CFA Level II is usually regarded as the toughest CFA level there is, and I probably agree with that. The time I spent on preparing for CFA Level II is substantial, but the manner of which I went about it is unusual – I did not use any study notes. Instead, my approach consisted of only practice questions.
My method worked for me, as I passed CFA Level II with just practicing. In this article, I’ll share my experience and tips on how it worked for me.
Growing up and attending college in Iowa, finance always seemed like a very peripheral topic – something the masters of the universe in NYC took care of. But then something funny happened – the Great Recession hit, and I saw my small community deal with rising unemployment and budget issues. On top of that, I had friends and family in Jordan getting laid off too. In other words, once I saw the very real impact the financial world has, and how it’s interwoven throughout every part of the world – from rural Iowa to third-world countries in the Middle East, I started to take notice.
Unfortunately, by this point I was a junior in college and already locked into attending law school in the near-term. But my interest in finance only grew, so as I finished up law school I took a job as a legal trainee on the project finance team at a top Middle Eastern law firm. I figured it was the closest I could come to blending what I’d studied (law) and what I was passionate about (finance). After working on some deals, it became clear that if I was going to be truly happy, on a professional level at least, I needed to dive head first into a career in finance.
Registering and Passing CFA Level I
With a liberal arts and law background, I knew boosting my technical skills was one way to facilitate this transition. And like many 300 Hours readers out there, I came across the age-old MBA vs. CFA debate, but instead of choosing, I decided to go for both. I focused on the GMAT and MBA applications first, and once I had an acceptance to one of the programs on my list (late Fall 2014), I decided to tackle the CFA exams next.
I started studying for Level I right around Christmas time – with an initial approach of reading the full LOS in Kaplan Schweser, then knocking out the concept checkers at the end of each reading, and then end-of-chapter (EOC) questions from the CFA Institute books. The problem here was that the reading part took way too long for me, and I wasn’t sure the cost benefit was there – especially since I’m not a passive learner. Therefore, I decided to make flashcards from the Kaplan Schweser LOS summaries (i.e., the sort of key takeaways at the end of each LOS), then knock out as many Qs on the topic as I could get my hands on – between the Schweser books, the CFA Institute books, and AnalystNotes (I signed up after reading Rachel Bryant’s book, who is also a 300 Hours contributor). I did this for each topic from about mid-January until the end of April. I then spent May knocking out practice exams – 1-2 a week over 4 weeks.
I ended up passing Level I that June (2015), right before I started business school that fall.
Registering for CFA Level II and Planning My Approach
I decided to hold off on taking Level II directly the next summer (2016) as I wanted to maintain my focus on MBA courses, the extracurriculars I was involved in, and transitioning into my summer internship (a real estate finance firm focusing on the healthcare industry). With a lighter schedule the following spring, I decided I would take Level II June 2017.
Again, I started around Christmas and again, I started by reading the Schweser notes. Even though I knew this was not the most efficient way of learning for me, I thought Level II had so much more breadth and depth, I couldn’t afford to miss any detail. However, the same issues of time-sink and lack of substantive retention via reading and note taking reared there heads once more, so I decided to ditch that approach (again). In fact, I took it a step further – I thought back to Level I and where I really got the most bang for my buck, so to speak, and I realized it was question reps.
My CFA Level II Questions-Only Method
So instead of investing time to making notecards based on LOS summaries, I decided to replace that time with even more question reps. Thus, my approach became simply:
- reviewing some of the key formulas/concepts for that particular LOS or topic on the Kaplan Schweser formula sheet, then;
- diving head first into tons of questions.
Specifically, I would tackle the Schweser Notes concept checkers first, then knock out several sets of six on their online QBank, then I would go to the CFAI EOC’s, and once I finished up a topic I would do the CFAI topic tests too. Rinse and repeat.
I won’t lie, there was a lot of trial and error and guesswork involved, especially the first time I saw a tricky concept. However, that’s what made the review so important. After each question set I completed, I would read the answers carefully. This helped in two-ways:
- for ones I got correct, I could see if I got them correct for the right reasons (i.e., I was understanding what they were asking, figuring it out the right way, etc.);
- for the items I got incorrect I could see whether it was an easy fix, or something that required a little more effort.
And if I kept getting the same type of question wrong, repeatedly (usually in the Derivatives realm), then, and only then, would I go back and read up on that concept to see if I could figure out what I was missing.
Moving from Practice Questions to Practice Exams
I pushed through this process until the last week of April (give or take), and from there it was full-length practice exams, timed, and treated like the real thing. I started with the Schweser Live Mock, which I’ve found EXTREMELY helpful for Level I and Level II. I then knocked out three more Schweser Practice Exams, a Bloomberg one, and finished up with the CFAI Mock roughly 10 days before the real test. In between each practice exam, I reviewed questions and answers substantially, to really ensure I wouldn’t make repetitive mistakes. I’ll be completely frank, I only “passed” (i.e., 70% or higher) one of the Schweser practice exam and the Bloomberg practice exam. I found the CFAI Mock incredibly challenging.
Reviewing, Exam Day, and Results
But with over a week remaining I had some time cushion, so I decided to peruse the Schweser Secret Sauce chapters on my weakest areas, to see if I could at least get a high-level understanding of what the program was trying to teach us on that specific topic area. Eventually, exam day arrived and as was promised, Level II was no joke! While after Level I I felt reasonably confident that I passed, after Level II I felt like it was a coin-flip – at best. I ended up passing – with some cushion, and even though I questioned my methodology after actually sitting for the exam, I felt somewhat validated.
My Post-Exam Study Statistics
Overall, I probably knocked out 7,000+ questions between January and exam day. And while I didn’t keep track of my “hours” per se (my focus was on the questions themselves, not study hours), some rough math would suggest I probably surpassed the 300 hours benchmark. Let’s say I took 1-1.5 minutes per question, and then spent another 2-3 minutes per question review, that would translate into roughly 21,000 minutes, or 350 hours (admittedly, a very rough guesstimate). For me, it was the best way to spend that amount of time.
- Active learning – I was always “doing”; either trying to answer a question, or reverse engineering it via review. This had much better retention residue for me.
- Muscle memory – I think there’s a lot to be said for training your mind to the exam itself. Doing questions in sets of six, over and over again, really put my mind in vignette mode and it eventually became second-nature.
- Question variety – By focusing on questions only, I had more time to do more questions, which in turn necessitated various sources. Between Schweser Notes, Schweser QBank, CFAI, and Bloomberg, I saw such a wide-range of questions and the way they were asked. This helped me see things from several angles, as opposed to one lens. You can find a range of the latest offers from recommended CFA providers here.
- Leap of faith – There was certainly some discomfort knowing that I was taking a pretty big risk here by going questions only. As mentioned above, Level II has a lot of depth to it, and there were many days I couldn’t shake the feeling that I was leaving points on the table by not reading the books/notes. At the end of the day, I had to come to grips with the idea that this was an experiment, and it was going to work or it wasn’t.
- Doesn’t work for the most nuanced topics – Derivatives and Ethics are, arguably, the two most challenging topics on the exam. And that was certainly the case for me. Unfortunately, it is very hard to really learn the mechanics of derivative pricing and strategy and the ins and outs of ethics just by practicing questions. In my opinion, these two topics, more than any other, really lend themselves to extensive reading. I basically had to chalk these up as losses, which really put the pressure on me to perform outstanding on the remaining topics.
This experience really underscored the notion that everyone learns differently. It really taught me the value of tailoring a study approach to my specific strengths and level of experience.
As I’ve said, I knew I didn’t retain well via reading/notes, and I needed to find a way to account for that. I also knew that given my MBA courses, I had already covered a few topics quite a bit going in. This was especially true for equities, as the CFA material was essentially a review of what I had already studied in school. Therefore, I was able to be more efficient by minimizing my time spent on Equities, and spending it instead on questions where I was more of a novice.
Perhaps the biggest revelation though was starting early gave me the flexibility to sort of tinker with various approaches – both levels I started with the more traditional route, but ended up shifting each time towards more unique paths.
Ultimately, the study trek for CFA boils down to the classic economic problem of making choices in a world of finite resources. Specifically, with limited time, we are forced to choose the best way to fill it in a manner that maximizes our odds of passing. In my case, that was knocking out as many questions as possible. On to Level III…