Monday, 17 August 2015

MY CFA EXPERIENCE



I wanted to wait till I pass the CFA level III exams before I write this. But then I remembered how when I was preparing for the level I exams, I knew no family member, friend who had written this exams before that I could go to for him/her to give me some tips.

So in this post, I will tell you some of the things you need to know before you go into the exams room to write the level I and II exams and some tips in preparing for them.

But first, my story:
When I was about completing my master’s degree, I came across CFA on the internet. After graduating, I registered for the level I exams. I wrote the exams on 5th December 2013; the results came out on 29th January 2014 and I failed with band 9. I do remember that I cried. But then I could not blame anyone because I underestimated CFA and did not study appropriately. The very next day I went back to studies with a different approach. I wrote level I again the day my elder brother got married on 7th June 2014. The results came out 29th July 2014 and I passed. I registered for level II immediately; sat for the exams on 6th June 2015 and again I passed. Currently, I am preparing for level III.

Now here are some of the things you need to know and some tips.

1.      CFA exams are different from any academic exams you have ever written. For me personally, university has been the easiest part of my educational life. I remember how I always started studying a week prior to exams by just going through my notes and recollecting the lecturers’ explanations. I graduated with a cumulative GPA of 3.05. The only time I really felt I had put in a lot of effort during my university time was for my thesis in which I scored 85%. But then CFA isn’t like university. Well no one told me. I thought I could manage my way out as usual. But in most professional exams, it is either you know or you don’t know. If you are going to pass the exams, you need to read, understand what you read, practice and master it. No two ways about it.

2.      Do not underestimate the exams. This is a sequel to the first point. I thought it was manageable. I told myself no matter what, I will be able to answer correctly most of the questions until I tried my hands on the mock exams and realized I was doomed. I wasn’t even able to score 50% both in the morning and afternoon sessions of the mock exams. The exams questions are tough as nails. Do not expect to have easy questions. After writing the exams, I prayed for a miracle for me to pass the exams. But then nothing could be done.

3.      The fact that you are already working in an investment firm, does not mean you will automatically pass the exams. I know candidates in the investment industry who are having a tough time trying to pass the exams. You will agree with me today that lot of things are computerized. Most investment professionals have the formulas they use in software and just need to enter the data for it to be processed. But then you cannot go into the exam room with a laptop. You will need to know all those formulas off head and review all the concepts mostly the ones you are familiar with because that is the tricky part.

4.      Start studying on time. Do not postpone the time you are going to start studying. Do not procrastinate. Start now to avoid last minute pressure and not being able to finish the curriculum. I heard a CFA candidate saying a friend of his started studying a week prior to the level I exams and he passed. He did the same and he failed. It is only possible to pass the exams with a week preparation if you are a student or just graduated and the finance course was specially designed to prepare you for the level I exams. Some universities do that. And yes, the candidate was fast to add that the friend had just graduated then.

5.      You will need to be organized in order to pass the exams. You will need to be disciplined to stick to your study program. If there is something CFA exams has taught me, it is to be a disciplined person. If I want something, I need to work hard towards it and there are no two ways. If I fail, it is because I did not work hard enough. You will also have to be focused because that is actually what will keep you going. For the next how many years until you finally pass your level III, you will have to sacrifice your weekends. I missed my brother’s wedding because I was writing exams on that day. Some family members and friends might not understand you and might think you are over exaggerating the difficulty of the exams. You might end up with little to no encouragement. Therefore you will need to encourage yourself. If you are working and also a family person, then it makes it even harder for you trying to combine these three things. You will also have burn outs when you get to difficult topics and you are not able to understand what you are reading especially the formulas.

6.      Track your progress. Personally, I had a book in which I had written all the topics, the study sessions and readings. Whenever I finish a reading, I tick. When I finish a study session, I tick. When I finish a topic, I tick. I then calculate the percentage of completion. It motivated me and alerted me if I am behind time. CFA has an online study planner. You can try that.

7.      Do active learning not passive learning. Do not just read or listen or watch. Truth is you would have forgotten more than half of what you read on the exams day. Be interactive with your study material. Personally I read and then write down a summary of every paragraph by paraphrasing it in simpler words, using drawings in order to be sure that I have understood what I have read. Then on two weeks prior the exams I go through my summary. I also make sure I answer all the practice questions in the curriculum and do the mock exams; no matter how difficult the question is and even if it takes me an hour. It is better than to rush reading and go to the exams room to meet the same question with just a change in figures and then you are not able to answer because it is too difficult.

8.      The study material you use can make or break you. I cannot tell which study materials are good or bad. I can only share my experience and that of the people I know. A study guide can work for you and not work for me. I have used CFA curriculum throughout. Nothing more nothing less. According to CFA institute, every question in the exams will be in the curriculum. I know two CFA candidates who are both using other study materials. One passed the level I after three attempts. We wrote the level II together and he failed. Another wrote the level II for the third time in 2015 and he failed again. I have also read other candidates who never opened the CFA curriculum but have passed the exams. According to a CFA charter holder, other study guides are good for level I and II. But for level III it is very risky to not use the CFA curriculum and you should combine both by at least reading the LOS, working the questions in the examples and practice questions.
9.      Do not overlook topics. Don’t see a topic as your strong point so because of that you will not study it. Do not also think that because a topic carries a small weighting you will not study it. Finally do not also think because a topic is tough you will focus on the easy ones. Personally the most challenging topic for me in both level I and II has been quantitative methods. It is actually the last or last but one topic that I study. When I read it, I feel like I am reading Chinese. I do not understand what I am reading but then I write my summary and go through it a day or two before the exams. Even when I failed the first time, I got above 50% in it. When I passed level I and II, in both I got above 70% in quantitative methods. What am I driving at? The topic that I see as tough and do not place high hopes on scoring much in it, it ends up becoming one of my best performing topics. So do not overlook any topic. Your strongest topic can disappoint you just as your weakest topic can favor you.
10.   Ethics and Professional standards is the diciest topic. I advise it should be the last topic you cover. Why? Trust me if you start with that, you would have forgotten everything you learnt on the exams day. But if you do that like a couple of weeks prior to the exams, it will be fresh in the memory. Also it is the only topic that remains somehow the same across levels. Believe when I tell you this topic can make or unmake you. Lastly do not think that just because you are ethical, the answers are going to be intuitive.

11.   Alternate between relatively tough topics and relatively easy topics. If you go through all the easy topics before you go to the tough ones, you will have burnouts when you get to the tough ones and might even feel like giving up. If you also go through all the tough topics first, it might slow your progress. If you start a topic and it looks tough, go to the next one and come back to it later on. I remember for my level II, fixed income was the third topic I had planned to study. But then when I started it, it became confusing for me so I skipped it and went on to study corporate finance. It ended up becoming the last but three topics that I studied. I scored above 70%. The only time you should delay on a topic you do not understand is when you have covered every other topic and it is the only one left.

12.   Do not jump paragraphs. I remember how I jumped a paragraph, and on exams day, a question came that was based on that paragraph. I tried so hard to remember but since I didn’t read it, there was nothing to remember. I missed 3 points that I could have easily obtained.

13.   Reward yourself after you cover every topic. A night out with family/friends will do. The next topic you will be covering might be tougher than that which you are done with. So refreshing yourself before you move on will do you a lot of good. Also, if you are reading and it is like you are not understanding what you are reading because you have been reading for long, take a break and watch some movies to refresh before going back. Sometimes even walking around the house and coming back to study helps a lot. Browsing through your Facebook newsfeed also does some good. Personally, I usually have music or radio in the background. The idea is to refresh yourself so that you do not get bored.

14.   When you fail, change your study methods. Do not make the same mistakes you previously made. If you did not start on time, start on time. If you did passive learning, do active learning. If you did not use the right material, change it. Learn from your mistakes and never make them again. My supervisor said the only time you fail a professional exams is when you do not write it. Remember I said when I failed, I cried. But then I learnt from my mistakes and changed the methods.

15.   When you pass, celebrate it, because the next level will be tougher and it is how you felt when you passed the previous exams that will keep you going. If you passed level III, celebrate even more because getting finally the CFA charter designation is another journey because of the requirement.

16.   You will need 48 months of relevant working experience. Just having any job is not enough. Four years as a bank teller is irrelevant. As you are studying and working towards passing your exams, think also about getting the relevant experience. It can be frustrating having passed all the levels and you are not eligible to the charter designation.

17.   Passing the exams will not automatically land you a job. Therefore when writing your CV, cover letter or at an interview, avoid centering all your knowledge, competence, and achievement on the CFA. Even CFA says it is wrong for you to claim that because you have passed the CFA exams and/or have the CFA designation you are more competent than the other person who hasn’t. Therefore referring to your CFA candidacy/designation once in an interview/cover letter is more than enough. Let the knowledge you have acquired through the exams give you confidence to answer questions without over stressing on the CFA. You do not need to tell the interviewer, he/she will draw the conclusion him/herself.

The list of things to know and tips is definitely not exhaustive. I hope this short one helps you. Until the first Saturday, happy studying.