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CFA More Relevant Than Ever?

New-I usually spend my time on this blog discussing the CFA exam and how best to prepare for it. One trend that I think all of you would be interested in though is how much more relevant the CFA is becoming. Yes, it’s always been a very good way for candidates and charterholders to distinguish themselves but I get a feeling that it’s becoming more than that.

It’s A Trend

If you think about the two main things that are transforming the markets these days, I think it’d be reasonable to say:

Regulation: The CFA has certainly been a leader in terms of ethics and establishing clear ethical standards. I’m no exception in not loving that part of the exam but I do have to admit that it’s an important part of the exam.

-Globalization: Increasingly, with companies, investors and institutions being increasingly active in global markets, it is difficult for one government to establish clear standards not only in terms of ethics but also accounting, etc. The CFA Institute however has the benefit of being a global player which makes its voice much more valuable.

So Yes, It’s (Even More) Worth It

Not that I (or hopefully you) ever doubted it but it’s a great time to become a CFA charterholder. So signup for the exam and get your plan ready:)

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Posted in About the CFA |

CFA Level 1 Exam Is Not Going To Get Any Easier

One of the main reasons the CFA exam continues to be so difficult is because the CFA institute is still seeing rising registrations to the exam. If you think about it, the more candidates they have, the easier it is for them to keep the level of knowledge required to pass the exam very high. Today, I took a look at the number of people that go into Google to search for: “CFA level 1” and you will not be surprised to see that it continues to rise over the years which is also consistent with the number of candidates who do actually take the exam every year:

I guess it’s not terribly surprising right? Of course, that does not mean it’s impossible or even unlikely that you will end up passing the exam. It does mean that you need commitment and a solid plan from the start.

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Posted in About the CFA |

Best of luck to all CFA takers

I remember those last few moments when there is so much you’d like to do but so little time to get it done.

Don’t try to review the entire material in one evening.

Decide until what time you want to study then let it go. Those few hours of rest and sleep will help much more than whatever you could learn in an extra hour or two.

So best of luck everyone, believe in yourself and answer one question at a time during the exam, no need to think about the what if’s, etc..:)

 

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Posted in Uncategorized |

2 Months To Go And You Lack Motivation? Might As Well Give Up…

I received an email yesterday from a reader who is studying for his CFA level 1 exam in June 2013.. he has 2 months to go and told me he’s made decent progress but has lost much of his motivation. I was shocked to hear that. Almost anyone entering the exam has a shot and certainly with 2 months to go, passing is within reach. But if you remember, I firmly believe that the whole exam’s success depends on those 2 last months.

You Might Get “Sick Of It”

I’ve certainly had my moments where I could not get myself to look at my material for a few hours. I just took a small break (2 or 3 days) and was back at it. I never would have described it as “lack of motivation” though. I never felt that way. The problem is that if someone is already feeling that way with the challenging part of the studying barely getting started, how is it possible to hope that this person will be ale to start making the CFA his top priority for those last 2 months?

Commitment Is Step #1

I always say that the first step before even signing up for the CFA exam is making sure that you are ready to be entirely dedicated to that new exam, especially in those last 2 months of studying. I understand that sometimes we have a lot going on and cannot focus enough energy and time on the CFA. That’s more than fine. But just don’t sign up:)

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Posted in About the CFA |

Where To Get Those CFA Mock Exams

For those who have read my CFA studying strategy ebook, you know that I recommend doing a ton of qbank questions as well as 10-20 mock exams. Just to clarify, I mean the 3 hour ones (some would say these are “half exams”)..they would generally have 120 multiple choice questions. So where can you find so many mock exams? It’s actually not that difficult:

-CFA Institute website

http://www.cfainstitute.org/programs/cfaprogram/courseofstudy/Pages/sample_and_mock_exams.aspx

By signing up for the exam, you get access to 1 mock exam. You can also buy 2 sample exam for $40 per exam. It might sound like a lot of money (in a way, it is),

-Schweser:

http://www.schweser.com/cfa/faq/cfa_faq_availability.php

Schweser is the leading CFA preparation company and they sell many different products including 2 full book of practice exams

-Analyst Notes:

http://www.analystnotes.com/

You can also use these services to help you prepare, they do have practice exams although I have not heard much recently, I personally got a lot out of this website when preparing for level 1.

In terms of qbank questions, which are quick and easier to do when you have less time, Schweser and AnalystNotes are your top options..!

These Are Critical

I’ve written about this but I basically feel like time spent on mock exams and qbank questions is by very far the best way to spend time studying. Just think about it.. it’s very likely that in your actual exam, 70-80% of the sets of questions (except for ethics) will be similar to sets that you’ve done in mock/practice exams. If you are able to do and understand the vast majority of those questions sets while doing mock exams, you’ll have a huge start for the actual exam.

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Posted in Preparation |

So 37% Of CFA Candidates Passed Level 1 Last December

The CFA exam is as difficult as any type of exam you’ll find in the world of finance. The 37% passing rate of level 1 last December is not much of a drop off of the 38% from last June. That does NOT include candidates that simply did not show up for the exam (somehow many think the passing rate is low in part because of all of those who don’t show up).

It Does Get Better Though

Last June, the passing rates were:
Level 1: 38%
Level 2: 42%
Level 3: 52%
Of course, even the average talent of level 1 candidates is quite high so seeing a 37% pass rate can be discouraging. In a similar way, that 42% rate for level 2 is slightly higher.. but it is 42% of the 37% that passed level 1… 

Don’t Forget That..

It’s actually a great thing to see such a low passing rate: I’ve written about this. Just think about it, that is what makes the CFA title so valuable..
It’s About Being Efficient: Again last week I met someone who was taking 3 weeks off to study.. 2 in February and one just before the exam. I’d call that poor management. If you’ve seen my ebook, you know that I believe it’s not about how much time you spend studying, it’s about:
-Having a solid plan
-Sticking to it
-Those critical last few weeks are where everything gets decided

Do you know anyone who did the December exam? If so, how did it end up going?

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Posted in About the CFA |

CFA Jobs – What To Expect?

It’s no secret that while some of us enter the CFA program simply to challenge themselves (5% according to the most recent CFA institute survey), a far higher portion to it for career advancement. For most of us, that means finding a new job.  If you had decided to do the CPA for example, your next step would be a very clear one. On the other hand, MBA graduates have a very broad opportunity in front of them. Somewhere in the middle there lie CFA candidates. They will sometimes end up working in the corporate finance departments of large companies no matter what the field but I think it’s fair to say that in the vast majority of cases, CFA charter holders end up working in the financial industry.

In most cases, we end up working for buy side companies such as:

-investment companies & mutual funds
-wealth management
-hedge funds
-banks
-insurance companies
-pensions
-etc

What type of jobs? I would say that these are the most common jobs for CFA holders:

-portfolio management
-analyst (research analyst for example)
-traders
-risk management 

All of these can be done for equity, fixed income, foreign exchange, private equity, etc. There really is no limitation there.  The most important part is trying to figure out where you’d like to end up working by reading about those places, meeting with current and former employees, etc.

Using Your CFA Title To Your Advantage

Once you hold the CFA charter, you will be part of a local affiliation. This should help you get in contact with some well positioned individuals that can guide you. They might not give you that dream job right away but over time, they might provide you with valuable contacts and tips. Most local chapters also have job boards which will have jobs that would normally make a lot of sense for you to register for.

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Posted in About the CFA |

Studying The CFA In A Digital Era

Studying used to be rather difficult in a few ways. One of them was that studying required you to either have your CFA institute books or the Schweser ones.

The Benefits And Challenges Of New Technologies

I personally think that the greatest challenge is that it’s easy to become overwhelmed. In theory, you could read the books, summaries, try qbank questions, mock exams (official and non-official), visit websites, forums, try ebooks (such as the one I wrote!), try some podcasts and mobile apps, etc. There’s no end really and you could possibly end up studying for several weeks on one specific subject.. worst of all? You might not even understand the material. Why?

It’s All About The Plan

More than ever before, having a solid plan is critical. If you try to understand every page/minute of material, you’ll never get to the end of it.

The Critical Part

Have a clear plan and be consistent. Every week, plan with that plan in mind. Don’t rethink it, redo the plan and adjust every few days. You’ll end up losing more time than whatever you do gain. At the most, the plan should be updated every few weeks.

Bonus Material In Bonus Time

I’m more than fine with adding other sources of material. For example, if you have a podcast that discusses the material, there’s certainly no harm in listening to it on your way to work. Why? Cause it’s not as if you would have been doing your studying, qbanks or mock exams. But if you’re at home, on a planned evening of studying, please don’t start to wander around looking for other ways to nail the material. Passing the exam, as I always say, is about having a plan, sticking to it and focusing on the key material. That is what will make you pass or fail.

Do You Struggle With This?

I’m the first one to admit that I can easily have my attention taken away, especially when I’m online, while studying. There are some apps that block out other websites or stuff like that and I know I could use those but in general, if I remind myself of how critical this exam is for me, what would happen if I ended up failing, etc. 

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Posted in CFA Strategy |

Studying The CFA Exam With The Previous Year’s Material

It’s a question that I get over and over. The two main reasons why this happens is:

-unfortunately, you failed the exam and are ready to retry it the next year
-you got your hands on material owned by someone else

As you can imagine, there is no right or wrong answer on this. Here are my general thoughts:

I would not consider using material that is over 1 year old: It might still be good enough but I don’t think it’s worth taking the chance. How much are you really saving?

If the material is 1 year old or less, I might go for it. I do think it might end up costing you a few % in the exam. It’s not 10% and is perhaps 5% but likely less than that. The question becomes: Are you willing to pay $XXX to increase your score (and the odds that you will pass) by 5%? Only you can answer that question.

I personally would consider doing it, it all depends on how much you value your time. Why? Don’t forget that your main investment in the exam is not the material or the amount you paid to sign up. It’s all of the time and sacrifices that you put into the exam. Once you know how much you’re putting in, you’ll be able to determine what the best thing to do might be.

Don’t Look Back

If you do end up deciding to use material from the previous year, then don’t question yourself later on. This is not a big factor in helping you pass or fail the exam. Everything else, especially having a solid studying strategy makes a lot more sense.

Have You Been In This Situation? Did you end up studying with the older material?

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Posted in Preparation |

Is The CFA Worth It? You’re Kidding Right?

Yesterday, I was asked if doing the CFA program was actually worth the effort. I paused and wondered how I should answer.. I finally sent the following:

“If you’re asking me this, probably not”

I wanted to get some kind of reaction and it worked. Within minutes the guy asked me why I would answer that. Here are a few of the many reasons why:

Getting a job in finance is easy, getting a great one is though: If you’re not sure that the CFA is worth the effort, then you’re probably not the type of person that will be willing to do what’s necessary to get the job anyway… sure there are exceptions like having great contacts, etc. But as a general rule, I think that those that end up with the best jobs would see the benefits and just dive into it.

You should welcome the challenge: In a world where setting yourself apart is increasingly difficult, a program like the CFA is actually a great opportunity to set yourself apart

-It Doesn’t Have To Take You 800 Hours: I know that many think it’ll take you months and months but as I explain in my ebook, it doesn’t have to be that way. It’s much more important to be smart about how you’re studying, what you focus on, etc. You can take a look at my ebook for more info

Yes the benefits are important: If the average CFA charterholder is making $200K or so per year depending on the location, then I think it’s safe to say the benefits are significant. Not convinced yet? Take that extra 100K for example, every year and calculate the present value… how much is that benefit worth? I’d say it’s a no-brainer

If You’re Unsure Now, Wait Till It Gets Tough: The CFA is certainly not easy. But if you’re not even sure it’s worth it before starting, wait till you’re in your final month, lacking sleep and time to hang out with friends and family, and unsure that you’ll even make it

What are your thoughts? Are you considering taking the CFA exams but unsure if it’s worth it? I’d love to hear from you

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Posted in Motivation |