Four Thousand Splendid Suns

I’m getting a good bit of email concerning how much time it takes to prepare for the CFA exam & earn a CFA so I thought I’d go ahead and do a blog entry about that today.

(1) How long does it take to prepare for the CFA exams?

Various sources quote a minimum of about 250 hours per exam, but it depends on your academic background and experience.

(2) How long does it take to earn a CFA?

About three years would be the time frame for someone who passes all of the exams on the first try. That evidently isn’t common though, so probably add on an extra year too. The Level 1 exam is given twice a year while levels 2 and 3 are only given once per year. I don’t know if anyone has actually done this, but conceivably a real investing guru could sign up for, take, and pass Level 1 in December with no preparation. Then turn around and pass Level 2 six months later in June, and Level 3 one year after that the next June. Total time in program: 1.5 years!

Good ethical standing & 4 years of professional work experience are also required to earn one’s CFA. Luckily, you can earn that work experience before, during, or after the exams. More on the work experience requirements here.

CFA Time

(3) Is there a certain time frame in which you have to pass all 3 exams?

A nice thing about the program is that there is no time limit for completion. And you can keep re-taking the exams with no penalty until you pass.

In my mind, this really takes the pressure off. I don’t have to worry about a low GPA or bad transcript if I have to take each test numerous times to pass. However, the the cost of the exams does give one a financial incentive to nail each on the first try. But if work or just “life” gets in the way and you don’t end up having the time to prepare properly for the exam you signed up for, no real worries. Take it for the practice and see what happens.

To be sure, it probably makes you a more attractive job candidate if you can say you passed each exam on the first try. I want this process to continue being enjoyable so if it happens – great – if not…

(4) I’m coming from an engineering background like you, how much harder does that make it?

You may not be as much of a newbie as you think. As a minimum, your strong math skills will be a plus. Many fields of engineering require a solid foundation in probability theory & stochastic processes. Flipping ahead through my current study guide, I see chapters related to this which will probably be a breeze.

But coming from another field does have its challenges. In some of the practice problems in the ethics section, I had difficulty initially understanding the exact scenarios being presented due to my unfamiliarity with some of the financial terminology. Luckily the study guides have a great glossary. 🙂

Finally, if you have an interest in investing, you’ve probably read a few finance books that give you some feel for this stuff – albeit at a much more watered-down level.

In Conclusion…

Just because I needed a catchy title for this blog entry, I’ll close by saying that earning a CFA – at least in sequential order – may take approximately 4000 days. That’s:

    (a) 4 years to get your college degree,
    (b) 3 years to pass the 3 CFA exams, and
    (c) 4 years working to get the necessary professional experience.

… with some lucky souls (most candidates?) fulfilling the last two almost simultaneously – meaning only 3000 splendid suns.

Back to the books…

Update: I finally passed all the CFA exams and wrote an eBook about the program. If you’re interested, click here.