Thread by @hedrees_ayinde

My CFA Journey - How I was humbled twice 😊

The @CFAProgram is a three-part exam that tests the fundamentals of investment tools, valuing assets, portfolio management, and wealth planning. It is one of the programs (the major) of the @CFAinstitute .

A Chartered Financial Analyst (CFA) charter is a designation given to those who have completed the CFA Program and completed acceptable work experience requirements. The CFA Program is typically completed by those with backgrounds in finance, accounting, economics, or business.

CFA charterholders are qualified to work in senior and executive positions in investment management, risk management, asset management, and more.

cfainstitute.org/en/programs/cfa

There are 3 levels of the exam. And each exam is taking usually in 2 parts on the same day - a morning and afternoon session. It used to be 3 hours each but I understand the exam format, duration and number of questions have now change slightly recently.

My journey to CFA started in March 2015 when I registered for the Dec 2015 Level 1 exam. I was encouraged by my then Boss (Gbenro, we call him the Master for a reason. He can perform valuation of almost anything 😊). Also I developed keen interest in financial instruments.

Started doing some valuations, using Bloomberg as well as building some smaller valuation models in excel. So it naturally feels like the next step. The CFA program has lots of subjects ranging from Financial Reporting, Derivatives, Fixed Income, Equity, Ethics, Portfolio mgt etc

With the exam about 9 months away, I had enough time to prepare. My study approach. I read the CFA curriculum twice. The first reading was faster as the aim was to take note of essential points and the second reading was to better understand. After this, I revised with my notes.

My notes in first reading will cover key important points. I also create Mnemonics to help remember key things or I try analogise. A funny example is “buy the cap, sell the floor” - to help remember, I decided this as “ra fila, ko tale”. If you understood Yoruba, it’s funnier.😂

It’s easier to memorise formulas or get used to it with practicing, but some theoretical concepts require extra effort. Personally relating them to terms/Mnemonics I am familiar with helps.

That’s why you will see things like LIRS, Greenwich( where I stayed then), Papa( my nick name), Law School=Lagos BRF 🤣🤣🤣etc. Whatever works, no matter how funny it may sound.

About two months to the exam, I was solving past questions. I did all the CFA exam online mock and some past mock papers. I also practiced with some prep providers questions e.g Schweser, and few others.

When the result was out in Jan 2016, I aced the exam. Had over 70% in 4 subjects and above 50% in the rest of the 6 subjects.

As a serial exam taker and prize winner😊, that gave me the confidence to register for level 2. At the time, level 2 & 3 exams are held only in June. That implies I have barely 4 months to the exam. Somehow, I was able to read for the exam but it requires significant sacrifice.

I will stay in the office to read overnight. The office had a bathroom and my car was my wardrobe, with all the dry cleaned shirts and suits for the week all lined up, you will think I was a dry cleaner then 😃. The timing only meant I had a month to solve past questions.

Due to the structure of the Level 2 exam, it meant I am only able to solve half of what I could do for level 1 exam for the same duration. This affected me significantly as I clearly didn’t have a good grasp of some tricky questions in the exam due to less practice.

Level 1 is just pure multiple choice questions(MCQ) while Level 2 includes a vignette ( like a small case study or in simple term- a comprehension passage) followed by MCQs.

During the exam, I had doubts as well. When the results were released, I didn’t pass. That was not the painful bit. Usually, the institute ranks those that fail into band 1-10. 10 being the highest. I was in band 10.

From my result when compared to few people that pass, you could tell, I probably would have pass if I did well in one of the two courses I had below 50%. It was a very tough pill to swallow, particularly because of the effort I had put in to the exam.

I registered for the L2 exam again but this time I had about a year to prepare. I started reading early and I had a lot of time to practice. The CFA Institute reviews the syllable every year. So there are instances where a subject may be entirely revamped.

That means, you will need to read the new material. In some cases, the remove some topics and add new ones to it. So you need to get the “syllabus” for that year and ensure you are reading the right materials. This is why an old CFA materials may not be relevant to prepare.

Even when solving past questions or mock, you may want to stick to recent ones so you don’t end up solving irrelevant questions 😊. When I wrote the exam, I was more confident and I ultimately passed. Not so sure the result was significantly different from when I failed 😊

But the catch is, the CFA Institute set a minimum passing score for each year. This is often influenced by overall performance and number of candidates that took the exam. That’s why CFA candidates are always furious with candidates that registered for the exam but were absent.

Common man! Attend the damn exam and fail honourably and let the MPS go lower 😂. If this is you, please do better and help your other candidates. Not a proven theory though, no one except the board of Governors know how they arrive at the MPS each year. 😉

Okay, back to my exam. So the level 2 results motivated me, plus I have a full year to prepare. So I registered for Level 3 and started the preparation. The Level 3 structure was different, and that was where my second humbling came from. There is an essay part and item sets.

The essay doesn’t require an epistle, your answers need to be concise and straight to the point. That’s why it’s regarded as constructed response. The item sets is similar to level 2. You will have the vignettes and the MCQs attached to each vignettes.

I approached the exam wrongly, especially the essay part and I failed. I was solving MCQs and then I was reading the essay past questions without actually writing down and practicing those “constructed response” stuff. In the exam, I had hardly done much, before the 3 hour mark.

So I registered for the exam again and wrote in June 2019 and passed.

I rectified the mistake I made previously by practicing the essay part more accurately and left enough time to practice. Attached images will give you an indication of how much I practiced.

To earn the CFA charter, you will also need to fulfil the work experience requirements and submit references in addition to passing the exam.

Key lessons.
1. Know what works for you: some people prefer study, online videos or physical classroom.
2. The CFA exam is rigourous. On the average, it is reported that you need 300 study hours. I think that’s just the starting point 😂. And if you’re working, it’s not easy.

3. You may need to adopt different strategies for each level. For some levels, it was okay to read the curriculum or prep provider materials. Attimes, I watch videos to understand difficult concept I can’t grab whilst reading.

4. Have a plan and stay consistent.

5. Never underestimate the impact of practicing. Leave enough time to solve questions.
6. The exam could be capital intensive as the fee is in USD. For the first 3 exam, I had to travel to Ghana (Flight +hotel cost) before they started ..conducting the exam in Nigeria in 2018.

So it may be good to map out how you intend to finance the exam. There are also scholarship as well by the institute. Apply for it if you need it. It helps save the cost.

I’ll stop here but hope this helps someone. Happy to answer more questions in the comments.

Idris Ayinde, CFA

PS: The CFA qualification doesn’t imply you are “superior or a superman” finance person, but, Yes, I humbly earned it, so I’ll use it 😊.

basno.com/rycqj2o2