How Hard are the CFA Exams?

Passing the CFA Program exams requires strong discipline and an extensive amount of studying. The three exams can be taken in June, with the exception of Level I, which can be taken in December as well. In 2019, the Level I, II and III exams will be given on June 15th or 16th. Level I is also offered on December 7th.

Although the exams can be taken as many times as needed, each exam typically requires candidates to study in excess of 300 hours. Given the considerable amount of time that must be spent studying, many candidates are deterred from continuing the CFA Program after failing one of the levels. To receive a charter, each candidate must pass all three exams and have four years of qualified work experience in investment decision-making.

The exams are difficult. Only 43% passed the Level I exam in June 2018. Having the right plan and the discipline to follow the plan are essential skills for passing all three exams. 2018 saw a record number of test takers. The pass rate was similar to previous years. The increase in test takers came primarily from Asia. The Institute now has test taking centers in 91 countries and territories around the world.

The six hour exam covers topics ranging from ethics and professional standards, to quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, derivatives, alternative investments, portfolio management and wealth planning, which is why most CFA charterholders recommend studying for more than 300 hours. The books provided by the CFA Institute provides more material than what is necessary to learn for the exam. Many candidates elect to study from an alternative source of prep materials, such as study books provided by Schweser. Classes, videos, and online quizzes can also provide assistance in studying for the exams. Utilizing a variety of methods for studying and taking advantage of prep materials can enhance a candidate's ability to pass the test.

The CFA Institute reports that historical pass rates for Level I and Level II of the exams are typically between 40% and 50% with Level III having a slightly higher pass rate. However, pass rates were much higher when the exams were first initiated in 1963 and have been trending downward since then. On the June 2018 exams, 43% of candidates passed Level I and 45% passed Level II. 56% passed Level III. Somewhere between 10% and 20% of candidates who sign up for the exam end up not showing up for the test.

The test material is very difficult, and exam questions are designed specifically to trick the candidates. For this reason, candidates should take many practice tests, to go through practice questions and get a feel for the types of questions they will encounter. Level I has 240 multiple-choice questions, Level II consists of 20 item set questions and Level III has a combination of item set questions and short essays. Although Level I's multiple choice questions only have three possible answers, candidates need to read the questions carefully to select the correct answers, which can often include "none of the above" and "all of the above" as possible answers. The time pressure during the exams also creates some anxiety for candidates. (See also: The Best Way to Prepare for the CFA Level 1 Exam)

Overall, the CFA exams are very difficult, but candidates can increase their chances of passing by studying for over 300 hours, utilizing alternative prep materials, answering as many practice questions as possible and creating a structured study plan. Finishing the entire CFA Program can be very rewarding, and the designation is recognized by companies across the finance industry. Charterholders can advance in their investment careers through the knowledge they gain and their access to an extensive and impressive network of CFA professionals.