What Is CFA Exam? A Useful Beginner’s Guide

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Considering the Chartered Financial Analyst exam (CFA) and wondering what is CFA all about?

The CFA exams have recently undergone huge changes in exam format and schedules.

​Here’s our ultimate beginner’s guide to all the CFA exam details you need to know.


What is CFA exam about? A quick overview

What Is CFA Exam about

The CFA charter is a world-renowned qualification in the investment management sector, and increasingly the “gold standard” for portfolio managers, wealth managers research analysts, and investment professionals in general.

It is a Masters / postgraduate level degree focused on building expertise and real-world skills in investment analysis.

Since the inception of the first CFA exams in 1963, more than 175,000 CFA charterholders have successfully obtained the designation. They are employed internationally at nearly every major investment bank, asset management firms, hedge funds, consulting firms, and more. 

number of CFA charterholders globally since 2012

There is fast-growing demand for the CFA charter – candidate registrations for the CFA exams have grown by an average of 10% per year since 2012, with 270,000+ candidates globally in 2019 (2020-2021 figures are impacted by pandemic postponements). 

​​In particular, the year-on-year growth has been accelerating since 2015 – we expect this trend to continue given increasing demand from emerging markets.


CFA exam format and structure

CFA Exams Overview - Topic Weights and Exam Format

The CFA exam consists of 3 levels, with each Level’s exam split into 2 sessions.

All CFA exams are now computer-based. They are conducted exclusively in English, in person at 400+ exam sites around the world. You can find out your nearest CFA exam center here. Candidates can only register for the next level exam only if they passed the current level.

In terms of pass criteria, there are no negative markings for incorrect answers. The minimum passing score by exam is determined by the CFA Committee each year.

Here are more details on each exam’s format, structure and duration:

Level 1

CFA Level 1 Exam Structure and Format
Exam FrequencyIn 2021, held 6x a year: Feb, Mar, May, Jul, Aug, Nov.

From 2022, held 4x a year in Feb, May, Aug and Nov.

See the latest CFA exam dates and calendar and our CFA journey planner tool for more information.
Question formatMultiple choice questions (MCQ)
Exam Structure & DurationLevel 1 exam is 4.5 hours with 180 MCQ in total, split into 2 sessions:

– 1st session (2 hours 15 min) has 90 MCQ. It covers 4 topics: Ethics, Quant Methods, Economics, and Financial Reporting and Analysis

– 2nd session (2 hours 15 min) also has 90 MCQ. It covers the remaining 6 topics: Corporate Finance, Equity, Fixed Income, Derivatives, Alternative Investments and Portfolio Management
Results AvailabilityWithin 60 days of exam via email, with a simple pass or fail and a 2 page breakdown of your performance by topic.

Level 2

CFA Level 2 Exam Structure and Format
Exam FrequencyIn 2021, held 3x a year: May, Aug, Nov.

From 2022, held 2x a year in May and Nov.

See the latest CFA exam dates and calendar and our CFA journey planner tool for more information.
Question formatItem-set based multiple choice questions (MCQ), whereby questions in each item set must be answered based on the information in the vignette.

Each item-set has 4-6 questions related to it. Each question is worth 3 points.
Exam Structure & DurationLevel 2 exam is 4.5 hours with 88 item set MCQ in total, split into 2 sessions:

– 1st session (2 hours 15 min) has 44 item-set MCQ.

– 2nd session (2 hours 15 min) also has 44 item-set MCQ.
Results AvailabilityWithin 60 days of exam via email, with a simple pass or fail and a 2 page breakdown of your performance by topic.

Level 3

CFA Level 3 Exam Structure and Format
Exam FrequencyIn 2021, held 3x a year: May, Aug, Nov.

From 2022, held 2x a year in Feb and Aug.

See the latest CFA exam dates and calendar and our CFA journey planner tool for more information.
Question formatLevel 3 has a mix of constructed response (essay) and item-based multiple choice questions (MCQ).

Item-set based multiple choice questions (MCQ), whereby questions in each item set must be answered based on the information in the vignette. Each item-set has 4-6 questions related to it. Each question is worth 3 points.
Exam Structure & DurationLevel 3 exam is 4.5 hours with essay and 44 item set MCQ in total, split into 2 sessions:

– 1st session (2 hours 15 min) has 8-11 constructed response (essay) questions. Each essay question on the exam consists of a vignette followed by several related items that require a written response. There will be some multiple-choice items in this session, as well.

– 2nd session (2 hours 15 min) has 44 item-set MCQ, similar to Level 2.
Results AvailabilityWithin 90 days of exam via email, with a simple pass or fail and a 2 page breakdown of your performance by topic.

More on the CFA exam and results format:


CFA exam pass rates & difficulty

CFA pass rates since 2010 for all levels

The latest CFA exam pass rates are:

  • 22% for Level 1 (Jul21)
  • 40% for Level 2 (May21)
  • 42% for Level 3 (May21)

As one would expect, the average pass rates increases as one progresses throughout the 3 levels. Since 2010, the historical pass rates for:

  • CFA Level 1 ranges from 22%-49%, with a 11-year average of 40%;
  • CFA Level 2 ranges from 39%-55%, with a 11-year average of 45%;
  • CFA Level 3 ranges from 46%-56%, with a 11-year average of 53%.

Sure, pass rates do give us a vague idea of the famously difficult CFA exams – but really, how hard is the CFA exams?

​Thankfully, we have an objective answer for you.

How Hard Is CFA, FRM, CAIA, Investment Foundations, IMC, ESG Investing, CIPM

According to UK NARIC (National Academic Recognition Information Centre of the United Kingdom), the CFA exams have been benchmarked individually by Level under UK Regulated Qualifications Framework (RQF):

  • CFA Level 1‘s difficulty is comparable to a Diploma of higher education (Level 5 qualification under RQF);
  • CFA Level 2‘s difficulty is comparable to a Bachelor’s degree (Level 6 qualification under RQF);
  • CFA Level 3‘s difficulty is comparable to a Master’s degree (Level 7 qualification under RQF).

Considering that RQF Level 8 implies a difficulty equivalent to PhD programs, passing all 3 levels of the CFA exams is certainly not easy!


CFA topic weights

The CFA designation is quite unique in the sense that it mostly sticks to the same 10 core topics across 3 levels, with increasing complexity and difficulty of testing as you progress.

CFA Level 1 exam does not assume any prior finance knowledge, mainly focused on introducing candidates to a wide range of terms and concepts from the 10 main topic areas (see table further below). The Level 1 exam consists of two sessions, each with 90 multiple-choice questions done in 2 hours 15 minutes. 

CFA Level 2 exam builds on the foundation of Level 1, with a stronger focus on analyzing and applying the concepts learned. The Level 2 exams also consists of two sessions, each with 44 item-set style questions (multiple-choice) done in 2 hours 15 minutes.

Finally, the CFA Level 3 exam is heavily focused on applying what you’ve learned in portfolio management and wealth planning topics. Similar to the previous 2 levels, the CFA Level 3 exam consists of two sessions, with the first session devoted to 2 hours 15 minutes of constructed response questions (essay), whereas the second session is similar to Level 2, with 44 item-set style questions (multiple choice) done in 2 hours 15 minutes.

Here’s a quick summary of the latest topic weightings for all 3 Levels for CFA exams:​

Topic AreasCFA Level 1 Topic WeightsCFA Level 2 Topic WeightsCFA Level 3 Topic Weights
Ethics15-20%10-15%10-15%
Quantitative Methods8-12%5-10%
Economics8-12%5-10%5-10%
Financial Reporting & Analysis (FRA)13-17%10-15%
Corporate Finance8-12%5-10%
Equity investments10-12%10-15%10-15%
Fixed Income10-12%10-15%15-20%
Derivatives5-8%5-10%5-10%
Alternative Investments5-8%5-10%5-10%
Portfolio Management5-8%10-15%35-40%

Learn more about CFA exam curriculum and topic weight changes here →


CFA exam fees & costs

CFA exam fees cost

The CFA enrollment and registration fees are just one aspect of the total CFA exam costs to consider. With these tough exams, it’s likely that candidates would need to budget for third party study materials to help save time.

For the 3 levels of the CFA exam, a realistic estimate of a total cost range is $2,600-$8,000 to complete your charter, consisting of a $1,200-$3,000 budget for Level 1, and $700-$2,500 each for Level 2 and Level 3 respectively. This doesn’t account for retake costs though.

As fees are a big topic in itself, check out our infographic above, along with our summary of CFA exam realistic costs you’ll need to budget for.


A detailed breakdown of realistic costs and fees incurred throughout the CFA exams →


2022 CFA exam schedule & key deadlines

This is certainly a time of crazy changes to the normal CFA exam cycle schedule, mainly due to the COVID-19 postponement of some 2020 exams as well as the introduction of computer-based testing (CBT) not just for Level 1, but for all Levels from 2021

For the latest key dates of the upcoming CBT exam cycles in 2022, check out our detailed post on CFA exam schedule, key dates and deadlines.


All key CFA exam dates and deadlines, and how to sync to your calendar →


What are the CFA program requirements?

CFA charterholder requirements

CFA Level 1 requirements

To register in the CFA program as a Level 1 candidate, you’ll need to meet one of the following enrollment requirements:

  • Have a Bachelor’s degree; OR
  • Be a final year student in a Bachelor’s program (or equivalent). In particular, your selected exam window must be 11 months or fewer before your graduation month for your bachelor’s degree or equivalent program. Degree program must be completed prior to Level 2 registration; OR
  • Upon CFA Level 1 registration, you must have at least 4,000 hours of work experience and/or higher education that was acquired over a minimum of 3 consecutive years. If you have a combination of work experience and higher education to achieve the minimum hours and years, assume that higher education takes 1,000 hours per year.

CFA charterholder requirements

In order to be become a CFA Charterholder and be able to use the CFA designation after your name, the following conditions must be fulfilled:

  • Pass all 3 levels of the CFA exams;
  • Have at least 4,000 hours of relevant work experience completed in a minimum of 3 years;
  • Submit 2-3 professional references;
  • Apply to become a regular member of CFA Institute (cost US$275 per year)

Find out more about CFA charterholder requirements here:


Benefits of the CFA certification

The CFA designation is the leading investment designation with worldwide recognition, and getting this certification certainly sets you apart from the rest.

Once you achieve this designation, you can expect to:

  • Differentiate yourself and signal your credentials in the finance industry
  • Enhance career growth and increase job mobility in the finance and investment management sector
  • Become a part of a prestigious, global group of CFA charterholders
  • Be recognized globally as a leader in investment management
  • Command better remuneration package and job opportunities

Although top tier firms prefer to hire CFA charterholders, and there are many benefits to getting a CFA charter, it is worth remembering that the CFA designation itself is not a golden ticket to jobs.


CFA vs FRM vs CAIA: Which is right for you?

What Is CFA Exam? A Useful Beginner's Guide 1

The CFA designation covers a broader scope of financial analysis, portfolio management and investment topics, whereas FRM and CAIA are more narrowly focused on risk management and alternative investments specifically.

From a career building perspective, CFA, FRM and CAIA are quite comparable in their respective fields as they are globally recognized designations with ample employment opportunities. Plenty of finance professionals obtain one or two of these qualifications to better perform in their roles and career.

Ultimately, it all depends on your preferred career route: if you’re into risk management, FRM is the clear choice. If you’re less sure but keen on a career in finance, perhaps CFA is a better choice for a broader finance base. If you’re into alternative assets, CAIA is a good specialization to go for.

Here’s a quick summary comparing the three designations:

CFAFRMCAIA
Pre-exam qualificationsHave a bachelor’s degree; orFinal year undergraduate of a bachelor’s program; orHave a combination of college degree and full time work experience that totals 4 years.None. There are no educational or professional prerequisites needed to register​.​​None. However, basic foundation in finance and quantitative aptitude is desirable.​​​​
Study Areas10 Topics: Ethics, Quantitative Methods, Economics, Financial Reporting & Analysis, Corporate Finance, Equities, Fixed Income, Derivatives, Alternative, Portfolio Management.​​​​​10 Topics: Foundations of Risk Management, Quantitative Analysis, Financial Markets & Products, Valuation and Risk Models, Market Risk, Credit Risk, Operational Risk, Liquidity & Treasury Risk, Risk Management in Investment Management, Current Issues.8 Topics: Professional Standards and Ethics, Current & Integrated Topics, Asset Allocation & Institutional Investors, Private Equity, Real Assets, Commodities, Hedge Funds & Managed Futures,  Structured Products.​
Number of Exams3 levels (pre-2021, the fastest route is in 18 months. From 2021, it reduces slightly to 15 months.)​​2 Parts (you can sit for both parts in one exam day)​2 levels (unlike FRM, you cannot sit for both exams in the same exam window)
Exam FrequencyFrom 2021, CFA exams will transition to computer-based testing for all levels with increased frequency:

Level 1: 4x a year (Feb, May, Aug and Nov).

Level 2: 2x a year (May and Aug in 2021, and 2022 onwards Feb and Aug).

Level 3: 2x a year (May and November).
Part 1: 3x a year (May, Jul, Nov)

​Part 2: twice a year (May, Nov)​​​​​
For both Levels: Twice a year in March and September.
​​
Exam FormatLevel 1: Multiple choice questions

Level 2: Item set questions

Level 3: Item set and constructed response questions 
Part 1 & 2: Multiple choice questions​Level 1: Multiple choice questions
Level 2: Multiple choice and constructed response questions​​​
Pass RatesThe range of CFA pass rates since 2010:
Level 1: 22%-43%
Level 2: 39%-47%
Level 3: 46%-56%
The range of FRM pass rates since 2010:​Part 1: 39%-53%
Part 2: 50%-62%​
The range of CAIA pass rates since 2010:
Level 1: 52%-74%
Level 2: 56%-64%​
Fees and CostsOne-off Enrollment Fee: $450

Registration fee (per level): $700-$1,000

​​Retakes: same as registration fee
One-off Enrollment Fee: $400

2021 Registration Fee (per Part): $550-750

Retakes: same as registration fee
One-off Enrollment Fee: $400

Registration fee (per level): $1,150-1,250

Retakes: $450 per level
Study Hours NeededAt least 300 hours per level200-250 hours per part​At least 200 hours per level
Post Exam RequirementsTo become a CFA charterholder:
Pass all the 3 levels of CFA exams;
4 years of qualified investment work experience;
Submit reference letters for 2-3 professional references;
Become a regular member of CFA Institute;
Adhere to CFA ethics and professional conduct.​
To become FRM-certified:
Pass both FRM papers;
a minimum of 2 years professional full-time work experience in the area of financial risk management or another related field;
maintain membership.​
To become a CAIA charterholder:
Pass both levels of CAIA exams;
Hold a bacherlor’s degree, or the equivalent, and have at least 1 year professional work experience; or alternatively, have 4 year professional work experience;
Abide by CAIA’s member agreement;
Pay CAIA membership fees.

While famous for being difficult, the CFA designation can be a powerful boost to your CV as a finance specialist, given its global recognition and broad appeal.  Be it asset management, wealth management, research, corporate finance, consulting, risk management, banking, insurance, pension and even fintech etc, you can find CFA charterholders having a career in a broad range of sector and job functions.

CFA charter can be a particularly impactful investment in the earlier stage of your career, e.g. after 3-5 years work experience. It is a good choice for those committed to a career in finance while opening up a broader range of options for the future.


Decided to take on the CFA exams? Awesome! Here are the best resources for Level 1 candidates:

Undecided on the CFA charter? No worries! You may find other related qualifications in our Beginner’s Guide series of interest:

Finally, if you’ve got any questions on the CFA exams, do pop them in the comments below 🙂

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5 thoughts on “What Is CFA Exam? A Useful Beginner’s Guide”

  1. Hi Melanie, yes as per the previous comment above, CFA Institute has frozen the syllabus for 2020-2021. So the 2021 syllabus will be the same as 2020 and you can use your current Kaplan Schweser books for May21.

    Reply
  2. Hello, I’m planning to register for CFA Exam on May 2021. Is it possible to study from the Kaplan Schweser 2020 books?

    Reply
  3. I’ve re-registered for the Feb21 exam from the Dec20 exam. Will my Dec20 books become obsolete in terms of syllabus?

    Reply

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