The CFP exam is the gateway to becoming a certified financial planner and is one of four criteria that candidates must pass to earn their CFP designation. In addition to the CFP exam, candidates are also evaluated based on their ethics, education, and experience.
"In my experience, the exam presents the one 'unknown' element of the certification process," says professor Craig Lemoine, CFP, at the American College. So how can potential financial advisors best prepare for their CFP certification exams? For one, evaluating and selecting the best CFP prep courses and programs can hike their chances of passing the exam.
Build a Study Program Around Test Dates
The CFP exam is administered by the Certified Financial Planner Board of Standards and is offered three times a year during an eight-day testing period in March, July, and November. Depending on how far in advance you sign up, the registration fee can range from an early bird rate of $725 to a late registration rate of $925. Standard registration costs $825.
The exam covers a variety of questions stemming from eight Principal Knowledge Topic categories, the most common of which are investment planning, retirement and income planning, and general principles of financial planning. The CFP Board gives a breakdown of the percentage of questions from each category the test will cover:
- Professional Conduct and Regulation (7%)
- General Principles of Financial Planning (17%)
- Education Planning (6%)
- Risk Management and Insurance Planning (12%)
- Investment Planning (17%)
- Tax Planning (12%)
- Retirement Savings and Income Planning (17%)
- Estate Planning (12%)
The only academic requirement to take the test is that the applicant holds a bachelor's degree. Additionally, the CFP applicant must have either 6,000 hours of professional experience related to the financial planning process, or CFP Board requires 4,000 hours of apprenticeship experience.
Choosing the Best CFP Program
Since only about 62% of applicants pass the exam, choosing the best CFP study programs is essential. To evaluate a CFP prep course that best fits your needs, the CFP Board advises asking the following questions:
- What educational level is your curriculum (junior/senior baccalaureate, master's, or doctorate level)?
- How long does it take to complete your curriculum?
- How much does your program cost? Does that amount include books, tests, and other fees?
- Are you anticipating making changes to your program?
- How do you schedule your courses? How often are courses offered?
- Is your distance education program offered online or is it paper-based?
- What are the credentials of your faculty?
- Does your program have internships or job placement services?
- Overall, how will your program prepare someone to be a financial planner?
Focus on Questions-Based Training
Lemoine advises CFP candidates to study and complete discrete, set, and case-style practice questions. "The questions and specific financial planning topics on the actual exam change with each administration, and are not known to academic programs or review providers prior to taking the test," he says. "However, students can learn the style of the exam by solving practice questions."
Go Price Shopping
The best CFP programs aren't cheap. When it comes to cost, consider all your options, including online courses, that will give you bang for your buck. To start, the CFP Board website has a full list of registered study programs that are searchable in three categories:
- By format
- By program type
- By program name
Purchase Your CFP Workbooks
Another helpful way to jumpstart your studying for your CFP exam is to purchase a few guides that will get you up to speed on the exam. Some, such as "Your Guide To the CFP Certification Exam" and the "CFP Certification Exam Practice Question Workbook" are available online for purchase and give you a helpful overview. You can also research further study tips for the CFP Exam.
The Bottom Line
The competition to become a financial planner is hot and growing even hotter. In 2019, there were more than 86,000 CFP professionals. That represents about one in five financial advisors in the U.S. The sooner you pass the CFP exam, the better off you'll be in gaining a solid foothold in one of Wall Street's fastest-growing sectors.