How to Become a CFA Charterholder

How to Become a CFA Charterholder

Step 1: Pass the CFA® Exam

To earn the CFA charter, you first have to pass the CFA exams. There are three exam levels (I, II, III) with unique topics and learning focuses. The topics include investment tools, asset valuation, and portfolio management. Each exam will test different learning focuses. The CFA Level I exam focuses on knowledge and comprehension, while CFA Level II exam is more application- and analysis-based. The CFA Level III exam focuses on synthesizing information and making evaluations. Make no mistake: these exams are challenging. According to CFA Institute, candidates spend an average of 300 hours preparing for the exam for each level and will find it easier with CFA exam prep.

About the CFA Exams and Requirements

Each of the CFA Exams is based on a curriculum laid out by the CFA Institute. Expect to spend at least 300 hours preparing for each test.

Level I Exam

To register for the first of the three CFA exams, you will need to either have completed a bachelor’s degree or be in your final year of college, have four years of professional full-time work experience, or have a combination of college and professional experience totaling at least four years. The Level I exam is made up of 240 multiple choice questions that are distributed equally over two sessions. Each session is three hours long.

Level II Exam

To sit for the Level II Exam, you must have passed the Level I Exam and completed your Bachelor’s Degree. The structure of this exam is different than it is for than the first one. While the questions are also multiple choice, you will be presented with 20 vignettes, each followed by six questions relating to it. Like the first exam, it is split into two equal sessions—one in the morning and the other in the afternoon.

Level III Exam

The last exam in the series is made up of eight to 12 essay questions during the morning session and 10 vignettes followed by six questions each during the afternoon session. Before sitting for this test, you must pass the Level II exam.


CFA Certification FAQs 

What Is a CFA Salary?

According to the CFA Society, the average total compensation for charterholders is 300,000 and the average median base salary is $180,000. The difference between the two numbers is a result of the impact of cash bonuses and equity or profit-sharing.

How Do I Become CFA Certified?

To become certified, you must pass the three-level CFA exam, build up work experience before, during, or after the program, submit several letters of reference, and apply to join the CFA Institute.

Is the CFA Exam Difficult to Pass?

By most accounts, the three-level CFA exam is challenging to pass. Each level of the exam typically warrants at least 300 hours of preparation and the pass rate is roughly 50%.

Is a CFA Better Than an MBA?

Both the CFA and the MBA are valuable to financial professionals looking to develop their expertise, bolster their reputation, and advance their careers. Possessing both can give an individual a leg up as well. Financial professionals who work as money managers and registered investment advisors are especially keen to get a CFA.

Certified Management Accountant (CMA)

The globally recognized CMA® (Certified Management Accountant) program, offered by IMA® (Institute of Management Accountants) demonstrates your expertise of advanced accounting and financial management knowledge in critical areas such as financial planning, analysis, control, and decision support. The CMA exam consists of 12 content domains organized into two exam parts, including multiple choice and essay questions. Find out why professionals and top employers worldwide value this relevant credential. Click here to learn more.

Preparing for the CFA Exam

In terms of how much time you need to put in to get ready for the CFA exam, Meyer recommends a minimum of 300 hours. Assuming you study three hours per day, seven days a week, you’d need to give yourself a good three months and change to prepare. Meyer says she studied two hours a day, five days a week, beginning in the fall, to prepare for a June test date. The last two months prior to taking the exam, she increased her study time to include half-day practice exams.

The CFA Institute offers online materials to help students prepare, along with a directory of exam prep service providers. Meyer says taking review classes can be well worth the cost to potentially increase your chances of passing the exam on the first try and avoiding expensive retakes. Be prepared for the extra cost of getting professional tutoring and instructional help.

“Unless you’ve been working as an analyst for a long time, or just finished your Master’s in Finance, you’ll need to budget another $600 to $1,500 per test level for prep classes and materials,” Meyer says.

If you can’t afford to take CFA exam prep classes, you can also purchase review books that guide you through the types of concepts the exam covers. Some also offer practice problems and tests to give you another level of preparation for what to expect on exam day. This can be a cost-effective way to get ready for the exam, but it requires a certain amount of discipline to make sure you’re studying thoroughly.

Are You Ready to Start CFA Program?

Enroll and register for the CFA exam.

Don’t delay; complete your registration to access study materials and candidate resources to begin the CFA Program today.

Enroll and Register

CFA Exam: Levels I, II III

In terms of content and structure, Level I of the exam covers 10 topics. They fall into four general categories:

  • Ethical and professional standards
  • Investment tools (quantitative methods, economics, financial reporting and analysis)
  • Asset classes (equity investments, fixed income, derivatives, alternative investments)
  • Portfolio management and analysis (corporate finance, portfolio management)

The exam is conducted in two sessions of two hours and 15 minutes each. Both sessions combined, the Level I exam features a total of 180 multiple choice questions (four hours and 30 minutes). The CFA Institute recommends that exam-takers allot themselves 90 seconds to answer each question. All exam questions are multiple choice.

Level II includes sets of vignettes with 88 accompanying multiple-choice questions. The exam is divided into two sessions of two hours and 12 minutes each (four hours and 24 minutes combined). Exam questions cover:

  • Ethical and professional standards
  • Quantitative methods
  • Economics
  • Financial statement analysis
  • Corporate issuers
  • Equity investments
  • Fixed-income
  • Derivatives
  • Alternative investments
  • Portfolio management and wealth planning

Level III of the exam is made up of vignettes with multiple choice questions and essay responses. The exam is split into two equal sessions of two hours and 12 minutes each (four hours and 24 minutes combined). The topics are the same as Level II.

The CFA Institute

Finally, before candidates can receive their charters, they must join the CFA Institute. If you need help, the CFA Institute's website explains the process in detail.

50% The so-called "pass rate" of individuals who take the three-level CFA exam.

What Does the CFA Exam Cover?

The chartered financial analyst exam comprises three parts: Level I, Level II, and Level III. Test-takers must complete each section of this computer-based exam at qualifying testing centers. Candidates do not take all parts of the test on the same day, but they must complete them sequentially. 

Level I features 180 multiple-choice questions and lasts 4.5 hours. Candidates complete the test over two 135-minute sessions with an optional break in between. The first session covers professional standards and ethics, financial reporting, economics, and quantitative methods. The second session explores fixed income, equity, derivatives, and portfolio management.

Level II consists of vignettes with 88 accompanying multiple-choice questions. It takes four hours and 24 minutes. Level II comprises two sessions that last two hours and 12 minutes each, with another optional break in between the two periods. 

Level III features vignettes with accompanying multiple-choice and essay questions. It takes four hours and 24 minutes to complete. Like Level II, Level III contains two sessions split into two hours and 12 minutes each, with an optional break in the middle.

CFA Exam Structure

Section Format Time
Level I 180 multiple-choice questions Two 135-minute sessions
Level II Vignettes with 88 accompanying multiple-choice questions Two sessions split into two hours and 12 minutes each
Level III Vignettes with accompanying multiple-choice and essay questions Two sessions split into two hours and 12 minutes each

Scoring the Exam

Machines grade the exam’s multiple-choice sections. Teams of CFA charter-holders grade the essay questions on the Level III exam using guidelines from the CFA Institute. Chartered financial analysts also double-check the grading for 10% of the multiple-choice questions on the other exam levels. 

After grading the essays, the team of CFA professionals compares answers, re-grading questions if they disagree. At the end of this process, the CFA Institute calls a meeting and creates a minimum passing score (MPS) for each level of the exam using a specific methodology. 

The CFA Institute does not make the MPS public, but research suggests a score of around 60-70%. After calculating the minimum passing score, the CFA Institute applies the MPS to each exam. The MPS changes every year. CFA test-takers do not receive numeric scores. All levels of the CFA exam receive pass or fail grades. Students pass if they score at or above the MPS. 

Each participant receives a summary of their performance on each section of the exam. Candidates get their test results for levels I and II within 60 days. Level III test-takers receive their scores within 90 days.

What does a CFA do?

A CFA is a certified investment professional who provides investment guidance and portfolio management for individuals, businesses and other organizations. These professionals can work at institutional investment firms, broker-dealers, insurance companies, pension funds, banks and universities.

The CFA designation is only given to investment professionals who have completed the requirements set by the CFA Institute. CFA members can be found at some of the world's largest investment institutions, including JP Morgan, Goldman Sachs, UBS and Morgan Stanley.

Related: Learn About Being a Financial Analyst

Professional Insights on Being a Chartered Financial Analyst: Lou Haverty, CFA

Lou Haverty, CFA, has decades of experience in various areas of commercial banking, including middle-market capital markets and portfolio management. He is the founder of Financial Analyst Insider, a resource for aspiring finance and accounting professionals to advance their careers.

Why did you decide to pursue a career as a CFA?

I graduated college during the dot-com crash. The year before I graduated, the job market was really strong, and most students were receiving multiple job offers with signing bonuses. The following year, the market turned, job offers were drying up, and some companies even rescinded their offers.

It was very clear to me that I needed to figure out how to stand out in a very crowded job market. After talking with other professionals in the industry, I realized that the chartered financial analyst designation was most often referenced as being the most prestigious but the most difficult financial designation to earn.

The challenging nature of the job market was what gave me the motivation to get through all three levels of the CFA exam. The designation has been extremely valuable for me in terms of getting more difficult interviews as well as being more effective as a financial analyst. The irony is that if the job market had been better when I graduated, I might not have had the motivation to earn the CFA charter.

Did you earn a degree in accounting?

No. I earned a bachelor of science in business administration with a major in finance. I came close to getting a minor in accounting, but I didn’t complete the necessary classes.

At the time, I made the decision to major in finance because I knew I wanted to be a financial analyst. However, what I didn’t fully appreciate was that successful financial analysts really needed a very strong understanding of accounting fundamentals in order to be effective.

I should have taken more accounting in college; the CFA exam was very heavily weighted toward accounting material. Particularly with the material on the Level II exam. So by making it through the CFA exam, I ended up with a very strong accounting background even though I didn’t get it in school.

How much time do you spend on continuing education, either as a requirement for your profession or for your own personal growth in the field?

I try to attend investment conferences a few times each year. It really comes down to how intense my work schedule happens to be. The conferences are really great opportunities to network with other industry professionals as well as keep up to date with the most relevant trends and topics.

The CFA Institute currently has optional continuing education credits that can be self-reported. However, right now, those continuing education credits are not mandatory, like what is required for CPAs. It’s always possible that it could change in the future.

What are some essential skills someone working as a CFA charterholder must have?The most important skill is understanding how to spend your time in the most valuable ways. When you are analyzing the financials for a company, there are so many different sources of information available. You need to understand how to prioritize your time in a way where you are focusing only on the most important information and filtering out the noise.

What advice would you give to students who are considering pursuing a career as a financial analyst with a CFA charter?

Working as a financial analyst on either the buy side or sell side of the industry is very competitive. You need to find as many ways to stand out from the crowd as possible. Pursuing the CFA charter is one of the best ways to stand out and let employers know you have a strong understanding of the fundamentals as well as a disciplined work ethic.

“Pursuing the CFA charter is one of the best ways to stand out and let employers know you have a strong understanding of the fundamentals as well as a disciplined work ethic.”

Just make sure you prepare yourself for a major commitment if you want to pass all three levels of the exam. Only roughly one out of five people make it through all three levels of the exam. The secret to passing the exam is starting your studying early (6-8 months before your exam date) and pacing yourself until exam day. That means spending a few hours each night reading and taking practice questions.

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