I heard stories from friends who wrote the exam two weeks after their final university exam, which would not be a pleasant experience for us muggles. Some can do it, but I recommend using the 300 hours (i.e., 4–6 months) recommended if you have little or no experience in finance. This strategy allows for a less stressful experience, as being calm and rested on exam day is one of the most overlooked aces up your sleeve.
If your schedule allows for full-time studying, you may be able to dedicate a full two months to studying and pack in below the 300-hour mark in study hours. This strategy is achievable and is suited to individuals who need additional stress to perform.
In the last month leading to the exam, I spent a religious 8hrs a day behind my desk, stressing about the ridiculous amount of content I still needed to cover. My solution was to skim over the sections I knew I would not be able to cover thoroughly, honing my focus on the areas that carried more weight. This tactic afforded me more time to focus on practice questions.
2. EXAM PREPPERS
If you want to save time going over the level 1 curriculum, Kaplan Schweser is your go-to exam prepper. They can be expensive, but the tax can be worth it if you pass. The online learning system can help you prepare your study timetable. They also provide a host of resources, such as mock exams, video tutorials and cheat sheets etc., that were very helpful in consolidating the sheer amount of content. I have scoured the depths of online forums, which I recommend everyone do for all due-diligence processes, and always found Kaplan’s resources to be the best overall.*
3. FINDING A COMMUNITY
I, unfortunately, did not have any study buddies to keep up to date with my studies, but I did keep in touch with an acquaintance who was writing at the same time as me. Sharing the struggle with someone who knows how you feels helps a lot. I always recommend collaborating in studies in any way possible to spice things up. Additionally, I used the online forum on the 300 hours site to answer a few personalised questions. I also did a CFA review seminar, although I found it a waste of time.
Another nugget which saved my skin was to ask my friends who wrote before me a few questions and advice on how they went about their studies.
An example of an unexpected question I asked that helped tremendously went along the lines of “what was the most unexpected part of the exam day process?”. The response I received was a recommendation to use a handheld whiteboard to practice questions. My mate explained that sometimes they make you use A4 paper to do workings, and sometimes they make you use the whiteboard. Either way, using the whiteboard helped me focus on practising instead of attempting to be neat the entire time and prepared me for the tricks that could have surprised me on exam day.
Seeking advice from your local communities helped calm the nerves and settle the uncertainties I had before exam day. These people have been through similar life experiences, so it is easier to paint a picture of what you can expect to experience. Do not be afraid to ask for help!
4. STUDY PROCESS
As the CFA level 1 curriculum combines a vast amount of content and calculations, there is no right way to begin your studies. The Kaplan books order the content very well, starting with the quantitative methods section (calculation heavy) and ending in Ethics (memorisation heavy). I wasted time taking notes by hand initially, and only once I realised I was not going to finish in time did I use active engagement techniques. I moved away from making handwritten notes, which tends to waste time. I settled on the following study process where I:
- Read a section
- Answer questions in that section and correct mistakes directly after for quick feedback
- Review the literature where weaknesses are
- Add the previously misunderstood key concepts to a notebook to review them over and over
Hammering in the questions at the end of the chapters and question bank provided by the CFA Institute (CFAI) tests whether you have been paying attention. Making cheat sheets also helps you fill in the gaps in your knowledge.
MOCK EXAMS, QUESTIONS, AND MORE QUESTIONS. Most forums recommended you complete 6–8 mock exams, but I found you get a good feel for exam conditions around four. Regardless, it helps to attempt as many questions as possible. The consensus is to spend the last month finishing all your questions plus the CFAI questions.
Good luck if you intend on pursuing the CFA designation and writing exam 1 out of 3, you shall get out of it what you put in. Combing a good understanding of the hours you need to put in, the prep providers you may want to use, the community on hand and the best study process are essential factors that, if focused on, will put you in the best place to succeed. Even if you end up failing, remember that you will always have a second chance — and by then, you will have built a more solid foundation than those that passed the first time. You only fail when you choose not to pick yourself up again.
P.S. Please, please do not forget your calculator (BA II Texas instruments or Hewlett Packard 12C) and your passport. When I wrote, I saw one of my fellow candidate's day end before they even set foot in the exam room because of a forgotten ID — let's save the tears for another day?
*If you are from South Africa, you can contact me personally and I can recommend agents who sell directly from Kaplan at a more affordable rate.