TOP 10 TIPS TO

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CFA® Exam Review efficientlearning.com/cfa

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How to Pass the Level II CFA® ExamHow Level II is Different from Level I and Top Ten Tips to Passby Daren E. Miller, CFA, Wiley instructor for CFA® Exam Review

Saturday, June 6, 1998 was the day that I wrote the most challenging exam of my life: Level II of the CFA® Program. It wasn’t the most complex exam, but it was the most stressful. I can still remember trying to control the pen in my shaking right hand as soon as I flipped open the morning session’s examination book. Instead of trying to breathe deeply to calm down (I know this powerful technique now) I grabbed my sweaty right hand with my weaker left hand to maintain my composure. It took many more anxious minutes before I was able to get into the exam “groove”, although I certainly was not fully confident. Thankfully, I not only completed the exam but also passed Level II on the first attempt. The Level II pass is my greatest test win.

Almost 18 years later after that memorable day, Level II remains as much as a challenge for today’s CFA® candidates as it did for me in the late 1990s. As a CFA® instructor, I have worked with many Level II candidates to help them avoid getting stuck on the Level II “merry-go-round” of multiple retakes. Looking back, a lot of my stress at Level II was a direct result of my Level I experience. I have learnt that preparing for Level II is different than preparing for Level I.

Here are ten ways in which the Level II exam is different from Level I and tips for succeeding at Level II.1.  Don’t rest on your Level I pass. Many Level II candidates approach the exam with hubris and a false sense of security simply because of the elation of passing Level I. But, the time to celebrate passing Level I has come and gone. Believe that you are now approaching a brand new exam that will have little relation to what you have already learned.

2.  Don’t over-concentrate on high-weight topics.Three topic areas alone at Level II represent between 40% and 65% of the exam weight: Financial Reporting and Analysis (FRA), Equity Investments, and Fixed Income. While passing these topics is important, it is impossible to pass the rest of the exam without mastering some of the remaining topics, such as Ethics and Professional Standards (10 to 15%). The remaining six topics have weight range with a minimum of 5%, which is why I believe that candidates tend to overlook them.

3.  Develop your concentration skills. Item sets require more concentration. Level I questions are stand-alone multiple choice questions (MCQs) with a planned completion time of 90 seconds per MCQ. At Level II, the testing format is more challenging. The item set consists of a multi-page vignette (or mini-case study) followed by six MCQs that require information from the vignette. Each item set of six MCQs now require a time budget of 18 minutes to complete, which requires more concentration and the ability to recall relevant parts from the vignette.

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4.  Practice, Practice, Practice. At Level II, there are fewer practice questions. Successful Level I candidates might have worked through through thousands of practice MCQs and as many as ten mock exams to practice for the real exam. At Level II, there is a smaller supply of high-quality practice item sets. And even by practising with a comparatively small sample, the real exam will look almost nothing like the practice item sets as the examiners use their imagination to conjure unexpected vignettes. Make sure you get access to high quality Level II practice questions and take at least two Level II Mock Exams. Wiley’s practice questions and Mock Exams will get you close to what you will see on exam day, so get early access to prepare yourself.

5.  Know Your Weaknesses from Level I.Weak Level I topics are revealed. Many of the Level II topics build on your knowledge from Level I. So if you were weak in Level I hypothesis testing (or skipped it altogether), then you will find Quantitative Methods much more difficult at Level II. Weak areas or skipping topics outright will come back to haunt you later.

6.  Get Expert Help.At Level II the readings are more technically demanding. For many Level I candidates, a generalist undergraduate business degree gives you a head start at Level I. However, many Level II readings contain obscure subjects that you have never heard about, such as the accounting treatment of multinational operations. Many Level II readings are dense and tougher to get through compared with Level I. So invest in a Course or Test Prep materials from a CFA Institute Recognised Provider like Wiley with access to Online Live Weekly Virtual Classes with Q&A, Online Mentoring, Study Guides, 110+ Hours of Recorded Lecture Videos from expert CFA instructors and more – it could save you time and and a great deal of heartache in the long run.

7.  Don’t Skip Readings or Take RisksAt Level I, the entire CFA exam consists of 240 MCQs which can come from almost 60 readings, which

corresponds to an average of 3 MCQs per reading on average. So, if you skip a reading or two, chances are that it won’t matter too much. At Level II, there are only 20 item sets across almost 60 readings, so there is a lot more uncertainty about what will be tested. If you skip a reading and it shows up on the Level II exam as an item set, then you stand to lose 5% of the exam.

8.  Manage your Stress.The post-exam waiting game is more stressful. At Level I, many candidates walk away from the exam centre rightly believing that they have passed. At Level II, most candidates walk away not knowing how they have performed and are surprised by unexpected item sets. This makes the nearly two-month wait to exam day a stressful and anxious time. (Looking back 18 years ago, it certainly was for me.)

9.  Be Determined to Re-Take with a Plan that Fits Your Schedule.

By being in the middle level of the CFA Program, most candidates are more determined to complete than at Level I. So, they will stick with the exam, even if it does not fit into their lives for the time being. For example, I know of candidates who married a few months before the June exam. They prepared well before the nuptials only to stop after the ceremonies. They may or may not show up on exam day. Of course, focusing on settling down with a new spouse is the right thing to do and ought to be a higher priority than the CFA® exam. However, the best course of action would have been to prepare for Level II in a different year. And because there is only one sitting of the Level II exam each year (there are two for Level I) candidates can be impatient because they do not want to wait a full year. To increase your chances of passing, make sure you get a realistic plan that fits around your busy work and life schedule and use an adaptive Exam Planner (like the one from Wiley) to make sure you stay on track. And if your circumstances change, be flexible – Wiley’s Pay Once Promise means you have access to your course until you pass, so if you need to defer you’ll continue to get access with all upgrades and updates until you pass.

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10.  Build on your Experience and Know How to Pass the Level II Exam.

At Level II, you are at least one year older. The ability to study gets more diff icult as you get older because life becomes richer and more complicated. Many Level I candidates are fresh out of university and are looking for that fi rst exciting job. With a new job comes the need to impress at work. There might be a lot of exhausting business travel, too. New personal relationships may form -- or old ones may break down. With more potential distractions comes more reasons not to hit the CFA® books.

While being older and more experienced, you would think that this would translate into a signifi cant higher rate of exam success at Level II compared with Level I. However, in recent years the percentage of candidates passing Level II is only marginally higher (by no more than 5 percentage points) than Level I. However, by adjusting your study technique and learning how to approach the Level II, you too can be successful.

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Daren E. Miller, CFA, is a leading global authority in CFA® exam preparation with over 15 years of fi nancial training experience over three continents. Candidates describe Daren as a “walking encyclopedia of knowledge” across the entire CFA® curriculum and is reknown for his ability to demystify the “essay” session of the Level III exam. Based in Calgary, Alberta, Daren delivers engaging, lively, and fun CFA® prep courses to a global roster of individual CFA® candidates and leading corporate clients, and is an instructor for Wiley on CFA® Exam Review.

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