2024 CFA Level I Exam: CFA Discussion Topic: Level 1 with no finance background

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Topic: Level 1 with no finance background

Author	Topic: Level 1 with no finance background
pompompom @2018-02-14 11:16:33	Hi, I just passed L1 in Dec. I started a new job with an IB in July 2016 and had zero finance background. I had studiously avoided math since high school (almost 20yrs) and have a BA in English and a Masters in Economic History (all qualitative, no math). But i passed. When i signed up to do this, there was not much about people who had no experience and no relevant education and how they found this exam, so with my newly minted pass (above 70 in all but [ironically] Econ) i thought i would share my thoughts: PROFESSIONAL BACKGROUND I started my new job with an IB and knew nothing - not even long/short. I didn't know what a bond was or what a derivative was. But i needed to learn (and quick!) so that i would be able to keep this job and have something to bolster my resume if i got fired. Before this I had been a web designer with very limited coding experience. ACADEMIC BACKGROUND No math. Hated math. I failed algebra freshman year in high school and struggled though the rest and deliberately avoided anything to do with it in college. Looking back, i think my confidence was blown freshman year and with the right mentor, i could have turned things around. TEST PREPARATION I bought analystnotes pro package. I read its notes exclusively and did the EOC questions in the CFAI books. The only exception was Ethics where I read both AN and CFAI. I started reading several nights a week in July. Ethics went by pretty quickly but, given my lack of math, Quant took until the end of September. In October, I switched to the study routine i stuck to until the end: 8-10pm every night except Fridays. Weekends, 2-4pm (while my daughter napped). Quant was a slog but ended up being a reliable win on practice tests and >70% on the real thing, so worth the effort. I tried to keep a rough schedule of a book per month. FRA took about six weeks, Econ took less than a month (although I got between 50-70% because I took it for granted). I ended up with about four weeks for revision and practice exams. I didn?t know quite how to structure this and would have been much more methodical were i to change the past. I should have gone through and written up all the notes (which i eventually did - 40 pages typed) and then done as many exams as possible. I used AN's 10 mock exams to drill down into areas I was shaky on (DDM, Percentage of Completion Method, swaps, and many more) and just did questions over and over until I felt some level of competency. SUBJECT AREAS - look at the study notes online if you subscribe, they offer good guidance on what you should know/focus on. ETHICS - concentrate on CFAI for this and brush up before the exam. Make sure you nail this. Ensure you understand what consitutes each section - often they give you three answers which are all true but only one refers to, say, code of ethics versus standards. The AN ethics questions were not as good as the CFAI ones. They tried to trick you semantically whereas the CFAI ones really tested the knowledge. QUANT There seems to be a lot and it may seem like you will never conquer it. Do all the practice questions you can. For the formulas, i found it easier to understand what the formulas were saying rather than the symbols. This meant that I could reconsitute the formula in some cases and in others it meant that the symbol expressions stuck in my head more. When you look at something like the formula for variance of a two stock portfolio (which will be tested) it looks like a nightmare but when you look at what it is actually doing, it becomes more easily understood. ECON There are some key sections which are easy to pick out but everything is up for grabs. Definitely know the kinds of things that will cause the economy/GDP/employment/inflation to increase/decrease. But i did have some background in this (and didn?t kick butt here). EQUITIES/CORP FIN/PORT MGMNT I found this ok although i spent a fair amount of time just researching vocab words to understand what was being said. Try to get a sense of where this is all going i.e. these are all tools to manage a portfolio and to advise an investor. That helps when understanding efficient frontier, CML/SML. Know how to calc DDM, all stuff to do with margins, CAPM is imperative, etc. Know the strategies and the hallmarks of strong-form, weak-form markets etc. - seems to be always on the tests and pretty easy. FIXED INCOME This was ok although i thought was stronger than i was. The practice exams caused me to rethink this and go back and relearn all the durations, T-bill calcs, etc. DERIVATIVES So much to learn for so few points. I found review questions were really useful to pare down my knowledge to need-to-know basis. I routinely did poorly on this section on the practice exams but did well on the final. Know how to calc swaps of all kinds, futures margins, etc. ALTERNATIVE INVESTMENTS This is fairly straightforward but again a lot to know for very few points. This means that you could know 90% of this well and the handful of questions you get on the exam could focus on your weak spots which knocks your confidence. Secret Sauce was again useful to get to the heart of the matter. FINANCIAL REPORTING AND ACCOUNTING Man, did i hate doing this. I routinely did poorly on this section and worked my ass off toward the end and got >70%. This is a make-or-break part of the exam so spend the time on it. Capitalising versus expensing - know all the key financial ratios and the effect that different accounting treatments would have on them. There?s a lot to know and it is pretty damn dry so just keep going. It IS doable. PRACTICE TESTS I did the AN 10 mock exams and got 65% on average. They didn?t give me a lot of confidence: 65%, 70%, 67%. CFAI mock: 68%. The tests helped me get my timing down much better and I got better with each test. On the real one, I finished well ahead of time in both sections?. which secretly terrified me. FORMULAS I went to the LOS and copied and pasted any that said "compute", "calculate", "estimate" etc. and made sure I could do those. It feels overwhelming but it is doable. I wrote them all on flashcards but ended up not having the time to look at them. I found that doing basic and review questions was a better way of getting the formulas in my head. Some of them such as updated probability, i could not remember the formula but knew how to do them anyway my own little way. Understand what the formulas are trying to express and they will become easier to memorise. Understand why the denominator is what it is because this is the units in which the numerator will be expressed (and, by the way, before i started studying, i could barely remember which was numerator and which was denominator). HOW HARD WAS IT? well, i don?t know about you but college was pretty easy for me. I went to a top 20 school in the states and didn?t have to work very hard at all to get an A-. For an A+ I would have had to work my ass off, so i didn?t. So i felt like kind of a fraud - like i had done a degree full of easy classes (i chose many to maintain a GPA rather than knowledge) and had never really tested how capable i was. I just cruised. Moreover, i had avoided science, finance and math because i felt i was "not good at those". So this was really putting myself on the line - finally testing whether i had the brains and stamina to pass something really difficult. i have never worked this hard. if i had worked this hard in college, i would have had a 4.0! my marriage was tested by all the hours of study. no single part of this test is really, really difficult. the hard part is putting in all the hours - especially when the subject is dry, dry, dull stuff you don?t care about. from my one experience (others may differ), if you put in the hours, cover all the material, give yourself a month to review and do at least four practice tests (including the CFAI one), you have a good chance of passing. I was amazing during the practice tests when i realised how much i had actually learned - the math was actually a delight because i would 'know' if i had the right answer (but there are annoying decoys based on common errors). But who would have ever thought i would have been excited to encounter a math problem. it is like being an athlete - you can be an OK talent but if you practice enough, you can compete with the big boys and win. Practice makes pass. Good luck. Passing was one of the best professional/academic achievements of my life.
chipster @2019-04-22 15:21:39	I can't thank you enough for this. It is incredibly inspirational. I am a full time physician with a young child running a small RIA on the side and found it very challenging to get past my Series 65, which I was fortunate to do on my first attempt, but L1 has been quite daunting. I am shooting for Dec 14 and much like you have never considered myself strong in math or stats.

Author

Topic: Level 1 with no finance background

pompompom
@2018-02-14 11:16:33

Hi,

I just passed L1 in Dec. I started a new job with an IB in July 2016 and had zero finance background. I had studiously avoided math since high school (almost 20yrs) and have a BA in English and a Masters in Economic History (all qualitative, no math). But i passed. When i signed up to do this, there was not much about people who had no experience and no relevant education and how they found this exam, so with my newly minted pass (above 70 in all but [ironically] Econ) i thought i would share my thoughts:

PROFESSIONAL BACKGROUND
I started my new job with an IB and knew nothing - not even long/short. I didn't know what a bond was or what a derivative was. But i needed to learn (and quick!) so that i would be able to keep this job and have something to bolster my resume if i got fired. Before this I had been a web designer with very limited coding experience.

ACADEMIC BACKGROUND
No math. Hated math. I failed algebra freshman year in high school and struggled though the rest and deliberately avoided anything to do with it in college. Looking back, i think my confidence was blown freshman year and with the right mentor, i could have turned things around.

TEST PREPARATION
I bought analystnotes pro package. I read its notes exclusively and did the EOC questions in the CFAI books. The only exception was Ethics where I read both AN and CFAI.

I started reading several nights a week in July. Ethics went by pretty quickly but, given my lack of math, Quant took until the end of September. In October, I switched to the study routine i stuck to until the end: 8-10pm every night except Fridays. Weekends, 2-4pm (while my daughter napped). Quant was a slog but ended up being a reliable win on practice tests and >70% on the real thing, so worth the effort.

I tried to keep a rough schedule of a book per month. FRA took about six weeks, Econ took less than a month (although I got between 50-70% because I took it for granted).

I ended up with about four weeks for revision and practice exams. I didn?t know quite how to structure this and would have been much more methodical were i to change the past. I should have gone through and written up all the notes (which i eventually did - 40 pages typed) and then done as many exams as possible.

I used AN's 10 mock exams to drill down into areas I was shaky on (DDM, Percentage of Completion Method, swaps, and many more) and just did questions over and over until I felt some level of competency.

SUBJECT AREAS - look at the study notes online if you subscribe, they offer good guidance on what you should know/focus on.

ETHICS - concentrate on CFAI for this and brush up before the exam. Make sure you nail this. Ensure you understand what consitutes each section - often they give you three answers which are all true but only one refers to, say, code of ethics versus standards.

The AN ethics questions were not as good as the CFAI ones. They tried to trick you semantically whereas the CFAI ones really tested the knowledge.

QUANT
There seems to be a lot and it may seem like you will never conquer it. Do all the practice questions you can. For the formulas, i found it easier to understand what the formulas were saying rather than the symbols. This meant that I could reconsitute the formula in some cases and in others it meant that the symbol expressions stuck in my head more. When you look at something like the formula for variance of a two stock portfolio (which will be tested) it looks like a nightmare but when you look at what it is actually doing, it becomes more easily understood.

ECON
There are some key sections which are easy to pick out but everything is up for grabs. Definitely know the kinds of things that will cause the economy/GDP/employment/inflation to increase/decrease. But i did have some background in this (and didn?t kick butt here).

EQUITIES/CORP FIN/PORT MGMNT
I found this ok although i spent a fair amount of time just researching vocab words to understand what was being said. Try to get a sense of where this is all going i.e. these are all tools to manage a portfolio and to advise an investor. That helps when understanding efficient frontier, CML/SML. Know how to calc DDM, all stuff to do with margins, CAPM is imperative, etc. Know the strategies and the hallmarks of strong-form, weak-form markets etc. - seems to be always on the tests and pretty easy.

FIXED INCOME
This was ok although i thought was stronger than i was. The practice exams caused me to rethink this and go back and relearn all the durations, T-bill calcs, etc.

DERIVATIVES
So much to learn for so few points. I found review questions were really useful to pare down my knowledge to need-to-know basis. I routinely did poorly on this section on the practice exams but did well on the final. Know how to calc swaps of all kinds, futures margins, etc.

ALTERNATIVE INVESTMENTS
This is fairly straightforward but again a lot to know for very few points. This means that you could know 90% of this well and the handful of questions you get on the exam could focus on your weak spots which knocks your confidence. Secret Sauce was again useful to get to the heart of the matter.

FINANCIAL REPORTING AND ACCOUNTING
Man, did i hate doing this. I routinely did poorly on this section and worked my ass off toward the end and got >70%. This is a make-or-break part of the exam so spend the time on it. Capitalising versus expensing - know all the key financial ratios and the effect that different accounting treatments would have on them. There?s a lot to know and it is pretty damn dry so just keep going. It IS doable.

PRACTICE TESTS
I did the AN 10 mock exams and got 65% on average. They didn?t give me a lot of confidence: 65%, 70%, 67%. CFAI mock: 68%.

The tests helped me get my timing down much better and I got better with each test. On the real one, I finished well ahead of time in both sections?. which secretly terrified me.

FORMULAS
I went to the LOS and copied and pasted any that said "compute", "calculate", "estimate" etc. and made sure I could do those. It feels overwhelming but it is doable. I wrote them all on flashcards but ended up not having the time to look at them. I found that doing basic and review questions was a better way of getting the formulas in my head. Some of them such as updated probability, i could not remember the formula but knew how to do them anyway my own little way. Understand what the formulas are trying to express and they will become easier to memorise. Understand why the denominator is what it is because this is the units in which the numerator will be expressed (and, by the way, before i started studying, i could barely remember which was numerator and which was denominator).

HOW HARD WAS IT?
well, i don?t know about you but college was pretty easy for me. I went to a top 20 school in the states and didn?t have to work very hard at all to get an A-. For an A+ I would have had to work my ass off, so i didn?t. So i felt like kind of a fraud - like i had done a degree full of easy classes (i chose many to maintain a GPA rather than knowledge) and had never really tested how capable i was. I just cruised.

Moreover, i had avoided science, finance and math because i felt i was "not good at those".

So this was really putting myself on the line - finally testing whether i had the brains and stamina to pass something really difficult. i have never worked this hard. if i had worked this hard in college, i would have had a 4.0! my marriage was tested by all the hours of study.

no single part of this test is really, really difficult. the hard part is putting in all the hours - especially when the subject is dry, dry, dull stuff you don?t care about. from my one experience (others may differ), if you put in the hours, cover all the material, give yourself a month to review and do at least four practice tests (including the CFAI one), you have a good chance of passing.

I was amazing during the practice tests when i realised how much i had actually learned - the math was actually a delight because i would 'know' if i had the right answer (but there are annoying decoys based on common errors). But who would have ever thought i would have been excited to encounter a math problem. it is like being an athlete - you can be an OK talent but if you practice enough, you can compete with the big boys and win. Practice makes pass.

Good luck. Passing was one of the best professional/academic achievements of my life.

chipster
@2019-04-22 15:21:39

I can't thank you enough for this. It is incredibly inspirational. I am a full time physician with a young child running a small RIA on the side and found it very challenging to get past my Series 65, which I was fortunate to do on my first attempt, but L1 has been quite daunting. I am shooting for Dec 14 and much like you have never considered myself strong in math or stats.

CFA Discussion Topic: Level 1 with no finance background

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I used your notes and passed ... highly recommended!

CFA Discussion Topic: Level 1 with no finance background

Lauren