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. πŸ™‚

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.

18 thoughts on “Four Thousand Splendid Suns”

  1. Hey, you realize that when you write “earn a CFA” you are not complying with the Code and Standards πŸ™‚ Questions on ethics do count when you on the edge of passing/failing the exam.
    Otherwise, it’s a great blog and I visit this site everyday to check whether there’s something new. πŸ™‚ Great work!!!
    Take care.

  2. Aaaargh – you’re right. πŸ™

    From the Ethics section of the study guides…

    …the CFA and Chartered Financial Analyst designations must always be used as adjectives, never as nouns or common names…

    So make that “earn a CFA designation”!

    Thanks Eva!
    Lumilog

  3. Good job! Your blog fend off some of the scariness of those postcards!

    But the countdown….

    I’m from China. Taking the CFA I next June. I’ve got no financial background, either.

    Like your idea about learning private investing from the CFA, but my friend said you can’t learn much about it, if you stick to the exam. He’s a CFA II holder, and is fighting for the III.

    Good luck! I’ll share more of my experience in the replies, if you like.

  4. Thanks Paul – and good luck to you too.

    So far I think the discounted cash flow and time value of money stuff would help someone in analyzing intrinsic value of stocks as present value of future cash flow – but I had sort of learned this already from Phil Town’s Rule #1 book.

    Yes, please comment as often as you like! πŸ™‚
    -Lumilog

  5. Hi, very interesting to blog your study process. I am a level III canidate. I will start studying for the June exam in Juanuary. if you have not taken any college classes in Accounting, I would say the financial statment analysis will give you the bigest head ache. so leave yourself some extra time for that. And buy the Schweser study notes. they are the key. Still read all the assigned material but you can use the notes to take your own notes and the extra pratice problems and practice exams are a great help. Its worth the investment. I am going to try and keep following this blog so if you have any questions about study tips or even the material do not hesitate to ask.

    note to Paul – “CFA II holder” is a violation for the standards of practice.

  6. Thanks for the comment Mick and congrats on your success so far.

    No accounting classes under my belt & I had sort of guessed (but you confirmed) that the study guide for financial statement analysis would be challenging. For my own private investing, I do examine some parts of company financial statements but much of it I don’t understand and therefore ignore. I’m looking forward to that no longer being the case!

    Thanks for the tips on the Schweser study notes. I will probably end up investing in these but my current goal is just to find enough time between now and June to at least read every chapter in the study guides and work and understand all practice problems. Hopefully I’ll do this with time left over to turn to other sources for add’l preparation.

    -Lumilog

  7. Hi there,

    Just a word of advice. Don’t start your study with ethics cos by the time you doen all your other reading you probably forgot most of ethic you studied already. This is an advice I got from other ppl who had passed the exam.

  8. Btw, I haven’t touched this material for a long time. I came from EE backgroup as well. The difference is that I did my undergraduate in EE but didn’t have much pure engineering work experience. After 1 short year working as an engineering sales, I went back to school and did my master in accounting and just passed Canadian CA exam and working in an accounting firm waiting for my work experience.

    I am thinking of taking CFA now cos I registered it long time ago (3 years) and never had a chance to finished it.

    So good luck for all of us.

  9. Thanks for the comments CS. And good advice on the ethics section.

    I’m hoping to have time after a 1st pass through the study guides to go back and review – or work problems from 3rd party sources.

    However with the speed at which I’m currently moving, I don’t know if I will indeed have any time left over. πŸ™

    -Lumilog

  10. I am planning on the Jun08 level 1. Schweser is enough or should I be reading other books as well? I have no accounting background

  11. Lumilog i read the CFA site and the requirements to be chartered are a BA degree OR 4 years work experience. So i believe that significantly lowers the time needed to be designated by your calculations

  12. Great information on people trying to break in from non finance fields. I’m reading another book “Capital Markets for Quantitative Professionals” – essentially a book for computer/math/physics people working on wall street. Apparently, Wall streets employees a lot of computer technologists as a lot of this number crunching and analysis is done through software. Perhaps a good way to break in for people from non traditional finance backgrounds then would be to either begin to work on this level here while getting the designation – I wonder if the CFA would count this work as four years experience (say if you’re developing visualization software for better analsysis of options pricing through screens on wallstreet). Here’s one that I saw recently released as opensource (free) from these guys: samoasky.com

  13. Hi Ray,

    This looks like a very interesting piece of software to check out. Thanks much for the link. While I consider myself relatively experienced when it comes to trading securities, I’m a total newbie with options apart from covered calls. I’m looking forward to getting to that chapter in the study guides and then when I know what I’m doing I’m going to give SamoaSky a test drive. πŸ™‚

    Thanks,
    Lumilog

  14. A simple point I’d like clarification on. Looking at the cost pages on the CFA site, I would have to pay the following for the level 1 exam in June 08:

    Program enrollment: $390
    Exam registration: $688

    Tell me, would I receive the (18lb box of!) study material included in these costs or do I have to pay extra for it?

    Thanks,
    LGP

  15. Hi LGP,

    Yes the study material is included. If you look at the fine print at the bottom of this link you’ll see that starting with 2008 the exam registration includes the “complete curriculum”, which is the 18 lbs. of study guides.

    Good Luck,
    Lumilog

  16. hello sir…..I have done b.com(p) from delhi university….I am not good at maths….is it advisable for me to join cfa….can I improve my maths skills for cfa??

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