Why Knowing the Material is Just Step 1 to Passing the CFA Exams

Knowing the CFA Material Is Not Enough

In the course of running our Level 3 class I've personally graded problem sets from dozens of Candidates. 

From that I've seen some common themes that are useful across all of the CFA levels. 

In this post I share an email I sent a Candidate who knew the material cold but still managed to throw away points left and right. 

The problem of wasted points isn't limited to Level 3 Candidates struggling with the constructed response (morning essay) section.

CFA Level 1 and 2 candidates also tend to make a series of simple mistakes that cause them to lose points in their strongest areas. 

It's not that these missed points mean you'll end up "failing" this section. Instead what happens is that you fail to bank points to make up for any unexpected (or expected) loss of points in another, weaker section.

Now we've gone over the math behind being a little less bad before, but this time, instead of talking about knowing your weaknesses we want to focus on how to maximize your strength.

The below email, sent to a real student of ours after a problem set around the Institutional IPS, should be a helpful guide.

How to Maximize Points during CFA Exam Day

Hey [].

Glad the video was helpful.

Your feedback is attached. It's pretty clear you know this material. If you perform this well on every section you'll clear the morning section.

Which is why the next part is important.

Because you lost more points in the section than you needed too. And that can hurt you on the margin.

Now the lost points are mostly easy things to correct. It's small stuff like being more specific and using details and numbers from the passages. Note for L1/L2 Candidates this could be failing to see a detail in a passage or ignoring that one last step and picking the 'trick' answer.

In your feedback I've highlighted the specific areas this happens. But here I've also listed more of the fundamental errors I see you making.

This is all good news by the way.

You'll be really cruising with a few more cracks at this. You are already doing most things really well, and hitting some details like labeling #s (good practice) and mastering time horizon explanations that turn part of earning points into a pure execution game.

Basic Lessons in Scoring Points

But a few core lessons can solidify this:

  • Always use specific #s from the passage to "prove" things. For example you state "strong operational performance..." but miss the chance to use "lower D/E and higher ROE" to justify that statement. Maybe that's the difference between 3/3 and 2/3 on that simple sub problem.  Doesn't seem like a big deal, but it's 100% vs. 66%
  • To pass you want to win each mini problem. You want to win in terms of both max points, but also minimizing time spent per problem (Banking time in one section compounds across the "portfolio")
  • You can also increase the precision of your answers by pointing out "core words." Things like actually writing"correlation" when talking about diversification of risk or being precise with the return objective will serve as guideposts for the graders. Note the L1/L2 equivalent here would be to truly understand the problem and whether it requires calculation or simply intuition