I’ll admit, I took the (Certified Financial Planner) CFP test a couple months ago without studying (no results yet). I took some brief time to look at the material but wasn’t able to study any of it in detail because I was very busy at the time, which I couldn’t control. I did intend on studying.. Now.. I have no intentions to manage money (RIA / Series 65 / Series 7 / 62 / whatever they are..), I just have extensive and acute experience in estate planning, pension law and retirement taxation. I figured I would take the CFP or PFS test and see how I do. I marked every question .25 / .5 / .75 or 1 depending on my perceived probability of getting the questions right. I added them up and came right around what I heard is the typical pass line. It’s a curved, weighted system that I don’t really understand so it may have been in vain. I manually ran a quick standard deviation analysis and if I remember, I came out to a 64% chance that I am within 5% accuracy of my guess. That basically means the probability is 32% that I am between complete accuracy (0) and 5% over or 32% probability of being under (between 0 and -5%), with a 36% chance I am completely out of the range. So take from it what you will! I was pretty conservative on the percent for each question, but it was fun to guess. To be honest I am not positive that 64% was the exact number anyways.
It’s obvious that the tax section was easier for me, because I own a tax practice.. We can probably agree on that. I found the retirement and estate planning sections to be fine, but overly subjective. That is more of a passion; connecting financial planning with taxation effectively for cleints. The insurance part was a bit more difficult for me than I anticipated. I am insurance licensed in multiple states. Some parts were easy and some parts I just flat-out didn’t know how to answer. Unfortunately, the Investment section is what killed me. The highest percentage of the test covers the Investment section and I was told it is weighted heavier than the others as well. So that doesn’t help.. ha ha. I don’t know how to run calculations using the Capital Asset Pricing Model etc…. I know the concepts, but I don’t mess with the math. That isn’t what I do. So I don’t anticipate passing after struggling on that. If I spent 50 hours on the Investment section I think I would be fine, without it I have to do extremely well in the other sections and will still show a deficiency in a section. So why did I take the test? I just wanted to. At some point I would like to market the PFS designation, but I thought it would be interesting to take the CFP test even if I couldn’t study in time. The next one is in March so I won’t be taking that. If I don’t pass I will probably take the PFS test during a time I know I can study sufficiently.
Conclusion of the test:
The test is much too subjective in my opinion. There are multiple ways to handle client situations and multiple variables that are difficult to quantify and different planners have different opinions. Some of the content seemed to basic, but that was the stuff I do for a living already. Being almost 2 months since I took the test I can’t think of an exact example, but I have enough experience to know when an answer can go either way and understand its subjective nature. This is the problem with financial problem in the first place and why many argue it is not a true science. Some think its a complete sham!
I don’t remember the CPA test being so subjective. The CPA test seemed much more finite and scientific. I felt like with the CPA test you know the stuff and can do the work or you can’t. I did find the CFP test difficulty was pretty significant. You can’t just jump on this test and pass it. If it’s your livelihood to pass, study your butt off because it is difficult. In comparison, the test itself was equal to between 1 and 2 CPA tests. The CPA license requires candidates to pass 4 separate tests. That is my opinion from taking both. Each CPA test cost me about 75 to 125 hours of studying depending on the content… This may be a skewed judgement, because I have experience on both ends now, so don’t throw your arms up if you are a CFP. =) I didn’t have the experience when I was testing for the CPA so maybe it seemed harder than it was. To pile on, the test was issued on a scantron which is absurd for a test of that nature in the year 2011. They also issued the test 2 hours late on the first day… Not a good experience and not impressive if I were to evaluate the designation based on the testing procedures I had a very poor experience. The state insurance test has a more professional environment than this test on this day did.
I will know in a couple weeks how close I came or if by miracle I passed with being so weak on the Investment section questions. Like I said, I have no interest in asset management but I know fundamental theories from self-studying and reading. I just don’t work on the “implementation” stage which is necessary for testing knowledge. Either way, I wouldn’t do any kind of asset management but everything else is fascinating to me.
If you don’t know what a CFP is or how to become one, I attached a piece below from Arbor Financial & Tax, PLLC, my tax firm in Arizona.
Tax Java
Tax Ignorance of the Historical Kind by MauledAgain
WHAT’S THE BUZZ? TELL ME WHAT’S A HAPPENNIN’ – WEDNESDAY EDITION
Financial Java
Whats Your New Years Financial Resolution? by Christian Personal Finance
Analyzing the Perception of the “1 Percent” by My Journy to Millions
Taxation of Financial Products is Plagued by Inconsistency by Big Fat Finance Blog
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Copyright 2011 Cafetax
Joe Arsenault
Joe Arsenault is a CPA, tax professional and avid blog writer. Joe founded CafeTax in 2010 and is the principal / CEO of Arbor Financial & Tax, PLLC. Joe doesn't just prepare taxes and perform tax planning services, he also specializes in retirement taxation by consulting with his clients and other financial advisors. If you don't want to talk business, Joe loves sports and almost every outdoor activity.
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