The Unique Structure and Content of the CFA Level 3 Exam

Understanding the Overall Structure of the Level 3 Exam 

Before you dive into the CFA Level 3 material you need to understand a few things.

First, you should understand the core perspective the exam takes. Tactically of course, this is the only exam with a constructed response morning section. 

To get started on understanding how this translates to exam day check out these posts:

Comparing CFA Level 3 to Level 1 and 2

Structure is not the only difference between this exam and the past exams. Level 3 also has a different emphasis on the type of content.
At the highest level:
  • Level 1 was all about "shallow" plug-and-play type questions that let you get a base level of knowledge across a broad range of subject areas.
  • Level II drilled further into quantitative calculations and required a deeper understanding of applying the right framework to solve a specific problem (plus you had to pick the relevant information from long passages).
  • Level III is about linking together financial management concepts and applying them to the real world.
The heart of this test is to get you to think like a portfolio manager. Sure, calculations show up and matter, but it is all rooted in how you would apply these to different types of clients. 

But what does that mean in practice?

  • Before you even get to financial knowledge, it means you need to know how people think, feel, and react when building their investment strategy. This is why L3’s behavioral finance section spends so much time explaining deviations from the optimal, rational frameworks we’ve learned up to this point. It's also why Lesson #2 and Problem Set 1 begin with behavioral finance
  • Second, you need to combine this understanding of your client’s unique mentality with the basics of asset allocation in order to build, monitor, and adjust portfolios and investment strategies. Keeping this 1-2 framework in mind can help you connect the material across each Study Session.