CFA Level 1 Pass Rate Drops to Lowest Since 2005

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The lowest percentage of candidates in four years passed the first level of the Chartered Financial Analyst exam, a designation that may offer an edge after the industry’s worst shakeout in at least three decades.

Thirty-four percent passed Level 1, matching the rate in December 2005, compared with 46 percent in June and 35 percent in December 2008, the CFA Institute said in a statement today. The pass rate for all first-phase exams taken since the program began in 1963 was 44 percent, less than Level 2 at 49 percent and Level 3 at 64 percent.

Applicants pursue the CFA hoping it will lead to a better job, higher salary and deeper understanding of finance. The not- for-profit CFA Institute, based in Charlottesville, Virginia, recommends 300 hours of study for each of the three six-hour tests. Those who passed Level 1 are eligible to take Level 2 on June 5.

“Despite challenging economic conditions, more than 44,000 individuals around the world took the Level 1 exam in December,” said John Rogers, chief executive officer of the CFA Institute. “This is a remarkable testimony to the dedication of candidates to the CFA Program and to their commitment to excellence and integrity in the investment arena.”

Asia Candidates

Candidates may have trouble retrieving their results from the institute’s Web site today because it crashed shortly after the scores were posted at 9 a.m. New York time, said Steve Wellard, a spokesman for the institute. He didn’t know when the site would be fixed.

Demand for the certification rose during the upheaval in the financial-services industry as firms worldwide cut 345,131 jobs, according to data compiled by Bloomberg. Candidates took a record 104,111 exams for all three levels combined in June, a 45 percent increase from June 2007. Level 1 candidates totaled 44,209 in December, an 18 percent jump from two years ago.

The pass rate for all three regions — Americas; Europe, Middle East and Africa; and Asia — was 34 percent. The institute offered the exam in 31 countries. Asia had the most test takers with 20,035, or 45 percent, of the 44,209 total.

Topics range from ethical standards and securities valuation to financial statement analysis and portfolio management. More than 1 million CFA exams have been taken since the program began, with 117,831 people passing Level 3. The institute offers all three exams in June and only Level 1 in December.

The CFA program stems in part from proposals by Benjamin Graham, a pioneer of value investing who mentored Warren Buffett, for a rating system for financial analysts.

Editors: Alec McCabe, Gregory Mott.