Thursday, July 31, 2014

Getting Ready for the Next CFA Exam

Many AIM alumni have just finished taking one of the CFA exams and this week found out their results. Now they must start planning for the next CFA exam. The following is from a semimonthly news update called The Finance Professionals' Post which is provided by the New York Society of Security Analysts.

CFA Exam Preparation: 3 Crucial Mistakes You Must Avoid

Just starting out on your CFA preparations and looking for some guidance? Many candidates aspire to aim for passing the CFA exams in three years.

While hard work and effort are a prerequisite, here are a couple of mistakes I made but wished I knew beforehand during my CFA journey - I hope it helps  you avoid the usual pitfalls of taking on such a challenging qualification!

You've heard of this old saying time and again, and it certainly applies to your CFA study preparation too. Many candidates fail because they just thought they could "wing it," and take their time studying the materials without sticking to some sort of a strict schedule.

Or worse, some candidates even took time to do a simple study plan, but ignored them anyway during the revision and start to fall behind schedule. If you know you're behind, perhaps because you underestimated the work load or it took more time to understand a tricky concept, you need to make it up in your studies to ensure you catch up with your schedule.

Why? Because finishing on schedule, specifically one whole month before the exams (which I highly recommend), gives you ample time to do tons of practice papers, and contributes the other 50% to your learning and grasp of material. Yes, reading and covering the syllabus is just half of the work (and still very important), but the real test of your understanding of CFA concepts comes when you're tested under timed conditions.

I have a degree in Economics and when I first took December Level 1, I remember smirking when looking through the economics section of the materials. Guess what? I paid the least attention to that section and scored the lowest band for that topic. "Easy," eh?
Overconfidence can be a dangerous thing for the CFA exams. In fact, in a 2012 study, we found that candidates with no finance background (in prior education or work experience) significantly outperformed candidates who had prior finance education for the CFA exams. 

This tells us two things:
- Complacency negatively affects your pass rates, which is common among candidates with prior finance education (but not working in finance currently). Skipping or "spotting" topics is not advisable, perhaps only when you're doing a last minute review (which shouldn't happen if you're learning from above).

- Having no prior background in finance nor work is actually an advantage.

After months of hard core studying, many candidates mess things up by not preparing logistically for the big day. You'll need to arrive early and on time, to avoid being flustered and distracted mentally when you get let into the exam hall late.

Do make sure you've brought everything required and have figured out how you're getting to the exam hall - you'll need to factor in extra time for the crazy traffic these places have during the CFA exams. It's also wise to bring your own food for lunch to avoid those massive lunch queues so you can eat at your own time far away from the chaos.

I hope this helps. Good luck!