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So You Failed the CFA – The Four Stages of CFA Exam Failure

Failed Rubber StampThe CFA Level 2 exam is a [insert your favorite swear word here]. The week before I took the CFA Level 2 exam I got a sinus infection thanks to my delightful spring allergies. I couldn’t breathe, I couldn’t sleep, and my head was pounding, but I had to press on.

At this point, after passing the Level 1 exam the prior December, I had been studying CFA material for nine straight months and had to give the test my best effort. The problem is that Level 2 is chock full of esoteric finance. Every other study item falls under the category of “When the hell am I ever going to use this?”

Still, I felt like I had a good enough grasp of the material that I could pass and move on to Level 3. Then, on test day, I ran into a question I will never forget. It was an entire item set on Treasury bond options. Not just bonds or options on stocks, both of which I understood, but options on bonds.

I didn’t have a clue. I mustered my best effort to apply what I knew of options to bonds, but the concept was so foreign to me that I didn’t know if my answer was even in the right area code.

A couple months later when I got the notification that the exam results were posted, I discovered that my answer had not been in the right area code. It might not have even been in the correct hemisphere because there it was:


I can’t remember the exact phrasing the CFA Institute used to say I did not pass. All I could see was that I had failed and it hit me like a sucker punch to the gut.

Given the low pass rates of the CFA exams, there’s a good chance this will happen to you, so here’s how to cope and press on after failing the CFA exam.

The Four Stages of CFA Exam Failure

Have you ever wondered why it takes so long to get the results of the CFA exams? I mean, Levels 1 and 2 are freaking multiple choice tests!

I never figured out the answer to that question, although I did formulate a theory that a bunch of test makers huddle up in a room somewhere looking like Montgomery Burns (“Excellent”), determining just how many of us they want to screw over with the minimum passing score.

At least that’s how I felt when I failed Level 2. I went through the same stages of CFA Exam Failure that you are going to go through—if you haven’t already:

  1. Surprise and/or Shock – Felt immediately upon seeing the result on the computer.
  2. Uncontrollable Sobbing – At least that’s what I did. Don’t judge me.
  3. Anger – The sobbing turns to anger at everyone and everything CFA related.
  4. Kicking Some Ass – Eventually, hopefully, you regain the desire to press forward and take the exam again, i.e., kick its ass.

Stages 1 through 3 happen pretty quickly, as in a matter of minutes or hours. The CFA naysayers you find on the Internet are usually the ones that get hung up on Stage 3 and quit the program. They’re quitters, and now all they have left is bashing the program online, because everyone is so much cooler online.


So let’s dive in and see how we can get past Stage 3 of CFA Exam Failure and move forward to Stage 4—Kicking Some Ass.

Some Stats on Failure

Progressing past Stage 3, the Anger stage, is the pivotal difference between CFA charterholders and CFA quitters. At the risk of sounding like a hipster who just came back from the acupuncturist, you need to acknowledge the anger and transform it into action.

Without action, there is no passing the CFA exams. You will come upon two roads diverging in a yellow wood and the choice will be yours:

  1. To the left, you can proceed down the road of anger and head to the online forums to bash CFA exams, saying things like, “It doesn’t make you a better investor,” or “The hedge fund people I know look down on the CFA,” or some other nonsense that makes you feel better about yourself. This anger will eventually subside to apathy and you just won’t care anymore. Then you’ll spend the rest of your life stuck in the back office.
  2. To the right, you can remember the statistics on passing the CFA exam. The pass rate is ridiculously low. If we had this type of passing rate in our university classes, we would have all flunked out of school. The CFA is not like any class you’ve seen before. It is a war of attrition and you just need to study smarter next time. Besides, you already know most of the material from this year’s exam, so studying for next year’s will be that much easier.

To prove my point, here are the average passing scores by level for the past 10 years:

CFA Level 1 – 38%

CFA Level 2 – 43%

CFA Level 3 – 54%

If the CFA exams were a gambling game in Vegas you would be broke before you ever made it to Level 3.

The Odds May Not Be Ever in Your Favor

I think a lot of the anti-CFA rhetoric from those who have failed is the result of heightened expectations. In most school situations, the vast majority of students pass. In fact, at some schools grade boosting is a problem. Everyone appears to be above average.

Just as it is impossible for everyone to beat the market, it is impossible for everyone to be above average. But, given the way academics work, that is the expectation candidates have going into the CFA: that it’s like school.

The CFA is not like school at all. Indeed, the CFA takes it a step further and fails more than half of all test takers. Everyone is below average in the CFA program, even you!

The distinction between school and the CFA program is important when dealing with exam failure. Your expectations should be that you will fail the exam at some point, because that’s what the probability is.

You just need to get back on the horse, study hard, and realize you’ll need a little love and luck to survive. If I had not gotten sick prior to taking Level 2, I would have had a better chance of passing. But that’s just what happens sometimes. Expect failure to be a part of the program. If passing the exams were easy, everyone would have “CFA” after their name.

Needless to say, I regrouped and passed Level 2 on my next try and finished off Level 3 in one attempt. It sucked to fail, and seemed like misery at the time, but now I look back and realize it wasn’t that big of a deal.

Don’t let the online CFA hatemongers get you down on the program either. Recognize the probabilities and then keep calm and carry on. Good luck on your next exam …

{ 7 comments… add one }
  • alvin

    Hahaha my last week before my level 1 exam. I like your article. It’s pretty encouraging.

  • Christine

    I appreciate your articles! Your knowledge actually surpasses CFA website’s information. Am more determined to JUST START my journey with CFA now. So many online trolls, am i came across this site.

  • Jay

    Thank you for your articles they have been of great help since i recently changed my career from pure mathematics to financial markets.

  • R

    Thank you for writing this. i needed to hear this.

  • Fantastic article!

    A common complaint about the charter is that everyone is equal who gets it – whether you passed all of them first time or retook them over and over. I don’t think its a valid complaint, because learning the resilience and gumption it takes to keep pressing on in the face of failure is just as valuable a skill in a finance career!

  • finisfin

    Nice article and Congrats on your CFA charter!
    Will receiving my L1 results in two days – I have a feeling I am going to fail it.
    Uncontrollable Sobbing is what I will do at my desk, when the results come

    Actually I am not even sure if I want to be in this whole CFA thing anymore, on some days, I feel like packing up and go live in the mountains.

  • J blaze

    I week before results day and I am officially freaking out. I thought I had 8 weeks of unadulterated, uninterrupted summer fun. Found out today results come out 26th July, 6 weeks after exam day! Save me

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