According to the Certified Financial Planner Board of Standards, between 55 and 68 percent of first-time CFP Certification Exam takers pass the exam. Repeat test-takers fare much worse, passing about 30 to 50 percent of the time. People who hold a bachelor's degree or higher and have completed the required planning courses can take the exam to become certified to work independently as financial planners. Unlike many tests, the 285-question CFP exam tests your ability to apply knowledge rather than your ability to memorize facts. In order to pass the test, you must know concepts as well as facts.
What Does the Test Cover?
The CFP exam consists of five parts. The exam covers your knowledge of tax rules and insurance, including ethics and planning, investment planning, retirement planning and estate planning. The test takes 10 hours to complete and is given over two days. You are given specific case studies and must answer questions based on those studies. The CFP exam does not ask you to recount facts about tax rules or planning laws -- instead you are asked to use your knowledge of these laws and rules to make a financial plan.
Things to Do Before the Test
Take a review course designed for the CFP. The CFP Board website gives a list of several schools that offer CFP review courses. A review course helps you to learn how to apply concepts to the CFP case studies and to consider your answers based on the CFP's reasoning for correct answers. Review the sample questions on the CFP website. The questions on the site are retired from previous CFP exams and will give you an idea of what to expect when you take the exam. Also, study tax rules. Consider taking the IRS Special Enrollment Examination prior to taking the CFP exam as the questions on the IRS exam are similar to the tax questions found on the CFP exam.
How to Take the Test
Read the complete case study before attempting to answer any of the questions. Once you begin with the questions, remember that the CFP is looking for the correct answer based on the academic concepts you have learned, so you need to evaluate the case in a strictly academic manner. This may not necessarily be how you would handle the situation in real life. Do not leave any of the questions blank. Don't second-guess yourself. Stick with your first answer and move on to the next question.
Examples of Questions
Questions on the CFP ask you to apply your knowledge of rules. For example, if a person asks you to open an IRA for his daughter, you need to find out more about the client. If a person wants to expand her business, you need to decide how best to advise her to secure the funding or whether expansion is feasible. If you have a client with negative cash flow who wants to refinance his mortgage, you need to figure out his best course of action.