The Certified Financial Planner (CFP) designation is one of the most prestigious titles that a financial professional can hold, so it shouldn’t surprise you to hear that it doesn’t come easy. It takes months of study before you can even think about taking the CFP exam, not to mention quite a lot of money.
You want to get it right the first time and that means choosing the right study tools and techniques from the get-go. For those who have been out of school for some time, textbooks and exams may feel a bit foreign to you. Use the following tips to help you develop a sound study strategy so you can ace the CFP exam on your first try.
1. Complete a CFP Board-registered education program
You can’t even think about taking the CFP exam until you’ve completed a CFP Board-registered education program. It’s not that it’s just a bad idea. The CFP Board literally will not allow you to sit for the exam until you prove that you’ve completed an approved course.
College Course Credit
There are many education programs for you to choose from. For those in college who would like to someday become a CFP, the best option is to pursue a financial planning degree at a university with a CFP Board-registered program. These programs usually involve several years of study and multiple courses, so you can go very in-depth with the material and get personalized assistance from your professors as needed. But it goes without saying that getting a college degree is expensive and those on a budget may find this approach to be cost-prohibitive.
CFP Exam Prep Courses
Your other option is to take a standalone CFP exam prep course. You can choose an in-person course if you need a structure and a classroom environment to stay on track or an online course if you don’t live near a classroom course and or if you learn better at your own pace. Whichever type of program you choose, it’s important to make sure that it’s certified with the CFP Board or else it won’t count as a qualifying education program. You can figure out whether a course qualifies by using the CFP Board’s Find an Education Program tool on its website.
CFP education courses usually come in one of three formats. Each has its own pros and cons. Here they are, listed in order from least expensive to most expensive:
- Self-Paced: You pay for access to the course materials and you review them at your own pace.
- Live Online: You log into an online classroom at regular times and study the material with the help of a remote instructor.
- Live In-Person: You travel to a physical location, usually a college campus, and attend classroom courses.
Most courses have a final exam that you must pass in order to complete the course. Expect the course to take you at least three to six months or even longer if you’re not able to give it much attention every day.
Our team reviewed the top CFP prep courses and gathered all the information you need to make choosing a prep course simple. Our top recommendation is Kaplan.
Once you’ve successfully completed your CFP Board-registered education course, the course provider should forward your name and course completion information to the CFP Board, enabling you to register for the exam.
2. Take a timed practice test
It’s important that you take a timed practice test before doing any additional self-study to help identify your weak points. You might be able to use practice tests from your education course or you can find an additional full-length practice exam on the CFP Board’s website.
Take it under conditions that are as similar as possible to your exam day conditions. That means putting away your phone and other distractions, finding a quiet space, sticking to the time limits, and taking breaks when you would normally be allowed breaks during the exam.
3. Identify your weak points
Use the results from your practice test to identify the areas that you know well and the areas where you could use a little more study. When you create your study schedule, you can plan to spend more time on the areas that are difficult for you and less on the material you already understand.
Make note of any topics you don’t understand, question types that trip you up, and how well you’re dealing with other factors, like time management and test anxiety. Plan to focus on all of these difficult areas as you move forward with your CFP exam prep plan.
4. Understand the breakdown of the test
The CFP Board breaks the exam down into the following eight Principal Knowledge Topic Categories and weights them accordingly:
- Professional Conduct and Regulation – 7%
- General Financial Planning Principles – 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%
It’s important to review each knowledge area because you’ll see questions about all of them, but you should focus your attention primarily on the General Financial Planning Principles, Investment Planning and Retirement Savings and Income Planning categories as these three together make up over half of the questions you’ll see on the exam.
If you struggle with concepts in any of these areas, you should spend the most time on these until you feel confident that you understand them and then you can move onto other concepts in the less-important knowledge areas.
5. Create a study schedule
Now that you know what you need to work on, you can begin crafting a study schedule to help get you ready for the exam. You might want to briefly review all of the material you’ll be tested on, but you should focus primarily on the problem areas you’ve identified.
Figure out how much time you think it’ll take you to complete your review of all the study materials and build in a bit of a cushion in case things take a little more time than you thought. Next, figure out how much time you can devote to studying for the CFP exam per day or per week. It’s up to you to figure out which study schedule works best for you, but for best results, you should plan to devote regular time to studying every week to keep yourself on track.
Your study schedule should also include regular practice exams so that you can continue to work on your time management skills and assess whether the extra time you’re spending on certain topics is paying off for you. If you find that you’re doing much better in one area or that you’ve fallen behind in another area, you can readjust your study schedule to keep yourself focused on the topics that are most important.
Once you’ve figured this out, you should have an idea of how many weeks it will take for you to feel prepared for the CFP exam. Don’t forget to work around days or weeks that you know you’ll be unable to study due to vacations, holidays or other events. Use your study schedule to help you decide when would be the best time for you to take the CFP exam.
6. Sign up for the exam – Test Dates
The CFP exam is offered in March, July and November each year. The next exam date might be fast approaching or it might be a few months out. Think carefully about when you plan to take it and don’t rush yourself into taking it before you feel like you’re ready.
The CFP exam is conducted on a first-come, first-serve basis, so if testing centers near you are full, you might have to wait until the next available date. You can take the CFP exam a total of five times in your life and a maximum of three times in a 24-month period.
Find a study partner
Those who struggle to stay on track on their own may do better if they find a partner who is also studying for the CFP exam so they can work together. This will help keep you accountable and it can also help you better understand difficult concepts and problem types. Your partner may be able to explain concepts to you that you’re struggling with and explaining concepts to them can actually help reinforce them in your own mind.
If you do plan to work with a partner, you should create a study plan together that you’re both comfortable with. You might choose to review all of the material together or to study separately most days and meet once per week to go over what you’ve learned.
If you can’t find a partner to work with and you run into problems, consider seeking help from someone who is already a CFP or check on the forums, if your CFP education course offered one, to see if there are others you can reach out to for support and assistance.
Focus on verbalizing concepts and applying them to real-world scenarios
When you’re studying for a test like the CFP exam, it’s tempting to focus on passing the test and nothing else, but you’ll be working as a CFP for years so you must make sure you actually know what you’re talking about. Try to explain concepts in your own words and apply them to scenarios you might come across in the real world.
The CFP exam contains several case scenarios that are designed specifically to test your ability to handle real-world problems, so seeking out practice case scenarios is a great way to assess how well you understand the most important concepts.
Arrive early and prepared on exam day
You don’t want to run into any problems on exam day after you’ve studied so hard, so make sure you review everything you need to do and bring with you. Figure out where your testing location is and approximately how long it will take to get there. Build in an extra cushion in case you run into traffic or construction. Plan to arrive in advance of your testing time so that you can complete the check-in process.
You must bring a valid, unexpired, government-issued photo ID, like a driver’s license or a passport to the exam to verify your identity. You may also have an approved calculator. The CFP Board’s website contains information on which calculators are allowed and which are not. Food and drinks are not permitted within the testing room. Those who need food, liquids, or medications for medical reasons must fill out a Special Accommodations Request Form before their exam day.
Your test administrator will provide you with a locker where you can store your personal belongings during the exam and they will check to make sure you have nothing in your pockets. They’ll also give you any other instructions you need to know for the exam.
Having a positive attitude, especially if you’re prone to test anxiety or you’re still struggling with a key concept, isn’t always easy, but it’s important for doing your best on the exam. Try to remain calm and encourage yourself by thinking about how far you’ve come and how many concepts you understand well. Be mindful of the clock during the exam, but give yourself plenty of time on the difficult questions.
Don’t worry about getting every single question right. You don’t have to get every question right in order to pass. Just do your best on each one and pat yourself on the back when it’s done.
What to do if you fail the CFP exam
You’ll get your CFP exam results approximately four weeks after you’ve taken the test. Don’t be discouraged if you fail the CFP exam on your first try. Many people do. You can always try again, though you’ll have to wait at least a few months for the next test date to come around.
Your results will break down your performance so you can see how you did and which areas you could use more improvement in. Go back through the steps above and focus on these challenging areas to help you better prepare for the exam.
Some CFP exam prep courses include pass guarantees, so if you don’t pass the test after completing their prep course, you can take the course again free of charge. Make sure you read through all of the requirements for the pass guarantee so you understand what you must do in order to claim it, if need be. You could also try seeking out another CFP exam prep course if you found that you struggled in many areas on the test.
Everyone learns a little differently, so there’s no single study CFP exam prep program that will work best for everyone. Think about how you learn best and make sure you give yourself plenty of time to go over everything. The last thing you want to do on a big exam like this is rush through it without giving your best effort.