The CFA Institute revises its Exam; Shortens Study Time and Emphasizes Practical Skills

The Chartered Financial Analyst (CFA) program is well-renowned for its rigorous curriculum designed to build deep-rooted knowledge and skills for professionals seeking a career in finance. Established in 1962, the CFA program has grown to become a highly competitive certification globally recognized by top employers, providing a powerful foundation in investment knowledge and experience.

The CFA Institute is the premiere provider of financial curriculums, designations, and certificates of distinction, and they recently implemented significant revisions to the CFA Exam, including shorter study time, practical skills emphasis, and increased technological implementation.

The CFA Exam consists of three levels, each designed to build upon the knowledge learned in preceding levels. Beginning in 2021, the CFA Institute shortened the overall study duration for Level I and Level II by fifty hours, while Level III will observe no changes. The average student now typically spends around 300 hours preparing for Level I and 325 hours for Level II.

According to the CFA Institute, “This reduction is in response to the changing dynamics of the exam taker and to match the learning required in today’s rapidly evolving financial industry.” The organization observed that financial technology companies and increased digitization made it necessary to shorten the study time and focus on practical, industry-relevant knowledge as evaluating traditional knowledge constructs only is no longer enough.

The revised curriculum now emphasizes practical knowledge and global investment, including private assets, fintech and big data analysis, cybersecurity, and other potential challenges facing finance professionals. The incorporation of behavioral finance, that is, the science behind human behavior and motivation as it relates to finance, has also increased.

Furthermore, online proctoring for Level I students is now possible via the primary test vendor, Prometric. The CFA Institute has mentioned that it has enhanced its security and monitoring measures to ensure fairness, security and accountability through the online testing regime. The new exam structure also allows students to test from a professional or home office, reducing time spent traveling and minimizing disruption to work schedules.

The CFA Exam experience also includes a shift from purely theoretical knowledge to applications of that knowledge in real-world scenarios. The revised exam format includes open-ended essays, case studies with extended questioning, short-answer type questions, and multiple-choice questions in the morning section, with only the latter in the afternoon section. The revised exam format also enhances the application of technology to make it more comprehensive and easily accessible to the student.

Practical skills have become essential to employment in most industries, including finance. The CFA Exam revision takes up the challenge of bringing industry-relevant skills into investment practices. Industry professionals believe that investment practices need to involve more than academic education and technical knowledge, says Colleen Graffy, former senior U.S. diplomat and now Professor of Law at Pepperdine University.

“Professionals need to know how to link their technical knowledge with practical applications by recognizing the relevance of not only quantitative analysis but also qualitative assessments of the markets,” Graffy said. “Bringing real-world experience and education is what is required in today’s industry, given the shift in technological innovations.”

The revision is a welcome change for some candidates. “The new shorter study time ensures that the exam remains fresh in your mind, and the change in the exam format forces you to think critically and apply the knowledge gained,” said Michael Lare, a CFA Level II candidate.

The CFA Institute has also made the curriculum widely accessible, with the availability of e-books, study materials, podcasts, and webinars. Students can now access the content through their laptop, tablet or mobile phone, which makes studying flexible and more convenient.

Before the revision, studying for the CFA Exam could take up to 1,700 hours over three years, which is up to five years when factoring in failure. The changes offer more flexibility for candidates, meaning less study time is required, increasing the effectiveness of the learning experience.

In conclusion, the exam revision is a strategic shift by the CFA Institute designed to keep up with technological advancements and an evolving industry. The shortened study time, practical skills emphasis and increased technological implementation, coupled with accessibility, present new opportunities for aspiring finance professionals to enhance their skills and knowledge. The real-world applications integrated into the curriculum ensure that what is learned is relevant and useful for the ever-changing financial industry.