The CFA exam is undoubtedly challenging. It's why one of the most commonly asked questions for prospective candidates is, “How much time should I spend studying?”
The right answer to that question is, “It depends on many personal factors.” Everyone should take a look at their situation and decide the amount of risk they want to take. It will help you decide how much study time is required for the CFA Level 1 exam.
We understand that it's not easy to get started so here's a few pointers to get you started:
Your Finance Background
The time you need to study depends on your educational background. The course includes both introductory level finance material and advanced level topics such as real options valuation and portfolio diversification. If you were a top-tier finance student, you could spend a lot less than the recommended study time (300 hours per level) and pass with ease. For example: 3 hours per day, 7 days a week is about 250 hours or 11 weeks. This commitment may be more than enough for those who've just graduated from an economic/finance background. However for many, three months is considered a minimum. So it varies if you're a professional finance/accounting background or if you aren't. This isn't to say that non-finance graduates shouldn't go forward for this exam, of course they should! Just take into account that you'll have to cover more unfamiliar material so allot yourself more time to do so.
Your Academic Abilities
Assessments like multiple choice and true/false help good test takers to “game” the system by using test-taking tricks and strategies to increase their odds of guessing right answers. Level 1 is a three-option multiple choice exam where there are only three possible answers per question. This means that a “good test taker” might score well in a standard multiple-choice test using their strategies. If you excel in this category, then you may not need as much time as those who don't. Here’s a couple of things that help being a good "test-taker":
- Low test-taking anxiety, which allows to perform better in the moment
- Well-informed schemas, which provide greater context and will enable them to make more educated guesses
- Study habits – retrieval practice, repetition, spacing the learning out, etc. – that help them learn, remember and recall knowledge more efficiently
This is also a consideration to undertake. The more time you have each week to study, the more flexibility you have. Those who are working full time, have a family or social accountabilities have a lot less flexibility. Moreover, you have to choose a prep course that offers the platform and content that meets your individual needs. Those with more responsibilities find self-paced digital formats easier to balance versus lectures and lengthy videos.
The Level of Risk You're Willing to Take
Studying for the CFA exam requires A LOT of your time, money, and personal sacrifice. Due to the vast material covered on the exams, the CFA Institute suggests that candidates begin to prepare for each level at least six months in advance, and recommends approximately 300 study hours per exam.
In recent years, pass rates for the first two levels are well below 50%. The 10-year weighted average CFA Exam pass rate for Level 1 is 38%, for Level 2, 43%, and Level 3, 54%.
Moreover, it takes the average candidate four years to pass all three levels of the exam to obtain the certification. Thus, the data suggests that this is NOT an exam that candidates should take lightly. This is why a good preparation plan is critical to your success.
On average, CFA candidates spend 323 hours preparing for the exams, with Level 3 candidates reporting the most time spent. With all of the factors mentioned, it might seem overwhelming but a thoroughly structured plan will help alleviate any concerns or worry. Serious candidates DO need to put in lots of study time. However the amount of time can vary depending on these factors.