How hard is the CFA Level 1 Exam?

Are you considering getting your Chartered Financial Analyst (CFA) designation?  Are you curious to how hard the process is and what the successes rate is for candidates?  I’m writing this post to try and answer some of these questions.  I completed the Level 1 Exam in December 2011, so a lot of the fears and information is still fresh in my mind.

So, how hard is it to pass the CFA Level 1 Exam?  Well, simply put… HARD!  But, this is a good thing.  It keeps the CFA designation credit worthy.  Within the whole investing community, worldwide, there are only 100,671 charter holders (taken directly from CFA Institute website).  Compared to the millions who work in the financial industry, this is a very small percentage.

So what is so hard about the exam?  What I found the hardest about the exam was the breadth of knowledge required to learn and retain.  There are ten different topic areas including: Alternative Investments, Derivatives, Equity Investments, Ethical & Professional Standards, Quantitative Methods, Economics, Corporate Finance, Financial Reporting and Analysis, Fixed Income Investments, and Portfolio Management. For the Level 1 Exam, each of these topics is basically a University 101 course, with some covering multiple courses, such as the Economics section covers both Macro and Micro Economics.  Studying for the CFA Level 1 Exam is kind of like your first 3 semesters of business school.

To those who have gone through university, which you have to be at least in your final year to start writing the CFA, you will find studying for this test a little harder and different than university exams.  The biggest difference is that there are no crib sheets.  So that means all the formulas and lists you would normally be able to put on your crib sheet have to be engrained in your head. This is another factor that makes the test harder than most university level exams.

One of the things I found most scary about going into the exam was the traditionally low pass rate.  Here are the pass rates for the CFA Level 1 Exam for the past ten years:

  • 2011 – 39%/38%
  • 2010 – 38%/36%
  • 2009 – 46%/34%
  • 2008 – 35%
  • 2007 – 39%
  • 2006 – 40%
  • 2005 – 35%
  • 2004 – 35%
  • 2003 – 41%
  • 2002 –44%
  • 10 Year Average – 39.7%

And on top of this, these numbers only reflect those who actually sat down for the exam.  There are many more candidates who don’t even sit for the exam.

The way CFA Institute grades the exams can be a factor to these pass rates.  As you can see, pass rates are usually between 35% and 45%.  The Institute changes their criteria or passing mark each year.  This allows them to control how many people can hold the charter.  Another tricky thing is that you never really know your mark.  There are three sections for grades: 1) <50% 2) 50% – 70% and 3) 71%>.  So, you get a vague idea or range, but that’s about it.  Take a look of this example of someone who passed the exam:

  • < 50%: 1 section in this range
  • 51% to 70%: 3 sections in this range
  • > 70%: 6 sections in this range

As you can see, the range of what the possible grade percentage is would be very wide.  This makes stating an average passing grade really hard.

So how well do you have to do to make the cut?  Well I personally think that getting over an 80% should get you a pass.  This is the strategy I used to pass the first exam.  Actually, I did questions and practice exams over and over until I reached a 90% average.

This post may make the CFA Exam seem scary and un-passable, but it is.  The key is that you have to work really hard at it.  I have heard from many colleagues about people putting in 3 hours a day after work to study for it, or studying for over six months straight.  It is an exam that requires a lot of focus and effort, but the pay off in the end can really be worth it.

In my next post, I’m going to share the techniques I used to study for the exam.  I’ll show you how long it took, how many books I read, which supplementary material I used, how many questions I did, and how many mock-exams I completed.

So if you are planning to start your CFA career, keep in mind that it is a difficult journey, but also keep in mind that it is possible with effective studying and a lot of hard work.

Thanks for reading and good luck out there!



  1. but where do i get practice exams to start practicing?

    1. Hey Shakaama, I used Schweser to get the practice exams. You have to pay for those, but they are great. I know the investopedia website used to have free study material. Try that out to start at least. But if you are going to be taking the exam, I suggest a study package. It can be a bit pricy, but I found it to be great help myself.

      Good luck out there!

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