The Downfall of the CFA Program - Easy Exams

The recent level 2 CFA exams boasted one of the highest pass rates we have seen in the last 30 years. This may be a symptom of the changed curriculum and exam format. And it may not be a good thing for the CFA program.

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- AJ

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[cuthbertngwira]

Hi AJ,

Couple of points:
1. You, and other observers, have taken one data point (the recent pass rate) and concluded that the exam is becoming easier. From a statistical standpoint alone, I think that’s an incorrect conclusion to make. If we have a trend of increasingly higher pass rates, then maybe we could make that conclusion. But we could literally be looking at a data point that is an outlier. As you have already pointed out, let’s wait and see what the data shows us going forward.

2. On your comment regarding “The exam isn’t becoming harder”. As a charterholder myself, my question to you is why should it become harder? I would want future charterholders to get the same level of difficulty as the exam that I wrote, but certainly not a harder exam. Having reviewed the material at level 1, I would say it has become somewhat watered down, since 2016. But at level 2 and level 3, I don’t think that’s the case.

All in all, I think you’ve put out an emotionally charged video with a lot of incorrect conclusions and bad comparisons. 😅

[humichael]

I passed L2 this May, I would've passed regardless of the pass rate. I don't think its entirely fair to conclude the exam is easier based on one datapoint, though it is certainly possible. I think the overall resources available today and the advancement of AI greatly aided learning. I certainly saved a lot of time using Chatgpt with harder concepts. Finance concepts aren't super difficult or abstract to begin with, I think it' s the dynamics in the financial markets that make finance seem hard. I believe the quality of the cohort also played a significant role in the high pass rate.

[Markjohn]

Hi AJ, I wrote the level 2 exam for the first time in 2021 and failed in the top 35% while the pass rate was 29% (I'm sure you can imagine that this was very disappointing). In my second try in 2023, I passed in the top 7% (above the 90th percentile line) with the exam pass rate being 44%. I can tell you from personal experience that both level 2 exams had essentially the same level of difficulty. I also passed the level 1 CFA in 2019 in the 90th percentile, so doing this well on level 2 wasn't impossible for me.

Keep in mind that CFIA seems to have been a lot harsher with the grading on level 1 exams from 2021 to 2022 (I think the pass rate was on average 25%), so there is a group of candidates that had to spend significantly more time studying for the exams. It's possible that some of the candidates from that era who failed the first time (could be on level 1 and 2) have finally made their way through level 2 which is why we are seeing the higher pass rate for the most recent level 2 exam.

[asiimwejohnson]

As someone who took the Level 2 in May 24 i think you are extrapolating an outlier. Are some topics in Level 2 being “dumbed” down? Yes. Are some topics being broken down into modules? Yes, maybe its to ease studying and retention. But the exam is not easy. For me it even felt harder than the mocks i took . So let’s not interpret comments on reddit posts as the general sentiment of CFA candidates. We still have to put in 500+ hours to pass the test.
I think the high passing score could be an influx of students taking the exam, a more prepared candidate class, a large number of candidates on their second or third attempt but it’s not because the MPS was lowered

[FTW]

I wrote CFA Level 2 this May'24 and passed, i can assure you it was extremely hard waaaay more tough than Mocks ( i scored 70+ in mocks).

after spending 600+ hrs I was not confident walking out of the exam hall.

[Billionaireben]

"It's not getting harder" Oh, you poor thing.

[cestlavie]

Hi AJ! I am looking forward to your reviews when the August 2024 L3 exam results are out! ^^

[david]

AJ I love your sense of humor and generally like the channel’s content. If you want to be taken seriously when you run your mouth like this you should present some evidence. Put the old and new curricula and mock exams side by side and show us how it’s gotten easier. I see some room for criticism in the new Level III tracks that have removed some of the financial planning content the portfolio curriculum but all 3 tracks seem to have retained a lot of solid base curriculum content. You seem to ignore the fact that pass rates on L1 have been lower and fewer candidates sat the L2. I participated in some of the surveys back in 2021 around adjusting the curriculum. The feedback I gave around simplification was that many of the readings were poorly written. Meaning they demonstrated poor logical structuring, synthesis and summary. The fact that a robust test prep market exists is prima facile evidence that feedback is valid. No more “raw dogging’ bring some evidence or zip it.

[larryrichards]

Thank you for this video. I understand the points that you raise (your concerns). Especially, my comment will be on the part where you mention something like "employers who had this charter previously might think that it is getting easier and recent Charter holders made it through easier exams". My response to this would be that you can get your results for each exam with an overall passing rate indicated. It is seen on the chart that for instance L1 in Nov.23 has a passing rate of 35% which is quite low. So if the employer has such concerns then I think these concerns can be addressed according to the passing rates. Even though I understand your concerns, in my opinion, depending on one exam result, and/or a very recent trend of passing rates, "we cannot yet make the conclusion that the exams are getting easier". The things that concern me more are on the side of how L3 curriculum is changing and how the curriculum content of "Private Markets" and "Private Wealth" are written. Mark Meldrum has a great video on that. Cheers.

[santiagocarrionmontojo]

Hi AJ,

I passed my L2 exam in November and I am in a master's now, and I don't know if the level is the same as before but I see a HUGE difference with the other people in my class. I think that the program was very very useful for me so far and I am planning to do the L3 after I finish my master's.

I get what you are saying and I think about it a lot and it worries me (a lot), but then I see the results and I think that it is still worth it. I don't know if there was a substantial change on the level, but I had to study A LOT (~400 hours if I had to guess) and it is definitely still worth it (at least the November exam was, for the one that was just done in may they introduced all the modules and changes).

[liamlindy]

Well I think part of the reality is that the industry is changing - and fast; there’s far more emphasis in the industry on privately allocated capital and technology skills, thus if more investment professionals work in subsectors that don’t particularly value the CFA as much that pinches the CFAI’s pipeline for candidates. All in all, I think it’s less about devaluing the charter and more about thinking how it can adapt to serve the increasingly privatized allocation of capital.

[krishnaraju]

It’s very unfortunate that CFA quality standards are coming down. So it’s better to ignore CFA !

[jessehooton]

I cleared the most recent L3 sitting and am a new Charterholder. Passed my exams during the historically low pass rate era. Huge accomplishment for anyone who passed, regardless of pass rate, but the CFA is a precious thing whose prestige needs to be protected.
Keep up the great content!

[aarondynamo]

Couple of points (I’m due to sit L2 in August)

1. For Level 2 I feel everybody is studying 400hrs + now a days due to the traditional understanding that L2 is the “hardest” If the average study time is increasing, so too would the pass rates naturally.

2. One data point has spiked up, but think it would be a fair assessment if the trend line was increasing.

3. Similar to point 1 I think people are more prepared now, more resources online, Kaplan, MM etc all excellent and better at teaching and condensing the curriculum.

300hrs 10years ago (reading and learning yourself from the CFA textbooks) vs 300hrs today: info has already been condensed by prep providers and perfected for learning means 300hrs goes a lot further today?

[allprolemontonz]

Same with other certs they are all getting watered down. Even lawyers have been extremely watered down by easy law schools who admit anyone. Med schools are talking about dropping mcats so they aren’t far behind either

[CzykGrant]

As someone who sat for the Level 2 May 2024 exam I hope to allay any concerns of current charterholders that the CFAI is not guarding the value of the charter with these exams. I’d consider myself among the most prepared candidates having studied 600+ hrs for L2 and still found the exam extremely challenging. I came out of the exam center convinced that I had failed and tipping my cap to the difficulty of the CFA program. Maybe I just got a really difficult version of the exam but luckily, I passed.

In the dips of the Covid pass rates few were speculating that exams had gotten harder- the onus was always on the quality of candidates and deferrals. But suddenly now CFA is a cakewalk. I think we will find this 59% is an outlier and it’s likely too early to call whether or not CFAI has become too lenient.

[davidpineda]

You saying it is the downfall is against ethics IV A

[coreygilmer]

Thinking you’re jumping the gun a little bit here. I passed L2 in May after my 4rth try and I don’t think the exam got easier. As I was taking the exam I do remember thinking that a lot of the questions were going to get thrown out because they weren’t either clearly written or they asked a very obscure question. The pass rates have steadily increased we know that but not to long ago I passed level 1 when the pass rate was 26%

I think it's very important to understand the impact of COVID, which lead to a computer based examination set-up, which actually is the main issue lies.

Before Covid, you have 1 big test centre everyone goes and the marking is universally more consistent with 1 paper being distributed.

Now after Covid, you have multiple version of the paper because of the test spanning the entire week. Now this pose a challenge to have a universal MPS, which explains a lot (I have no stat to back this up so just a hypothesis) of why the pass rate were so low suddenly.

This has kicked off a series of effort in adjusting the examination marking with a useable and sensible MPS. Apparently the pass rate has been low since COVID, and because of this low pass rate and the difficulty in setting a objective MPS with the new computer based examination, it does appear to me that CFAI is trying to swing the pendulum back with adjusting the MPS again but might be a bit too much for this time, hence, this 1 2024 lv2 datapoint with a 59% passing rate.

I understand several move from CFAI were not welcoming, but I think the focus should remain on those unwelcoming move (such as fees, new poorly written lv3 materials etc) rather than cherry picking this 1 datapoint on pass rate when in fact, the issue actually might not seems to be as big.

[khurramiqbal]

Agree a 100%. Further if you see the content is also a bit toned down. The complex financial concepts are being excluded & its been made a a lot more theoretical. We are here to understand and master the complexity not for just a designation. Look at the Society of Actuaries content. They offer some pathways to FSA designations with core finance & investments topics, all so technical. If the institute carries on like that it would be just as good as doing MBA in finance. We want the challenge. THE GOLD STANDARD.