Disclaimer – I cannot say that these tips will guarantee a pass, but if you follow them your chances should improve.  This represents my basic approach to L2 (taken in 2009) and I appeared to pass with at least some margin of comfort.  Please do not take these as hard rules. Co-opt them to fit your style and do whatever it takes within the CFA Code of Ethics to pass.

Study Length – I recommend a minimum of four months of study preparation (i.e., by Feb. 1 at the latest you should have a book open); five months is better.  CFAI says 250 – 300 hours and I agree with this.  Look at the material five to six days per week Jan/Feb through April; in May, study every day.  Typically I would take Fridays off, until May arrived.  For those of you who are employed, I recommend “strategic sick days” in May to get in some additional study time.

Prep Programs – In full disclosure, I used Stalla for Levels I, II, and III.  I know people who have had success with Schweser.  Ultimately, you will want to do a lot (and I mean a lot) of practice problems, so make practice problems a core part of your study routine.

Calendar – Make a simple study calendar for yourself with topic milestones.  This will help you to pace yourself.  One thing I recommend to every test taker is that he/she gets through every exam topic section by May 1.  You will want to have the last five weeks to review the massive pile of books that were read over the preceding months.  Finishing the last topic one week before the exam is not good.  The review that you will do during May is a key to your success.  If you finish all readings by May 1, a lot of material will come together for you in those last five weeks; you will literally feel the light bulb going on above your head as you review (it happened for me on several of the tougher accounting and derivatives items in May).

Topic Priorities – All exam subjects are not created equal. Your highest tier of topics for Level II is: Financial Statements, Ethics, and Equity.  The middle Tier is Fixed Income, Derivatives, Corporate Finance and Portfolio Management.  The bottom tier is Economics and Statistics.  Do not expect exam success without mastery of the top tier.  I made extra time for those topics in the top tier and above 70% in Ethics and Financials Statements and was 50.1%-70% range for Equity.  Additionally, do not spend too much time on the bottom tier.  There’s no point in beating yourself up over auto-regressive statistical models when you may only see one or two questions on the subject.  Position yourself to get two or three points on those items sets and save your time and energy so you can get four to five points on the more heavily weighted sections.

Special Note on Ethics – Scoring above 70% on Ethics can be the difference between a pass and a fail, so take it seriously.  Reading the CFA Curriculum for Ethics is a must.  The Institute has every right to pull some obscure questions out of its Ethics hat.  Review Ethics a little every week (flash cards are great for this) and make some extra time in that final week of study to focus exclusively on re-reading this section in the CFA Curriculum.

Order of Topics – I do not have a hard recommendation for this CFA order, but I found it easiest to just follow the CFA Curriculum order.  I spent more time on the topics more heavily weighted by the Institute (particularly Financial Statements and Equity).

Practice Questions – This was touched on above.  Do lots of them.  There is no substitute.

Formulas and Note Cards – I made about 250 – 300 note cards for the formulas.  I could not memorize every formula, but I did memorize most and I recommend trying.  You will have a lot of confidence on exam day if you have a couple hundred formulas etched in your brain.  Many of them you will not use directly, but understanding the formulas will help you work through problems which technically require no computations but depend on a working understanding of the concepts.  If there are a few formulas which you simply do not get, just let them go.  Last year, there was one derivative formula that I could not master; sure enough the CFA asked a question about it.  (Same thing happened to me with one of the L1 formulas.)  Who knows if I got the question correct, but I passed the test.

Practice Tests – I cannot over-state the importance of practice tests and recommend taking four to six.  Leading up to May I would periodically do half-tests covering only the topics that I studied to date.  By early April, you should have tried at least one partial test covering the material you have studied to date.  Do a CFA Institute practice test.

You can download that from the website and the Institute will likely send you an email about it sometime before the test.  I also recommend contacting the Boston Security Analysts Society (their local name for the CFA chapter) to purchase their annual practice exam.  It is expensive, maybe USD $100+, but is highly regarded in the CFA community and the Boston Society provides explanations for each question.  I did their exam in preparation for all three levels and found it very helpful.

May 1 – By this date you should have covered every topic, completed many practice questions on each topic and taken two to three practice tests.  Use the final five weeks to review every topic, with heavy focus on the high tier subjects as well as items that you struggled with.  Take at minimum two full practice tests during May (three is better).  Time them and try to replicate exam conditions.  Review them carefully and understand why you missed the questions that you missed.  If you are scoring above 70%+ on your May practice tests and are strong in Ethics, then you are in great position for a Level II pass, just don’t let up.  Hit it hard until the day before the test and then give yourself a rest on the day before.

Chad M. James Corporate Finance Professional

Below is a brief white paper to provide a test taker with strategic tips for outlining a successful study plan and maximizing the value of their study time in the months leading up to the exam.