Wednesday, August 15, 2012

CFA pass rate is declining

The CFA institute has been launched in 1963 at that time more than of 80% were passing the CFA level I, and nowadays the pass rate is under 40%

June 2012 CFA Exam Pass Rates        1964 CFA exam Pass Rates

  • Level I: 38%                                  Level I: 79%
  • Level II: 42%                                 Level II: 94%
  • Level III: 52%                                Level III: 95%

What are the reasons to that sudden decrease?

-First the decrease is not sudden at all, the pass rate for the CFA has been decreasing gradually since its inception in 1963, but what we have to know is that only 600 people registered for all levels of the CFA in 1963, while more than 60 000 people registered for the last session in June.
The reason could be that with this increasing number of people registering for the CFA, candidates are less knowledgeable about finance, indeed nowadays many CFA candidate who are coming from other expertise areas such as management or marketing see the CFA has complementary or are looking for a career change throug the CFA examination.

-Another possibility (although not verified) would be that CFA Institute is making the CFA examination harder or lowering the pass rate due to the high number of candidates that are enrolling every year in order to maintain a standard of excellence for the CFA designation.
CFA "Chartered Financial Analyst" pass rate from 1963 to 2012
CFA "Chartered Financial Analyst" pass rate from 1963 to 2012

You are welcome to comment if you have any ideas about the CFA institute or CFA examination decreasing pass rate.


Anonymous said...

There is no question the exams have become harder with the inclusion of more complex financial instruments and concepts, however I believe that the key driver is that less candidates actually do the reading. The "industry" which has developed around the exam contradicts the fundamental basis for its learn the “body of knowledge”. Most candidates now take the short cut of using study notes without reading the text....hence, they do poorly.

Jonathan Dion said...

Indeed, it would be interesting to check the pass rate by college major, and by learning method.

Ryan Tao said...

I am not surprised, given the number of people participate in the exam increases each year, and CFA may only want certain if not a fixed number of people "enter the game", so the pass rate will drop.

Jonathan Dion said...

I totally agree with you Ryan, the more famous the CFA will be, harder it will be to becone a CFA charterholder.

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