In the level 1 exam that took place in June this year, only 42% of candidates were successful and the success rate was even lower for the 2nd exam at 39%. Remember that the 39% is out of those who passed level #1. The CFA Institute estimates that successful candidates spent about 300 hours studying for the exam which might lead you to believe that it is all about putting in a huge number of hours. It certainly is part of it, but there is far more to it than that.
I decided to look into the main reasons why so many fail the exam so that you can avoid making the same mistakes. These are all taken from experience, speaking with friends and colleagues, etc.
1. Not dedicated
I wrote a full post about dedication last week and it’s clearly one of the main reasons why so many fail. Not being ready to sacrifice the necessary time is surely the most important reason for failing candidates
2. Not efficient
While putting in the time and being dedicated is important, I know of plenty of people who spent so many hours and yet they never were able to get organized to be as efficient as possible. Having a clear plan and road map is probably the most important part but you could also include having a good studying environment with a group of friends or fellow candidates which will be a good way to maximize your time in those last few weeks. These are all subjects that we will be discussing in the next few weeks and months on this blog.
3. Not enough practice
I hear it every time. Candidates who push back doing practice exams for weeks because they are not done with the material yet and fear seeing what score they would get. The more you postpone your practice exams, the less chances you have of passing. I strongly believe in this and I would bet a lot that the correlation between that and passing the exam is very strong. Practice makes perfect and while you might think you understand when reading the book, you might conclude otherwise after doing a practice exam.
4. Last minute studying
For whatever reason, some candidates feel like they are so brilliant that they can ace through it in the last couple of weeks. They’ve done it throughout school so why not for the CFA exam? There is one big difference– the scope of the exam is so big that time is required to go through all of the material. If you do not have enough time, you will quickly fall into a type of panic mode where you will lose efficiency because you will start wondering about “What if I fail,” “I should have started earlier,” etc. These are all pointless thoughts of course but when you feel overwhelmed, these can eat up a lot of valuable time, energy, and focus.
5. Did not live up to the last few weeks….
The CFA might be a long term program but in my opinion, the months prior to the exam do only one thing: Set you up for the final 2-3 weeks. That is when everything is won or lost and where you can either pass or fail this exam. I will be writing about it and you could certainly argue with me on this but I’m pretty convinced:)
6. Not your cup of tea
The CFA, like any other exam, degree or profession is not for everyone. We all have our strengths and weaknesses and this exam is certainly looking for a specific type of individual that has specific strengths. Sometimes, that simply will not fit you and you have to accept it as is. I would say that the main strengths required are skills with numbers, interests in finance, and organizational skills.
Like it or not, luck does have a part in your success or failure because it is a multiple choice exam.. It might not be a huge factor but in an exam where everything is about a few extra points here and there, an extra bit of luck can mean the difference between success and failure.
8. Other circumstances
Let’s face it, when you enroll into a program as long as the CFA, circumstances can change dramatically because of personal, family, career, or other changes that either leave you not as dedicated, available, or even interested in pursuing the CFA. There isn’t much you can do about it, you can only sign up and expect circumstances to remain the same. If they do change for one reason or another, you can re-evaluate your participation in the program at that point.
As you can see, the first and primary reasons why candidates fail are well beyond your control and I will certainly be posting more about them but I think that having the dedication is the first and most important step as described in my previous post. I would love to hear any additional thoughts on the subject. Hopefully you did not live through the experience but if you did, why do you think you failed?