The Certified Financial Planner The designation is widely regarded as the definitive mark of competence among investors and finance professionals. Individuals seeking the CFP designation can gain professional skills through the program, while the prestige that comes with holding the designation can also increase an individual’s personal business. (This is especially true for those who wish to provide financial advice on an hourly rate.)

At its most basic level, the CFP designation helps finance professionals better understand the overall financial picture of their clients. Whether you aspire to become a stockbroker, insurance agent, tax specialist or mortgage loan officer, you may be able to advance your career by earning the CFP designation. But those who intend to pursue a CFP designation need to know what they are getting into.

What to expect from the CFP exam

The CFP exam includes questions on five areas of finance: investment, tax, retirement, estate planning, and insurance, the latter of which includes sections on planning education, ethics, and the financial planning process.

The test lasts approximately six hours, divided into two three-hour sessions with a 40-minute break in between.

During this time, individuals must answer 170 multiple-choice questions, including several short and in-depth case studies. Case studies allow a student to show their knowledge of course material and apply it to real-world scenarios. The CFP exam is administered three times a year in March, July and November.

Although students are allowed and encouraged to take the CFP exam multiple times, the chances of a student passing the test are highest on their first exam and decrease with each subsequent exam they take.

For March 2022, the CFP reported an overall pass rate of 65%, while the pass rate for first-time exam takers was 67%.

It should be noted, however, that pass rates do not accurately reflect your chances of passing the exam. The figures reported by the CFP Board are influenced by students who do not pass the exam the first time and attempt to retake it without further preparation. Students who do not pass the exam the first time should not be discouraged from taking the extra steps and trying again.

Key points to remember

  • Professionals typically study up to 1,000 hours to prepare for their CFP exam.
  • The CFP exam questions cover five areas of finance including, but not limited to, investing, retirement, estate planning, tax, and insurance, including sections on education for family members.
  • A CFP designation can help finance professionals build successful careers as a stockbroker, tax accountant, mortgage loan officer, or insurance agent.
  • The CFP exam lasts approximately six hours. The exam is administered in two three-hour sessions, with a 40-minute break.
  • Interested professionals have three opportunities throughout the year (Spring, Summer, and Fall) to take the CFP exam.

How to study

Although the CFP exam is only six hours long, it takes an average of 1,000 hours of study to get there.

Students who have taken out another insurance or FINRA-Administered securities exams may feel that their preparation for these tests will help them cut some of those 1,000 hours, but, tragically, that’s not always the case. Although there is some overlap in the material of the two types of tests, the CFP exam requires students to apply their knowledge of this material differently.

Here are some tips to help you maximize the effectiveness of your studies.

  1. Don’t focus on memorizing concepts. Licensing exams ask candidates about short-term and long-term factual recall, but the CFP exam demands much more of students. To pass the CFP exam, candidates must not only know the curriculum, but they must also be able to synthesize it and apply it to the real world. financial planning scenarios. In fact, the way you might think of studying for licensing exams can actually be counterproductive when it comes to the CFP exam. Although there is a lot of memorization required for both certifications, people who do not practice recall and application will not be prepared for the CFP exam.
  2. Learn the reasoning of the CFP board. Many first-time candidates will be surprised by how the CFP Board scoring exam responds. The CFP board has a specific rationale that it uses when creating correct answers to test questions. In order to have the best chance of passing the exam, students must understand and apply this reasoning as closely as possible.
  3. Aim to get the highest score possible. It probably goes without saying, but candidates taking the CFP exam should aim for the highest possible score. Licensing tests are graded and given a percentage mark, where students must achieve a minimum percentage to pass. But with the CFP, applicants do not receive grades. Instead, they receive a mail notification telling them whether they passed or failed the exam.
  4. Sign up for a review course. You can also consider enroll in one of the many review courses offered in preparation for the CFP exam. Instructors who teach review courses often provide students with internal reasoning guidance through case studies and can indicate the weight that will be given to each section of the exam. Given the scope of the program content of the call for proposals, some topics will not be tested or will be allocated very few questions. By understanding the likelihood of a topic being presented for the exam, individuals can structure their studies more effectively.

How to Succeed on Test Day

When it comes to multiple choice tests, the advice is endless, but these strategies are priceless. Here are our top recommendations for students who want to increase their chances of passing the CFP exam.

  1. Answer each question. Be sure to answer every question, even if you have to guess. You have a 25% chance of guessing an answer correctly, but a 0% chance of getting that answer if you skip the question. CFP exam takers are not penalized for guessing, so you must answer each question. If you can safely eliminate one or even two of the possible answers, your chances of selecting a correct answer increase dramatically.
  2. Stick to your instincts. Your first answer to a multiple-choice question is usually the most accurate.
  3. Learn about taxes. When it comes to the CFP program, students tend to agree that the tax section is the hardest to learn and apply. It may be worth spending more time studying your taxes before starting the CFP program. A helpful way to do this is to study and take the IRS Registered Agent exam, as the majority of the material for this test is also present on the CFP exam.

To eat or not to eat

Some students take up to five years to complete the coursework required to take the CFP Board exam. Others take five months. Although the time required to study for the CFP Board exam differs for each student, all candidates face the same set of questions on test day.

Exam prep manuals often warn students against cramming for tests, but many candidates pass the CFP exam every year by doing just that. Before deciding to study at the last minute, consider what you have already prepared and your performance in short-term recall.

The essential

As with any test, students should get a good night’s sleep beforehand, eat breakfast, wear comfortable clothes, and be prepared for the bright lights and uncomfortable chairs that come with any testing environment.

Although the breadth of material covered by the CFP curriculum can be daunting at first, virtually any student who takes the time to study is capable of succeeding – if not on their first try, then next time.

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