Hi there!

Welcome to the first of our study session specific blogs for the CFA Level I exam. My focus in this post is on Study session 1- Ethical and Professional Standards (Ethics).

My personal advice to you is to read the Ethics portion THOROUGHLY just as you commence your preparation, and at least once again at some point in the last three to four weeks leading up to the exam.

Candidates are often unsure of whether they should be reading the Ethics material from the curriculum or from study guides. It’s fairly obvious that the curriculum is a lot more comprehensive, but I understand the need for study guides as a more efficient and focused mode of learning. For Ethics however, I strongly recommend that you read the curriculum. It is a bit too technical in certain areas, and tends to use a lot of investment industry-related jargon that might overwhelm some of you who are new to the investment management industry (e.g. buy side and sell side research, discretionary and nondiscretionary portfolios). So do not get caught up in too many minute details.

If you find the Ethics readings in the curriculum too long, too boring or if you don’t have so much time, then the least you should do is read the description, guidance and recommended procedures for compliance from your study guide but go through the examples from the curriculum. You might not realize it as this stage, but reading over those examples thoroughly will improve your problem solving skills going forward.

Only once you are done with the readings should you attempt the Ethics questions in the curriculum. Ethics-related questions on the exam will be very similar so don’t waste these questions by attempting them before you’re ready. Yes, prep providers provide lots of questions, but I feel that they tend to be very verbose, and sometimes extremely vague to the point that they end up doing more harm than good. However, one of the best ways of absorbing subtle points is learning from your mistakes. So when you answer questions incorrectly make sure you understand exactly how your thinking was flawed. Keep in mind that Ethics questions on the exam aren’t very long, and do not generally contain convoluted case studies/stories that you might get lost in.

CFA Institute does make mock exams available for purchase. These contain Ethics questions as well. Only purchase these after you’ve reviewed the Ethics readings again as a part of your final revision. Of course, if you’re not doing well enough on Ethics, I would advise you read it again and again.

Ethics comprises 15% of the Level 1 exam. Typically the first 18 questions of both the morning and afternoon sessions are on Ethics (including GIPS, which I shall blog about later). Do not underestimate its importance. I find that students are very eager to get with the ‘real stuff’ so they leave Ethics for bedtime reading later on, but I urge you to read it at least once at the onset. Doing well on Ethics is crucial to your success on the exam.

I welcome constructive and helpful feedback from my peers and students. If you currently are a Level I candidate or have already taken the exam, please do share your strategy with regards to preparing for Ethics. It’s always good to learn from one’s own mistakes, but it’s wiser to learn from someone else’s.

Be back soon with more.

Tata