How to study for the CFA exam: a step-by-step guide

By Indeed Editorial Team

Published 6 July 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Choosing the right stocks, shares and companies to invest in can be a challenging task for anyone establishing a career in finance. Demonstrating your ability to do so is important as the field of financial investment and analysis is highly competitive, and hundreds of candidates may apply for each available job role. Knowing how to study for and pass the Chartered Financial Analyst (CFA) exam can benefit your career prospects and help you stand out from the competition. In this article, we discuss how to study for the CFA exam and some of the advantages of becoming a CFA charterholder.

What is the CFA exam?

The CFA exam is an examination offered by the CFA Institute and those that pass it become holders of the CFA charter. To pass the exam, participants demonstrate a range of skills, including the mathematical and conceptual skills necessary for any role as a chartered financial analyst. The CFA programme takes place across three different levels. Passing the first level is a prerequisite for taking part in the next, with those that complete all three levels becoming holders of the CFA charter.

Pass rates for each stage are currently 42%, 45% and 54%, respectively. The criteria for entry to the CFA exam are a bachelor's degree in a relevant subject or being within 11 months of graduating from a relevant university course or having over 4,000 hours of relevant work experience in the field. These criteria ensure that those entering the exam possess appropriate abilities in the field and have a good chance of passing the course.

Related: How much does a CFA cost? (Plus common FAQs)

How to study for the CFA exam

As with all exams, knowing exactly how to study for the CFA exam can be a challenging process. Passing the CFA exam can help you to establish a promising career as a financial analyst, making it an important qualification to have. Here are some valuable study tips to help you prepare for the CFA exam:

1. Examine past papers

When studying for these exams, it can be helpful to identify some of the most common themes that appear in previous examinations. Looking through past exam papers gives you a much better idea of some of the content that's present in the exam and the topics that frequently recur over the years. This knowledge can help guide the topics you study, so you spend less time on anything that rarely appears and instead focus on subjects that are key to the exam.

2. Create a study plan

While researching a range of different topics and narrowing down the areas of study is important, creating a study plan introduces a degree of structure to your studies. By following a study plan, you avoid focusing your efforts on sections of the CFA exam that you already comprehend well so that you can distribute your time more evenly among other topics. This strategy helps you to develop a comprehensive understanding of the entire syllabus. Having a structured study plan is key to better exam preparation.

3. Understand the concepts

Understanding the context and concepts surrounding CFA-examined topics is an important aspect of making the most of your study time. This ensures that you understand each of the scenarios outlined in the exam and can help you to use the correct formula for the situation. By doing this, you may make significant progress towards passing the exam, even if your knowledge of the underlying mathematics is less comprehensive than your understanding of the concepts.

4. Understand the exam

Developing a thorough understanding of the structure of the exam can help improve your performance. Having a good knowledge of the question format can assist you in answering each of the types of questions included in the exam and maximise your potential for achieving the points set out in the marking scheme. Answering questions in the right way can help you to convert your knowledge of a concept into marks in the CFA exam.

5. Practice time management

The ability to manage your time effectively is an integral part of your exam preparation. The CFA exam is significant in length and can take up to six hours if you choose to make full use of all the time that's available to you. This means that managing your time is important. By balancing your time across all the available questions, you maximise your chances of answering each question appropriately. This helps to strengthen your performance throughout the entire exam, boosting your marks and helping you to earn your CFA charter qualification.

Related: Time-management skills: definition, examples and tips for improvement

6. Balance your studying

Focusing exclusively on studying in the weeks prior to the exam is not always beneficial. Taking regular breaks can help you to avoid burnout and maintain your long-term productivity. Consider splitting your study sessions into smaller chunks so that you remember information from every session rather than trying to retain an entire day's information. Taking a half-hour break every few hours can help improve your study habits.

7. Remove any distractions

When studying, ensure that you're free from distractions that can cause issues for your focus. This is especially important for those with conditions such as ADHD, where distractions make it challenging to maintain focus for extended periods of time. Removing distracting items from your workspace and using a different web browser for your study time are effective ways of keeping your focus on your studies. These strategies can help ensure your time is more productive, and your marks in the final CFA exam may reflect this.

8. Remain hydrated

Hydration is important for healthy brain function and can help support cognitive processes, such as memory retention. When studying for an exam, retaining as much information as possible is an important part of the process. Drinking at least two litres of water every day as you study can help ensure that your mind works to the best of its abilities. You may see the results both in terms of your exam performance and in your general level of health throughout the study period. Staying hydrated is a good habit to get into, regardless of your circumstances.

Why is passing the CFA exam important?

Passing the CFA exam has a range of different benefits for aspiring financial analysts. In such a highly competitive field, having an additional qualification can set you apart from the competition. Here are some of the reasons why passing the CFA exam is important for those wishing to pursue a career in financial analysis or investment and the difference it makes in the hiring process:

It can give you a stronger negotiating position

One of the significant benefits of holding a CFA charter is that it can give you a stronger negotiating position in the event of wage discussions. CFA charterholders have demonstrable abilities as financial analysts and the relatively limited number of CFA charterholders makes them challenging to replace for businesses. If you enter into salary negotiations with a company after passing your CFA exam, you might be in a stronger position than an equivalent candidate without the same CFA qualification.

Related: How to negotiate successfully (plus tips and its importance)

It can enhance your CV

The CFA exam has a total success rate of around 50% for each stage and approximately 12% of applicants succeed in the examination process at their first attempt. This means that CFA charterholders are among the top financial analysts in their field, and a successful CFA exam is demonstrative of your skills in the industry. Typically, financial hiring managers search for qualifications, such as the CFA charter, as a key aspect of the recruitment process. Therefore, studying for and passing your CFA exam can help to put you in a prime position in the job market throughout your career.

Relevant: Work experience: definition, importance and tips

It helps you to consolidate your skills

Studying for and passing the CFA exam not only provides evidence of your skills to potential employers but also helps you to consolidate your knowledge in your own mind. Spending a significant amount of time studying the subject matter in preparation for the exam not only increases your chances of passing but also improves the standard of your work since all the relevant concepts are still fresh in your mind after the study period.

Please note that none of the companies, institutions or organisations mentioned in this article are affiliated with Indeed.

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