Congrats on passing Level 1, and welcome to CFA Level 2!
Unfortunately, the Level 2 exam is a different beast, with a reputation to be the most challenging exam with the most material to cover. Many candidates fail at this hurdle given the step up in difficulty that is unknown upfront.
That’s why we are here: just like our Level 1 commandments, here’s our top 10 advice – distilled from thousands of experienced candidates and CFA charterholders – that every Level 2 candidate needs to know.
#1 – Level 2 Is More Difficult Than Level 1
CFA Level 1 can be easy for some especially if they have a good grounding in finance back in university, or because of the context of their work.
A big mistake would be to assume Level 2 is a continuation of this. It’s not.
This is the main downfall of candidates who end up not passing – Level 2 is a step up in difficulty from Level 1. Candidates who failed often realize their mistake too late in the preparation process. There is a huge amount of material to cover and you’ll need to (ahem) level up for Level 2.
Start studying slightly earlier, if possible: In order to cover the vast amount of details in Level 2 materials, it may be worth considering starting your studies earlier (6-9 months before). Unless of course, you passed Level 1 in December like Sophie and are trying to pass CFA in 18 months, in which it can be done in 4 months (with some determination).
#2 – Basics Of Level 1 Will Be Needed
Many concepts in Level 2 build on basics that are outlined in Level 1 – having a good grounding in Level 1 helps. Some study materials include a Level 1 refresher booklet specifically for this purpose – I recommend hanging on to that. If not, a condensed version of your Level 1 notes would work as well.
Start studying earlier if a your weaker topic is heavily-weighted in Level 2. You’ll need extra time on that topic to improve your scores and chances of passing.
#3 – Target 350 Hours of Study Time, At Minimum
More importantly, candidates need to get used to answering the vignette-style multiple choice questions that is new in Level 2 (see #4).
As a guide, a typical Level 2 candidate spent an average of 325 hours to prepare for Level 2 exams (June 2018’s CFA candidate survey). However, we recommend targeting 350 hours of study time as a start to do these properly:
- hone your new exam technique (see #7);
- learn vast amounts of new material;
- balance work and other life commitments (as this will be put to the test).
#4 – Understand The Vignette Format (Mini Case Studies)
On the other hand, Level 2 consists of 20-30 vignettes supporting
120 multiple-choice questions across 2 exams. A vignette (mini case study) is typically accompanied with 4-6 questions,What are the implications of this new exam format?
- You don’t really have more time per question in Level 2 (see #5): It is common mistake of Level 2 candidates to assume have 3 minutes per question for Level 2, instead of the 1.5 minutes of Level 1. While that is technically correct, reading through the vignette (which can be up to 2 pages long) does eat up precious time and requires practice (see #7).
- Questions are harder due to interdependencies: Adding to the fun, as the questions are now part of 4-6 group, you will see all kinds of nasties such as interdependent questions (e.g. question 10 that depends on you getting question 9 right). This means that questions will be much more in-depth than Level 1, as they have the vignette to include more context to the questions.
- Less diversity in topics questioned: Vignettes usually focus around a particular concept. This means that compared to Level 1, the diversity of questions will be much less – 240 independent questions in Level 1 versus only 20-30 vignettes in Level 2.
- But each question is worth more: While skipping topics in Level 1 may be OK (though not advisable), if a skipped concept happened to be central to a vignette in your Level 2 exam, that’s potentially the whole 4-6 questions down the drain, which by the way are worth twice the points of a question in Level 1. Which brings me to the next point…
#5 – You Can’t Afford To Skip Topics In Level 2
This means that you can’t really afford to skip any topic, and CFA Institute’s changes were most likely implemented to discourage this behavior anyway.
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CFA Level 2 Topic Area
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% Weighting in 2020 Exam
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Ethics
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10-15%
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Quantitative Methods
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5-10%
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Economics
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5-10%
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Financial Reporting and Analysis
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10-15%
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Corporate Finance
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5-10%
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Equity
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10-15%
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Fixed Income
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10-15%
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Derivatives
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5-10%
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Alternative Investments
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5-10%
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Portfolio Management
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5-15%
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- In your study plan, there are still the big 4 topics you need to prioritize aside from Ethics: FRA, Equity, Fixed Income and Portfolio Management.
- We also recommend that you study Level 2 topics in this order for better absorption →
#6 – Be Strict About Time Management During Studies and Exam Day
Compared with Level 1, you need to be stricter with time in Level 2 and implement cut-off times:
- When studying: It is tempting to go through a topic without a deadline in an attempt to 100% grasp each topic. That is not a good strategy given the vast materials you have to go through. It is better to understand 70% of the whole Level 2 curriculum, than 100% of half the material. When time is up, move on to the next topic, come back to it once you’ve finish reading through the whole curriculum and have extra time.
- On exam day: Each Level 2 vignette comes with 4-6 questions (see #4 above). At the start of each vignette, allot yourself a maximum time per vignette and stick to it (i.e. 12-18 minutes max depending on number of question). When time is up, circle the question, choose the best answer and move on. You can always come back to your circled question when you have extra time at the end.
#7 – Practice Your Vignette Exam Technique
But with practice, you can learn to size up the whole vignette as a whole and efficiently discard irrelevant information. Here are a couple of useful exam techniques to learn:
- Skim questions first before reading the whole vignette – This way, you can then proceed to read the vignette with more purpose and focus in searching for the answer. I found that this significantly reduced the back-and-forth checking between vignette and questions – a super time-saver.
- Circle or underline keywords – Highlighting keywords in your reading of questions and vignettes minimizes costly mistakes. With more to read in Level 2, you ca easily spot and remind yourself of tricky wordings used. Some examples include “except”, “is not”, “most/least likely”, “closest to” etc.
#8 – Ask For Help When You Need It
If you’re used to being an overachiever this can be a blow to your ego. Do not let pride get in the way – if you don’t understand something, reach out and you will save valuable time instead of trying to understand on your own.
Post a question in our Forum: sometimes a simple, informal way of explaining it is all you need.
#9 – Level 1 Commandments Still Apply
With the exception of Level I rules #1 and #3 (which are already covered and updated above), almost all rules from Level I should apply.
Refer to the Level 1 Commandments now →
#10 – Consider Taking 1 Week Study Leave Right Before Exam Day
I personally found that I learned the most in the last few weeks before exams when actively going through practice exams and revising. If you’re behind schedule, this is also the perfect time to bunker down uninterrupted to catch up.
This extra time can make a difference between pass and fail – take a week off for last minute preparations if you can.
Meanwhile, here are other useful articles that should help your Level 2 preparations:
- CFA Level 1 – Top 10 Tips and Advice From Previous Candidates
- Free and Upgraded – 300Hours CFA Study Planner
- CFA Level 2: How to Prepare and Pass CFA in 18 Months
- CFA Level 2 Topics: What Is The Best Study Order?
- 2020 CFA Exam Curriculum and Topic Weight Changes
- Fast Track CFA Charter: How to Pass the CFA Exams in the Fastest Way Possible
- Free 300 Hours Guides, including the 10 Commandments
- Free CFA Study Materials 2020
