How to Prepare for the Financial Analyst Exam

Becoming a financial analyst means joining a field that offers endless opportunities for advancement. These opportunities only come to those willing to put in the time and effort required through continued education and certification; for many finance professionals, this comes in the form of the financial analyst exam, known as the CFA Exam. The Chartered Financial Analyst program is run by the CFA Institute, and was created to teach finance and investment professionals a particular curriculum, known as the Candidate Body of Knowledge (CBOK). This designation can lead to career advancement and greater earnings, and the prestigious distinction is a coveted aspect that can give you a leg up on the competition in the saturated finance industry. If you need more one on one help with your exam then you should look into private tutoring.

What Does the CFA Exam Entail?

It’s important to understand exactly what you’ll go up against during the CFA exam. The pass rates are worrisome enough to give even the most experienced of financial analysts pause. In 2015, a mere 42% of candidates who took the Level 1 exam during the June session passed, and only 43% of those who took the test in December passed. As evidenced, many find they need to take and retake portions of the exam several times before passing. In fact, according to the CFA Institute, it takes the average CFA candidate four years to complete the program, during which they must dedicate six months of preparation to each exam. It’s also important to keep in mind that each portion is only administered once or twice a year, which can extend the timeline.

There are three parts of the CFA exam: Level I, Level II, and Level III. Level I is offered in June and December, while Levels II and III can only be taken in June.

Level I: This test centers on an individual’s knowledge of both ethical and professional standards. It entails basic knowledge and comprehension programs, some of which require detailed analysis.

Level II: This exam covers complex analysis issues, and uses contextualized situations to determine your ability to value assets.

Level III: In this exam, you’ll be tested on your ability to apply these standards in portfolio management situations.

Get Started Early

The CFA Institute recommends that individuals dedicate at least 250 hours of independent study to each exam, but recent studies have shown that exam candidates actually spend at least 50 to 60 hours more than this recommended amount during their prep time. Generally, candidates give themselves at least six months of study time before sitting any portion of the exam, so it’s important to give yourself a head start, especially if you’re hoping to dedicate more time to study and preparation.

Take a Review Course

The CFA Institute offers study materials to help you prepare, but it’s in your best interest to consider taking comprehensive CFA courses that offer supplemental study aids. These courses are updated each year, meaning you’ll have up-to-date information and practice materials that will leave you better prepared when you do sit the exam. These courses are structured; you’ll find yourself focusing on a single portion of the exam for weeks at a time. Many find that this structure is essential for test preparation—it helps you maintain focus and schedules out your study regimen in advance.

Take Sample Exams

Some of us just aren’t natural test-takers; if this describes you, it’s even more important to take timed sample exams, often included with review courses. A mock exam adds a bit of pressure to the study experience, not unlike the pressure you’ll experience as you sit the actual exam. With immediate results, you’ll understand which areas you need to be more diligent with in terms of study before spending the time and money on taking the actual test.

Prep Your Materials

While you shouldn’t need much for any specific portion of the exam, there are some essentials you should have packed and ready to go the day of your test. Pack pencils, a calculator, your photo ID, exam ticket, and ear plugs if you find you’re distracted easily. Be sure to pack snacks or a lunch to refuel during breaks. Finally, bring that tenacity and determination; the CFA test can be daunting, but the rewards it offers are more than worth your efforts. Once passed, you’ll have access to higher earnings, better finance job opportunities, and the feeling of accomplishment inherent to passing this rigorous exam.

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