I’ve been getting lots of emails & comments concerning the use of third-party (non CFA Institute) preparation materials for the exams. So I thought I should do an article on this, but… not having actually used any third-party materials so far it’s obviously difficult for me to do more than just speculate.
But I won’t let that stop me…
In ideal CFA world, you just learn what’s in the study guides provided by the Institute and you’re good to go for the exam. In the real world (or so I’m told) almost everyone uses additional materials like those provided by Schweser and/or Stalla as most consider them an important key to passing.
There are a variety of reasons as to why. I’ll pick perhaps what I think are the top three. Comments from the more experienced readers are always encouraged!
#1: To save time
So here I am 7 months before the exam. I’ve been studying for about 2 months and I’m still in Vol. 1 (of six volumes). I’m nearing the home stretch now (pg. 425 of 525). I think…
Wouldn’t it be nice if you could get a sort of Cliff’s Notes for the CFA exams – where someone has taken the approximately 3500 pages of each level’s curriculum and boiled it down into something you can work through a little faster?
I think this blog entry from Schweser sums it up quite well. The CFA Institute provides essentially textbooks containing the core theory of the material, not summarized study notes like the third-parties.
Schweser doesn’t claim that their study notes are a substitute for the CFAI curriculum, rather a complement. But I would guess that if you’ve already learned the material once at the deeper “textbook” level – maybe from your college courses or perhaps from a first (long) pass through the CFAI curriculum – and what you mostly need is to just review and refresh, these third-party study notes may be a much faster way to prepare.
#2: To supplement difficult material
This seems a little paradoxical given what I wrote above. If you’re struggling with a particular topic, wouldn’t it be best to go back to the long, detailed explanations (i.e. the CFA textbooks) to re-learn the theory?
Maybe, but sometimes it can be helpful to just get the same material explained in a different way. And lest you think that these third-party companies offer only study notes, rest assured they offer much more if you have the $$$. We’re talking online video webinars where you can ask live questions of instructors (who also have office hours).
#3: To get more practice problems
Similar to my engineering classes, it seems that knowledge of the theory is not enough by itself to pass the exams. One also needs to be able to work the problems at bullet-train speed! Level 1 is 240 questions over 6 hours – so only 1.5 minutes per question.
I used to have a big problem with tests given in this fashion as it always seemed the test-givers were using time to artificially lower the number of passes. But I understand that working efficiently is also an important skill in the workplace…
In these situations I’ve found that the more practice problems you can get the better. And the ones from third-party sources often include questions from prior CFA exams!
Here’s what worked for me in college. Take your large set of sample problems, park yourself in front of a dry-erase board, and work, re-work, and re-re-work the problems in random order until they’re so ingrained in the subconscious that you could still get the correct answers quickly after splitting a bottle of wine with Schmoopie over dinner.
My lack of a background in finance is leading me to focus only on the CFA textbook material for now. My priority from day one has been to learn the theory first (so I can actually apply it to my personal investing), and pass the exams second.
But I do definitely want to pass! 🙂 So I’ll probably defect to third-party once I make one complete pass through the textbook curriculum…