By Zee
One of the most common questions we get here at 300 Hours from potential CFA candidates is: What is the CFA designation?
As this site is for potential candidates as well as for current candidates (and charterholders), it's important for us to revisit the basics and understand what exactly is the CFA designation, how the exam process is like, and its history.
Today, let's cover the exams, and exactly what you need to get done to obtain your charter, in one handy article (and one handy infographic).
One of the most common questions we get here at 300 Hours from potential CFA candidates is: What is the CFA designation?
As this site is for potential candidates as well as for current candidates (and charterholders), it's important for us to revisit the basics and understand what exactly is the CFA designation, how the exam process is like, and its history.
Today, let's cover the exams, and exactly what you need to get done to obtain your charter, in one handy article (and one handy infographic).
The Exams
To qualify for the CFA charter you first must pass the famed CFA exams, which is what the majority of this site is about.
The certification process itself is 3 exams usually taking place in the first weekend of June each year. An exception is the Level I exam, which has an additional exam slot in December. Test centres are available in major cities throughout the world - you can register for any centre to take an exam. Each exam is divided into 2 papers of 3 hours taken on the same day, one in the morning and another in the afternoon, totalling 6 hours of exam time.
The first exam, Level I, can be taken either in June or December each year and consists of a total of 240 independent multiple choice questions. Both morning and afternoon papers are identical in format and topics can appear in any paper.
The second exam, Level II, is taken in June only and has 120 multiple-choice questions arranged in 6-question item-sets. Questions can be more in depth than Level I because of the item-set format and generally requires more reading, hence the reduced number of questions compared to Level I.
The third and final exam, Level III, has a constructed response format in the morning paper, more popularly referred to as ‘essay questions’ by candidates. Questions are more open-ended and candidates are required to show workings for calculations and other reasonings. The afternoon paper takes a format similar to Level II.
To qualify for the CFA charter you first must pass the famed CFA exams, which is what the majority of this site is about.
The certification process itself is 3 exams usually taking place in the first weekend of June each year. An exception is the Level I exam, which has an additional exam slot in December. Test centres are available in major cities throughout the world - you can register for any centre to take an exam. Each exam is divided into 2 papers of 3 hours taken on the same day, one in the morning and another in the afternoon, totalling 6 hours of exam time.
The first exam, Level I, can be taken either in June or December each year and consists of a total of 240 independent multiple choice questions. Both morning and afternoon papers are identical in format and topics can appear in any paper.
The second exam, Level II, is taken in June only and has 120 multiple-choice questions arranged in 6-question item-sets. Questions can be more in depth than Level I because of the item-set format and generally requires more reading, hence the reduced number of questions compared to Level I.
The third and final exam, Level III, has a constructed response format in the morning paper, more popularly referred to as ‘essay questions’ by candidates. Questions are more open-ended and candidates are required to show workings for calculations and other reasonings. The afternoon paper takes a format similar to Level II.
How Long Do I Need to Get the CFA Charter?
The entire set of exams can be taken in a minimum of 18 months (if you start from the December Level I), to an unlimited maximum time period. On average candidates take 4 years to complete them. Candidates can choose not to take an exam a particular year and pick up where you left off when you feel like it. Also, as you may have heard, pass rates are low and if you fail you have to retake the level to progress. Read here to see how one of our regular contributors, Sophie, did hers in 18 months.
Study Format
Despite the tough pass rates and numerous exams, the CFA exams can be taken in tandem with a full-time profession as it uses a distance-learning approach. Candidates mostly adopt a self-study format, although a significant portion utilizes third-party materials and courses to supplement their study. It is generally considered normal practice to hold a full-time position while studying for the CFA exam.
Obtaining Your Charter & Joining the CFA Elite
There is some confusion on membership types in the CFA Institute and its relevant regional CFA societies, and rightly so - available information can be fairly difficult to find, confusing, and sometimes omit crucial information.
The CFA Institute is the body responsible for maintaining and executing the CFA charter, CFA exams and curriculum. All membership applications require two sponsors to recommend you, one of which is a Regular Member of the CFA Institute, and the other your current supervisor. Memberships can be viewed in as 3 main types:
CFA societies are a local version of the CFA Institute - they are a separate body but exist to maintain a network of CFA charterholders and others involved in the investment profession. You will need to apply to a local society as well when you apply for membership to the CFA Institute.
CFA societies often organize seminars, industry talks, social events and act as a career and industry network for your local region, so most of your networking benefits from the CFA program stem from being active in your local society.
Work Experience
In order to qualify for Regular Membership and obtain your charter, you'll need 48 months of 'relevant work experience'. The CFA Institute is looking for relevant industry experience to investment and investment decision making. See this article on how to write your work experience entry, and this article on how to find out if your work experience is considered relevant.
Keeping Your Charter
To maintain your charter after you earn it, you will need to continue to be a member of the CFA Institute. Should your membership expire you will no longer have the right to use your designation. If you forget to pay your membership fees one year and your membership expires, don’t worry, you can reactivate your membership at any time.
Note that although it is required to maintain membership with the Institute, this requirement does not apply to your local society. After your first year if you wish you can choose to let your local membership expire and continue to be a member of just the CFA Institute to maintain your charter.
Other Recommended Reading
Some candidates know surprisingly little about the process they are in the middle of, so we've included many recommended articles to read in the various sections above. If you're interested in finding out even more, these may be helpful:
We're constantly trying to think of better ways to better prepare our readers for the exam, and I hope this article has done so. Let us know what you think in the comments below!
The entire set of exams can be taken in a minimum of 18 months (if you start from the December Level I), to an unlimited maximum time period. On average candidates take 4 years to complete them. Candidates can choose not to take an exam a particular year and pick up where you left off when you feel like it. Also, as you may have heard, pass rates are low and if you fail you have to retake the level to progress. Read here to see how one of our regular contributors, Sophie, did hers in 18 months.
- CFA in 18 Months: How & Why I Did Level I
- CFA in 18 Months: How I Defeated Level II
- CFA in 18 Months, Part III - How I Survived Level III
Study Format
Despite the tough pass rates and numerous exams, the CFA exams can be taken in tandem with a full-time profession as it uses a distance-learning approach. Candidates mostly adopt a self-study format, although a significant portion utilizes third-party materials and courses to supplement their study. It is generally considered normal practice to hold a full-time position while studying for the CFA exam.
- 10 Crucial Study & Schedule Tips for Dec Level I
- How to Increase Your Productivity by Utilizing the Right Kind of Study Music
- 4 Steps to Effective CFA Studying During the Work Week
- A Simple Tweak to Becoming More Disciplined in Your CFA Prep
Obtaining Your Charter & Joining the CFA Elite
There is some confusion on membership types in the CFA Institute and its relevant regional CFA societies, and rightly so - available information can be fairly difficult to find, confusing, and sometimes omit crucial information.
The CFA Institute is the body responsible for maintaining and executing the CFA charter, CFA exams and curriculum. All membership applications require two sponsors to recommend you, one of which is a Regular Member of the CFA Institute, and the other your current supervisor. Memberships can be viewed in as 3 main types:
- Affiliate Membership - no exams or work experience required
- Regular Membership - pass your Level I exam, acquire 48 months of work experience and you can qualify as a Regular Member
- Regular Membership as a Charterholder - pass all 3 exams in addition to the Regular Member requirements to receive your charter
CFA societies are a local version of the CFA Institute - they are a separate body but exist to maintain a network of CFA charterholders and others involved in the investment profession. You will need to apply to a local society as well when you apply for membership to the CFA Institute.
CFA societies often organize seminars, industry talks, social events and act as a career and industry network for your local region, so most of your networking benefits from the CFA program stem from being active in your local society.
Work Experience
In order to qualify for Regular Membership and obtain your charter, you'll need 48 months of 'relevant work experience'. The CFA Institute is looking for relevant industry experience to investment and investment decision making. See this article on how to write your work experience entry, and this article on how to find out if your work experience is considered relevant.
- Is Your Work Experience CFA-Relevant? Here's How To Check
- 7 Must-Know Tips to Getting Your CFA Work Experience Approved (Plus a Bonus Tip!)
Keeping Your Charter
To maintain your charter after you earn it, you will need to continue to be a member of the CFA Institute. Should your membership expire you will no longer have the right to use your designation. If you forget to pay your membership fees one year and your membership expires, don’t worry, you can reactivate your membership at any time.
Note that although it is required to maintain membership with the Institute, this requirement does not apply to your local society. After your first year if you wish you can choose to let your local membership expire and continue to be a member of just the CFA Institute to maintain your charter.
Other Recommended Reading
Some candidates know surprisingly little about the process they are in the middle of, so we've included many recommended articles to read in the various sections above. If you're interested in finding out even more, these may be helpful:
- 8 Myths & Misconceptions You May Have About the CFA Exams
- 8 CFA Candidate Mistakes You Could Be Making
We're constantly trying to think of better ways to better prepare our readers for the exam, and I hope this article has done so. Let us know what you think in the comments below!
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