If you’ve been in the CFA Program for more than five minutes, you’ve probably heard the following statement from a candidate or charterholder: “the CFA Institute recommends that you study 300 hours to pass each CFA exam.”
In reality, no such recommendation exists. There has never been a recommendation to study 300 hours, and there likely never will be a recommendation of any kind from the CFA Institute.
If the average candidate studies 300 hours, study more than 300 hours to pass. Prepare in an above-average manner to achieve an above-average score. It’s that simple.
So why ‘300 hours’?
Where did this 300 number come from? Every year, the CFA Institute conducts a survey of candidates taking the June exam (check out the 2017 survey results here). In the annual survey, the CFA Institute asks half of the June candidates how much they studied and averages the responses, regardless if they failed or not. According to this survey, the average candidate studies approximately 300 hours.
The survey tells you how many hours the average candidate studies even though an average score does not pass. Therefore, the 300-hour suggestion is flawed. The fact that both failing and passing candidates are captured in the survey response mix means the 300-hour average is not one you want to emulate. Even worse, more failing candidates influence the average since they represent a higher proportion of the population. This proves that 300 hours are not enough, barring extenuating circumstances or luck. Essentially, the 300-hour “recommendation” tells you exactly how many hours not to study.
300 Hours’ research agrees: passing candidates study on average 20 more hours than failing candidates. We also track study start dates, number of practice exams attempted and other tips in CFA Insights.
Average performance fails the exam.
With passing rates huddling around 40%, the average candidate in the 50th percentile fails. Another truth: Average scores result from average preparation. Sure, every once in a while you will hear of a candidate studying only two or three weeks and passing. Sheer luck happens. But normally, average preparation produces average test scores, and average test scores will not pass. Studying 300 hours is an average approach; aim beyond the average to pass the exam.
Studying more saves you time overall
The good news is that studying more than an average amount actually results in fewer hours in the long run! Consider Peter and Sally, both Level II candidates. Peter adheres to the mantra that 300 hours is the “recommended” number of hours to study for the exam. Peter studies an average amount, is therefore prepared to an average level, achieves an average score, and fails because the passing rates dictate that an average score will not pass.
Peter signs up for Level II the following year and studies 300 hours again, thinking it must be a function of the test simply being “really hard” rather than recognizing that he needs to study more than the average amount. He passes on this second attempt, but only after 600 total hours of study time: 300 hours for the first attempt and 300 hours for the second. Meanwhile, Sally studied some additional hours the first year, passed on her first try, and moved on to Level III.
If you only study 300 hours and fail (remember, this is the likely result) and study 300 hours again the next year to pass, you will study a total of 600 hours. Studying 600 hours for two attempts is more than 400 hours, for example, for one attempt. You can actually study less overall if you, just one time, study beyond the typical amount. (To help you decide exactly how many hours to study for each Level, check out my book, Direct Path to the CFA Charter, for my recommendations on study hours for Levels I, II, and III.)
The CFA passing rates are not a function of who is smartest; they are a reflection of who prepares in an above-average manner. Start by studying more than 300 hours. Embrace the evidence, put in some extra time, and surpass the 300-hour average.
Rachel Bryant is a finance professional with broad experience in risk management, capital markets, banking, regulation, investments, and corporate finance – and the author of Direct Path to the CFA Charter. If you’ve got a question for Rachel, pop it in the comments below!