Executive Summary
Last week, the CFP Board issued a press release announcing that it was transitioning from a paper-based test to a computer-based testing process, in an effort to improve the ease and efficiency of the test-taking experience for CFP certification candidates. The move to computer-based testing will allow the CFP Board to issue preliminary results immediately, offer official results in just 1-2 weeks (down from 5 weeks with the paper-based exam), and dramatically expand the breadth of available testing locations.
Yet in a surprising and dramatic change that was explained as little more than a side "benefit" to the computer-based exam process, the CFP Board also announced that the length of the CFP exam going forward would be chopped by a whopping 40%, from 285 exam questions down to only 170, while the duration of the exam itself is reduced from a 10-hour day-and-a-half exam into a 6-hour single-day exam.
While the CFP Board maintains that this is not a change in how hard the CFP exam really is - i.e., the difficulty of the exam isn't meant to be increased nor decreased by the change, because the (fewer) questions themselves will still be targeted for similar difficulty - the question arises nonetheless why the CFP Board would implement such a change, if the goal wasn't to at least create the perception that the exam will be easier and therefore more appealing to take? Which in turn raises the question - did the CFP Board just lower the standards of the CFP exam and try to make it easier to grow the ranks of CFP certificants?
CFP Exam Announcement
The CFP Board's announcement of the transition to Computer-Based Testing (CBT) was announced last Thursday in a press release (now available on the CFP Board's website). The key changes associated with the announcement included:
- CBT will be first available for the November 2014 exam. The March and July exams will continue to use the existing paper-based system.
- CBT exams will be administered at Prometric proctored testing centers (not available from a home computer), which should expand the available test-taking locations to approximately 250 nationwide (by contrast, there are only about 50 paper-based testing sites now).
- With CBT exams, testing will no longer occur uniformly on a single day nationwide. Instead, each exam cycle will have a "testing window" with 5 available exam days (presumably over the span of 1 week). The new CBT exam date process will be scheduled online, allowing candidates the choice of which date they wish to test (within the testing window) and at what location (amongst the available Prometric locations). For the November exam, registration is not available yet (nor are the testing dates announced) but they will be available online sometime later this year, by June 1st at the latest.
- Preliminary "unofficial" CFP exam results will be available upon completion of the exam. The "official" results will be available 1-2 weeks after the exam is completed, rather than the current 5-week process. The time period from completion until the release of "official" results is when the CFP Board conducts its exam scoring process, including testing and analysis of the exam results to affirm the cut score (required score to pass), determine whether any questions were flawed and need to be eliminated based on results and/or any post-exam complaints, etc.
Yet included in this announcement of changes, the CFP Board also noted that an additional "benefit" of CBT is that the CFP exam will be reduced from its existing day-and-a-half 10-exam hour into a "convenient" 6-hour exam administered in a single day.
Looking Deeper At The New Shorter CFP Exam
The CFP Board's press release, along with a supplemental "Frequently Asked Questions" (FAQ) document specifically emphasizes that the new, shorter CFP exam will still be comprehensive and will remain "equally rigorous" by still testing the same content based on the CFP Board's Job Task Domains and Principal Topics. Questions will still be multiple choice (with four answer choices), and will still be a combination of stand-alone multiple choice questions as well as sets of exam questions around short scenarios or lengthy case histories. But instead of 285 questions (on the 10-hour exam), there will be only 170 questions on the 6-hour exam (a 40% reduction in questions to align with the 40% reduction in test-taking time).
The CFP Board declares that the science it uses to determine the requisite pass score to maintain comparable difficulty from one exam to the next will be applied to ensure the same performance level is required to pass the 6-hour computer-based exam as the 10-hour paper-based exam.
Yet the question remains - why would the CFP Board reduce the duration of the exam in the first place, if it wasn't intended to improve perceptions about the difficulty of the exam and make it seem less daunting? In other words, if the goal was really to leave everything the same about the difficulty of the exam... then why change the length of the exam in the first place? Why not just make it the same day-and-a-half 285-question CFP exam, just delivered via CBT at the closest available Prometric testing center?
Easier CFP Exam Or Just Modernizing It?
Arguably, at least one clear reason to change the exam from 10 hours to 6 hours was simply an acknowledgement that it really is inconvenient to have the exam administered over multiple days. In the context of administering via computer-based training, this requires some additional cost to manage the multi-day oversight and proctoring, and introduces at least some additional risk that candidates will try to cheat (especially if they're not all testing at the same time across the country). In addition, a challenge of the existing multi-day format is that candidates who don't live near testing locations often have to spend additional money on a hotel just to be able to stay overnight near an available testing center to cover the 2-day span (though presumably this would be less of an issue with the expansion to 250 testing centers, as CFP Board estimates that there will now be a site within 25 miles of nearly 90% of CFP certification candidates).
Of course, the CFP Board certainly isn't unique in its goal to administer the CFP exam in a computer-based format. The CPA exam is administered via computer (though the CPA exam is still administered in 4 sections spanning 14 hours!), and the CFP Board notes in its press release a wide range of other professional standards organizations that have long since adopted CBT, from the National Board of Medical Examiners to the American Board of Surgery, and of course much of financial services itself has long since adopted CBT (e.g., all FINRA exams are also administered via Prometric centers).
Yet the concern remains that this change follows quickly on the heels of the CFP Board's study released this summer that found a whopping 69% of surveyed financial planning students who graduated between 2006 and 2011 had not taken the CFP exam; the clear implication is that if so few students are taking the CFP exam, perhaps making it "more convenient" will increase the number of students that pursue the exam (and hopefully the subsequent requirements that still apply to ultimately receive and be eligible to use the CFP marks). In other words, by making the exam a less-daunting 6-hour exam instead of a 10-hour exam, is the CFP Board trying to entice more students (and others?) to pursue the CFP certification?
How Hard Is The CFP Exam, And Is A Shorter One Still Sufficient As A Professional Standard?
To be fair, it's worth noting that there's nothing especially sacred about a 10-hour versus a 6-hour exam, besides the non-trivial detail that everyone who's earned their CFP certification for the past 23 years has had to sit for the 10-hour exam, and when someone goes through that kind of endeavor, it doesn't feel very good to know that someone who came afterwards had to do less or had it "easier" - it reduces the sense of achievement. With the CFP Board's change, there will now be three cohorts of CFP certificants - those who got it prior to 1991 who didn't have to sit for the exam; those who got it between 1991 and 2014 who had to sit for the 10-hour exam, and those who got it November 2014 or later, who had "only" the 6-hour exam.
Nonetheless, the fact remains that when you try to evaluate how hard the CFP exam really is, the length of the exam isn't necessarily the best indicator. A longer exam doesn't always mean it's more comprehensive, and it's entirely possible that the only thing really different about the "difficulty" of the 10-hour version of the exam versus the 6-hour version is that it tested someone's capacity to stay focused and not freak out for a 10-hour exam testing period... which isn't particularly meaningful as a professional standard. Whether the CFP Board otherwise allows the exam to get "easier" remains to be seen, though again it pledges that there is no intention to otherwise change the criteria used to set the pass score for the exam (and the CFP Board does in fact use a reasonably rigorous psychometric process to determine this).
On the other hand, the near term reaction from many prospective exam takers has been clear: the perception is that the 6-hour exam will in some way, shape, or form, be less arduous and/or difficult. As one ChFC (non-CFP) who has been considering the exam put it:
This is great news! With managing a practice, I might sit for it. CFP Board Moving to Shorter, Computer-Based Exams http://t.co/QdSflOZTC5
— Janet Barr, MS, ChFC (@JanetBarrCFS) January 10, 2014
I've already heard from many others who are earlier in the process, and are expressing relief that by the time they finish their coursework, they will be sitting for the shorter exam. Ultimately, the CFP Board's own public statistics on test-taking will reveal a lot about whether the exam is at least perceived to be easier when we see how many people actually sit for the CFP exam at the March and July testings, versus how many choose to defer to the first CBT 6-hour version of the exam in November. If we see a plunge in the number of exam takers for the March and/or July exams, we'll at least have the answer about whether the exam is perceived to be easier because it's going to be shorter.
In addition, as one anonymous reader has pointed out, the case studies are notorious for being a difficult part of the CFP exam because of their depth and breadth, but it's not entirely clear how a broad case study can even be delivered in a CBT format. Will the case study have to be shortened to the point that it all fits on a single page on one screen with the question below it, since there is no "test exam booklet" to flip through multiple pages? Will the entire case study portion of the CFP exam be undermined in a CBT format?
In the end, though, the real statistics we'll all be waiting to see is not just how many people pass the November CFP exam, and whether there is a material difference in the pass rate compared to the historical average. At that point, we'll have a clearer picture about whether the CFP exam was really just made more convenient, or if the CFP Board actually just lowered the bar to try to bring in more CFP certificants.
Either way, though, I have a feeling that for decades to come, we'll still be hearing a lot of today's CFP certificants remind those who come along in the future "Back in my day, the CFP exam was almost twice as long as it is now!" (Followed, no doubt, by the point that they had to walk to the testing center in the snow, uphill, both ways.) Let's hope that the future certificants can at least legitimately reply "Yes, but the test is still just as hard, and the standards are just as high as they've always been; the pass rate isn't any higher now than it was back in 'your' day." We'll see.
So what do you think? Is the new shorter CFP exam a sign of progress and modernization, or a lowering of the standard? Are you CFP candidate planning on waiting for the new format of the CFP exam?
I wonder if they considered breaking up the exam to keep the length? As you know, the CPA exam is electronic too but it’s 14 hours in total, broken into 4 different sections that can be taken separately. Of course those of us who took it under the new electronic version still hear about how much harder it was for those who had to sit through two days of a paper exam. I’m sure new CFP candidates will be hearing the same for years to come!
There was an interesting article in the latest MACPA Statement magazine about this debate between old timers and newer CPA’s on the CPA exam… http://www.nxtbook.com/ygsreprints/MACPA/g39601_macpa_jan2014/#/12
Chris,
Thanks for pointing this out. I’ve actually added a note to the article itself about this, as the point that the CPA exam is still able to be long enough to be broken into multiple sections – and tested on multiple days – is a really good point.
I don’t know if the CFP exam material is really built to be broken into a “sections” format similar to the CPA exam. But realistically, it certainly seems like that COULD be done, if the true goal was to keep the duration of the exam high and it was just a question of “how” to accommodate the length in a CBT format…
– Michael
I personally don’t feel like the pre ’91 CFP Candidates are any less deserving of the mark that I am just because they sat for 6 individual exams and I sat for a comprehensive one. I would be interested to see the numbers on how many people rushed to complete all of the individual exams before the switch. Caleb Brown and I had to split a hotel room in Dallas when we took it in ’03. Having access to a testing center closer to home would have alleviated some of the stress and additional cost. I didn’t have to walk in the snow but it was a 5 hour drive from Lubbock to the Dallas testing center.
Jason, if ya’ll had waited Dr. Cordell convinced the CFP Board to have the test done in Lubbock in 2006. But then they changed the test center without notifying us, so the dozen of us that were sitting for the exam arrived at the test center a couple hours into the start of the exam and had to receive special permission to proceed as if the exam were starting right then, so maybe you should be glad you didn’t take the exam that year…
I think the thing I would miss is the comradery of going to the bar after each section to celebrate the progress we had made. This was what made the test memorable for me.
One of the hardest parts about that exam was the fourth hour on Friday. From a stamina standpoint, two 3-hour sessions were a breeze compared to just that final hour Friday afternoon. Passing the exam was a much about concentration as it was about a comprehensive understanding of the material. I can’t imagine opting to take the July exam instead of waiting a few extra months for November to roll around.
I will soon sound like my grandfather, “in my day the CFP exam was two whole days and twice as many questions and we had to fill in a small circle with a pencil!” The test will be less rigorous and stressful by going to one day, but the purpose is to measure knowledge not to see how long you can sit on a wooden chair. I don’t have a problem with it.
I actually forwarded this article to the intern in our office who is currently in the CFP program at his college (my alma mater) and said, “I remember in my day when the exam took 10-hours and two days to complete and I had to walk up a hill both ways!”
Over the past few years, the percentage of people passing the exam increased to about 2/3, compared to the roughly 55% that was true a few years ago. Was there ever any explanation for that?
The test of ability to focus on minute details for too many hours always seemed absurd, along with the questions that tested whether you were using the ‘end of the period’ or ‘beginning’ of the period keys on your calculator. No one in their right mind uses a calculator to achieve that level of ‘accuracy’ in this decade. They should continue to eliminate some of these old school approaches!
Cameliah,
The CFP Board makes the exam pass rate statistics public – see http://www.cfp.net/news-events/research-facts-figures/cfp-examination-statistics
The pass rate has generally fluctuated from the low 50s to the mid 60s since the exam came out, but it’s not unusually higher recently. For the past year, the exam averaged about 63%, but it was the same average in 1996 as well. I’m not sure there’s any basis that the pass rate has persistently gone up lately any more than just random noise (though it’s worth monitoring going forward).
Broadly speaking, given that the test is normalized for difficulty, one could make the case that the pass rate should improve simply because our educational materials and techniques are getting better, though ironically I’m not sure that’s evidenced in the pass rates either…
– Michael
I’ll admit that I gave out a big Hallelujah after reading the narrative of this article. However, after reading the entire article I must agree that I much prefer the new option for a whole new set of reasons; mainly the convenience.
To me it doesn’t seem possible for the new exam to be nearly as comprehensive with 40% fewer questions. When we consider there are in excess of 700 individual topics that are part of the study material and only 170 questions will be asked on the new exam less than 25% of the available topics could be asked even if every question deals with a separate topic, which we know is unlikely. It just seems to me that asking fewer questions, by it’s very nature, makes for a less rigorous and comprehensive exam and serves to dilute the qualifications of CFP practitioners in the name of increasing the numbers. The quantity vs. quality issue. As a fairly recent CFP certificant I am not amused by this change not because I care that others after me will have a shorter exam but I truly feel it undermines the exclusivity and accomplishment of those who did it the way it’s been since 1991.
The test is now 35% fewer questions than the Series 7 with the same amount of alloted time to complete it. It’s definitely going to be easier, but the public isn’t going to care one way or the other. Most don’t even know what a CFP is, much less the fact that the bar to become one has been lowered dramatically.
That’s an interesting point, Phil, and had occurred to me too. I think though it’s less about what the public is aware of and more about establishing a certain level of competency of who can and cannot call themselves a financial planner going forward. It appears the CFP Board is lowering the bar in an effort to entice more into the ranks.
It sounds nice to take a shorter test and for only one day. However I am sitting in March as the test hanging over me all year does not really sound like much fun…..
More and more I “sell” my degree in financial planning and neglect to mention the CFP. This move certainly does not help the way I view the exam and designation, which in my opinion barely scratched the surface of what one needs to know as an entry level planner. Watering the exam down waters down the marks. I guess the Board is looking to expand revenue……
I’ve had the study materials for a couple of years, but haven’t been motivated to devote the necessary time to complete the CFP program, because I seldom come across anyone who even knows what it is. Besides, how many people actually do real financial planning? It’s so difficult to justify spending the time, and clients are mostly unwilling to pay for it. Most advisors these days are just putting clients into fee-based accounts and heading out to the golf course — CFP or not.
John, I know quite a few advisors that do comprehensive planning, myself included. We’ve charged a separate planning fee since day one (Nov. 2007) to all of our clients that engage us in a client relationship. I agree that it’s hard to assess a fee to a client for a comprehensive plan for “middle America” but as you go up the wealth curve, there is obvious benefit to the process and clients realize this. A $3-$5k fee for a financial plan for a client worth a couple million and mid-six figure income is well worth the investment.
As a CFP student scheduled to sit for the boards at the end of the year, I enjoy learning more and more about the details of the profession. Will I use all of the material? Absolutely not. I am a bit saddened to hear that they will be shortening the exam, though I enjoy the fact that it will now be electronic. Regardless of how the CFP board spins it, I don’t see how it’s possible for them to create as difficult of an exam as they previously had with 40% fewer questions. Just doesn’t seem possible.
However, one fact that’s missing from all of this (and correct me if I’m wrong): in order to take the board exam, you will still have to sit for and pass all of the module exams. You can’t “pass go and collect $200” without getting through all of the modules, which do test pretty in-depth. This may still be the barrier we need to protect the “best of the best” image that CFP desires.
Regarding your comment about fee-based accounts and hitting the golf course, you’re spot on. It really, really, REALLY bothers me when advisors, especially seasoned advisors with an old book of A-shares, talk a client into moving into a fee based account. The client’s relationship doesn’t change, their performance lags because of increased fees, and the advisors’ revenue can (at very least) quadruple overnight. Tell me how that’s “acting in the best interest of the client.” So to your point there…I support it 100% and I believe it is a very, very real problem in this industry.
I can’t fathom that the shorter exam will be as comprehensive as the 2 day. I think this move will water down our standards. How unfortunate.
I passed the 10-hour exam in March of 2012. From the onset, I feel that this is a bad idea for the CFP designation and the financial planning profession as a whole. I grew up playing all different types of sports and at the beginning of each season, all we ever did was run until we turned white in the face. The people who couldn’t take it would walk off the field or court and eventually quit. What was left was the cream of the crop; the people who really wanted to excel and be the best of the best. As much as I hated that process at the time, it made playing in the games later on that much better. When I passed the CFP exam, I had the same feeling as if I was back on the basketball court. Part of becoming a CFP professional is enduring the toughest; mentally, physically, emotionally and spiritually. I graduated from college in 2010 and many of my friends have yet to pass the exam and/or have left the profession. When it comes to financial planning, I personally believe it is just as important as being a doctor and taking care of someone’s physical or mental health. If we don’t have the absolute best students passing this exam, what are we saying about our profession, our designation, our future? Not everyone can win and when it comes to financial planning, we need people, I mean professionals who are ready to tackle the toughest cases and problems.
Obviously merrill lynch and morgan stanley are behind this. They know this is the direction things are going but their guys cant pass the 10 hour version of the exam…
Rob,
I’m not aware of any information at all to substantiate that statement. All public information indicates the CFP Board’s focus and concern on the low volume of new students taking the test, and that wirehouses are not a material factor in this at all (and certainly not the primary).
That aside, there are plenty of people from all channels of the industry who have failed to pass the test. It’s not specific to wirehouse brokers.
– Michael
I think there’s a huge chance that there will be a higher pass rate, not due to easier material but due to the ability to focus more intensely for a shorter period of time. Sometimes your brain shuts down against your will after so many hours. Maybe the shorter exam will eliminate a percentage of the stupid mistakes people make even though they know the material. I am planning to sit for the exam in March of 2015, and I was extremely happy to hear the news.
I truly do not understand how the CFPBOS can claim that the exam is just as rigorous when they are dropping so many questions at a time when the field of required topics has expanded. They could have a multi-day exam, the same as the CPA community does, but obviously the CFPBOS is striving to make it easier to take and pass.
It is also quite likely, considering the amnesty that Keller granted to the wirehouse people, that this move is being done to make it easier for the brokerage houses to have their employees pass the test. This does remind me of CFP Lite, but now everyone post 14 will be lite, without the public even being aware. Keller devalues the license with each breath he takes.
Hopefully, the Camrada suit will knock some wind out of their sails.
As someone who has completed the CFP and CFA exams, I have to say that doing an exam in one day (each portion of the CFA) didn’t make it any less difficult than spending a day and a half on the CFP. It’s entirely possible that the case studies will become watered down as a result of the move to computer-based testing, but the shorter duration shouldn’t be a factor.
Yes, I think you are correct Mike. The proof of an easier exam will be in the November pass rate and future tests. If the pass rate increases over time, they have made it easier.
I would slightly disagree with your comment “that it tested someone’s capacity to stay focused and not freak out for a 10-hour exam testing period, which isn’t particularly meaningful as a professional standard”. I believe it is meaningful. Imagine a financial advisor having a rigorous week of appointments and his last few appointments on Friday are exhausting and he’s too tired to focus and makes some mistakes. Is it worth anything to a client that someone with a CFP designation was able to stay focused for long length of time (better than his peers), being in a healthy condition both physically and mentally. Is that worth something to the client that after an exhausting week for the CFP they can trust their CFP to still be mentally sharp?
CFP Board Promotes Former Merrill Exec To Grow Number Of Licensees
http://shar.es/SZqvQ
It is about time it is computer based. The FINRA exams used to be paper based and does anyone think the Series 7 is easier today than it was while paper based?
Let’s go for 1 1/2 hrs no coursework.