The Downfall of the CFA Program - Easy Exams
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- เผยแพร่เมื่อ 27 ส.ค. 2024
- The recent level 2 CFA exams boasted one of the highest pass rates we have seen in the last 30 years. This may be a symptom of the changed curriculum and exam format. And it may not be a good thing for the CFA program.
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Hi AJ,
Couple of points:
1. You, and other observers, have taken one data point (the recent pass rate) and concluded that the exam is becoming easier. From a statistical standpoint alone, I think that’s an incorrect conclusion to make. If we have a trend of increasingly higher pass rates, then maybe we could make that conclusion. But we could literally be looking at a data point that is an outlier. As you have already pointed out, let’s wait and see what the data shows us going forward.
2. On your comment regarding “The exam isn’t becoming harder”. As a charterholder myself, my question to you is why should it become harder? I would want future charterholders to get the same level of difficulty as the exam that I wrote, but certainly not a harder exam. Having reviewed the material at level 1, I would say it has become somewhat watered down, since 2016. But at level 2 and level 3, I don’t think that’s the case.
All in all, I think you’ve put out an emotionally charged video with a lot of incorrect conclusions and bad comparisons. 😅
Perfectly nailed it! 💯
@@saptarshisinha6000 The exams are not easier - it's that people are learning how to study more effectively for the exams and that the test prep providers understand the exam better. More transparency regarding the exam is a good thing, not a bad thing
100% agree with this take. Honestly, it just seems like there's a bit of resentment due to the unproven belief that some people may have gotten an easier exam.
Fair comment. I think more than the one data point, the reason people feel the curriculum is getting easier is due to the simplification of many of the LOSs. Just look at the amount of detail of the examples from 5 years ago compared to today. Definitely simpler stuff.
@@straighttalks-ajsrmek323 I think it is important to differentiate “simplification of LOS’” with “clarification of LOS’”. I think previously many of the LOS’ were not clear/relatively ambiguous. The Institute has since tried to make these clearer/less ambiguous and therefore need less explaining/examples. I genuinely don’t think the material is becoming easier- it does not seem plausible that anyone at the Institute would want to compromise the integrity of the exam.
I passed L2 this May, I would've passed regardless of the pass rate. I don't think its entirely fair to conclude the exam is easier based on one datapoint, though it is certainly possible. I think the overall resources available today and the advancement of AI greatly aided learning. I certainly saved a lot of time using Chatgpt with harder concepts. Finance concepts aren't super difficult or abstract to begin with, I think it' s the dynamics in the financial markets that make finance seem hard. I believe the quality of the cohort also played a significant role in the high pass rate.
I disagree, that exam in May was drastically different than just the one in November
@@castafinance Based on what? People are reaching here, the passing rates have had significant volatility since the early 2020s.
@@waleedabbas4996 You can look at what the exam providers have removed and added over the years and it is obvious they are making the exams easier
Hi AJ, I wrote the level 2 exam for the first time in 2021 and failed in the top 35% while the pass rate was 29% (I'm sure you can imagine that this was very disappointing). In my second try in 2023, I passed in the top 7% (above the 90th percentile line) with the exam pass rate being 44%. I can tell you from personal experience that both level 2 exams had essentially the same level of difficulty. I also passed the level 1 CFA in 2019 in the 90th percentile, so doing this well on level 2 wasn't impossible for me.
Keep in mind that CFIA seems to have been a lot harsher with the grading on level 1 exams from 2021 to 2022 (I think the pass rate was on average 25%), so there is a group of candidates that had to spend significantly more time studying for the exams. It's possible that some of the candidates from that era who failed the first time (could be on level 1 and 2) have finally made their way through level 2 which is why we are seeing the higher pass rate for the most recent level 2 exam.
As someone who took the Level 2 in May 24 i think you are extrapolating an outlier. Are some topics in Level 2 being “dumbed” down? Yes. Are some topics being broken down into modules? Yes, maybe its to ease studying and retention. But the exam is not easy. For me it even felt harder than the mocks i took . So let’s not interpret comments on reddit posts as the general sentiment of CFA candidates. We still have to put in 500+ hours to pass the test.
I think the high passing score could be an influx of students taking the exam, a more prepared candidate class, a large number of candidates on their second or third attempt but it’s not because the MPS was lowered
I wrote CFA Level 2 this May'24 and passed, i can assure you it was extremely hard waaaay more tough than Mocks ( i scored 70+ in mocks).
after spending 600+ hrs I was not confident walking out of the exam hall.
"It's not getting harder" Oh, you poor thing.
I cleared the most recent L3 sitting and am a new Charterholder. Passed my exams during the historically low pass rate era. Huge accomplishment for anyone who passed, regardless of pass rate, but the CFA is a precious thing whose prestige needs to be protected.
Keep up the great content!
Hi AJ,
I passed my L2 exam in November and I am in a master's now, and I don't know if the level is the same as before but I see a HUGE difference with the other people in my class. I think that the program was very very useful for me so far and I am planning to do the L3 after I finish my master's.
I get what you are saying and I think about it a lot and it worries me (a lot), but then I see the results and I think that it is still worth it. I don't know if there was a substantial change on the level, but I had to study A LOT (~400 hours if I had to guess) and it is definitely still worth it (at least the November exam was, for the one that was just done in may they introduced all the modules and changes).
Yea I definitely think it is still very worth it.
Hi AJ! I am looking forward to your reviews when the August 2024 L3 exam results are out! ^^
Well I think part of the reality is that the industry is changing - and fast; there’s far more emphasis in the industry on privately allocated capital and technology skills, thus if more investment professionals work in subsectors that don’t particularly value the CFA as much that pinches the CFAI’s pipeline for candidates. All in all, I think it’s less about devaluing the charter and more about thinking how it can adapt to serve the increasingly privatized allocation of capital.
Shouldn't it makes the tests even more difficult then as a form of signalling mechanism?
PE/VC will never be a subsector that most charter holders will be able to break into.
You need M7 MBA as worthless as education is regarding financial acumen. To crack PE. VC.....CAIA CFA perhaps
AJ I love your sense of humor and generally like the channel’s content. If you want to be taken seriously when you run your mouth like this you should present some evidence. Put the old and new curricula and mock exams side by side and show us how it’s gotten easier. I see some room for criticism in the new Level III tracks that have removed some of the financial planning content the portfolio curriculum but all 3 tracks seem to have retained a lot of solid base curriculum content. You seem to ignore the fact that pass rates on L1 have been lower and fewer candidates sat the L2. I participated in some of the surveys back in 2021 around adjusting the curriculum. The feedback I gave around simplification was that many of the readings were poorly written. Meaning they demonstrated poor logical structuring, synthesis and summary. The fact that a robust test prep market exists is prima facile evidence that feedback is valid. No more “raw dogging’ bring some evidence or zip it.
Couple of points (I’m due to sit L2 in August)
1. For Level 2 I feel everybody is studying 400hrs + now a days due to the traditional understanding that L2 is the “hardest” If the average study time is increasing, so too would the pass rates naturally.
2. One data point has spiked up, but think it would be a fair assessment if the trend line was increasing.
3. Similar to point 1 I think people are more prepared now, more resources online, Kaplan, MM etc all excellent and better at teaching and condensing the curriculum.
300hrs 10years ago (reading and learning yourself from the CFA textbooks) vs 300hrs today: info has already been condensed by prep providers and perfected for learning means 300hrs goes a lot further today?
Agree 300 hours will go "further" today. But I don't think most people are doing 400+ now. Just a guess. But there are plenty of L2 candidates who are not active on reddit or TH-cam reading all the 400+ hour tips.
As someone who sat for the Level 2 May 2024 exam I hope to allay any concerns of current charterholders that the CFAI is not guarding the value of the charter with these exams. I’d consider myself among the most prepared candidates having studied 600+ hrs for L2 and still found the exam extremely challenging. I came out of the exam center convinced that I had failed and tipping my cap to the difficulty of the CFA program. Maybe I just got a really difficult version of the exam but luckily, I passed.
In the dips of the Covid pass rates few were speculating that exams had gotten harder- the onus was always on the quality of candidates and deferrals. But suddenly now CFA is a cakewalk. I think we will find this 59% is an outlier and it’s likely too early to call whether or not CFAI has become too lenient.
Same with other certs they are all getting watered down. Even lawyers have been extremely watered down by easy law schools who admit anyone. Med schools are talking about dropping mcats so they aren’t far behind either
Lmao that's why u have the BAR exam. I've seen people graduate law school, but couldn't pass the BAR.
Dude cmon making passing rate high or low doesn’t increase value of the qualification. When I cleared L1 in May 2024 I practiced 13 mocks totally and most of folks did like 4-5 mocks with avg scores of 70-80( as seen on Reddit) So clearly the benchmark of candidates have substantially improved.
Have they;???
@@kodiakgriz2296 I certainly think so
Agree a 100%. Further if you see the content is also a bit toned down. The complex financial concepts are being excluded & its been made a a lot more theoretical. We are here to understand and master the complexity not for just a designation. Look at the Society of Actuaries content. They offer some pathways to FSA designations with core finance & investments topics, all so technical. If the institute carries on like that it would be just as good as doing MBA in finance. We want the challenge. THE GOLD STANDARD.
Exactly.
I think it's very important to understand the impact of COVID, which lead to a computer based examination set-up, which actually is the main issue lies.
Before Covid, you have 1 big test centre everyone goes and the marking is universally more consistent with 1 paper being distributed.
Now after Covid, you have multiple version of the paper because of the test spanning the entire week. Now this pose a challenge to have a universal MPS, which explains a lot (I have no stat to back this up so just a hypothesis) of why the pass rate were so low suddenly.
This has kicked off a series of effort in adjusting the examination marking with a useable and sensible MPS. Apparently the pass rate has been low since COVID, and because of this low pass rate and the difficulty in setting a objective MPS with the new computer based examination, it does appear to me that CFAI is trying to swing the pendulum back with adjusting the MPS again but might be a bit too much for this time, hence, this 1 2024 lv2 datapoint with a 59% passing rate.
I understand several move from CFAI were not welcoming, but I think the focus should remain on those unwelcoming move (such as fees, new poorly written lv3 materials etc) rather than cherry picking this 1 datapoint on pass rate when in fact, the issue actually might not seems to be as big.
Cant say it has been easy but I feel they have refined the curriculum as their example is more understandable as those are more in the investment context rather than just theory.
Besides this changing the weightage of subject might have helped too. The current weight looks good as a finance course.
And some topics they just shuffled among different levels.
Perhaps an outlier ...WAtching next cycle like Wolf in the Yukon brush
You saying it is the downfall is against ethics IV A
How so?
Thinking you’re jumping the gun a little bit here. I passed L2 in May after my 4rth try and I don’t think the exam got easier. As I was taking the exam I do remember thinking that a lot of the questions were going to get thrown out because they weren’t either clearly written or they asked a very obscure question. The pass rates have steadily increased we know that but not to long ago I passed level 1 when the pass rate was 26%
I see what you mean. And congrats on passing!!!
What if CFA institutes prep exam material has gotten more efficient? Let’s look at the bright side of things… CFA it still a hard exam. And congratulations to you if you pass a harder exam. 🎉🎉🎉
Or maybe people nowadays are opting more for the paid deferrals instead of taking risk and loosing their USD 1200 dollars since the exam is getting more and more expensive. They rather take more time to prepare and that's the reason why we see a spike in passing percentage.
Could be more prepared candidates.
I am from China and I passed Feb 2024 L3, slightly before finishing a master's degree in finance. Honestly, HRs don't care about CFA but they believe CPA in China and degrees from some top-tier universities are much more valuable. This is a consensus even among CFA Charterholders in China. The CPA in China contains 6 subjects, with a 20% pass rate for each. It looks crazy. On the other hand, my classmates and professors in grad school believe CFA is pretty prestigious, due to marketing by some Prep providers I think.
Now I have graduated and I find it hard to get a decent job even with L3. I hope to make a transition to another industry.
Wow, is the CPA program a requirements for accountants in China?
@@straighttalks-ajsrmek323 CPA focuses external auditing and it is a requirement for signing audit and other assurance reports.
While accounting title certifications like Junior, Intermediate and Senior Accountant tiles in China focus more on handing internal accounting.
CPA is considered much more difficult. But it is OK for working as accountants in firms with Junior or Intermediate tiles in China.
Level 2 has been nerfed since the last few years, pension accounting, credit analysis models, private equity, M&A were either removed or entirely revamped. Although that could arguably be appropriate to keep relevant content only (db plans less common and stock options and rsu becoming a more common way of comp.), those changes are drastically reducing difficulty and definitely makes it unfair for candidates and charterholders who passed level 2 back in the day, especially nowadays that there is more publicly available content than ever to learn, candidates sharing tips on forums. Making exams easier isn't the most appropriate route in an industry which is become more saturated and with students and fresh graduates now being allowed to take exams. I share this insight as an student who passed Feb'24 L1 and Aug'24 L2 candidate, Level 2 isn't anymore the beast it used to be.
I HAVE NEVER PARTICIPATED IN ANY EXAM. IF YOU HAVE A BIG TALENT AND GREAT SKILLS YOU GET A GREAT JOB WITH HIGH-END EMPLOYERS. THEY RECOMMEND YOU STARTING THE FIRST LEVEL. IF YOU BEHAVE LIKE A WORKING SLAVE THEY DO NOT WANT YOU. THEY HAVE ENOUGH PEOPLE THE ARE NOT ABLE TO THINK ON THEIR OWN. THEY DO NOT WANT PEOPLE THAT DO NOT KNOW HOW THE „INDUSTRY“ WORKS. 😮
Could also be because of the modules. If you didn’t complete them you didn’t get your score
But I do agree! It does seem they are diluting the certification
A hard topic to discuss AJ. I usually enjoy your point of views, but this is one of the harder topics to discuss. And you could be more direct with less wording. 😮
They killed the certification allready
How so?
@@straighttalks-ajsrmek323 with the new smaller certifications and changes to the cfa exam
I’d bet that people who were likely to fail didn’t complete the PSM and thus their scores were invalidated and it looks like a larger % passed than would have been the case otherwise.
There can be anomalies in the students taking the exams, we saw the very exact opposite happening in the early 2020s.
However, I completely agree about your main argument. I'm not sure why the CFAI would think that commercializing the designation is a good choice? Even an undergrad can tell them this. Why pay significantly more for something that's not anymore valuable than a generic certificate?
Gen Z. Lazy and unmotivated. If they don’t decrease difficulty , soon the pass rate will be around 10%😂
this aint it. feels like your emotions got the better of you here
I understand your thinking and honestly I was not feeling very emotional about this. But yes I am salty.
AJ ! Quick thx for exam tips ! It helped alot ! Especially the one, regards how many mocks to do ! Lvl 2 cleared. Sooo I feel my hard work is being down palyed 😑 I have a question for you ! Thoose who done exams before 2019 .... If I go to "300 hours" & check old MPS for each exam.... why it seems that MPS was lower for prior takers ?🤔
We will never know for sure, but my guess is harder questions. That would be the CFAI's answer as well I beleive.
@@straighttalks-ajsrmek323 Soooo, just for the sake of an interesting debate ... At least that's my "angle".... Higher MPS + larger penalty for a mistake (after 2019) .... makes it "fair and square" ... An extra though ... do you take into consideration ... the spread of information through social media ... regards how to correctly prepare for the exams ? I will be frank with you .. without your tips ... it would have been "game over" :)
You are partially wrong in what you are saying. The CFA level 2 exam is getting easier to pass (maybe due to lower MPS) but you forget about the other added part, PSM. Now you need to spend time finishing one of the PSMs provided with each level, reading study material, and be prepared for the exam in like 6 months (on average) or more which needs extra effort. In some way, they altered their exam structure but hard work should be done.
PSM? Those are a breeze ...lol
Thats a fair point that I did not consider. I don't think the PSMs add difficulty though.
I would submit medical school may have lower bar of entry to some folks due to Cultural allowances
Boom.
All this is based on one data point. Has a Charter but seemingly forgot everything about analysis and quant. Ironically this analysis may be devaluing the percieved value of the charter
Also, even if all of this was true, it's a nonsequiter that it devalues the *charter* as claimed. At most, it would only show that level 1 and 2 are easier to pass, not 3, which is necessary to get the charter.
One data point and the more simplified curriculum.
Why the may always be a highest?
I think you're missing two big things which you are simply not aware of enough which is causing your confusion.
First of all the exam is now given by students. That's right. Full time students with no job and all the time in the world to study. Everyone online seems to pride themselves on working while giving exams but students inevitably have an easier time clearing exams. This is certainly going to up the pass rate.
Second of all, ant you may hate to admit it, but India. Cfa has now become super popular in India. Being the gold standard, it naturally fights against the local accounting qualification which is the toughest in the world, and also against some other well respected degrees. Indian exams are naturally tough. Indians are raised in a heavy education environment and like many of the toughest exams in the world originate in India. Combine that with a highly competitive job market of literally millions of people for roles, it only makes sense that the super educated would attempt this. And not to mention that this qualification is easier than our local accounting qualification. That's right, everyone who has completed the local charter CA, and has done the cfa has said that it's not that much tougher at all and studying for it is not stressful.
Combine these two factors together and maybe cfa pandering to students, and you have your answer.
@10:40 this already has happening lmao. Look at the amount of states that are removing the BAR exam?
CFAI said there was a much lower number of deferral candidates in the test group,which usually have a lower pass rate. You should be looking at the candidate pool.
Very low quality video.
Good point.
I have been on FSA since March, are you out of your mind? Lol
what a shame
Not saying its a short book. But its shorter than it used to be.
Hi AJ,
I think It’s almost asinine that you, someone who is clever and likely familiar with graphs & data can infer “it’s getting easier” from that graph. Honestly such poor inference 😔. I’ll still be watching ur videos loool dw
Haha thank you.
OMG mate. Imagine you would be registering to Level 1 today. Would you wanted it to be harder? Big L opinion.
Personally yes I would want it to be harder. Makes the thing more of a challange.
Yes! If it's harder, I know it's worth it. If everyone is a charter holder then what's the value of the course?
and why? did finance become harder and we were not aware of it?
Also, I don't think the Charter was anywhere close to being the "most difficult exam" in the world at any point in its history.
Conventional finance has always been easier than many other disciplines, people who are speed running the exams would've been able to do so 20 years back as well. Just saw a kid that speedran Stanford's undergrad (Finance + Math minor iirc) in 2 years with a near perfect GPA.