CFA Pass Rate Fell For First Exam

CFA Pass Rate Fell For First Exam, Institute Reports
2009-01-28 17:46:13.929 GMT


By Ian Katz
Jan. 28 (Bloomberg) -- A smaller percentage of candidates passed the first test of the Chartered Financial Analyst exam, a three-step process aimed at gaining a hiring edge as job losses accelerate in the financial-services industry.

Thirty-five percent passed the initial test, down from 39 percent last year, the CFA Institute said in a statement today. Almost 50,000 people worldwide took the first stage in December, a 25 percent increase from a year earlier, the Charlottesville, Virginia-based institute said.
"The number of hours candidates spent studying the material" is the main reason the percentage of people who pass varies, Bob Johnson, the institute's deputy chief executive officer, said in an e-mail.

Candidates take the exam betting the certification can become a path to better jobs, higher salaries and a deeper understanding of finance. The not-for-profit CFA Institute recommends candidates spend at least 250 hours studying for each test phase. It costs about $2,500 to
complete all three levels. Demand for the certification rose as job losses mounted in the
financial-services industry. Employment in New York City's securities industry fell 10 percent to 168,600 in December from 187,800 in October 2007, the New York state comptroller said in a report today. The state will have lost as many as 225,000 jobs and $6.5 billion in securities industry-related tax revenue by Oct. 31, the state has said.

Test Topics

To qualify for CFA designation, a person must be employed in a financial job, such as a broker or an analyst, and have four years of relevant experience. Topics range from ethical standards and securities valuation to financial statement analysis and portfolio management. About 20 percent of candidates who begin the test process will become charter holders, a designation now held by 86,968 people, according to the CFA. About two-thirds who take Level III successfully complete the process.

The CFA program started in 1963 and stems in part from proposals by Benjamin Graham, a pioneer of value investing who mentored Warren Buffett, for a rating system for financial analysts.

For Related News and Information:
News securities firms: NI SCR
Top financial stories: FTOP
Stories about job cuts: NI JOBCUTS
Stories about financial services: NI FIN

--With reporting by Henry Goldman in New York. Editors: Steve Geimann,
Alec D.B. McCabe

To contact the reporter on this story:
Ian Katz in Washington at +1-202-624-1827 or ikatz2@bloomberg.net

To contact the editor responsible for this story:
Alec McCabe at +1-212-617-4175 or
amccabe@bloomberg.net

CPA vs CFA vs MBA

CPA, CFA or MBA?

It’s not a question of which one is better. It’s a question of which one is better for you. Traditionally, the CPA would lead to a career as a CFO; a CFA was on the path to become a portfolio manager; and a MBA would eventually become a corporate executive. This notion still holds today, however, achieving one of these certifications no way guarantees success.

Deciding which certification to pursue is usually made subconsciously. In our daily lives we read, talk and listen to friends, family and colleagues. Based on these interactions, we develop a superficial understanding on which certification to pursue. After much career and soul searching, I've come to realize that the most important question to ask before choosing a path is “what do I want to do?”

Do I want to be a CFO of a hedge fund?

Do I want to be a portfolio manager at a hedge fund?

Do I want to be a managing director at a private equity firm?

Do I want to be VP of business development at a corporation?

Now this might seem easy, but in reality it’s difficult. It’s difficult to verbalize why you want to pursue a particular career. My advice is follow the work, not the money. Regardless of the risks or the sunk costs, pursue your passion.

CPA

The Certified Public Accountant certification is a benchmark credential. It carries stature, significance and job security. In economic booms or busts, accountants are always needed. The more personable and diligent you are, the more success you will achieve.

Accounting is the basis of business. And being an expert in accounting gives you a unique business perspective that your other friends might not possess. However, the thing I have come to realize is that once you’re labeled an accountant, you may be an accountant the rest of your life. It’s incredibly difficult to make the switch into a different career path within the business world (when I say business world I mean hedge fund analyst, private equity associate, business development).

My opinion on the matter might be affected by the economic environment in which I recruited. It is difficult to switch careers in a bear market. Ultimately though, my conclusion is drawn from the countless interactions with professionals throughout my recruitment process. Every time I would talk with headhunters, recruiters, HR and interviewers, it would become apparent that they just wanted a two year analyst from an I-bank or consulting firm. My two years at PwC didn’t mean a thing to anybody. They would always tell me of a great job in the middle or back office and convince me that was the best role for me.

CFA

I am not a Chartered Financial Analyst charter holder. So I cannot express the opportunities that have or have not presented themselves as a result of the CFA. However, as a Level III candidate, no unique opportunities have appeared. No special career doors have opened. When I was recruiting, it was thought more of a differentiation than a value added credential. I am interested to know what the future holds if I successfully pass the third part, complete the work experience, and receive the designation.

MBA

After talking with many people and seeing it first hand, I am convinced the only sure way to change career paths and make it to the top echelon of finance, without a background in investment banking or strategy consulting, is to attend a top 10 MBA school. Of course, you can get great finance jobs through other methods (that’s what I’m hoping to do) but this way seems most certain.

So if you want to work in private equity or at a hedge fund and are not an investment banker or strategy consultant, I highly recommend crushing the GMAT (above 700) and going to a top 10 MBA school.

I have merely outlined my insight based on experience, which I hope can help you better decide which certification path to follow. Remember though that no path is certain or on a straight line.

Introduction

Both of these exams are difficult and require extensive time and effort in order to pass. I passed all four sections of the CPA exam and level I & II of the CFA exam on my first attempt, but it took a lot of studying and I had to make a lot of sacrifices. This blog can hopefully give you guidance and insight into either the exam. This is simply a forum for others to learn from my experience, view my notes and ask questions.

Half the battle is applying, paying and scheduling either exam. It takes a lot of research to understand what you need to do in order to be prepared. I assume that you have a familiarity with your respective exam but if you don't start here
For the CPA - read through the CPA Candidate Bulletin
For the CFA - visit the CFA Institute

My Timeline
2006
Early Sept..... Start Master's in Accounting Program
End of Nov..... Apply for CPA NTS (BEC & FAR)
[For NY it usually takes longer to process NTS]

2007
Mid Jan..... Receive NTS, schedule BEC and FAR exam,
purchase Becker CPA Review through PwC
End of Feb..... Start studying for BEC
Early April..... Take BEC exam, after exam start studying for FAR
Late April..... Apply and pay fees to sit for CFA level I in December,
purchase Stalla CFA Level I Review
Mid May..... Take FAR exam, after exam apply for NTS (AUD & REG)
Late May..... Receive NTS, schedule AUD & REG, start studying for AUD
Mid June..... Receive BEC and FAR scores
Mid July..... Take AUD exam, start studying for REG
Mid Aug...... Take REG, start studying for CFA level I
End of Sept..... Receive AUD and REG scores
Early Dec..... Take CFA Level I Exam

2008
End of Jan..... Receive CFA score, apply and pay fees for Level II,
purchase Schweser CFA level II Review materials
Early Feb..... Start studying for CFA level II
Early June..... Take level II of CFA exam, then Party Party Party
Mid August..... Receive CFA score, then Party Party Party
Mid September..... Sign up and pay fees for Level III

2009
Early Feb..... Start studying for CFA level III
Early June..... Take level III of CFA exam, then Party Party Party

Early Aug..... Receive level III CFA exam results, then Curse and Cry

2010
Early Feb..... Start studying again for CFA level III
Early June..... Take level III of CFA exam again, then Party Party Party

Hopefully my timeline indicates how meticulous I was in planning for the exams. If you want to be successful you have to plan 6 to 18 months in advance. Anticipate future school, work or life events that will impact your ability to study. The last thing you want is to pay $X and not be able to take the exam or, even worse, not be able to adequately prepare and fail. For the last 3 years all I've done is study, work-out and, very rarely, party. I wasn't able to spend enough time with the people I cared for. I sacrificed a lot and you'll probably have to do the same.

Study Guide

For either the CPA or the CFA exam, you should focus your time in memorizing the core material then answering as many practice problems as possible. Mastering just one component will not be enough. The notes I have posted are meant to help memorize the core material.

CPA Exam
I highly recommend using Becker CPA review to study for the exam. The lectures are painful (especially by Duffy & Gearty) but are definitely worthwhile. Use my notes as a refresher, then complete as many practice problems as possible. The more problems you complete, the better your chances of passing.

CFA Level I Exam
I used both Stalla and Schweser review materials for this exam. I originally bought Stalla, viewed all the lectures, and studied based on their materials (this is before the CFA Institute sent study materials). However, two months before the exam I talked extensively with a friend about his experience taking level one. My friend advised against using Stalla, because he thought Stalla focused too much on the details and that the practice questions from his review did not reflect the questions he faced on exam day. He recommended using Schweser. So I purchased Schweser notes on Craigslist and supplemented my Stalla materials with Schweser.

Conclusion
Stalla's video lectures are much better than Schweser's video lectures. However, Schweser's written study materials and questions are much better than Stalla's. In addition, the CPA institute now sends candidates study materials. I recommend picking study materials based on your study preference/habit, then stick with it. There is so much material to cover that it's virtually impossible to comprehensively use 2 different study sources.

CFA Level II Exam
This exam truly tests your endurance. After spending all that time and energy to pass level I, the last thing you want to do is essentially do it all over again. Keep in mind that the material builds of the concepts from level I. Make sure to differentiate between old and new concepts, and focus on the key testable material.

CFA Level II Study Notes

Level II of the CFA exam is considered the most difficult of the three. In general, I did not find the material more complex but it did delve deeper into core concepts compared to Level I. The reason that level II is the most difficult is a function of both the material and the level of competition. All the candidates that take level II are obviously diligent, intelligent and understand the test conditions. So this time around you're studying against peers who didn't just sign up on a whim or cajoled by their firm.

The CFA institute now issues course materials along with optional sample exams. I still bought Schewser notes and I regretted it. If you are a disciplined individual who can self-study, I highly recommend just using the materials that the CFA insitute sends. The books and sample exams are great.

I studied from the beginning of February to June. At the time, I was working about 70 hours a week. When I wasn't working I was studying. If you're serious about passing this exam, I recommend you do the same.

1 - Statistics - Formula Sheet Mini Test Level II

2 - Economics - Formula Sheet Mini Test Level II

3 - Fin Stmt Analysis - Formula Sheet Mini Test Level II

4 - Corp Finance - Formula Sheet Mini Test Level II

5 - Equity Analysis - Formula Sheet Mini Test Level II

6 - Fixed Income - Formula Sheet Mini Test Level II

7 - Derivatives - Formula Sheet Mini Test Level II

8 - Portfolio Mgmt - Formula Sheet Mini Test Level II

Ironic Shirts

You might find one or two of these funny.

Link - Ironic Shirts

Introduction Old

Both of these exams are difficult and require extensive time and effort in order to pass. I passed all four sections of the CPA exam and level II of the CFA exam on my first attempt, but it took a lot of studying and I had to make a lot of sacrifices. This blog can hopefully give you guidance and insight into either the exam. This is simply a forum for others to learn from my experience, view my notes and ask questions.

Half the battle is applying, paying and scheduling either exam. It takes a lot of research to understand what you need to do in order to be prepared. I assume that you have a familiarity with your respective exam but if you don't
For the CPA - read through the CPA Candidate Bulletin
For the CFA - visit the CFA Institute

My Timeline
2006
Early Sept Start Master's in Accounting Program
End of Nov Apply for CPA NTS (BEC & FAR) [For NY it usually takes longer to process NTS]

2007
Mid Jan Receive NTS, schedule BEC and FAR exam, purchase Becker CPA Review through PwC
End of Feb Start studying for BEC
Early April Take BEC exam, after exam start studying for FAR
Late April Apply and pay fees to sit for CFA level I in December, purchase Stalla CFA Level I Review
Mid May Take FAR exam, after exam apply for NTS (AUD & REG)
Late May Receive NTS, schedule AUD & REG, start studying for AUD
Mid June Receive BEC and FAR scores
Mid July Take AUD exam, start studying for REG
Mid Aug Take REG, start studying for CFA level I
End of Sept Receive AUD and REG scores
Early Dec Take CFA Level I Exam

2008
End of Jan Receive CFA score, apply and pay fees for Level II, purchase Schweser CFA level II Review materials
Early Feb Start studying for CFA level II
Early June Take level II of CFA exam, then
Party Party Party
Mid August Receive CFA score, then
Party Party Party
Mid September Sign up and pay fees for Level III

2009
Early Feb Start studying for CFA level III
Early June Take level III of CFA exam, then
Party Party Party

Hopefully my timeline indicates how meticulous I was in planning for the exams. If you want to be successful you have to plan 6 to 18 months in advance. Anticipate future school, work or life events that will impact your ability to study. The last thing you want is to pay $X and not be able to take the exam or, even worse, not be able to adequately prepare and fail. For the last year and half all I've done is study, work-out and, very rarely, party. I wasn't able to spend enough time with the people I cared for. I sacrificed a lot and you'll probably have to do the same.

CFA Level I - Study Notes

The CFA Level 1 exam is essentially every accounting and finance class you took as an undergraduate rolled into one exam. Regardless of your background, you will have to spend a lot of time preparing for this exam. 250 hours of studying are recommended by the CFA Institute but realistically you should put in 300 hours to be properly prepared on exam day. There is no shortcut to this exam. It's going to take time to learn the material. If your accounting knowledge is weak, review the notes I have posted in the CPA sections. These notes are simply a template to study with which hopefully helps you identify your strengths and weaknesses.

Ethics and Statistics - Formula Sheet Mini Test

Economics - Formula Sheet Mini Test

Fin Statement Analysis - Formula Sheet Mini Test

Fin Corp Finance, Portfolio Mgmt & Equity Analysis - Formula Sheet Mini Test

Fixed Income, Derivatives, Alternatives - Formula Sheet Mini Test

CPA - AUD Study Notes

I've been working on a new website and I just launched it! All my notes are now available at

www.cpa-cfa.org

Good luck studying!

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In my opinion, this is the trickiest of the 4 sections. Every answer came down to 2 answer choices. That's because the majority of answers are qualitative and the differences between the answers are one or two words. So really pay attention to the details in this section.

AUD - Study Notes 1

AUD - Study Notes 2

AUD - Study Notes 3

AUD - Study Notes 4

AUD - Study Notes 5

AUD Formula Sheet Mini Test

Here are the updates for 2009

2009 AUD Updates

Source: Becker Updates