When I was studying for L1
last year around this time, I went to a review course where the instructor
shared his point of view on the “best” way to study for the CFA exams.
He made it clear that the CFAI texts should be the primary source to draw your
studying from with outside providers being used as supplementary- time permitting.
He used the following analogy to the medical field in order to make his main
argument in favor of his bias:
“When you walk into your
doctor/surgeon/medical professional’s office, do you want to see the ‘Coles
Notes” version of his medical text books on the shelf? Or do you want to know
that he has read the actual medical text books?
Most people would agree that
you’d be more comfortable having, for example, a surgeon who has read the full
version of his texts to perform your surgery rather than the alternative. His
question is why should it be any different when a client walks into an
Investment Professional’s office?
Which leads me to the debate
question, do CFA’s who primarily used CFAI texts have a more comprehensive
knowledge of the investing realm than those who got through the program using
3rd party providers alone?
I’m interested to see what
the 300hours community thinks about this subject? Are there any other CFAI Text
Fundamentalists out there?? (not saying I am one)
Interesting topic @WesMantooth , thanks for sharing with us.
While not siding either camp on this, as yes I do see a point of his argument, I’d like to point out a few things:
- Your instructor assumes that providers’ books are inferior in general to CFAI books. While CFAI curriculum are more detailed and ‘complete’ (and they have to be since they set the standard), sometimes I don’t think a shorter/clearer/more concise way of explaining things is worse. There are many ways to present/teach a concept, and if one does it more efficiently that the other in less words, it’s in fact superior? Of course, that doesn’t mean all concepts in the curriculum can be taught in a clear and concise way by the providers, and that’s where the debate comes in I suppose – what is the extent of the curriculum that is taught ‘well’ by the providers (generally in less words)?
- Your instructor also assumes an ideal world, which may be typical of an academic setting. It’s like in Economics where one assumes a perfect market and there is no inefficiency in the world, which is rarely the case. In theory yes, one would like everyone to cover the curriculum from the books, but in practice, most candidates are all working in demanding full time roles with barely time to sleep, not to mention study for this gruelling exam. Time is a limited resource, and that forms the constraints on studying schedule. In the real world, there are probably not many doctors etc who would pass exams (and be a doctor in the first place), without some ‘short cuts’ (or what I’d call efficiency hacks) along the way.
So to your question, I don’t think those who use CFAI texts have more comprehensive knowledge than those who use providers (note: I wanted to declare that I use providers’ notes in my studies, but answered the questions in an objective way nonetheless). In fact, I think working on a relevant investment/financial job plays a more important role in training/retaining/constantly updating and improving the knowledge as one can still forget (pretty quickly) without daily practice of the financial knowledge gained from CFAI.
@WesMantooth I like the analogy offered by the instructor, comparing investment professionals to surgeons. However, I believe the analogy is not a great one because I believe the quality of a surgeon is defined by how well he performs a surgery, not by which books he has read. In this case, skill in ‘doing’ something is not directly related with how much you read about the topic. A more obvious example is sports: I can read many books about basketball, and they may improve my understanding of the game, but none of them will substitute for actually putting in hours on a court to practice and play the game. Nassim Taleb offers another great example: Physics professors lecturing birds how to fly.
Ok, enough about the analogies, I agree with the points @Sophie makes above – the third party books may not be ‘worse’ for the purpose of learning about the investment industry. Furthermore, in practice you don’t have time to read everything you might want to read, as you may have a life besides studying for the CFA (is this blasphemy?). To go back to the original analogy: would you prefer a doctor who has read the ‘Coles Notes’ version of the medical textbook front to back, or a doctor who read only the first chapter of the actual medical textbook?
In my opinion, the curriculum gives you everything that could possibly be tested on the exam. The test prep providers like Schweser give you most of the things that they feel have a better probability than not of being on the exam. Moreover, the difference is in depth. The curriculum is not concerned with brevity, so it will drill deeper into some topics than others without regard for the reader’s sanity. Level III option strategies is a great example of this, but there are lots of others.
The curriculum is what, 3K pages long or something per level? Schweser Notes are something closer to 1/3 to 1/2 that in length. There’s just no way for all the topics to be covered in that short amount of space (adequately). So, some things will be left out and none of the topics will be discussed in as much detail as what you’ll get from the curriculum. Calculating the duration of a swap, for example, is nowhere to be found in Schweser’s Level III books, but the curriculum discusses it at length. It may or may not show up on the exam, and Schweser takes that into account when they decide what to include.
That being said, the providers are great at taking very complex topics and boiling them down into actually applicable tenets. You also get lots of additional questions to practice and the sample exams, among other resources. I used only a provider for Level I and it was fine. But I probably went 75/25 provider (test prep plus an additional third party three-day seminar focused solely on FSA) to curriculum for Level II and then reversed that ratio for Level III.
I agree with @sophie’s comments. Also, using your instructor’s analogy, you’re not the patient, but rather the doctor. Also also, ‘Coles Notes’ as I understand it is a massively skimmed version of a book, and used for literature. Where CFA finance principles and concepts apply, there is a limit to how much you can shorten, especially if you have to pass an exam as strict as it is.
Personally Im not a big fan of the analogy because it doesn’t
draw a meaningful parallel to an effective way of passing the exam, which is
the point the instructor is trying to convey. The exam itself is the measure of
a candidate’s acumen and sets the standard of expertise to become a practicing
professional or surgeon in this case. While the patient’s negative perception
of a coles notes version of the text might factor into their anxiety or lack of
confidence, the only thing that can quantify the actual skill or level of expertise of
the surgeon is the medical degree hanging on his wall. I would’ve at least acknowledged his point if he had said
something to the effect of “Would you practice for your
drivers license test with a golf cart?”. But in this case the patient has nothing to do
with whether the surgeon is a capable enough.
Passing the CFA exams is the ultimate barometer for our ability
as is determined by the CFAI. Its not as if you can achieve a charter through
different institutions with different standards like a graduate degree.
Everyone has to achieve the same standard which makes the ends much more
significant than the means.
I disagree @mattyc because I think his point was that in a perfect world with unlimited time it would be best to read the full version of the CFAI texts because they are more comprehensive and are guaraunteed to cover everything tested on the exam, which is hard to argue with. This is by no means the most time efficient way to study for the test. Reading from the 3rd party providers instead of the CFAI texts is a shortcut no matter how you look at it. Does it provide you enough knowledge to pass the exam? Absolutely, but the point is that you would probably accumulate more knowledge by reading the CFAI texts. The CFAI doesn’t put the supplementary readings in there for kicks, they are meant to provide more depth to your understanding.
If you took Candidate A and Candidate B who are identical twins with the exact same abilities and experience until now and you give A CFAI texts only to study, and you gave B 3rd party texts only to study for an exam what would the results be? They might both pass the exam, but I would bet that A would have a higher % chance of scoring better and coming out with more knowledge overall than B.
“the only thing that can quantify the actual skill or level of expertise of the surgeon is the medical degree hanging on his wall”- I really disagree with this statement but that is a tangent I will avoid for now.
The main point I focus on in the analogy is that using “summarized” texts of some form is a shortcut and can be a signal of having less of an understanding than someone who did not take the same shortcut.
I don’t disagree that the person who only used CFAI would have a wider/deeper breadth of the entire CFAI curriculum than the person who only used a 3rd party. To suggest otherwise would be a tough argument since CFAI is setting the standard. Although I do not extrapolate that to saying using the CFAI books is best way to pass the exams, that I feel is more of a personal study preference. I was taking issue with the analogy itself because it seemed he was using the perspective of the patient which to me was ERRONEOUS! (since you’re a Vince Vaughn fan). Im glad you added your 2nd caveat also since I dont think anyone can imply that using CFAI materials makes you a better investment professional.
Just FYI, the CFA requires all registered Prep Providers to inform students that the CFA material is the best to study from and that their prep materials are meant only to be supplementary to that material.
The CFA books are the most thorough way to study. That said, depending on your experience/education or your learning style it may not be the most efficient. Our video lessons, for example, are 41 hours, and they provide complete curriculum coverage. If you read a page a minute of the material (which is a good clip), you’re at about 50 hours. And of course, our materials are supplementary so you should do both 🙂
I think this is highly dependant on your study strategy. I’m going to attempt a similar process to what worked for me on the CPA this year. Attack high level, use the test bank to figure out the holes in my understanding and use the detailed material to fill in the gaps. I think your strategy should vary though based on your background. If you’ve never had a finance, accounting or econ class you will definitely have to spend more time in the detail to build the foundation….
I agree with most of the above.
One distinction that has not really been mentioned.
If you look at the size of the individual topic areas in the curriculum compared to the guideline exam weights: Ethics takes up roughly 9% of the curriculum (based on word count) but carries a guideline exam weight of 15%. Conversely economics takes up roughly 17.5% of the curriculum for a 10% guideline exam weight (all using the June 2015 curriculum). I don’t want to get too hung up on these numbers, but if you are constrained for time (aren’t we all), it probably makes sense to rely on an abbreviated study guide for some areas of the curriculum, but I would still study ethics at source…
- You must be logged in to reply to this topic.