What Is CFA Level 1 and Should You Feel Intimidated By It?

Becoming a CFA Level 1 is not for everyone. Once you get a good grasp of what is CFA Level 1 you will have the realization that it is a challenging but rewarding career path. It can expose you to areas of the finance world that the vast majority of the population considers a major mystery. Becoming a CFA Level 1 will also enable you to become a Portfolio Manager, Equity Research Analyst, Wealth Manager, Fund Manager, Risk Consultant, or even a CFO.

What is a CFA?

It is better to first start with the definition of a CFA before moving to what is a CFA Level 1. A CFA or chartered financial analyst is a profession recognized worldwide that depicts the level of competence of a financial analyst. It also depicts a high level of morality and ethics.

Amongst the many areas that are covered by a CFA school, the most notable are accounting, money management, financial analysis, security analysis, ethics, economics, and many more. Passing exams cover all these areas and students are expected to have advanced knowledge on the topics, more so than someone with an economics degree. It is considered the gold standard for investment analysis.

Why are there multiple levels?

In total, there are 3 CFA Levels. Each level has a specific structure and goal. A CFA Level 1 mostly emphasizes the theoretical aspects of the discipline and various areas of study. For new students, the amount of theoretical information may seem overwhelming. This is also reflected in the CFA Level 1 exam that is based only on the theoretical concepts studied during the course.

Level 2 is different in structure as it focuses on applying theoretical concepts to simple use cases. Its goal is to teach students how to use their knowledge in genuine scenarios. The exam is different as it is structured in multiple-choice questions revolving around simple use cases.

Level 3 continues similarly to Level 2 but focuses on more advanced concepts and use cases. The exam is usually structured in the form of essay questions. Each question requires a well-written and formulated an answer that provides the solution to a problem.

Is the CFA Level 1 a challenge?

CFA Level 1 can be overwhelming for individuals with little to no practice in finance or who have no finance studies. It goes over many theoretical concepts that are being taught in economic schools and dives deeper. Having some prior knowledge makes the CFA Level 1 easier. It still requires plenty of dedication and study. It also caters more towards individuals with a high moral standard and ethics. Simply put, Level 1 can be challenging or easy depending on prior experience, education one your willingness to learn new concepts and financial analysis methods.

For many institutions and organizations, when asked what is CFA Level 1 it automatically implies a highly skilled individual with an analytical way of thinking, deep knowledge of the finance world, equipped with the skills to manage a portfolio, understanding of corporate finance, ability to evaluate risks and a deep understanding of portfolio management and wealth planning.

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