How I took CFA Level 1

It's no secret that now the banking industry is more and more dependent on information technology (IT). Banks are forced to buy large numbers of IT services. Purchasing is carried out according to various schemes to support / support existing systems and to develop / create new ones. The first task is solved by people in the staff of a credit institution, generalists with a wide profile with good, but not expert knowledge of technology, and more or less serious improvements and new projects are most often given to the side: it is not profitable for a bank to keep narrow technical specialists on a regular basis - they are bought as needed. For programmers and other techies who managed to linger in the banking industry, technical skills develop to a certain average level, and moving above this level is no longer very interesting for the bank, or rather, it is not ready to pay for it. In general, IT banks appreciate mid-level managers with a good knowledge of technology and business, as well as analysts / technologists who know the business of a particular bank well and are able to set a high-quality task.

Among other ways to get out of this situation, for programmers a good option is to study finance. This allows you to increase your value further. After mastering the technical skills, the programmer has no choice but to expand his understanding of banking, i.e. business, unless, of course, he is not going to move to another subject area. And this is also a good test - if banking is not interesting, then you should not waste time on banks. The most successful and happy in the bank are those people who are really interested in all these processes for the endless movement of funds.

How to study

Thus, we consider the need for studying banking for programmers to be justified and move on to discussing methods of learning. Below is an analysis of the approaches:

• Read books A good approach for those who can read, i.e. knows how to work with a book productively. The problem is how to maintain motivation, how to check the degree of assimilation of the material.
• Learn in the process of work If there is such an opportunity, probably the best option. I'm afraid not always feasible
• Go to the second higher or advanced training A serious approach that requires money and time. The best option for the future for young employees, since almost all of our additional education is focused on recent graduates. Programs for experienced professionals, except for Master in Finance from NES, I do not know
• Pass on a certificate in finance. It is essentially a reading of books, but with motivation for the result: passing the test. The material is systematized and selected. Options: exams FSFR, FRM, CFA and others. Some of them are more detailed further.

Since the article is about passing the exam for a certificate, I give my comments on the certificates regarding the financial / financial markets:

• FSFM (Certification of Financial Market Specialists) Required to work as a specialist in the financial market. However, it may be useful for techies. The basic level provides a good introduction to the economic and legal foundations of financial markets. The test question base is fixed and known in advance, so passing it is quite simple. The material consists of a financial and mathematical part and a legal part. The legal part is based on the current laws of the Russian Federation. This allows you to sort out what laws generally exist on finances and what is written in them.
• CFA (Chartered Financial Analyst) This is an exam for financial asset management professionals. A kind of quality mark for a specialist, confirming not only broad knowledge in the field of financial analytics (namely broad, not deep!), But also the requirements for high professional ethics, which are quite strict. Those. in theory, communicating with a specialist in CFA status, one can hope that he will act in the interests of the client and will not be scammed. The volume of material can be compared with an economic education or an MBA program. Objectively challenging exam that requires diligent preparation. Valued all over the world. The exam consists of three increasingly difficult levels, each with an average of one year for preparation. To get a certificate you need to pass three exams (this is a minimum of 2.5 years), then confirm the experience of profile work, i.e. real work as an analyst or asset manager (experience as a programmer will definitely not work, you need to come up with something).
• FRM (Financial Risk Manager) Specialized risk certificate. In complexity, they roughly correspond to the first level of CFA. It consists of two parts, each requires an exam (conducted twice a year). It is possible to pass both levels at once at the same time or turn in turn in two steps, i.e. You can get a certificate for six months or a year of study, depending on the initial preparation. After passing two exams successfully, you need to confirm the relevant work experience, but the content requirements are lower than for CFA. It is quite possible to obtain a certificate by working in an area somehow related to risks, including IT. The exams have a lot of math and a good overview of capital markets. More practical and technical exam than CFA. Perhaps the best choice for quick results (preparation year, 2 exams once every six months)

CFA Exam

Further, oddly enough, we will focus on the CFA certificate. I passed only the first level, the most general and introductory, without specialized things. I wanted just a good theoretical coverage of basic things. The delivery of one level is quite a tangible achievement: in technical vacancies such phrase is sometimes found: CFA Level 1 as an advantage. And in the CV, a CFA, even of the first level, looks attractive to the employer. I did not swing to the other two levels, I see no reason for myself.

The format of the CFA Level 1 exam is as follows. You need to answer 240 questions, each of which is offered three answers. There is no penalty for an incorrect answer, if the correct answer is unknown, one can and should guess, this is recommended. Questions are given 6 hours in one day. 6 hours are divided into 2 sessions of 3 hours with a break of 2 hours for lunch and rest. There are 120 questions per session, the sessions themselves are independent, but the result, of course, is general. Thus, on average, 90 seconds are allotted to the question, which is quite stressful. The formats of examinations of the second and third level are more complicated, I will not write about them.

In Moscow, the exam is held in Crocus City. On the exam, they are very strict about cheating. People walk in the rows who look at what I’m doing and who pass and periodically check my passport (only foreign!). You can take only pencils and a financial calculator of the authorized sample (HP or TI) with you. Without a calculator, a number of tasks can take a lot of time, more than a minute and a half to a question.

Questions are divided into 10 topics according to the weights listed below.

• Ethical and Professional Standards (15%) Ethics: important for professionals, for techies - a headache. Preparing for this section, I first wondered why I needed all this, why I was doing this “garbage”. Tricky questions, I would say, with a legal bias. I left them on the exam at the end, when the head already refuses to count, but it completely copes with the questions in the form of a text.
• Quantitative Methods (10%) The mathematical part - I prepared for it with pleasure and spent a lot of time grinding the results. He answered the exam first of all, with a fresh mind. Questions from statistics and financial mathematics. For techies the easiest, for economists often the hardest
• Economics (10%) Introductory material on macro and micro economics. In preparation, I had an idea to completely score on it, because there was little time. However, having solved the examples, it turned out that without preparation I could not answer well. I had to learn.
• Financial Reporting and Analysis (15%) The most voluminous part of the material. Objectively difficult because of this. Covers many accounting topics under IFRS. I read 3-4 months. Useful for horizons.
• Corporate Finance (10%) Mathematics for the evaluation of PV projects. Pretty simple, but many formulas to remember
• Portfolio Management (6%) A simple overview of the CAPM model and general principles of portfolio management
• Equity Investments (11%) An overview of equity instruments and a bit of math to evaluate. Not very difficult
• Fixed Income (11%) A review of debt instruments and a lot of math on bonds. Considered challenging. There are nuances that need to be understood (duration, for example).
• Derivatives (6%) Derivatives Survey. It seems to be simple questions, but since there are very few of them on the exam, unsuccessful ones may occur and you will get a low score on this topic.
• Alternative Investments (6%) Like derivatives - the probability of getting a low score, but overall a simple topic. Much attention is paid to hedge funds.

The results for each individual topic are summarized in a secret weighted formula. Then all the results around the world are collected and the minimum level for passing is revealed. It is not the absolute result that is taken into account, but the level relative to other applicants. According to statistics, approximately 50% of participants successfully pass the first level. I hit them. According to various estimates from the Internet, you need to collect about 70% of the correct answers in general, while at least 50% for each topic.

The first level exam is held in June and December. Each year, the exam is slightly adjusted. To pass, you need to register on the CFA website and pay for the exam. The prices are substantial, it’s better to look at them on the website, since they change depending on the date of registration, the sooner the cheaper. Those who pay the exam are given official benefits in electronic form. For an additional fee, you can buy a paper version of textbooks.

Exam preparation

The organizers say that preparing for the first level takes 300 hours, I have about the same amount. By the way, this assessment is also found in the study of languages, for example, 300 hours are needed to master the level of CEFR B1 (Intermediate) in German.

I was engaged for about a year, trying to spend one hour a day. Two hours closer to the exam. The system is very important, i.e. regularity of classes. Before the exam itself, it is recommended to take a vacation of at least 2-3 days for a complete repetition. It is very useful.

I ordered books in paper form, first prepared on them. I walked on topics, solved problems at the end of each chapter. As it turned out later, these tasks are not at all similar to questions from the exam, but they are suitable for checking the assimilation of the material. Then he sold the books and switched to electronic versions, read them from the phone, which was quite comfortable. When 3 months were left before the exam, I switched to Kaplan materials - more focused and concise than official ones. I read them from printouts (two pages per sheet from two sides). Kaplan did not solve the problems at the end of the chapters, since they are even farther from the real exam. Somewhere 2 months before the exam, I began to intensively resolve issues from the official CFA database - available online after paying for the exam. There are about 1000 questions on all topics. They are much closer to the exam, but still have a training focus. A month before the exam, I switched to CFA mock exams. There are 3 of them, they can be downloaded as a PDF (also after registration). It was very useful - the questions were as close as possible to a real exam. I regretted that I had not started solving problems from mock exams from the very beginning and before the exam I managed to master only two. In the end, the essence of the exam is to pass the test and, one way or another, you need to pull on it, to the detriment of the depth and quality of knowledge.

A trial mock exam from Kaplan is held 2 weeks before the exam. A mock exam costs money, but it benefits a lot. The format of the conduct repeats the real exam, but, of course, no one watches the cheating. At the end, access is given to a site where a video with a detailed explanation is offered for each issue - a very cool thing. The mock exam really makes it clear how difficult it is to sit and solve for 3 hours in a row. I figured out if I had time to answer all the questions in principle, it was also interesting to feel the brain overload at the beginning of the third hour, when you can no longer remember and use elementary formulas. It helped to plan the alignment of forces in a real exam.

What are the findings?

The exam gives a good broad overview of almost all areas of finance. But still it is aimed at professionals in the field of finance. In finance, a certificate gives a competitive advantage, in IT it is unlikely, but the training process pumps knowledge and the ability to systematically work intensively and effectively for a long time.