I made a rookie mistake in my Level 3 exam years ago, with 3 whole constructed-response questions left to do in 15 minutes. However, what I did next thankfully contributed to an overall pass.
So here’s a detailed guide of my Level 3 study strategy with some useful tips and insights, which I hope would be helpful for your – hopefully – last CFA exam.
This guide starts off by ensuring you know what you’re up against in CFA Level 3, answering the key questions you need to bear in mind before studying.
Then, we move onto the details of my Level 3 study plan, so you can use this as a base reference when customizing your own study plan.
Finally, I’ll end with study tips specifically for Level 3 that I hope is useful for your preparation.
- CFA Level 3: A Quick Overview, Plus Some Q&A
- What Is The Level 3 Exam Format? How Is It Structured?
- How Difficult Is CFA Level 3 vs. Level 2?
- What Are Level 3 Historical Pass Rates Like?
- How Much Does CFA Level 3 Cost?
- What Are The Latest Level 3 Exam Curriculum & Topic Weights?
- How Many Hours I Need To Study for CFA Level 3?
- Is There a Maximum Time Gap Between CFA Level 2 and Level 3?
- Here’s My CFA Level 3 Study Plan & How To Create Yours
- CFA Level 3 Tips, From My Experience
CFA Level 3: A Quick Overview, Plus Some Q&A
In 2021, CFA Level 3 would be a computer-based exam held 3x a year in May, August and November. From 2022 onwards, it will revert to a regular twice a year schedule in May and November.
Unlike Level 2 which is heavily quantitative and calculation-based, the real challenge in Level 3 is lies in the more qualitative nature of the questions combined with half the paper being a constructed-response (written, non multiple choice) format.
We need to understand what CFA Level 3 is about to beat it.
Let’s go through some common questions I’ve received from candidates recently (and my answers):
What Is The Level 3 Exam Format? How Is It Structured?
- CFA Level 3 exam consists of vignettes (mini case studies or item sets) with multiple-choice questions and constructed response (essay) questions in total. These are split into:
- First session, 2 hours 15 minute exam time with 8-11 constructed response questions;
- Second session, 2 hours 15 minute exam time with 44 multiple-choice questions.
- Constructed-response questions are basically non-multiple choice questions, where you’ve to write concise answers to the questions and show your calculations, if applicable. The second session is the same format as Level 2’s item-set questions.
- All the 7 Level 3 topics are tested in the both morning and afternoon exam sessions. That said, there is a major shift in emphasis from topics on Investment Tools (e.g. corporate finance, FRA and quantitative methods) to portfolio management and wealth planning (35-40% topic weight). Less formulae to remember, but doesn’t mean it’s easier.
How Difficult Is CFA Level 3 vs. Level 2?
Well, we ourselves are divided on this question at 300Hours!
Level 2 is difficult for the sheer amount of materials you have to learn and know how to calculate, whereas Level 3’s curveball is the constructed-response format and the more qualitative nature of the questions.
However, once you’ve learnt how to answer succinctly in the Level 3’s constructed-response format, on balance, Level 2 is probably the more difficult paper.
What Are Level 3 Historical Pass Rates Like?
The latest pass rates for CFA Level 3 are 56% (Dec 2020), with an average of 53% for 2010-2021.
For more details on CFA exam pass rates:
- CFA exam historical pass rates since 2010
- CFA exams in 2021: A beginner’s guide
- CFA passing score: our latest estimates
How Much Does CFA Level 3 Cost?
The exam fees for CFA Level 3 are US$700-1,000, depending on how early you register.
There are other optional additional fees to consider:
- An extra $170 (includes $20 shipping), if you would like hard copies of the CFA curriculum instead of just e-Books, which are already included in exam registration fees,
- Rescheduling fee of $250, only if you have to reschedule your computer-based exam appointment.
- Third party study materials, if you choose to use them, could range from $300-1,500 depending on packages you choose.
For the latest info on CFA exam registration and fees:
What Are The Latest Level 3 Exam Curriculum & Topic Weights?
|CFA Level 3 Topic Area||Topic Weight in 2021|
|Financial Reporting & Analysis||–|
Due to COVID-19, CFA Institute announced that 2020 curriculum will be applicable in 2021 with no changes, therefore allowing postponed candidates carry on using the same curriculum in 2021. This means the 2020 topic weight would be identical in 2021.
What is interesting about the recently changed Level 3 topic weights is that it is possible to test all topics more evenly (excluding PM and Fixed Income), probably done as a move to discourage candidates from dropping topics.
For those considering using previous year’s books to study, it’s worth referring to the latest CFA Curriculum Changes & Topic Weights article to check how much the curriculum has changed over the year.
How Many Hours I Need To Study for CFA Level 3?
Based on CFA Institute’s June 2019 Candidate Survey, the average Level 3 candidate studied for 344 hours. However, based on our experience to increase chances of passing, studying for a minimum of 350 hours over 4-6 months is more common.
I would recommend having a look at the CFA Fast Track Plan as a guide (for students, working professionals and parents), then use our latest updated Free CFA Study Planner to customize your study plan to get going!
Is There a Maximum Time Gap Between CFA Level 2 and Level 3?
Unlike FRM, the CFA program doesn’t impose any time limit between levels, nor impose any time limit to complete all 3 levels, which is certainly helpful to have such flexibility.
However, candidates may lose momentum and motivation if they take a too long a break between exam levels.
Here’s My CFA Level 3 Study Plan & How To Create Yours
For Level 3, I didn’t use CFA curriculum as my main reference and relied on third party materials. I had a soft start to studying 6.5 months before, but only really started ramping up and properly studying with 6 months to the exams.
I just about scraped through and passed my Level 3 exam with a full time banking job in 6 months. The more qualitative nature of CFA Level 3 requires some adjustments in strategy vs Level 1 & 2. Here are the details of my study plan, which you can easily use as a reference to tailor your study plan:
- Target at least 350 hours study time for Level 3 preparation: With 6 months (26 weeks) to prepare, that implied nearly 14 hours a week of study hours, which is more manageable than my Level 2 timeline. Similar to previous levels, my long hours during work week was exhausting, and I pretty much relied on studying full days on weekends to make up 14 hours. Of course, my case is a little extreme, if you can consistently dedicate 1-2 hours per day on weekdays, that could make things more manageable on weekends depending on your life commitments.
- Create a customized CFA study plan: For this to work and be sustainable, it is really important to tailor your plan around your work/life commitments (here’s a few CFA Fast Track study plan as reference for students / working professionals / parents). I highly recommend using the recently upgraded 300Hours’ Free Study Planner, which was inspired from the first version of my study plan years ago. Not only does it track your study progress, it also identifies weaker topics, offers practice exam score benchmarks and even predicts your CFA exam score!
- Leave Ethics last: Given the recent topic weight changes, I would recommend following my suggested Level 3 study order for optimal absorption. Oh, and don’t be tempted to skip Ethics (and GIPS).
- Blitz through the reading quickly (and do Curriculum end of chapter questions): Level 3 is a different beast, where you can read all you can and your brain still feels foggy like it has learned nothing. So it wouldn’t be wise to drag on with the reading for long, instead the strategy here is to go through the readings quickly, leaving a bigger chunk of time for practice, revision and note making (next point).
- Save the last 7-10 weeks for practice exams & revision: Make sure you have covered the study material roughly once before attempting practice papers. Remember, don’t skip topics if you can help it.
- Write your own summary notes during revision for relevant sections: This doesn’t apply to all study chapters, but only the ones you find that taking notes would be useful. Not only hand writing it yourself would be a useful practice for the constructed-response morning paper, but it will save time for the revision process down the road. Refer to CFA curriculum for areas where you need more clarifications.
- Do TONS of practice papers under timed constraints: And grade them strictly (for constructed response). Then revise sections where you got wrong, then repeat. We recommend doing at least 6 practice papers, ideally under time constraint.
- Track your study and time progress: I’m not one for detailed study plans, but to ensure I don’t lose track of time, I have allocated 9 weeks out of my 26 weeks for practice and last minute revision. This means I have to cover 38 readings of Level 3 in 17 weeks, i.e. 2.5 readings per week. Use our free CFA study planner tool to help you with this.
- Take 1-2 weeks before the exam off for final preparations: This is the last Level, so it is time to make sure it is the last CFA exam you need to take. I took 1.5 weeks holiday to fully focus on nailing the rest of the practice exams and rereading materials on weaker areas. I also woke up at 630/7am daily to mimic exam conditions whilst taking timed practice exams.
CFA Level 3 Tips, From My Experience
Besides the 10 Commandments of CFA Level 3 (super useful by the way), here are 4 key principles that I found crucial for passing Level 3:
Time Management Is Crucial
I may sound like an old broken record, but this is worth repeating. No matter how experienced a candidate you think you are – practice is quite different from the real thing.
First thing to do when your Level 3 first paper starts is to see how much time you have per question, as number of questions vary from year to year.
As question length can vary, use the number of minutes/points to each question (this should be shown in the exam paper) to both inform you on how much time you should spend on the question, and how much information should you aim to put in your answer.
For time management purposes, consider 1 point to equal 1 minute of time to be spent on that essay question.
Have A Go At All Questions To Maximize Your Score
Second thing to do is to make sure you stick to your time limit per question, i.e. the ‘shoot-and-go’ principle. If time is up, choose/write an answer, and move on. This is the only way you have a chance to attempt each question, even if you’re not sure (this feeling could permeate the whole exam)!
For the first paper, it’s a little more trickier than having a multiple choice to ‘shoot’ and move on. But if you really are stuck, just write your best answer down and move on. There is no negative marking, and my Level 3 experience showed that writing something down, such as showing your calculations or workings, helps maximize your scores even if the final answer is incorrect.
There would be (a lot of) moments in the constructed-response section where you have absolutely no clue of the answer, but some vague possibilities. List those possible answers (limit to 2-3 only) on the side in pencil as a reminder, BUT pick the best answer for now and write them on the answer sheet. You can always revisit this if you have extra time later, but at least you have covered your bases.
Keep Your Constructed-Response Answers Short & Simple
The common tendency when we’re not sure of an answer is to start writing a lot. Let’s include everything, maybe something will stick!
That’s not a good idea unfortunately. CFA examiners recommend writing succinct, straight to the point answers with no fluff. This means use bullet points, short sentences, shorthands for formula notation etc – these are all acceptable and in fact encouraged!
The reason is two-fold:
- You don’t get rewarded for more info than asked for. Read and answer what they are exactly asking for. Nothing more, even if you know a whole load about the topic. Seriously, the examiners have no qualms about looking at an epic essay and cheerfully crossing it all out if it’s not relevant.
- The guideline answers in your practice exams are longer and more elaborate for explanatory reasons. For the actual exams, short answers in bullet points are sufficient.
However, for questions requiring calculations, DO show your calculation methods for arriving at your answer. Even if the final answer is wrong, you may get awarded points for the right working or formula application and you’d be surprised how many points you can get with those!
Keep Calm & Carry On
You’re already in the exam and nearly there. No matter what happens, just chug on and finish it the best you can. You’ll be amazed how smart, resilient and resourceful you are when you face up to these challenges.
When shit hits the fan, your mental power is key. Your choice of reaction will determine the outcome. Always be thinking: what can you do to salvage the current situation for the best outcome? This attitude saved my ass during the constructed response part of the exam where I lost track of time and are left with 3 whole questions to do in 15 minutes – I just blasted through all the questions quickly and wrote something in all of them before time’s up.
This positive mind power is also cultivated way before the exam. I had a several funny and motivational posters, pinned on my board during the months of studying. It made me smile and kept me going on days where I was feeling meh/argh/why-did-I-get-myself-into-this. Try it and let me know if it works for you as well?
I hope you find my CFA experiences helpful for your preparation. Let me know if you have further questions (always happy to help) in the comments below and feel free to share your tips too!
Meanwhile, you may find my Level 1 and 2 experiences below, along with some other useful articles:
- CFA Level 3 Topics: What is the Best Study Order?
- CFA Level 3 Tips: Top 10 Advice from Previous Candidates
- CFA Level 1: How to Prepare & Pass CFA in 18 Months
- CFA Level 2: How to Prepare & Pass CFA in 18 Months
- Fast Track CFA Charter: How to Pass the CFA Exams in the Fastest Way Possible
- Free & Upgraded – 300Hours CFA Study Planner
- Free 300 Hours Guides, including the 10 Commandment