How to Recover from a Level I CFA® Exam Failure

Spending 6 months of your life studying for an exam only to find out that you failed can feel like an unrecoverable setback.  When you consider that you still need to pass two more exams that are even harder, it’s enough to make you never want to go near another practice question ever again.

Before you close the books permanently on your journey to becoming a CFA charterholder, it’s really important to take an honest look at what may have gone wrong in your initial study plan.  This article examines the major reasons why someone might fail the first level of the CFA exam and offers some insight and context for how you can address those issues and successfully continue down the challenging, but ultimately fulfilling path of becoming a CFA charterholder.

Stop Thinking About It

Your first natural instinct after failing such a challenging test might lead you to over analyze the reasons you failed.  Rather than grind yourself into a toxic stew of self-doubt and self-criticism, stop thinking about the exam and take an extended break.

Most likely you spent the last six to eight months balancing the demands of a full time job and trying to jam an extra study session into your schedule whenever a free minute or two appeared.  That’s an incredibly exhausting and stressful way to live.

Give yourself a break.  Take a vacation.  Go to the beach.  But do something that doesn’t involve the CFA exam or studying.  You’ll be amazed at how much clearer your mind will be if you give it a month rest from that frantic schedule you’ve been keeping.

Take an Honest Assessment

Now that you’ve had time to focus on more enjoyable things and gave your brain a rest, it’s time to ask yourself a few honest questions.

Why did you decide to study for the CFA exam?  Do you have a natural interest in the material or do you just see it as a way to earn more money and get an edge in your career?

If you have a natural interest in some or all of the topics on the CFA exam, you already have an important edge for passing the exam.  The CFA Program curriculum covers over 4,000 pages of material.  If you have a natural interest in some or most of that material, you’ll have a far easier time committing it to memory than someone who doesn’t have a natural interest.

What if You Don’t Have a Natural Interest?

If you really don’t have a strong interest in the material or your only studying because you think it will benefit your career, you need to really consider whether you should re-take the test.

No matter how much you push yourself, your subconscious will work against you because every minute of studying will generate a small bit of internal resentment that you have to sacrifice so much of your personal time towards something that you’re not fully committed to achieving.

Does Natural Interest Equal Passing?

Unfortunately, a natural interest in the CFA exam topics will not be sufficient to get you to a passing score.  What your natural interest can do for you is to give you the stamina and drive to continue studying even when you would rather be doing anything else except studying.

When someone fails the first level of the CFA exam, its usually due to a few common reasons:

• Not spending enough time studying.
• Inefficiently using your study time.
• Difficulty mastering a few important topic areas.

Not Spending Enough Time Studying

CFA Institute recommends 300 hours of studying for each level of the CFA exam.  Although that sounds like an overwhelming number of hours, let’s break that down into a basic 6-month study schedule.

Let’s assume you keep the following weekly study schedule:

• Weekdays: 2 hours per night on Monday, Tuesday, Wednesday, and Thursday.
• Weekends: 2 hours on Saturday and 3 hours on Sunday.

This schedule gives you 13 hours of study time per week, 52 hours per month, and 312 hours of total study time.

How Did You Compare to that Schedule?

The first question you need to ask yourself is how your actual study time compared to that example?  If your actual study time was less than 300 hours, the next question would be by how much?

If you studied less than half of the recommended 300 hours, the reason you failed the CFA exam was simply because you didn’t put in enough time.  So this issue isn’t so much whether you are capable of passing the exam, the issue is more about whether you can commit to the necessary amount of time it takes to master the exam.

Not everyone can commit to that amount of studying while working full time.  If you have particular life commitments going on that you know will prevent you from studying, the answer might be to wait for another year and re-take the exam when your schedule is less chaotic.

What if You Studied More than 300 Hours?

If you studied for the recommended amount of time, but still didn’t pass the exam, it’s important to evaluate how you studied and explore whether you can make your study time more efficient in the future.

Should you Use the CFA Institute Curriculum?

The most common question new students have is whether to study with the original textbooks or use more efficient other preparatory materials. This is a very important question because it impacts how efficient your study time will be utilized.  It’s also important to recognize that the answer to this question is different for everyone and depends on each person’s unique learning style and preferences.

Before answering this question, carefully consider what your experience is with the major topics on the CFA exam.

• Were you a finance or accounting major in college?
• How many advanced accounting and finance classes did you take?
• Did you like accounting or finance classes better?

If you have a bachelor’s degree, but didn’t major in Accounting or Finance, you can still register to take the CFA exam, but you’re learning curve will be incredibly steep.  For students in this category, you may need to study well in excess of the 300 hours and should spend extra time reading the original material from CFA Institute textbooks in addition to any CFA exam prep course you might consider.

For students that already have a strong background in some of the accounting and finance material, it might make sense for you to consider a mix of study methods that might be more efficient for you.

It’s really not a smart use of your time to re-read topic areas that you already have a strong mastery.  The key to using your time more efficiently is by regularly practicing test questions from a quality prep course provider.

Test bank software will include detailed statistics breaking down your strengths and weaknesses by topic area.  The diagnostic statistics are a gold mine of information to help you plan your study schedule.

Structuring an Efficient Study Plan

Rather than starting at the beginning and plowing through each topic area, start by ranking each topic area in order of difficulty for you.  Since you’ve already taken the exam and failed, you already know which topic areas are easy and which topic areas are more challenging.

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Attacking the Hard Topics

After you have created your list, split your list into two categories.  The easy topics and the hard topics.  For the hard topics, you should go back and re-read the original material from CFA Institute for those sections.

The key is to break down the hard topic areas into smaller, bite sized pieces.  Go and read each topic in small sections.  After reading that section, immediately practice questions from that topic area on your test bank software.  The more frequently you do this the better.

By breaking those topic areas down into smaller sections and repetitively practicing those sections, the material will be more easily retained in your permanent memory.

Efficiently Mastering Easier Topics

Instead of reading the original CFA Institute material for easier subjects, your time will be better spent by reviewing study notes for those sections.  There is just no reason that you need to spend extra time re-reading sections that you already know well.

The key with the easier topics is to pair your study notes with practice questions.  By reviewing your results and the diagnostics, you’ll be able to see how well you perform over time in the easier topic areas.

What you might find is that you have difficulty with very small subtopics within a particular topic area.  You might get stuck on inventory accounting or foreign currency translation.  By recognizing your weakness might be limited to a question type rather than a topic area, you can then go back and re-read the original text to help you solve those particular question types.

Difficulty Mastering Certain Topic Areas

Some finance students might have trouble with accounting.  Other students might find derivatives to be a total mystery.  If you find that you’re getting stuck in much larger topic areas, you might want to step back and try a different approach.

It might make sense for you to take a few extra accounting classes at your local university in the evening.  Intermediate accounting is tested very heavily on the CFA exam and you might benefit by taking that class in a traditional university setting.

You can easily take these classes at night and many employers may be willing to reimburse your tuition costs.  It might take up more time than you might like, but in the long run, it will benefit you in the exam and in your career.

What you Can Learn from Failure

The important thing to remember from failing level I of the CFA exams is that you’re in very good company.  CFA Institute reports that it takes an average of 4 years to get through all 3 levels of the CFA exam.  That means most people fail at least one level of the exam, but still go on to earn the CFA charter.

It may be hard to stomach, but you should look at failing the CFA exam as a positive thing.  If you can develop the stamina to fail level I and continue to march forward and re-take the test again, it will help you build and develop the fortitude needed to withstand the future challenges that you will inevitably face in your career.

You might be in a situation where you lose your job due to an acquisition.  You might be a specialist in a field that becomes automated or outsourced.  In any of those situations, you might need to find a way to re-invent yourself and switch career paths.

The only way you’ll be able to survive and eventually thrive when challenging situations appear is to draw upon that same stamina and fortitude you used when you re-applied to sit for the same level of the CFA exam after having failed the first time.

The key is to take an honest inventory of why you failed and then create a plan to address those deficits.  The real question you need to ask yourself is whether you’re the type of person that is strong enough to accept a temporary setback and not let that change your resolve to accomplish your goals.

If you really think about it, someone that fails a section of the CFA exam and still goes on to earn the CFA charter is probably a more valuable asset to a firm than someone that passes all 3 levels on the first try, but doesn’t have any real experience in dealing with setbacks.

That first employee will be better equipped to handle pressure and challenges, while the second employee may be liable to fold under pressure the first time they navigate something that doesn’t go their way.

This article was written by Lou Haverty, CFA.  Lou is the Founder of Financial Analyst Insider which is dedicated to helping young professionals advance their careers.