Today (Jan 9, 2016) we are exactly 21 weeks away from the June 2016 CFA® level 1 test. If you have signed up for the test already you may be pondering if you should get started, or if you can get away with postponing it a little while longer. If you haven’t already I would recommend that you read our 3 part series: (1) commitment trumps everything else (2) study harder than average (3) study smarter than average. If you do nothing else but read and follow the advice in these 3 articles I am convinced you will start your CFA journey with the right foot first.
If you are not already aware, I also want you to know that we are running a progress group called FEA Elite, to generate a bit of friendly competition among candidates committed to passing the June 2016 test, and hopefully make the entire experience a bit more enjoyable. If you think this might be for you, send us an email answering the following two questions:
Question 1. Are you prepared to start your study program at least 21 weeks in advance of the test (Jan 9, 2016) to follow the program?
Question 2. Are you willing and able to commit to a study program requiring 15 hours a week for the first 15 weeks and 25 hours a week for the remaining 6 weeks of revision leading up to the test? Please consider other commitments (work, studies, family, social life etc.) to ensure this is realistic?
We will be glad to have you on board. We target a 100% pass rate for candidates willing and able to keep up with the progress group. But it is a two-way street: You get what you put in.
The curriculum covers 10 different topics. These topics are further broken down into 18 different study sessions, further subdivided into 60 readings. The readings contain 529 Learning Outcome Statements that you will need to master (at least most of them) by answering the 1,284 end of chapter questions as you read through the roughly 3,000 pages worth of content if you follow the printed curriculum.
If you haven’t run away screaming yet, it should come as no shock that we recommend you spend a good 21 weeks preparing for this, if you want to have a realistic chance of mastering the material in time for the exam.
So if you are convinced to get going, where should you start your efforts?
You obviously need the curriculum (if you haven’t already), and any potential abbreviated study notes that you may have decided to use. We do recommend the use of abbreviated study notes for most candidates as they can really speed up your learning and help you focus on the core areas of the curriculum. I would recommend having a look at the Wiley CFA Exam Review Products (previously known as Elan Guides).
You will also need a calculator. The options are as follows for the June 2016 test (most candidates prefer one of the calculators from Texas Instruments):
- Texas Instruments BA II Plus (including BA II Plus Professional)
- Hewlett Packard 12C (including the HP 12C Platinum, 12C Platinum 25th anniversary edition, 12C 30th anniversary edition, and HP 12C Prestige)
In addition you will need a flashcard app for your smartphone/tablet or a large stack of empty flash cards. You are going to be filling out literally hundreds of these over the next 21 weeks. I would recommend Quizlet (Android / iTunes) as a free, easy-to-use, no-frills option.
At the face of it, the smartphone option seems like a lot less hassle. The reason I stuck to “old school” flashcards when studying for the exams is that I was struggling to find one enabling me to write formulas. You can read an entire post about why I think flashcards are a crucial part of you study program here. And if you do trip over a smartphone flash card app supporting formulas, please do let me know.
A good place to start in the curriculum would be having a closer look at Ethics. You can read more about why Ethics is worth prioritizing in this piece, but suffice it to say:
- Ethics makes up a disproportionate part of the test score (15%), compared to how short the curriculum readings are (roughly 9.2% of the total curriculum).
- If you are a borderline pass, a solid Ethics score may convince the CFA Institute® to let you through.
If you are sold on prioritizing Ethics first. What is the strategy to attack this topic?
This week we are going to attack the first 2 Ethics readings. Reading 2, is by far the meatiest of the 4 Ethics readings. You could argue that reading 2 is the most important in the entire curriculum. I would by no means ignore the other readings, but the fact that this reading is the only reading in the topic area with a meaningful amount of end of chapter questions (40), likely indicates that the CFA Institute® considers this highly testable material.
My suggested plan of attack is slightly different from the other topic areas in the curriculum, so please pay attention:
I would typically recommend creating flashcards based on the LOS and then search for the answer to the LOS while going through each reading. This is pretty difficult to do in the Ethics readings because (1) the readings are very wordy (2) the LOS are so open that you would need to write a short novel to cover all bases.
For reading 1 you can answer the first LOS the usual way, something along the lines of:
“Overseen and enforced by the CFA board of governors and the Professional Conduct Program (PCP) made up of volunteer CFA charterholders”.
You can split the second LOS into two covering
- (1) the code of ethics: (1) integrity, competence, diligence, and respect (2) profession/clients > own interests (3) reasonable care, independent professional judgment (4) encourage others professional/ethical manner (5) promote capital market integrity (6) maintain and improve professional competence.
- (2) the standards of professional conduct (1) professionalism (2) integrity of capital markets (3) duties to clients (4) duties to employers (5) investment analysis, recommendation and actions (6) conflicts of interest (7) responsibilities as a CFA institute member or CFA candidate.
You can ignore the 3rd LOS in reading 1 for now as we will cover these points in much more detail in reading 2.
Now as discussed reading 2 is arguably the most important in the entire curriculum, it is however covered by just 3 LOS. As you can imagine it is nearly impossible to fill all of the information in the most important reading in the curriculum on the flip side of 3 flashcards. Instead I would recommend that you create individual flashcards for each of the 22 sub-standards of professional conduct. Here is a little sneaky tip. At the end of reading 1 you will find a complete list of the 7 standards and 22 sub-standards of professional conduct, complete with a short description of each sub-standard. I would recommend that you leverage this information to create your flashcards. Remember to put the book-, reading- and page number at the back of each flashcard along with your answer for ease of reference.
Apart from creating the flashcards, I would recommend that you study the examples in depth. We will revisit these several times throughout the study program to make sure we refine our distinctions.
Go through the 40 end of chapter questions in reading 2 answering them to the best of your ability (This should take about an hour if you answer them in the same speed that you need for the exam). As you answer the questions make a list of the questions that you find particularly difficult in your question log (if you haven’t set one up yet have a look at this post for more information) and report back on firstname.lastname@example.org. Review your answers thoroughly (particularly those that you got wrong). You will now have a customized list of the hardest questions in the reading seen from your perspective. If you build on this list as you progress through the 60 readings it will serve as a very useful tool later in the revision process.
The day after you completed the above tasks go back and redo only the “tricky” flashcards and end of chapter questions from your question log, revise your answers (particularly those that you answered incorrectly). Rinse and repeat the following day for as many days as required until you have mastered all of the flashcards and end of chapter questions relevant for the reading. This process will ensure that you are focusing your efforts on your weaknesses and pushing yourself just that little bit harder than the average competing candidate (without wasting time). Remember the pass rate was just 44% in December 2014 (and that is a fairly high pass rate compared to the recent past), so you want to make sure you are not one of the nearly 60% of candidates receiving bad news in July.
Once you have completed these steps pat yourself on the back. You have now got a solid grasp of one of the most important readings in the curriculum in the very first week, not a bad start! I realize that the study approach described may feel a little bit cumbersome at first. We are however going to apply the same study approach throughout the curriculum, so it will soon become second nature. Following this rigid study approach will ensure that your brain stays alert looking for answers to the questions and LOS statements as you progress through the curriculum, improving your chances of passing the test.
Finally, I want to make it clear that Ethics is the only topic area I would recommend that you study in the underlying curriculum, even if you have bought an abbreviated study guide. As described above this topic area has got the best trade-off between effort and exam impact, and there really is no substitute for reading the examples in the underlying curriculum. As a general rule you can apply the FEA Elite study approach irrespective if you are studying with the aid of a study guide or directly in the underlying curriculum. In either case I would recommend that you do the end of chapter questions in the curriculum, but you can “hunt” for the LOS descriptions and create flashcards based on a study guide, just as well as the curriculum.
In week 2 we are completing Ethics and starting Quants.
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