CFP Exam

Written by: Mary Gerardine

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CFP Exam

For aspiring financial advisors, the Certified Financial Planner exam stands in the way of one of the most respected qualifications you can obtain. In this article, we break down this exam’s structure and content outline, as well as provide prep tips to help you successfully pass on your first attempt.

Whether you’re just starting out or are in the final stages of preparing for your exam, this resource contains invaluable guidance as you work toward achieving your goal of becoming a Certified Financial Planner (CFP).

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What is the CFP Exam

The CFP exam is one of the key requirements to achieving the highly regarded Certified Financial Planner (CFP) designation, which is recognized across the finance industry as a definitive mark of expertise and competence.

This exam tests candidates’ knowledge of a broad spectrum of financial topics, including investment, tax, retirement, estate planning, and insurance. Beyond these core subjects, the exam also delves into more specialized areas like education planning, ethics, and the overall financial planning process.

This extensive range of topics ensures that candidates are well-versed in various aspects of financial management and advice.

The exam is typically scheduled during three eight-day periods, which take place in the months of March, July, and November. To ensure you’re prepared well in advance of these CFP exam dates, equipping yourself with the right study resources is essential.

Exam Requirements

In order to be eligible to take this exam, you’ll need to meet the CFP Board’s certification coursework requirement. This can be done by either:

  1. Completing a CFP Board Registered Program; or
  2. Finishing equivalent coursework approved by the CFP Board’s Transcript Review process

While you can register for the CFP exam before you complete one of the above, you will need to provide verification that you’ve completed this course by your exam’s Education Verification Deadline. Failing to send this confirmation to the CFP Board before the deadline will incur a $500 exam postponement fee.

Certain advanced degrees or professional certifications will open up an accelerated pathway that allows you to skip the program coursework and proceed straight to the exam. You’ll qualify for this accelerated pathway if you hold any of these designations or licenses:

  • Certified Public Accountant (CPA)
  • Licensed Attorney
  • Chartered Financial Analyst (CFA)
  • Doctor of Business Administration, Financial Planning, Finance, or Economics
  • Chartered Financial Consultant (ChFC)
  • Chartered Life Underwriter (CLU)
  • CFP Certification from outside the United States (e.g., from the Financial Planning Standards Board affiliate located in the candidate’s territory of residence)

Note: While you don’t need to obtain a bachelor’s degree before sitting the CFP certification exam, you must do so within five years of passing.

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Interested in starting your CFP exam studies? Check out Kaplan’s in-depth study materials.

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Exam Structure

The CFP exam is a six-hour, computer-based test that’s designed to evaluate your understanding across the following core areas of financial planning:

  • Professional Conduct and Regulation
  • General Principles of Financial Planning
  • Risk management and Insurance Planning
  • Investment Planning
  • Tax Planning
  • Retirement Savings and Income Planning
  • Estate Planning
  • Psychology of Financial Planning

The CFP exam is made up of 170 multiple-choice questions across two three-hour sections that are each divided into two further subsections. Each of these three-hour test sections is separated by a 40-minute break as well any additional unscheduled breaks that you can take after question 43 of the first subsection.

Rather than being graded based on how well you do compared to others taking this test, the CFP exam is criterion-referenced, meaning it judges your performance based on a specific level of competency you’ll need to pass. This ensures that everyone is tested fairly, regardless of whether previous exams were easier or harder.

Interested in finding out more about this qualification? Check out our in-depth CFP Certification article.

Content Outline

Below, we’ve provided a content outline breaking down the core areas of financial planning you’ll need to be confident with before taking the CFP exam.

A. Professional Conduct and Regulation

This evaluates your understanding of ethical practices in financial planning, covering the CFP Board’s Code of Ethics and Standards of Conduct, procedural rules, and the fiduciary standard.

It also assesses your knowledge of the structure and purpose of financial institutions, as well as financial services regulations and consumer protection laws — which are crucial for ensuring that financial planners act in the best interest of their clients.

B. General Principles of Financial Planning

Here, the focus is on the foundational elements of financial planning, such as how to understand financial statements, cash flow management, and strategies for managing debts. You’ll need to know how to combine these practical concepts with more theoretical economic principles, such as the time value of money.

C. Risk Management and Insurance Planning

This part of the CFP exam tests your knowledge of insurance and risk management. You should be familiar with the principles of risk and insurance, how to analyze risk exposure, and have an in-depth understanding of the different types of insurance your clients may need, such as health, disability, long-term care, life, and annuities.

D. Investment Planning

Questions related to investment planning will evaluate your ability to understand and advise on various investment vehicles, risks, market cycles, and investment strategies. This includes the theoretical concepts of asset allocation and portfolio diversification, as well as how to value stocks and bonds and analyze investment returns.

E. Tax Planning

This section delves into tax law and its application to financial planning, covering the taxation of business entities, trusts, and estates, and strategies for reducing tax. A strong understanding of the tax implications of property transactions and charitable contributions is also needed, as they are crucial for efficient tax planning.

F. Retirement Savings and Income Planning

Due to its focus on preparing for retirement, an understanding of needs analysis, Social Security, Medicare, and eldercare planning is essential to succeed in this section of the CFP exam. Here, you’ll be tested on the different types of retirement plans, rules for distributions, and various different retirement income strategies.

G. Estate Planning

You can expect the CFP exam to assess your knowledge of the strategies used for transferring property and complying with estate tax laws. To be able to answer these questions effectively, a thorough understanding of concepts such as how to title property, designate beneficiaries, and create estate planning documents is essential.

Topics such as estate liquidity, trusts, marital deductions, and planning for special circumstances like divorce or special needs will also likely be touched upon.

H. Psychology of Financial Planning

This topic explores the psychological aspects of financial planning, including areas such as understanding client and planner attitudes, biases, and behavioral finance. Principles of counseling and effective communication are also covered, along with managing money conflicts and how to deal with crisis events.

While preparing for such a comprehensive exam can seem daunting, having the right study resources makes all the difference. Using specialized materials is the best way to deepen your understanding and ensure that you’re thoroughly prepared for the wide array of topics covered in the CFP exam.

CFP Exam Preparation Tips

Preparing for the CFP exam can be quite overwhelming, given its comprehensive nature and the depth of knowledge required. To help with this, we’ve provided a list of some essential tips to guide you through the process of preparing for your CFP exam:

  • Create a study plan: Outline the topics you need to study and allocate sufficient time to each, making sure to focus on those you may personally struggle with. Make sure to stick to your plan but be flexible and adjust it as you progress
  • Take official practice exams: Taking practice exams from the CFP Board or other reputable sources can give you a feel for the pacing of the real exam and help you identify areas where you may need more study
  • Simulate exam conditions: When taking mock tests, try to simulate the conditions under which you’ll take the actual exam. This can help you combat nerves during the real thing and improve your performance

Passing the CFP exam is no small feat, but with thorough preparation, a strong understanding of the content, and the right study resources, you’ll be well on your way to earning this credential.

Ready to get started? StateRequirement recommends having a look at Kaplan’s study materials and resources.

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CFP Exam FAQ

Is the CFP exam hard?

The CFP exam is considered challenging because in addition to the wide variety of financial planning topics it covers (such as investments, tax planning, and retirement), it focuses on critical thinking and problem-solving skills instead of just factual knowledge recall. This is one of the main reasons why CFP professionals are so highly regarded.

What is the CFP exam?

The CFP exam is a six-hour, 170 multiple-choice, computer-based test that measures your proficiency in financial planning. Administered by the CFP Board, it covers topics like investment, tax planning, and retirement. Passing the exam is a key step in earning the CFP certification, a respected credential in the financial planning industry.

Is the CFP exam harder than the CPA?

The CFP and CPA (Certified Public Accountant) exams are both rigorous and require extensive preparation, but the “harder” exam may depend on your expertise with the specific topics covered. The CPA exam is longer, consisting of four separate sections each with its own test day, while the CFP is a single six-hour exam.

How long does it take to study for the CFP?

The time required to study for the CFP exam varies depending on your background and familiarity with financial planning topics. Generally, candidates spend anywhere from 200 to 400 hours preparing. Most people devote three to six months to studying, often combining self-study, review courses, and practice exams. Find out more in our CFP Certification article.

How many people fail the CFP exam?

According to the CFP Board, the overall pass rate of the CFP exam hovers around 67%, with first-time test takers faring slightly better. This means about 33% of the candidates fail the exam in each window. Many factors can affect your performance on the exam, such as your educational background, work experience, and study habits.

What is the difference between the CFP, CFA, and ChFC exams?

The CFP exam focuses on personal financial planning, including estate and retirement planning. The CFA (Chartered Financial Analyst) exam specializes in investment management and financial analysis. The ChFC (Chartered Financial Consultant) exam covers similar topics as the CFP but delves deeper into specific planning issues. Each exam targets different aspects of finance.

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