How the CFA Exam is Changing
Introduction
As most of you may have heard, the Level I CFA exam will move to a Computer Based Testing (“CBT”) format, starting in Feb 2021.
I’d thought that the only change was the switch from the Paper Based Testing (“PBT”) format to CBT. But recently the CFAI revealed some significant changes in the new era of CBT.
Most of the below content under “old” and “new” is based on information in CFAI emails and their website. The comments are my personal views and does not represent the views of CFA Institute or CFA Society Emirates.
At the end I’ve helpfully summarized what has NOT changed regarding the Level I exams.
Flexibility
Old
You could choose to write Level I in June or December of a particular year and that was it. It was a proctored exam in 192 locations globally.
New
The Level I CFA Program will move to the CBT format in four windows each year (February, May, August, and November).
Each window will be a maximum of seven days during which candidates can sit for the exam. Its offered four times each year, but candidates can only register for two exams per year.
It will be a proctored exam in 400+ locations globally, to include all locations currently offered in June.
Comments
Candidates have long commented that the rigid exam dates provided no flexibility to address personal or professional obligations or conflicts. The CBT format is more flexible.
Also, the CBT format has more locations (more than double the existing number). This means less hassle, less cost, and less stress in travelling to and from the exam center because the new exam center may be closer to home.
Format
Old
Under the PBT, candidates took exams alongside hundreds if not thousands of fellow candidates, typically in a large ballroom or convention center or similar space.
New
Under the CBT format, candidates will take their examinations in secure computer labs with many fewer candidates at a time.
Each candidate will have time available to go through a brief orientation to the center and the computer software.
Comments
Less crowds probably means less pressure.
Also, no need to rush especially during the break due to fewer people.
Fewer candidates at one time also means you can focus better due to a lesser chance of being distracted or disturbed by your neighbor/s during the exam.
On the negative side it can get lonely writing a tough exam all by yourself with the absence of most of your study buddies.
Duration
Old
The exam consisted of three hours of testing time followed by a two-hour break and then three more hours of testing time.
New
Each exam appointment will include:
30 minutes allotted to pledge, tutorial, and survey
135 minutes for session 1
30 minutes for optional break
135 minutes for session 2
Total testing time is 4.5 hours
Total appointment time is 5.5 hours
Comments
This will come as a big relief from the 8-hour mental marathon that was the Level I exam for the longest time.
The total duration has reduced by 2.5 hours from 8 hours (9 am to 5pm) to 5.5 hours. Instead of spending the better part of one working day you spend a half day.
Breaks
Old
There was a mandatory 2-hour break between the AM and PM sessions.
New
There is now an optional 30-minute break between the two sessions.
Comments
The earlier 2-hour break was too long, and the current 30 min break is probably just enough to grab a quick sandwich.
On the other hand, if you want to push on without a break you can do so and nail the entire exam in 4.5 hours. Warning- this can be a serious challenge and you shouldn’t do this unless you have practiced at home on the mock exams.
Number of Questions
Old
The Level I exam used to consist of 240 multiple choice questions—120 in the morning session and 120 in the afternoon session.
New
Under the CBT format, the examination is being reduced from 240 to 180 questions.
It seems that CFAI found that reducing the length of the exam would not have a material impact on pass/fail decisions. In other words, by the time a candidate has completed about 160 questions they already have enough information to determine whether the candidate should pass. The additional 80 questions were not providing incremental information.
Comments
Another good move. Although the time per questions remains the same (270 minutes divided by 180 questions is 1.5 mins/question), fewer questions means less time required overall.
This also means that the coverage may reduce. For example, if you had 36 questions from FRA earlier (15% of 240) you will have only 27 questions from FRA now. This means the breadth and depth of coverage of the LOSs in FRA may be reduced.
This also means that each question has a higher weightage and hence is more important than before. Earlier you had a fixed score (assume 100 marks) spread over 240 questions which means 0.42 marks per question. Now you have the same 100 marks over 180 questions which means 0.56 marks per question. In other words, although there is no negative marking, the negative impact of getting a question wrong is now higher.
Experimental Questions
Old
The number of experimental questions was not specified.
New
The CBT examinations will now include 20 experimental questions. 160 of the 180 questions count toward your score and 20 of the 180 questions do not.
Candidates will have no way of knowing which questions count and which are experimental questions.
As per the CFAI, this is an extremely common practice among testing organizations and it is an opportunity to assess the performance of individual test questions that have been newly written or revised before they are used as a scored test question.
Comments
You’ll effectively be wasting time on 20 questions but it’s a relatively small number (11%) of the total questions.
Topic Grouping
Old
Candidates were presented with questions from all ten topic areas in the morning and then all ten topic areas again in the afternoon.
New
On the CBT format, topics will no longer be duplicated before and after the mid-exam break.
Candidates will first be tested in Ethics questions. After that, candidates will move to a section where all topics related to Investment Tools are grouped—Quantitative Methods, Economics, and Financial Reporting and Analysis.
After the break, candidates will go through a section where Corporate Finance and Portfolio Management questions are grouped.
Lastly, candidates will be presented with a section covering Investment Assets—Equities, Fixed Income, Derivatives, and Alternative Investments.
Comments
There is more predictability now and in that sense some comfort. You know that Ethics or Economics will never be tested again that day, thereby avoiding having to be tested on concepts you did not fully understand.
The downside is that you lose some flexibility. Earlier, in either AM or PM session, you could choose to answer the paper in whatever sequence you liked among the 10 topics. If Equity was your fave topic you could start with that, get some confidence and then tackle other topics.
Now your flexibility is limited to the few topics within a session (e.g. Ethics, FRA, quants, and Eco in the first session).
Questions within sections
Old
The Investment Assets section would have all the questions in one topic together (e.g. equity) followed by all the questions in another topic (e.g. fixed income).
Within a Section, questions on different topics were never mixed and were always clearly segregated.
New
Questions on different topics may be shuffled within sections.
For example, in the Investment Assets section they may not present all Equity questions, then all Fixed Income questions, and so on.
Instead, questions maybe shuffled. So, perhaps candidates might see something like a Fixed Income question, then an Alternative Investments question, then two Equity questions, and so on.
Questions from one section will not be shuffled with another section. Ethics questions, for example, would not be shuffled with Investment Tools questions. And Portfolio Management and Corporate Finance questions will not be shuffled with Investment Assets questions.
Comments
This can be confusing as you briefly wonder in a few cases which Topic this question came from, hence costing you valuable minutes. This can slow you down.
I hope the mock exams prepared by CFAI and the various prep providers reflect this so that students are mentally geared.
Results
Old
Results emailed within 60 days of exam administration.
New
The exam results will be released faster, however, CFAI has not yet established the exact amount of time for results to be released.
CFAI expects to provide a more reasonable expectation after the first few CBT administrations.
Comments
Although you still must wait 6 months before registering for the next exam like before, it’s good to get results earlier so that you can start sooner; for Level I if you fail and for Level II if you pass.
Preparing for Level II
Old
If you wrote Level I exam in June the results came out in July and you had 11 months till the Level II exam in June of the following year.
But if you wrote the exam in December the results came out in late January and you had just 4 months to prep for the big ocean that is Level II.
New
Level II exams will continue to be held only once a year as before, in June.
As per CFAI if you write the Level I exam in Feb or May of a year you cannot write Level II in the same year. So, if you pass Level I in February or May 2021 the earliest you can write Level II is in June 2022.
Comments
In the new CBT format since you have four windows you can choose not to write the Level I exam so close to level II.
Since the Level II exam is only in June, I’d suggest you write Level I in August or November of the previous year.
Because if you write in May or February of the previous year it’s a long gap till the next Level II exam and you may lose momentum, motivation and memory.
What hasn’t changed
From what I have seen online so far:
The registration and exam fees are the same.
You will still be tested on ten topics on the same day.
The methodology for determining the Minimum Passing Score has not changed.
You can only write Level I twice a year.
You still must wait for at least one year before writing Level II
Level II and III are still once a year and still paper based exams
Conclusion
The change is overall positive in many ways.
The CBT format will improve the candidate experience by offering a wider selection of testing venues, more flexible scheduling, and faster test results.
Candidates have long commented that the rigid exam dates provided no flexibility to address personal or professional obligations or conflicts.
The CBT format also addresses concerns on the physical stresses, challenges, and distractions, of sitting for long exams in a single day and the concerns of crowded exam centers in many locations.
After a long while the CFAI has finally joined the CBT bandwagon. This is good news and I hope more such changes that are candidate friendly (yet maintain the rigor and integrity of the exams) happen soon.
For more info, please check out: https://www.cfainstitute.org/en/programs/cfa/exam/computer-based-exams