As the old adage goes, if at first you don't succeed, try, try again. But as this week's round of the CFP exam kicks off, with tests scheduled from July 11 to July 18, those who fail will have to ask themselves: is it worth it to try again?
Taking the CFP exam, a required step to earn the certified financial planner credential, may be one of the hardest things a financial advisor does in their career. But even harder may be retaking it, given that the pass rate for retakers is consistently lower than for first-timers.
During the last exam round in March, 2,300 out of 3,527 candidates — 65% — passed, meaning over a third failed. For the first-time test-takers in that group, a majority at 78%, the pass rate was 69%. The pass rate for retakers was only 53%.
John Loper, the CFP Board's managing director of professional practice, says that while many factors play into that disparity, "I suspect some retakers may not make the necessary changes to set themselves up for success for subsequent exams."
Loper is a retaker himself who passed on his second attempt. Although he considers himself good at taking tests, he allowed that "I may not have given a level of seriousness to the exam that I should have" on his first try.
"I've actually had the privilege of talking to a lot of candidates to encourage them to get back up and do it again," Loper said. "One of the things I think is extremely important is to start off with the right frame of mind."
Showing up with focus and intention is especially important, given that even taking the exam once is a costly affair. The fee just to register is $925, although registering early — up to six weeks before the registration deadline — is discounted at $825. Those who register late pay $1025. In addition, the CFP Board requires all candidates for the certification to take a board-approved preparatory course, which can run into the range of several thousand dollars. (The CFP Board and third-party entities do offer scholarships that candidates can apply for, though, and many employers are willing to reimburse workers for the cost of exam preparation.)
Read more: 5 tips for advisors preparing for the CFP exam
Additionally, to qualify for the CFP designation a candidate must fulfill a work experience requirement or demonstrate comparable equivalent professional experience in a related field. That entails logging 6,000 hours of professional experience at a qualifying employer, which comes out to around three years of full-time work at a firm, or 4,000 hours of apprenticeship experience. Candidates must also have a bachelor's degree in any subject area — either before taking the exam or within five years of passing — to qualify.
Then there's the test itself. The exam, taken on a computer, is a six-hour, one-day affair with 170 multiple-choice questions spread out among multiple subject areas, according to the CFP Board website. Candidates have a 40-minute break midway through and can take unprepared breaks as needed. The test is broken up into two three-hour sessions with 85 questions each.
The eight currently tested areas are: 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; and psychology of financial planning.
Read more: Diversity grant winners finish CFP test prep at twice the rate of others
The competency standards for a CFP license have generally been unchanged in roughly 20 years, but the CFP Board is convening a 15-person expert group to review and update them — an effort expected to last at least through the end of 2024, meaning candidates this year probably won't see any changes in that regard.
Candidates should achieve an acceptably high score in each category to pass the overall exam, according to Loper, who noted that it would be "very difficult to pass the exam showing competency in most of the domains, but perform(ing) poorly in one." Those who pass will not receive a breakdown of their score. However, those who fail will receive feedback in an email that provides a bar graph indicating how they scored in each area of the test — high, medium or low.
Though a daunting experience for many, advisors say taking and passing the CFP exam is worth it for many reasons. Industrywide, the CFP designation is largely considered the gold standard for advisors, one that holds them up to a fiduciary standard to always serve clients' best interest and which demonstrates skills beyond portfolio management. It can also help the advisor command a salary premium.
Financial Planning spoke with test retakers from across the industry about how they beat the odds. Below are their stories of failure and triumph, and several tips on how to follow their path.
Read more: How to study for (and pass) the CFP exam
The exam is offered three times a year, in March, July and November. The next CFP exam sessions will be offered from Oct. 31 to Nov. 7 and registration is already open. The education verification deadline is Oct. 10. Note that there is a lifetime limit of five attempts allowed per test-taker — although those who took it four or five times before January 2012 can have two more attempts — with no more than three attempts permitted within 24 months.
For more advice on how to succeed with the CFP exam, read our prior coverage here, here and here.