CFP exam: The 15 best study tips include brunch

Published
  • May 21 2018, 12:40pm EDT

The CFP certification may be one of the most popular credentials in the industry. More than 80,000 individuals have become certified financial planners. But earning the right to add those letters after your name is no easy task.

Of the more than 2,700 people who took the exam in March, only 61% passed, according to the CFP Board. That was relatively in-line with the 64% overall pass rate in 2017.

"The success rate proves it’s a difficult exam, but it understates the difficultly," says William Platt, a CFP and partner at Momentum Advisors, a New York-based RIA. Platt earned his certification in 2006.

Preparing for the six-hour test is akin to preparing for a marathon, according to advisors who have been through it.

Just to be eligible to take it, candidates need to complete education (university-level coursework in a program registered with the CFP Board) and fulfill experience requirements (6,000 hours of professional experience or 4,000 hours of apprenticeship experience).

The computer-based exam, the CFP Board says, assesses an advisor's ability to apply financial planning knowledge to real life situations. It's comprised of 170 multiple-choice questions that cover eight topics including tax planning and risk management. The test includes sets of questions associated with case histories, the CFP Board says on its website.

The exam is available three times a year at more than 260 testing sites. The next test dates are in July and November.

The CFP Board makes study materials and guidance available on its website. But to get a sense of how successful exam-takers have tackled this trial of knowledge and endurance, Financial Planning asked more than 20 CFPs what worked best for them in preparing for and passing the test. Their tips run the gamut from using flashcards to finding a study buddy to eating healthy on exam day. Yet they all agreed on one thing: the journey to CFP certification is hard but worth it for your clients.

While studying for the test, "you can literally envision each client that can benefit from what you are learning," says Kobby Okum, a financial advisor at Edward Jones who passed the exam last year.

Scroll through to see Okum, Platt and other CFPs' best test prep tips.

Setting the pace

To tackle the test, it's best to set a study pace early and stick with it.

"You make a commitment to achieve one of the industry's leading designations and need to take that commitment seriously by consistently budgeting time and resources to achieving the designation," says Peter Creedon, a CFP since 2012 and CEO of Crystal Brook Advisors, a New York-based RIA.

But what's the right study pace? That depends on what works for you, but be sure to set realistic objectives.

"I set my max hours per day at four. Beyond that, I wasn't retaining anything," says B. Brandon Mackie, a CFP in Kennesaw, Georgia. He earned his CFP designation in November 2014.

Creedon says he set aside blocks of time on a weekly basis to study reading materials.

"I also found it easier to keep going and not taking a lot of time off between courses. It is hard to remember concepts from courses you took years prior," he says.

Content Continues Below

Timing counts

Some people earn the CFP certification early in their careers; others later on. Rachel Gottlieb, a UBS advisor, got it in 2010, shortly after getting married.

"I knew I wanted to do it before having kids," the New York-based advisor says.

It would be a lot harder to do it today while juggling work, studying and looking after her two small children, says Gottlieb.

"Stage of life matters," says Emil Mokhtarian, a CFP and senior financial planner at IHT Wealth Management, an independent practice affiliated with LPL Financial. Mokhtarian, 43, started studying for the exam five months prior to taking it in March. Waking up at 5:30 a.m. to study was critical to his success, he says.

"By the time I got home from the commute, ate dinner and helped the [two] kids with their homework, I'd be fried. It's hard to study after all that," the Chicago-based advisor says.

"Studying for that exam was one of the harder things I've done in my life," he continues. "And it wasn't that the material was hard. It's just remembering it all, and it's kind of a data dump. Just the amount of knowledge you have to retain is challenging. Unless you are extremely smart and can just soak it up, then you have to stay regimented and stick to it."

Exercise your memory

Using flashcards to memorize key concepts proved extremely helpful to advisor Charles Adi, who took his cards ― bought from a test prep company ― with him everywhere he went for months.

"At the gym, I reviewed between sets, I reviewed while on the treadmill and bike and reviewed on my walk in and out of the facility. While I was grocery shopping, I reviewed as I pushed the cart, in the checkout line, and on my way out the store. They came with me during my lunch break, too, and I reviewed as I ate," says Adi, a Houston-based financial advisor.

Okum, the Edward Jones advisor, preferred to create his own as his waded through study materials.

"As I wrote it down, it helped etch it in my memory. In fact, in the test, I could visualize what my cards had looked like,' he says.

Other advisors say they used similar study aides. Stephanie Mushna created a one-page study sheet.

"Every day when I started studying I would recreate my study sheet. I wrote down the acronyms of the principles, standards, etc. Then on the day of the test I recreated my study sheet so during the test I wouldn't second guess myself," says Mushna, an advisor at Grand Wealth Management in Grand Rapids, Michigan.

She took the exam in November.

"My study routine, consistent with what I did in college, was to read and take notes of the material, but then quickly shift to flashcards of important information and practice tests," says Platt, who took the exam in 2006. "I wanted to understand and internalize as much important information and as many concepts as possible."

Leverage your firm's experts

Some companies will compensate their advisors for CFP exam-related study costs. But look beyond financial reimbursement to other resources at your firm, says Cameron Diehl, a financial advisor with Raymond James & Associates.

"I recommend seeking out experts at your firm in areas with which you feel like you’re struggling. I did this and found that having plain-English conversations about how these concepts play out in the real world helped the subject matter crystalize in my mind," the Tampa, Florida-based advisor says. He earned his CFP designation in 2012.

Content Continues Below

Invest in a review course

Several advisors interviewed for this article hammered that point home.

"It’s not just to help you review and learn topics you may be struggling with, but it will help you understand the metrics of the test, how the scoring is done, what areas of subject gets tested more than others, recent exam questions, etc. It is the best investment you can pay for to help you get through," says Bill Harris, a CFP and co-founder of WH Cornerstone Investments in Duxbury, Massachusetts. Harris got the credentials in 2002.

Some advisors say they preferred the in-person courses, which had the added social benefits that reinforced study habits.

"I knew I wasn't an online individual," Okum says. "I had to go to class. And I established relationships with my classmates, people from other firms, and we were on the phone, sharing thoughts and asking questions."

Other advisors, however, preferred the online variant. Kristin McFarland, a CFP with Darrow Wealth Management, says that method works best for "folks who are self-disciplined and prefer to learn on their own schedule."

Regardless, don't let inertia or overconfidence keep you from doing it, McFarland says.

"I think there’s a tendency for advisors to forgo the exam prep class or not study as much as they perhaps should have because they routinely work on these types of questions or areas for analysis with clients," the Boston-based advisor says.

The CFP Board does not make recommendations regarding test prep courses offered by private companies, says John Loper, managing director for professional practice at the board. However, the CFP Board has an online forum where potential test takers can swap ideas and talk study strategies. The board also sells two sets of practice questions (50 questions each) that exam registrants can purchase and use for review, and it makes a surfeit of exam information available on its website.

Practice, practice, practice

Advisors interviewed for this article couldn't say it enough: Don't stop practicing.

"Study until you think you know it all, then study some more," says Clark Randall, a CFP and founder of Financial Enlightenment in Dallas.

Eat right

Meal-related tips were among the highest received from advisors for this article. Surprising? Maybe not when one considers that this is months of studying boiled down to an intense six-hour exam. Who wants to be stressed about not having eaten enough on a day like that?

"Pack a lunch, don’t rely on local vendors. This will give you time to regroup," says Ross Hamilton, a wealth manager with Steward Partners, an independent firm affiliated with Raymond James.

Sarah Graham, a CFP at VLP Financial Advisors, says to avoid eating anything too heavy, "otherwise you will be falling asleep in the second half."

In a sense it's like training for a marathon: you need to eat right, says Marguerita Cheng, CFP and CEO of Blue Ocean Global Wealth.

"Seriously, when I took the test, instead of going with my test buddies to get fast food, I walked to get a kale and romaine Caesar salad with salmon. I went for a walk and returned to the test center. I honestly think that’s why I passed," says Cheng, who is currently training for a marathon.

Content Continues Below

Unplug beforehand

Just prior to taking the exam, try to get in the right mindset, advisors say.

"Take off the two workdays that come before the exam date and do not check work email during this time. This will allow you to avoid any work-related pressures that could stress you out right before your exam," says Graham, who is based in Vienna, Virginia. She passed the test in November.

Some advisors take this advice a step further.

"I took the day before the exam off and took myself to my favorite brunch spot and walked around doing things I liked, and I made sure to go to bed early," says Maja Janko, an advisor with the Morse, Towey & White Group at HighTower Advisors. Janko got her CFP in 2012.

Focus on what counts

"I think the no. 1 thing people do wrong is getting too caught up in the weeds," says Amy Hubble, a CFP and founding principal at Radix Financial in Oklahoma City, Oklahoma. She passed the exam in 2008.

"When studying for the CFP exam, focus on the big point areas like fundamentals, investments, retirement and tax," Hubble continues. "Remember that you will likely not have to do any calculations that would take you longer to complete than five minutes. Get the easy points, and don’t waste time agonizing over how to do an overly technical calculation."

Knocking down the easy ones first will enable test takers to save time for the hard parts and build confidence early on (it can, after all, be a stressful exam).

The computer-based exam allows test takers to review questions they've marked.

Remember: You don't need to ace it

"Remember that you’re not trying to score 100% on the exam," says Hamilton, the Bethesda, Maryland-based advisor with Steward Partners.

"There will be questions that you can’t answer and that’s OK. Let the CFP have those questions ― congratulations to them, they stumped you. Move on to the next question. This is as much a time management exam as it is a content exam."

Content Continues Below

Use scratch paper

Financial planner Roger Ma recommends making use of scratch paper.

"While trying to pinpoint the right answer, I also tried to eliminate answers that were clearly wrong," the New York-based founder of lifelaidout says. "Being able to cross out those answers on my scratch paper helped me more efficiently come to the right answer. By numbering this work on my scratch paper, I could feel comfortable skipping questions, coming back to them later and leveraging my previous thoughts/work.”

Ma passed the exam in 2016.

Know your calculator

The CFP Board permits advisors to bring board-approved calculators to the exam. Make sure yours meets the criteria (you can see a list of approved calculators here). And get to know the ins and outs of your calculator long before you ever show up at the test center. There's no time to learn its functions while taking the test, advisors say.

Another good tip: bring back-up batteries.

"You do not want to run out of battery power during the exam," says Harris of WH Cornerstone Investments.

Dress comfortably

Seriously, you want to be at ease when taking the exam.

"Wear layers and plan for the test center to be too cold/hot. I was seated directly under an air-conditioning vent. I’m not even sure it was 60 degrees in the room," says Hamilton.

Clothes that can absorb sweat may also be a plus.

Content Continues Below

Visualize your success

This method can help you stay focused, says Leon LaBrecque, who has taken the bar, the CPA exam, the CFP exam and the CFA exam.

"Get a copy of a pass letter from a friend and make one up for yourself, as if you have passed. Put the date of the exam and the date you'd get the result (or thereabouts). Put it somewhere where you can see it and remember that is your goal. Visualization works," says LaBrecque, who is CEO of LJPR Financial Advisors in Troy, Michigan.

Do it for the right reasons

This is a big undertaking, something you may spend months on.

"You’ve got to be all in," says Gottleib, the UBS advisor. "Don't take it lightly. You can't just say, 'Oh, I'll take it.' You got to live, breath and eat it. And if you're excited about it and feel it will benefit you, then by all means. You can't be doing it for anyone but yourself."