As a certified Chartered Financial Analyst (CFA), I am often asked which level of the CFA exams is the hardest. Having gone through the rigorous process myself, I can confidently say that each level presents its own unique challenges. However, there are certain aspects of each level that make them stand out in terms of difficulty. Many CFA certificate holders consider the CFA Level 3 exam to be the most difficult. This is due to the time and reflection required to successfully respond to elaborate answers.
While typical passing rates for the CFA Level 3 exam are the highest of all CFA exams, only about 56% of candidates pass it. This is significantly lower than the passing rates for Level 1 and Level 2, which are around 40% and 45%, respectively. When it comes to difficulty, it's important to note that Level 1 CFAs are often considered to be one of the most demanding exams in the world. However, their level of difficulty is comparable to that of a diploma and, from then on, it becomes more challenging. Personally, I have found that Level 2 is harder to prepare for because it has more volume, but it's easier to pass if you're well prepared. I don't think Level III concepts are that difficult.
However, some topics may prove to be more challenging for certain individuals. For example, the subject of immunization was a challenge for me, but I'm not a bail person nor do I find it remotely interesting (no offense to anyone who does). From an objective perspective, the difficulty of the CFA Level 3 is equivalent to that of a master's degree, while Level 2 of the CFA is equivalent to that of a bachelor's degree program. One of the main reasons why Level 2 is considered to be more difficult than Level 1 is because it contains much more material. Recent changes in the weight of the subjects have made it even more challenging to focus on just a few select topics.
For example, option valuation models don't figure in the CFA Level 1 exam curriculum (aside from a brief mention of binomial valuation of options) and you won't have to worry about that until you take the Level 2 exam. At Level 1 of the CFA, all multiple-choice questions (MCQ) are independent of each other and are often much shorter and more direct compared to those in Levels 2 and 3.This makes it easier for candidates to prepare for this level. However, as you progress to Level 2 and Level 3, the questions become more complex and require a deeper understanding of the material. I personally believe that Level 3 is the most difficult, although it is also the most pleasant from a study point of view. This is because there are a large number of lists and summaries to help you review the material. The real debate here is between CFA Level 2 and Level 3, as deciding which is the most difficult CFA level between these two exams is less clear. The difficulty of each level is subjective and can vary from person to person.
However, this hierarchy of difficult or easy topics is intended as a guide to help you approach the CFA exams sensibly. As someone who has gone through the entire process, I wish I had someone who could have pointed out the potential challenges and pitfalls along the way. For me, Level 2 was the easiest of the three. This may be because some of my courses at the time covered accounting very well and I was comfortable with everything related to derivative numbers. However, this doesn't mean that it will be the same for everyone.
Each individual's strengths and weaknesses will play a role in determining which level they find the most difficult. In 2024, some important changes will be introduced to the topics of the Level 1 CFA exams. These changes may include new weighting of the subjects or a new number of learning modules. As such, it's important to stay updated on any changes and adjust your study plan accordingly. In conclusion, while there is no definitive answer to which level of the CFA exams is the hardest, each level presents its own unique challenges. It's important to approach each level with dedication and a solid study plan in order to increase your chances of success.
Remember, becoming a CFA is a journey and each level is a stepping stone towards achieving this prestigious certification.