Definition
The term Certified Financial Planner Examination refers to a test that assesses the candidate's ability to apply financial planning concepts in real life situations. The Certified Financial Planner Examination, or CFP Exam, is developed and administered by the CFP Board. The purpose of the examination is to ensure individuals have the knowledge and skills necessary to work independently as a financial planner.
Explanation
The Certified Financial Planner Exam, or CFP Exam, refers to a test that ensures individuals are qualified to practice financial planning; candidates that pass the exam are eligible to receive CFP certification. The examination is a 10 hour, computer-based test, which is administered in one four-hour session on Friday followed by two three-hour sessions on Saturday (see Note below). The exam is offered three times each year in the months of March, July and November.
The examination consists of nearly 300 multiple choice questions, which include stand-alone as well as scenario-based problems (see Note below). Generally, the exam will cover topics such as insurance, investments, tax law, retirement planning, and estate planning. Questions appearing on the examination were developed based on a job analysis study, and include the following eight domains:
Establishing and Defining Client Relationships (approximately 8% of questions)
Gathering Information (approximately 9% of questions)
Analyzing and Evaluating Current Financial Status (approximately 25% of questions)
Developing Recommendations (approximately 25% of questions)
Communicating Recommendations (approximately 9% of questions)
Implementing Recommendations (approximately 9% of questions)
Monitoring Recommendations (approximately 5% of questions)
Practicing within Professional and Regulatory Standards (approximately 10% of questions)
Note: Starting in November 2014 the examination will not only be computer-based, but the length of the examination will also be lowered to 170 questions administered over two three-hour sessions, occurring over the course of one day.
Candidates are allowed five attempts to pass the exam and are limited to a maximum of three exam attempts in a 24 month timeframe. After three unsuccessful attempts, there is a sit-out period of one year. Overall examination pass rates average around 60%, with first-time takers passing nearly 70% of the time and repeat takers having a pass rate closer to 45%
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