5 tips for financial advisors pursuing CFP certification

5 tips for advisors preparing for the CFP exam

July 27, 2022 5:56 PM

The pursuit of one's certified financial planner (CFP) designation and the looming six-hour exam that serves as the adventure’s final hurdle has earned a reputation as one of the tougher tasks in the industry.

And veteran CFP Andy Watts wouldn’t have it any other way.

“The CFP is not an easy designation, which I'm sure many have heard. But I'm OK with that. Frankly, I want it to be difficult because I want the bar to be high for those who have this designation,” Watts, vice president of investment solutions for Avantax Wealth Management, told Financial Planning. “So I think even before someone dives into the CFP, they need to have an honest conversation with themselves as to why they’re doing it. If it's solely about making money, I'm sure that will come, but that shouldn't be the primary motivation. If it's only about letters after your name, then this is not the right designation for you.

“But if the ‘why’ behind you getting the CFP is better serving your client, enhancing the solutions that you can bring to the table and helping them solve for their goals, then I think it's the certification for you. But understand your ‘why’ going into it, write it down and put it on a sticky note so you can remind yourself when the process gets tough.”

Industry News

Diversity grant winners finish CFP test prep at twice the rate of others

June 27, 2022 9:50 AM

CFP Board kicked off 2022 by celebrating the biggest, most diverse class of CFPs to ever earn certification. The previous year ended with the number of CFP professionals hitting an all-time high of 92,055, up 3.8% from the 88,726 tallied at the close of 2020.

There were also notable year-over-year gains among women, Black and Hispanic CFP pros. There were 1,374 women in the class of 2021, representing an increase of 4.2%. The 267 new Hispanic and 150 new Black CFPs were increases of 15% and 10%, respectively. Overall, 5,273 professionals earned CFP designations in 2021 months.

The latest figures put the number of total CFPs at 92,954. But diversity numbers continue to struggle with just 23.4 % of CFPs being women, 2.8% being Hispanic and 1.8% being Black.

Financial Planning asked CFPs who have already reached the summit to share their knowledge with those just starting their climb. Scroll down to see what they had to say about study tips, time management, support systems and more.

Don’t get discouraged

All the anecdotes of the CFP exam being tough are backed up by exam statistics. According to the CFP Board, 65% of the 2,705 candidates who sat for the exam in March passed. That’s up from the just 58% of test takers who passed in November 2021.

The test is offered in March, July and November. July 2022 statistics are not yet available.

The highest pass rate the test has ever seen was 70% in July 2015, while the lowest was 42% in July 1992, according to statistics from the CFP Board, the organization that sets and monitors the credential. But most exams see pass rates in the high 50s and low 60s, meaning each test sends just under half of test takers home disappointed

Jarrod Sandra, owner of the Crowley, Texas-based Chisholm Wealth Management, said it took him nearly 10 years to finish his journey. He came face to face with the exam for the first time in 2010 while working for a wealth management firm.

“I was overwhelmed and felt ashamed in my first course because I didn’t know everything that was going on,” Sandra said. “With a change of firms and a move from Oklahoma City to Fort Worth, I dropped it for a year or two and picked up my next course. However, I changed jobs and went to work at Fidelity running 401(k) plans, so I paused again. Then when I got my footing at Fidelity after a few years, I started again only to soon find out that my wife and I were about to have a baby.”

The convergence of professional goals and real-life milestones gave him plenty of excuses to stop. But he knew that getting the credential was a must, and the right opportunity to start again came when Texas Tech came to the Fidelity campus to offer its Personal Financial Planning Master's Program.

With financial support from Fidelity, Sandra graduated in May 2020 with his master’s and immediately began studying for the CFP exam, which he passed in September 2020.

“You’re not supposed to know everything the first time you see it,” he said. “Take the time to actually learn. This is not a place to check a box and ‘pass a class.’ You and your clients will thank you later."

Experience goes a long way

In addition to those who come out of college and jump right into the pursuit, there are a number of individuals who decide to chase CFP certification after many years in another profession.

Lauren Sigman, principal and managing director at Robertson Stephens, said the kind of work experience you bring to the table could be a big difference maker.

“I think that unless you're in a financial services kind of job or have some kind of similar role, it's probably going to be difficult to pass your CFP exam on the first try if you don't have a little bit of practical experience to apply to it,” said Sigman, who also serves on the board of directors for the College of Financial Planning. “I took the exam many, many years ago, but I still remember it being one of the hardest things I've done. You either know the answer, or you don't. You really have to know your stuff, and you have to be a good test taker in order to pass.”

Sigman said when experience is lacking, reach out to the experts and find a quality coursework provider.

“I think the College for Financial Planning, obviously, is a quality resource. They've been doing this for a very long time,” she said. “And another pointer: If you're going to take the exam, give yourself two weeks before the exam not to work and to just grind away and refine your test-taking skills.”

She also recommends resources available at Kitces.com.

“I think Michael Kitces has a lot of wonderful, practical information. I rely on it for my own ongoing continuing education, and there's a lot of good webinars and reading and quiz taking that you can do so that you really test your knowledge,” Sigman said. “I also think that it gives you a flavor for what being in the industry is like.”

Find the time, or get help making the time

Going after the CFP is time consuming, but unfortunately, it isn’t time stopping. Once you decide to go for it, your other life and work responsibilities still need your attention as well.

Marguerita Cheng, the CEO of Blue Ocean Global Wealth and a CFP Board Ambassador, began her career as a CFP after establishing herself in another sector of the financial world. Before becoming an advisor at Ameriprise Financial in 1999, she worked as an analyst and editor at Towa Securities in Tokyo, Japan. She co-founded Blue Ocean in 2013.

She also started with a 4-year-old son, a 6-month-old daughter and a desire for in-person education.

“I started with self-study, but realized that joining live instruction would benefit me. I attended class every other Friday from 5 p.m. to 9 p.m., and Saturday from 9 a.m. to 5 p.m.,” she said. “Make sure you don't cram. Set aside the appropriate time to study (and) don't forget to ask for help. Meaning, I asked my parents for help on those Friday nights. It is important to enlist the support and help of others. When I passed the certification exam, my parents and clients were so happy because they shared in my success.”

Avantax’s Watts also recommends having a strong support system while studying. For him, that led to the creation of lifelong bonds, as well as providing an extra boost when the going got tough. He highlighted three key people or kinds of people you should have in your corner.

“No. 1 would be your peer group. I would not have gotten through my study material and studying for the final exam without community. And if I didn't have the people that I was studying alongside at the time, people who I'm friends with still today 16 years later, I would not have gotten through,” he said. “No. 2 is support from your leadership. I want them to know that I am pursuing this so that they maybe give me some grace. But also so they know that I am trying to improve myself and ultimately our business at large.

“And No. 3, and really this is something for me personally, but I've benefited greatly from a mentor in my career, and I think it's different from the leadership or community … someone that has gone before them, blazed the trail, tells you where the roadblocks are and maybe saves you some of the hardships in the process.”

Test-survey-study-online-computer-work-strategy

Practice, not a game

When seeking advice from CFPs on this topic, one tip showed up more than others.

Practice. Practice. Practice.

Clark D. Randall, a CFP since 1999 who has taught course material in a board-registered education program for 18 years at Southern Methodist University, said that after finishing the two-year required curriculum, candidates should move right to review courses.

“It is important to understand that while the board-registered programs are designed to teach the material required to pass the exam, they are not designed to help you pass the CFP exam,” said the founder and owner of Financial Enlightenment, a financial planning firm in Texas offering fee-based services. “The review courses teach how to pass the exam. Once you have finished the review course, I recommend studying eight hours a day for two weeks, finishing up one or two days prior to the exam date. Rest for those days and then take the exam and pass.”

Rodney M. Loesch of LifeGoals Strategies Group said there is nothing more deflating for a test taker than to fail the exam. But more time, more practice and more perspective can help you shake off the disappointment.

“Even with the online test, we know that nearly 40% fail it the first time. One way to increase your passing odds, of course, is a review class,” he said. “If you can afford it, an in-person class is preferred. However, in any case, consider the review class from some place other than where you did your initial study. It always helps to have a different viewpoint on the material.”

Caleb Pepperday, a CFP based in Hermitage, Pennsylvania, suggests creating a study plan and sticking to it. But make sure it doesn’t clash with the life you’re already living.

“If you're a morning person, study every morning religiously. If you're an afternoon person, then study then,” Pepperday said. “Practice questions are your friend. As someone who is a terrible standardized test taker, this was the biggest reason I passed the exam. I did about 5,000 practice questions in the months leading up to my exam, which made the actual test much easier than other standardized finance tests.”

Craig Toberman, founder of the fee-only Toberman Wealth in St. Louis, said integrating your study plan into your routine can help you thrive in both your professional career and your personal life.

“If either one of those is neglected, your study plan will suffer. If you can wake up early on Saturday morning and study until noon, you will be surprised at the amount of deep work you can get in before your friends and family start their Saturday. Then, after that, you will have the entire weekend ahead of you to refresh and recharge,” he said. “I found that six or seven straight hours of fresh studying was better than 10 hours spread out randomly across many tired evenings and mornings.”

Enjoy the journey and remember the goal

While challenging, the difficulty of the pursuit should not overshadow the rewards.

Matthew D. Gelfand, a financial advisor at Tricolor Capital Advisors in Chevy Chase, Maryland, said many of the benefits of earning your certification are hidden behind the experience.

“Enjoy the journey and learn as much as you can while studying for the CFP certificate. The real value of earning the credential is the knowledge that you acquire along the way,” he said. “Although I already had a lot of formal training before pursuing my CFP certificate, I learned a lot from the program.”

With so much material to absorb, he suggests starting early and doing everything you can to avoid cramming at the 11th hour.

“During the summer that I was preparing for the exam, I carried the telephone-book sized study guide with me to the community swimming hole and kept on schedule by reading while ‘relaxing’ at the pool. Every little bit helps,” he said, adding that understanding your learning style can help you reap the hidden benefits of the process.

“Some people learn by listening and others by reading. I am the latter type, so I focused on making sure I read and understood all the material that I purchased,” he said. “Auditory learners might prefer exam prep classes. Either way, don't cut corners. Read all the material or attend all the classes.”

Avantax’s Watts said centering your mission also makes the chase more fulfilling. It goes back to understanding your “why” and knowing that all the hard work is more than worth it.

“There are those designations that are there exclusively for education … and then there are designations just to get letters after your name. I don't want to suggest that they’re as easy as checking a box. But in some cases they are. And then there are the designations that I feel like are kind of the complete package,” Watts said, listing the CFP and the CFA as those he holds in the highest regard. “It was very clear that the CFP was right for me because I knew that I cared deeply about the fiduciary standard and I care deeply about how we think about planning in a comprehensive manner. And that's what a CFP does.”