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How difficult is it to become a certified financial planner?

post #1 of 7
Thread Starter 
Yeah, just got done with my degree, currently thinking of going for CPA or CFP. I am leaning toward CFP, I know CPA is a more popular option but I have no real interest in auditing and accounting. However, I do have quite a strong interest in finance. I would like to hear from you guys especially someone who has gone through all this pain. Is CFP more difficult than CPA exam? I know CMA is.
post #2 of 7
SKILLZZ
post #3 of 7
Here you go, everything you'll ever need to know about the CFP exam: http://www.cfp.net/become/

With risk of being politically incorrect, I'll give you my honest opinion. The CFP designation is much easier to obtain than the CPA, CMA or CFA, but that is not to say it isn't well respected.

The CPA (once you have passed the exam and have met the education and expereince requirements) is actually license to practice public accounting and thus is a professional designation in every sense of the word, much like the PE for engineers, passing the bar exam for lawyers, or the boards for doctors. The exam content is broad and detailed and the pass rates are quite low, typically less than 20% on a national level.

The CMA is somewhat similar to the CPA in terms of difficulty level, but is not a license to practice in any way, and thus the standards are more subject to being changed from time to time, or even being inconsistent. The CMA exam is certainly well developed and now in a fairly mature stage. Depending on your academic background and experience, it may be as challenging or even more challenging to pass than the CPA, although the pass rates tend to hover in the 40% range and they draw from essentially the same pool of candidates (or at least a very similar pool).

Of course the CPA and CMA are both accounting exams (although certainly, they both touch on other areas of business, particularly the CMA). So my advice (having developed and taught a full service CPA reivew course here in Cayman for a number of years now) is that if your'e not particularly interested in accounting and auditing (as you've stated) then don't even bother to waste your time getting started with this journey. It's a long and hard journey to pass either of these exams (for most of us mere mortals anyway) and it will result in nothing but frustration, heartache, and outright mental pain if you're not totally into it. It's not something you can just dabble in.

The CFA exam has three successive levels that you need to pass, one year at a time, in order to get your charter. Although it's not a liscence to practice in the investment profession in the same way that the CPA is in the accounting/auditing profession, it is probably more widely recognized as a minimum entry level requirement in the investment field (for analyst jobs with the big firms) than say, the CMA is for working as a management accountant in industry. In other words, the CFA designation is the clear market leading qualification to have in the investement field. There are several other qualifications that investment professionals can pursue, but the CFA is the way to go if you're thinking about a long-term career in the investments field.

The CFA is a very rigorous exam, especially levels two and three! The pass rates vary quite a bit from year to year and level to level, and they don't seem to have settled into a consistent pattern like the CPA and CMA exams have. I've seen pass rates as low as 22% and as high as 81% for the CFA depending on which year and which level. The average seems to be between 40% to 60% for individual levels, but it's extremely hard to predict. The odd thing is, you might feel like you're failed, but still pass. Whereas with the CPA, if you think you failed, you failed! So there is always hope with the CFA and the key is to keep working and doing the best you can with every minute alotted. Those who wallk out of this exam early are absolute fools, IMO.

Although the CFP is also something worthwhile for investment professionals, it doesn't compete directly with the CFA in the sense that it is a much less technically oriented and rigorous exam, and is not a three level exam like the CFA. The CFP is for financial planners as opposed to financial analysts (to state the obvious) and as such has a more practical, hands on, orientation. Much of the exam has to do with case scenarios where you effectively are put in the position of a financial planner, and you need to identify areas of concern, questions to raise with the simulated client(s), and develop some recommendations that demonstrate your knowledge of various investment options, including life insurance, and all sorts of other things.

The CFP is the most "reachable" goal for someone who does not have an extensive academic background and thus is the one that lends itself best to a self-study approach. I'm told that there are some excellent materials available as well as prep courses. It's an excellent credential to have and is probably more flexible than any of the others in terms of what you might do with it once you have it in hand. There are a lot of creative CFP's out there who've really done well for themselves in life without necessarily having to spend years and years in college before getting on the success path. I'd recommend it most strongly for the entreprenurial types who are real self starters and go-getters!

Just for disclosure, I'm a CPA, CMA and CFA, but not a CFP. No doubt, my personal biases creep into this, but I've tried to present a fair and objective view. It might not be the same as that held by others. Although the CFP does hold some appeal to me, nearly 100% of the content from that exam (except the insurance stuff) is incorporated in one way or another in the CFA curriculum, so going back to do the CFP now would be mostly rehash. That, and I prefer to hang out with my headphones these days!
post #4 of 7
I'm both a CPA and a CFP...the CFP exam is probably about 2/3 as hard as the combined parts of the CPA exam. The hard thing about the CFP exam is you have to pass it all at once, unlike the CPA exam which in many states can be taken part by part. Also, the questions are harder on the CFP exam in that it is harder to guess the answers.

For example, on the CPA exam many questions are relatively easier "choose A, B, C, or D" types multiple choice question. You can eliminate ones which you know are false and increase your odds of guessing correctly.

On the CFP exam they will give you a lot of questions like this:

Scenario A
Scenario B
Scenario C
Scenario D

Then it will ask you to choose A, A+B, D+C, A+D, D or none of the above.

Your odds of guessing correctly go down with these types of questions so you need to study going in. I wouldn't call the CFP exam a piece of cake.

On the other hand, the CPA exam has changed since I took it back in 2000...it's now administered on computers so maybe it is harder or easier than it used to be.
post #5 of 7
wow....
i'm planning to sit CPA exam either in Aug or Oct, then CFA level 1 next year....

Don't have too much interest in becoming an accountant but more working in the financial industry; CPA is a basic necessary qualification to have imo...
post #6 of 7
Thread Starter 
Thanks for all the replies! Another thing that set me back for CPA is that I am not sure if I have the educational requirement to take the exam. Will the office pre-determine for you? Btw, I live in california, I heard some states are easier to obtain the CPA license...
post #7 of 7
Quote:
Originally Posted by Luvya
Thanks for all the replies! Another thing that set me back for CPA is that I am not sure if I have the educational requirement to take the exam. Will the office pre-determine for you? Btw, I live in california, I heard some states are easier to obtain the CPA license...
Passing the CPA exam and getting your CPA license are two distinct steps, so what you've heard is half true. The CPA exam is administered on a national basis, so the exam itself is the same no matter which state you take it in. Thus, your odds of passing are exactly the same in all jurisdictions. But state law controls, 1) what the minimum education requirements are to be eligible to sit for the CPA exam, and 2) what the experience requirements are to become eligible to get your CPA liscence.

The education requirements to be eligible to sit for the exam vary from state to state, but at this point all but 5 states (California, Colorado, New Hampshire, Delaware and Vermont) have enacted legislation requiring a minimum of 150 semester hours of college education, and in most states, there are also mimimum requirements in terms of how many accounting and/or business credits are required within the 150 hours. In some states, there are specific courses that are required as well. Some states make their own determination of whether you've met the education requirements; others use designated agencies to evaluate your academic transcripts, and then report their findings to you and the state. Details on a state by state basis can be found as www.nasba.org (National Association of State Boards of Accountancy). Those candidates (such as the ones I teach here in Cayman) who have credit hours from non-US academic institutions must also have their foreign transcripts evaluated seperately.

The experience requirements for licensure also vary from state to state, and are detailed on the NASBA site, I believe. You can also get this information from the individual state board. There are also reciprocity agreements between the various states, so in case you were to move from California to Illinois, you would be able to determine what you needed to do to transfer your licence.

Once you pass the CPA exam, you are forever a CPA, even if you never become a licensed CPA. You'll get a shingle to hang on your wall, but you cannot sign an audit opinion or represent a client in court for a tax matter, for instance, without becoming a licensed CPA.

Quote:
Originally Posted by Soundbuff
I'm both a CPA and a CFP...the CFP exam is probably about 2/3 as hard as the combined parts of the CPA exam. The hard thing about the CFP exam is you have to pass it all at once, unlike the CPA exam which in many states can be taken part by part...
This is intersting, and 2/3 as hard to pass is about what I would have expected. They are very different exams in terms of structure (that part of your quote that I've left out) and purpose. Since the CPA leads to licensure in the public accounting / auditing profession, there is more of a slant toward the academic side. By this, what I mean is that they need to make sure that someone who passes the exam will be technically competent. There are other goals, but this one tends to outweigh them all. With the CFP, the emphasis seems to be more on the practical/applied side, as you've described with the different scenarios that will be presented to candidates. They're more interested to see if you can think on your feet in an advisory capacity.

If you don't mind a legal analogy, the CPA exam looks for those who can do the detailed legal research necessary to prepare the briefs, while the CFP is looking more for those with trial advocacy types of skills. In reality, it is important to have both a sound knowledge of your discipline (i.e., technical competancy) and an ability to apply that knowledge (i.e., practical skills) but no one exam can test all of these things equally well.

The CPA exam in recent years is actually moving more and more toward the applied side, but isn't quite ready for the types of case scenarios that are tested on the CFP (and the CFA for that matter). The answers to CPA questions tend very much to be "right" or "wrong" with very little room for grey areas (i.e., kind of right answers) except for the "simulation" type questions that have been included since the computerized format was put in place in 2004.

Although the CPA exam can now be passed part by part in all states, the candidates are complaining a lot about the structure of the exam. Within each of the 4 exam parts (say auditing, for example) you will have 5 sets of questions (3 multiple choice question sets, and 2 simulations). When you're taking the exam, there is no going backwards like we used to be able to do in the pencil and paper exam! In other words, once you complete the first set of multiple choice questions and move on to the next set, the system locks you out of the first set, and so on until you are done. This really stinks big time because we used to be able to leave questions blank and then go back to them at the end of the exam with whatever time was remaining, and at a point when you could relax a bit, gather yourself, and apporach it from a fresh perspective. Oh well, better them than us!
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