CFA Institute revises exam; cuts study time, stresses practical skills

The CFA Institute unveiled sweeping changes to its three-level financial analyst exam to emphasize practical skills and reduce the amount of time candidates study, in the biggest reworking since the test was introduced in 1963.

Starting next year, chartered financial analyst candidates will take Level I and Level II tests with new content covering skills used in the working world. New study modules will reduce the time needed to prepare for the exam, which has trended higher than the historic 300-hour average, CFA executives said.

The CFA designation can lead to higher salaries and better job opportunities. A typical charterholder, of which there are more than 190,000 globally, took four years to complete all three levels. Feedback from charterholders and others was instrumental in drafting the new test, said Chris Wiese, CFA managing director for credentialing.

“Talking to employers and candidates, even as they look at the program and acknowledge CFA tries to be practical, we got the sense there was a final step we were missing, which was: How do you actually use this in the workplace?” Wiese said. Candidates also said the curriculum took too long, was difficult and didn’t align directly with jobs they were seeking, Wiese said.

“Practical skills” modules were drafted to give candidates paths that focus on their interests. The online modules include 10-15 hours of video in addition to work exercises. Introductory and basic skills were removed from the test, and kept as reference materials.

New Tests

Starting in 2024, Level I candidates can pick between Python, a programming language, or financial modeling. Level II will offer advanced Python or analyst skills. The first level of the new tests will be offered in February of next year. Level III, set for 2025, will allow candidates to choose from focuses on portfolio management, private wealth and private markets.

With the new format, candidates completing the first and second levels will receive a badge that shows they are on the path toward becoming a charterholder, rather than waiting until the final level.

The charter distinction “is still the pinnacle, but passing Level I says something about your basic competency and skills, so we want prospective candidates to realize the value of that when they apply for their first job,” Wiese said.

The institute has also expanded eligibility, allowing students two years away from graduating college to take the exams. In a pilot program, the younger students did just as well as their senior counterparts, Wiese said.

New add-on study materials will be introduced. A practice pack will be available for $299 that includes 1,000 practice problems and 6 additional mock exams. The CFA is testing the packet at Level I, and plans to roll it out for Level II and III based on demand. Every other offering is included with registration which ranges from $940 or the standard fee of $1,250.

Wiese said the institute is focused on making the test more approachable, and applicable to the future. “We’re setting the stage to address what learners want now,” he said.