CFA Level III Pass Rate Drops as More Than Half Fail the Test

A record 54 percent of candidates for the third and final part of the Chartered Financial Analyst exam failed after the number of applicants more than doubled in the past 10 years.

Of the 21,462 people who took the test in June, 9,880 passed and 11,582 failed, according to a statement today from the Charlottesville, Virginia-based CFA Institute. The pass rate of 46 percent declined from last year’s 49 percent. In 1963, the first year the exam was offered, 94 percent were successful.

Applicants sign up betting that the CFA designation will lead to a greater understanding of finance and a higher salary as Wall Street continues to hire more workers. New York City financial firms added 6,900 employees from the end of February through June, compared with an 11,000 loss during the same period last year.

“While pass rates in the last decade are lower than in the early decades of the program, there is a much larger pool of candidates pursuing the designation and today’s capital markets are more complex,” Tom Robinson, the Institute’s managing director of education, said in the statement.

The Level 3 exam includes a series of essay questions and is the final part of a process that typically takes candidates four years to complete, according to the Institute, which recommends 300 hours of study for each of the three tests.

In July, the not-for-profit organization said 42 percent of 62,300 applicants passed the exam’s first stage, down from 46 percent on the June 2009 exam. Level 2 results were also down, with 39 percent of 52,500 applicants passing compared with 41 percent a year earlier.

The Institute formed in 1990 with the merger of the Institute of Chartered Financial Analysts and the Financial Analysis Federation. The CFA program, previously administered by the ICFA, started in 1963 with 284 applicants. It stems in part from Benjamin Graham, a pioneer of value investing who mentored Warren Buffett and advocated a rating system for financial analysts.

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