The Chartered Financial Analyst (CFA) title is a respected certification given by the CFA Institute that can help you differentiate yourself as an established expert in the field of finance and wealth management.
In this guide, we’ll break down the CFA Level 3 exam’s structure, as well as offer tips on how you can go about preparing in order to pass on your first attempt.
Let’s get started.
CFA Level 3 Exam Structure
In the CFA Level 3 exam, there will be 11 essay sets and 11 item sets, consisting of constructed response questions (essay questions) and multiple-choice questions.
The exam is divided into two parts, each lasting 2 hours and 12 minutes, with an optional break between them.
Since the format change in February 2023, each exam session will contain either 6 item sets and 5 essay sets or 5 item sets and 6 essay sets, with no significant structural differences between the two sessions.
Here’s a list of the curriculum you will be expected to know for both CFA level 3 sessions:
- Behavioral Finance: Learn how emotions influence investment decisions
- Private Wealth Planning: Understand how to manage individual wealth and client needs
- Institutional: Gain insight into portfolio management concepts for institutions
- Asset Allocation: Master strategies for diversifying investments
- Trading: Know how trades are executed and regulated
- Performance Evaluation: Learn to measure investment success
- Investment Manager Selection: Understand how to choose and evaluate investment products
Note: Each vignette will clearly state the topic and the total point value in question; this is important as it can allow you to focus your responses and allocate time accordingly.
You should also keep in mind that since all topics may appear in either the first or the second session of the exam, you will need to ensure that you spend a commensurate amount of time in each section while studying.
If you are interested in having a more in-depth look at the exam’s structure, we recommend having a look at our CFA Level 3 Mock Exam guide.
Exam Question Format
Below we’ve broken down the different ways in which questions are formatted in order to assist you in your preparation.
Unlike the CFA Level 2 multiple-choice questions, the CFA Level 3 exam incorporates constructed response questions. Supported by vignettes, these essay sets offer candidates three ways of answering: essay writing, numerical entry, or multiple choice.
In essay questions, command words will be highlighted and bolded in order to guide candidates in their answers. While a text box is provided for direct responses, some flexibility is retained in relation to how you can present your answers.
For example, you can choose to respond in bullet points or in structured paragraphs, so long as you articulate your answer clearly and accurately.
For numerical responses, the entry box strictly accepts numbers, commas, and decimal points. Detailed instructions will often accompany question sets, which are meant to guide you on the exact format and scope you will need to adhere to when providing each answer.
Your CFA Level 3 exam’s item sets will be designed around vignettes which will be necessary to answer each accompanying multiple-choice question.
Unlike the CFA Level 1 exam’s independent questions, each item of the Level 3 item sets questions will be highly contextual.
You should also keep in mind that the vignette for each item set will start with a declaration of the subject and the total points that can be earned.
How to Prepare for Your CFA Level 3 Exam
How well you prepare for your CFA Level 3 exam will play a pivotal role on whether you will be able to pass on your first attempt.
Even though the “ideal” preparation method will be a different process for each candidate, we’ve provided a few resources and areas where we think you should focus on in order to improve your chances of success:
- Draft a Study Plan: Outline a study schedule that allocates ample time to each topic. Remember, successful candidates typically spend over 300 hours of preparation per CFA exam level
- Join Study Groups: Collaborative learning can be incredibly beneficial. These groups facilitate dynamic discussions, clarify doubts, and offer diverse perspectives on various topics
- Practice With Mock Exams: Schedule at least one mock exam in your preparation. These mock exams familiarize you with the exam format, hone your time-management skills, and highlight areas that might need more preparation
You will also want to ensure that you are using the right resources:
- CFA Program Curriculum: This is your foundation for success. It comprehensively covers all areas that you will be tested on, and so will ensure you’re well-versed with both core concepts and nuanced details
- CFA Institute Learning Ecosystem (LES): The LES is a valuable digital platform from the CFA Institute. With features like adaptive study plans, practice questions, and mock exams, it’s designed to simulate the real test environment and boost your confidence
- CFA Program Approved Prep Providers: Consider complementing your main study materials with courses or packages from approved prep providers. These often provide supplementary in-depth study guides, video lessons, and extra practice questions, which can give you an added advantage when sitting the exam
Exam Day Tips and Strategies
The CFA Level 3 exam demands both subject mastery and adept exam strategies.
We’ve provided a few tips that you should keep in mind during your exam in order to optimize your performance, manage your time efficiently, and navigate complex questions with confidence:
- Manage Your Time Wisely: The exam is timed, so practice answering under timed conditions to pace yourself properly
- Read Each Question Carefully: Misinterpreting a question can lead to errors. Take a moment to understand what’s being asked
- Stay Healthy: A good night’s sleep and proper nourishment will keep your mind sharp on the exam day
- Don’t Burn Out: Maintain a steady study pace and take breaks. Overexertion can hinder performance
- Stay Positive: Confidence goes a long way. Believe in your preparation and stay calm
Remember, exams are not just about knowledge but how you apply it under pressure. Keep these tips in mind, and you’ll set yourself up for success in the CFA Level 3 exam.
Is the CFA Level 3 Exam Right for You?
The CFA exams all require substantial dedication, both in terms of hours and intellectual investment.
Having said that, they are essential if you want to become a CFA charterholder, which can go a long way in setting you apart in the competitive landscape of financial services and wealth management.
Ultimately, we recommend weighing your availability, professional goals, and available resources (e.g., time, budget, etc.) before determining if this qualification is the right step for you.
If you choose to continue with the CFA program, remember to set your sights high, remain consistent with your study regimen, and take healthy breaks in between in order to prevent burnout.
CFA Level 3 FAQ
Is CFA Level 3 the hardest?
The difficulty of the CFA Level 3 exam is often considered to be one of the hardest; this is because you will be expected to have an in-depth understanding of a plethora of complex financial and wealth management topics. The exam structure is also different in relation to the Level 1 and Level 2 exams. If you want to have a look at the exam structure, have a look at our CFA Level 3 Mock Exam article.
Why is CFA Level 3 hard?
The level III CFA exam can feel particularly challenging due to the complex topics it covers (e.g., performance evaluation portfolio management, behavioral finance portfolio management, etc.), as well as due to the fact that it has a different exam structure. For more information, have a look at our CFA Level 3 article.
Is the CFA Level 3 worth it?
This will depend on your specificities. All in all, we recommend considering your available time, budget, and career aspirations before deciding whether or not to pursue the challenging CFA designation. For more information, have a look at our What is a CFA article.
Is the CFA harder than the CPA?
How difficult you find each exam will depend on your personal strengths, as well as your academic and professional background. This is because they focus on different areas (e.g., investment and institutional portfolio management and wealth planning vs. accounting principles, etc.). See our CFA Level 2 Mock Exam article to get a general idea of the difficulty of the CFA exams.
What percentage of people pass all 3 levels of CFA?
Historically, roughly 10-20% of candidates pass all three levels consecutively. However, the pass rate varies yearly and depends on various factors, including the difficulty of the exams and the preparedness of the candidates. The easiest part of the CFA curriculum is arguably the first level; have a look at our Mock Exam CFA Level 1 overview for more information.
When can I take the CFA exams?
For the February 2024 cycle, the CFA exam dates are going to differ depending on whether you are in the early or standard registration. Early registration ($940) was available between May 16 and July 13, 2023, whereas the exam window for standard registrations ($1250) is between July 14 to November 8, 2023.
Do I need notes for the CFA Level III exam?
Yes. Notes for the CFA Level III exam can be highly beneficial. Since this level emphasizes portfolio management and wealth planning, summarizing key concepts, formulas, and theories in notes can assist in targeted revision and reinforce understanding. For more information, see our CFA Level 3 Notes article.