What to Anticipate on the CFA Level III Exam

The CFA Level III exam marks the culmination of the three-part CFA examination process administered by the CFA Institute. Successfully passing this final exam, combined with a minimum of 36 months of relevant professional experience, grants candidates the prestigious CFA charter designation.

While Levels I and II emphasize foundational financial concepts, investment valuation, and their practical applications, Level III centers on advanced portfolio management and wealth planning strategies.

Essential Highlights

• The CFA Level III exam is the final stage in the CFA certification journey, offered biannually in February and August during 2024 and 2025.
• Completion of this level, along with requisite work experience, leads to earning the CFA charter.
• Exam content primarily targets wealth planning and portfolio management, with many questions requiring essay-style responses.
• The exam is structured into two sessions, each lasting over two hours.
• The curriculum is extensive, introducing new topics such as behavioral finance, risk management principles, and advanced risk mitigation techniques.

Exam Format

The Level III exam combines item set questions, similar to those in Level II, with essay questions. It is divided into two sessions, each lasting approximately 2 hours and 12 minutes.

Across both sessions, candidates face 11 item sets and 11 essay sets, each valued at 12 points.

Starting in 2025, candidates will select one of two specialized pathways—private markets or private wealth—during registration. Approximately 65-70% of the exam covers core material shared by all candidates, while about 30% focuses on the chosen specialization.

Important Details

The exam is scored out of 264 points, correlating to one point per minute of exam time.

Curriculum Overview

The exam predominantly covers portfolio management and wealth planning, alongside seven topics grouped into Ethical and Professional Standards and Asset Classes. The following illustration outlines the topic weightings:

Ethics and Professional Standards maintain significant importance, consistent with previous levels. Investment tools are integrated within portfolio management, with economics included in this section for Level III.

The bulk of the exam emphasizes portfolio management and asset classes within the portfolio context.

Ethical and Professional Standards

At Level III, ethics focus on the CFA Institute's Code of Ethics and the Global Investment Performance Standards (GIPS), comprising 10-15% of the exam. The Code of Ethics typically appears as an item set in the second session, while GIPS may be tested either as an essay in the first session or an item set in the second.

Pass Rates

The average pass rate for the CFA Level III exam in 2023 and 2024 ranges between 47-49%.

Asset Classes

The exam evaluates knowledge across major asset classes including alternative investments, derivatives, equities, and fixed income, with a strong focus on portfolio management applications.

Approximately 15-20% of the exam targets fixed-income portfolios, covering objectives, benchmarking, return analysis, immunization strategies, relative value assessments, and risk management techniques. International and emerging market strategies, along with derivatives usage for managing interest rate and credit risk, are also examined.

Equity securities, a vital portfolio component, are assessed through topics like equity investment strategies, fund manager evaluation, equity indices, and corporate governance issues affecting shareholder value. International and emerging market portfolio management is also included.

Alternative investments are discussed with emphasis on various classes and the use of derivatives such as swaps, futures, and forwards to manage associated risks.

Portfolio Management and Wealth Planning

This section represents the largest exam portion, accounting for 35-40% of total points. It introduces advanced concepts including behavioral finance, foundational to financial decision-making, and comprehensive risk management tools and techniques.

Key topics include the Investment Policy Statement (IPS) and its components, institutional portfolio management, asset allocation strategies, risk management applications, and performance evaluation. Economics, previously covered under investment tools, is now integrated within portfolio management.

The CFA Institute does not prioritize specific topics within portfolio management but provides sample essay questions to aid candidates in exam preparation.

Exam Details

Duration: 4 hours 24 minutes
Cost: $990 to $1,290
Questions: 44 multi-part essay and structured response
Passing Score: Varies annually
Pass Rates: Approximately 49% (as of February 2024)
Format: Item Sets and Essays
Prerequisites: Successful completion of CFA Levels I and II, plus a bachelor's degree or equivalent
Experience Requirement: Minimum 36 months in a relevant field for charter eligibility
Exam Dates: February and August
Results Timeline: Typically 5 to 8 weeks post-exam
Official Website: CFAInstitute.org

Exam Difficulty

The CFA exams are known for their rigor. Pass rates for Level I ranged from 35-46%, Level II from 44-59%, and Level III from 47-49% during 2023-2024, highlighting the challenging nature of these assessments.

Requirements to Become a CFA Charterholder

To earn the CFA charter, candidates must pass all three exam levels, meet educational or professional experience criteria (a bachelor's degree or 4,000 hours of relevant work over three years), submit professional references, and pay membership fees to the CFA Institute.

Compensation Expectations

According to the CFA Institute, the average annual salary for CFA charterholders is approximately $180,000, though it is unclear if this includes bonuses or other forms of compensation.

Final Thoughts

The CFA Level III exam is recognized as one of the most demanding, primarily due to its essay-based questions. Success hinges on extensive practice with essay responses and mastery of portfolio management topics, which form the core of this examination.

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