What to Expect From the Certified Financial Planner Exam
If you’re interested in becoming a certified financial planner, passing the CFP exam is a necessary step. The CFP exam is a 170-question multiple choice test that’s designed to thoroughly test your knowledge about financial planning. Preparation is key, as the exam has a reputation for being difficult. Developing a plan for study and knowing what to expect on exam day can increase your odds of earning a passing grade.
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What Is the CFP Exam?
The CFP exam is a comprehensive test that gauges your ability to apply financial planning concepts to real-world scenarios. Passing the test is a requirement for obtaining a certified financial planner designation. The exam is administered by the CFP Board three times a year in March, July and November, both in person and through remote testing centers.
To complete the test, you must answer 170 multiple-choice questions. The exam is administered in two three-hour sessions. There is a fee to take the test, which is determined by your registration date. The fee schedule is as follows:
Early registration – $825
Standard registration – $925
Late registration – $1,025
You can register to take the CFP exam online at the CFP Board website. To register for the test, you must either complete a CFP Board registered program or complete equivalent coursework. Submitted coursework is subject to a transcript review by the CFP Board.
If you opt for the second route, you have to verify your coursework before the exam date. Otherwise, your registration will be withdrawn, and you’ll be charged a $500 postponement fee.
You don’t need a bachelor’s degree to take the CFP exam. You do, however, need to complete a bachelor’s degree program within five years of passing the exam.
What Does the CFP Exam Cover?
The CFP exam spans several areas of core knowledge that the CFP Board deems necessary to work as a certified financial planner. Those core areas include:
Professional conduct and regulation
General principles of financial planning
Risk management and insurance planning
Investment planning
Tax planning
Estate planning
Psychology of financial planning
Each section is assigned a different weighting. For example, retirement savings and income planning account for 18% of the exam questions while the psychology of financial planning is just 7%.
All questions are pass/fail and count as one point each toward your score. In terms of the minimum score needed to pass, the CFP Board does not disclose one. Instead, the Board uses the results of the exam to gauge how competent someone is to carry out the duties of a certified financial planner. As of November 2022, the exam had a 64% pass rate.
How to Study for the CFP Exam
The CFP exam is designed to test what you know about financial planning and your ability to apply those concepts to situations you might encounter when working as a financial planner. With that in mind, here are a few helpful tips for preparing for the CFP exam.
Start early. While it takes just a few hours to complete the CFP exam, it can take months of study to fully prepare. Depending on how much time you have available, you may want to begin your studies three months, six months or even a year in advance of your anticipated test date.
Take advantage of CFP resources. The CFP Board provides free study resources, including a full-length practice exam, study guides and a mentoring program to help you prepare. Those benefits are all included with your exam registration fee.
Create a study schedule. Having a set study schedule can help you to get organized and keep an appropriate pace so that you’re able to cover everything before the exam. You can set your schedule to include specific days and times, which can help you stay committed to the plan.
Consider a course. Taking a CFP exam prep course might be helpful if you’re more comfortable learning in an instructional environment, rather than just doing a self-paced study. You’ll typically pay a fee for these courses, but it may be worth it if you’re able to glean new knowledge or study skills as a result.
Practice makes perfect. And the more problem-solving activities you’re able to complete, the more prepared you may be by the time exam day rolls around. Again, what’s most important to keep in mind is how you can use the concepts you’re learning practically when working with clients as that’s what the CFP Board is most concerned with.
What to Expect When Taking the CFP Exam
How you prepare for the day of the exam depends largely on whether you registered to take the test remotely or in person. If you’re taking the exam at a testing center, you’ll need to have a valid, government-issued ID to gain entry.
You’ll also need to offer a fingerprint, take a photo and complete a body scan upon entering the test center. A body scan isn’t required for remote testing, but you will need to provide a video of your test-taking workspace. And you will need to demonstrate you’re not concealing any cheat sheets on your person.
Before the exam begins, the test administrator will go over the rules and regulations of the test center. They’ll review your calculator to make sure it’s up to standard and provide you with a whiteboard to use during the exam. Once the preliminaries are over, you’ll be shown to your test seat.
The exam is self-paced but it’s important to keep the three-hour time limit in mind as you work through each section. You’ll have a five-minute tutorial to complete beforehand, followed by 180 minutes to complete 85 test questions. There’s a 40-minute break period, followed by the second 180-minute block to complete the remaining questions.
You’ll have a chance to take a brief survey once the exam is over to share your feedback. After you complete the CFP exam, you’ll get your results by email, typically within four weeks.
Is Taking the CFP Exam Worth It?
Taking the CFP exam is worth it if you want to pursue a career as a certified financial planner. You won’t be able to do so without first taking the exam.
Working as a certified financial planner can be rewarding if you’re passionate about helping people to reach their financial goals. The CFP exam can prepare you for a wide range of situations you might encounter when working with clients. And it can help you to fine-tune your problem-solving skills.
However, you don’t need to obtain a CFP designation if you’re interested in becoming a certified educator in personal finance (CEPF) or a certified credit counselor. While there are educational requirements that need to be met for those designations, they’re not as rigorous as the CFP exam.
The Bottom Line
The CFP exam can seem a little daunting and early planning can be critical to your success in achieving a passing grade. Knowing what the exam covers, how to study for it and what happens on the test day can help you to approach it calmly and confidently.
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