Interpreting & Analyzing CFA Pass Rates and Scores

Ever wondered why the CFA exams have gained a notorious reputation for being among the most difficult in the finance world, or why understanding the pass rates seemed to be a different battle altogether? You are not alone!

In this blog, we look in-depth at CFA pass percentages, what they really mean, and how they have been trending lately. Suppose you are preparing to take the exam or are simply interested in the trends that relate to CFA exam results. In that case, this breakdown will provide insight into what one needs to do to pass the CFA but, more importantly, how to interpret those scores, which have been rather elusive. So, let’s get started!

What are CFA Pass Rates and Scores?

CFA pass percentages and scores are reflective of the performances of candidates who have taken CFA exams. The pass rate is the percentage of candidates passing a particular level of the exam. Scores, on the other hand, represent the numerical results obtained by individual candidates. This gives insight into the extent of difficulty and competitiveness involved in the CFA certification.

CFA Exam Results and Score Distributions:

The CFA Institute is the governing body behind CFA. It releases the examination results of the CFA for all levels. The results give the overall performance of candidates based on all levels. The results show the spread of the distribution of scores, which helps identify the relative difficulty of the exam itself.

The CFA Institute will use scaled scoring to maintain consistency between exams and offer fairness. Scores are reported over a range from 0 to 100. The minimum passing score is calculated each year by the CFA Institute and varies depending on the level being taken.

Analyzing CFA Pass Rates Across Levels:

(a) Level I: The CFA exam Level I is the most attempted. Levels I, historically, have had worse pass rates compared to Level III. That may partly be because there are too many candidates trying Level I, and the majority of them can be quite junior in their finance experience.

(b) Level II: Level II of the CFA program is said to be the most challenging one of all three levels. Those candidates who are successful in attaining Level II have demonstrated their commitment and knowledge to the CFA program. Therefore, the pass rates for level II are always lower compared to those of level I.

(c) Level III: Level III is the culmination of the CFA program. The exam is centred on portfolio management and wealth planning with more subjective and qualitative questions. Pass rates for Level III are normally higher than for Level II because candidates have passed the two earlier levels and are often better professionals.

Factors Influencing CFA Pass Rates and Scores:

Exam Preparation: Better preparation leads to a better chance of passing with a better score. The student, who spends more hours studying, utilises the material supplied by the exam board or publisher, and who also performs well in mock exams, is likely to pass.

Work Experience: The finance experience at work helps the students excel in the exams. Exposing them to the practical environment enables the translation of in-class concepts to the world, hence providing better comprehension and results during the exams.

Exam Difficulty: CFA Institute aims to hold consistent levels of difficulty in the exams. However, exam difficulty can vary from one year to another; hence the pass rates and scores are affected. A challenging exam would mean lower pass rates, while a relatively easy exam may result in higher pass rates.

Regional and Cultural Factors: Pass rates can also be influenced by regional and cultural factors. The difference in educational background, study approach, and even language proficiency can cause variations in pass rates across different regions.

An Overview of the CFA Pass Rate Since 2014

Candidate Volume vs. Pass Rate for CFA Level 1

The CFA level 1 passing rate has hovered between 42% and 45% from 2014 to 2020. That makes sense, given that Level 1 is an entry point for a huge number of candidates, most of whom are first-time test-takers. As expected, this level is known for its broad curriculum that tests candidates’ fundamental financial concepts and usually reports the lowest pass rate among the three levels.

However, it witnessed a sharp decline in 2021 and reached an all-time low of 25% in May 2021. The COVID-19 pandemic may be held responsible for this sharp decline since it disrupted study routines, introduced stress, and made it hard for candidates to adjust to the online learning and testing environment.

From 2021 onwards, there has been a gradual recovery in the pass rates. By May 2023, the pass rate climbed back up to 46%, suggesting that candidates and the CFA Institute have adjusted to post-pandemic conditions, including new exam formats and evolving study approaches.

Candidate Volume vs. Pass Rate for CFA Level 2 

In this regard, passing rates for Level 2 have fluctuated between 45% and 47% from 2014 to 2019. This consistency within the pool of candidates shows that the material or candidates have not changed much over the years. Level 2 is considered complex because it deals with the application of financial theories and analyses of data, and the questions are deeper compared to those asked in Level 1.

Still, the pandemic had a serious impact on the pass rate for Level 2: this May 2021, the pass rate drastically fell from its previous record to 29%. It is one of the largest declines that has ever been recorded in the history of the CFA exams, with candidates facing additional challenges in balancing work and health concerns with preparation under unusual circumstances.

However, the pass rate at Level 2 sprang back vigorously over the following couple of years to a high of 59% by February 2024. That represents the highest pass rate in this dataset and probably reflects a combination of factors of improved preparation, good conditions, and determination by candidates to make it after the tough pandemic period.

Candidate Volume vs. Pass Rate for CFA Level 3

Historically, CFA level 3 pass rates have been the most stable of the three levels, ranging from 53% to 56% between 2014 and 2020. Level 3 focuses on portfolio management; thus, the exam involves essay questions and is quite practical and application-orientated, testing candidates on the integration of knowledge across topics.

Even Level 3 was not immune to the pandemic effects, despite its stability. The pass rate moved down to 40% during August 2021, reflecting the broader challenge that all candidates had been facing during that period. However, at Level 3, candidates tend to be more prepared and further along in their career journeys, which could have cushioned the overall decline compared to the earlier levels.

In May 2023, the pass rate for Level 3 bounced back to 49%, thereby indicating a recovery but less sharp than the rebound that happened in Level 2. The nature of the exam, with its essay components and practical applications, may have played into it stabilising pass rates quickly.

CFA Pass Rates: Why Are They So Low?

Low pass rates in the CFA are majorly due to the challenging curriculum that ranges widely between topics such as ethics, corporate finance, and portfolio management. These exams require much more than just conceptual clarity; they also test the application of concepts in real-life scenarios. Since many candidates are working professionals, they find less time for in-depth studies, which again results in low pass percentages.

CFA: How Hard is it?

The CFA is regarded by many as one of the most challenging financial examinations due to its huge curriculum, which includes ethics, corporate finance, and portfolio management, among others. Not only is it a theoretical test, but it also includes the ways in which concepts can be applied practically. Questions are designed to challenge critical thinking and decision-making skills; for many candidates, this fact makes the exam quite gruelling.

Levels of CFA Difficulty: Which CFA Exam is Hardest?

Each level in the CFA exam has its challenges. Level 1 is considered an introductory stage where the candidates are tested on their basic notions of finance principles and ethics. It involves so many topics, ranging from basic to extensive, and conceptually easier but voluminous, hence challenging, especially for freshers.

Most consider Level 2 to be the most challenging of the three levels. Much of this is attributed to the focus of the level: application. It moves from knowledge of theoretical concepts that are tested in Level 1 to the application of concepts in practice that constitute real-world financial analysis. This is also the exam where item sets are introduced, requiring candidates to interpret financial data, value companies, and assess risk-all in a timed manner. For many candidates, the jump in difficulty and complexity is overwhelming.

Level 3 moves to portfolio management and wealth planning. Still difficult, but easier for some candidates than Level 2, due to its applicative nature. However, the essay-type questions could raise certain surprises if candidates are not properly trained.

Tips for Passing the CFA Exam

Prepare Early: Start early, at least 6-9 months before the date of the exam, so that you can give yourself enough time to study the contents of the CFA curriculum (Update) in depth. The CFA syllabus is voluminous, and doing it in a rush near the exam date leads to superficial learning.

Follow a Schedule: Plan your studies properly. Spend something like 300-400 hours at each level, which should be distributed evenly over months. Also, divide your time studying into smaller blocks so that you can go over everything little by little.

Practice: Making time for practice through mock exams and past papers is important. The CFA exam is not just about knowing the material; rather, it has more to do with applying the material within the time limits of the exam. Practice will also make you get used to the format and question types.

Focus on Weak Areas: Try to develop in yourself the idea as to where your weak points are. Allow extra time to master those areas. Underlining a topic you have difficulties with will make much of a difference on exam day.

Beat Exam Day Nerves: Many students get anxious and allow it to interfere with their performance. Ensure you go to the exam well-rested and with a free mind. A steady, composed demeanour will enable you to navigate the problematic questions far more successfully than others.

Questions Regarding The CFA Program

Click Here

Conclusion

Undoubtedly, the CFA exam is tough, and the pass rates reflect that notion. It is achievable, though, through early preparation with a disciplined study plan focused on understanding and applying financial concepts. Take each level strategically, focusing your attention on the demands presented by each respective exam to maximise your chances of passing.

FAQs on Interpreting & Analysing CFA Pass Rates and Scores

Is there a significant regional difference in pass rates?

No, the exams uphold the same standard throughout the globe due to the CFA Institute; therefore, the regional passing rates remain identical across the globe.

Is it possible to pass CFA with 60%?

Yes, though the CFA Institute does not officially publish its minimum passing score, it is generally believed to fall between 60-70%. Many candidates have passed by achieving this range.

Can you tell me what a good pass rate is for the CFA exam?

Anything above 60% is considered good, as many find the examination challenging, and usually, the global pass rates fall below this threshold for all levels.

Which CFA level has the highest pass rate?

Level 3 has the highest pass rate because candidates have already passed Levels 1 and 2 and, by this stage, are usually better prepared and more experienced.

How does candidate preparation affect pass rates?

A candidate who devotes enough time, follows a plan of study that is structured, and practices with past examination papers performs better, thus yielding higher pass rates. It also means that the candidates who leave less time, are underprepared, or rush through may have a difficult time.

Anant Bengani, brings expertise as a Chartered Accountant and a leading figure in finance and accounting education. He’s dedicated to empowering learners with the finest financial knowledge and skills.