Computer Based CFP Exam - Easier or Harder?

The CFP Board recently announced some changes to the CFP^® Certification Examination, that will be implemented for the November 2014 exam. The changes include:

• The exam will now be a computerized exam given at more than 250 testing centers across the country.

• There will be a five day window when candidates may take the exam, rather than the current Friday afternoon, all day Saturday format.

• The exam will be 170 questions over six hours, rather than 285 questions over 10 hours.

• Candidates will receive preliminary results immediately after completing the exam.

The benefits of the changes are obvious. There’s less time stressing while taking a shorter exam, there’s now a five day window to take the exam so no more giving up all day Saturday to test, there is a more consistent testing experience across the country and candidates receive preliminary results immediately.

Over the past few weeks, I have heard from many advisors planning to take the CFP exam that ask “should I test now under the current format or wait until November, since the November exam will be easier because it will be shorter?”

While I agree that the six hour computerized exam won’t be as physically challenging as the current 10 hour exam, I do think there are some considerations when deciding between the current format in July versus the computerized exam in November. Here are some considerations:

Less Questions = Less Room for Error

The playing field for the exam is not changing. In other words, the same material is being tested, the learning domains are weighted the same and the topical areas will still have the same average representation. Students are still required to learn the same enormous amount of information. In fact, it’s likely to be more challenging because instead of a topic like duration having about 4 questions on the exam, there may only be one or two. For example, you may be comfortable with concepts surrounding duration such as the relationship between, term, yield, coupon and duration but uncomfortable with the actual calculation of duration. With the current ten hour 285 question exam there may be 4 duration related questions, 3 on the concepts and 1 on the actual calculations. You may answer the 3 concept questions correct, but miss the 1 calculation question. With the new six hour 170 question format, the exam may only have room for 2 duration questions, both of which could be the concept questions and you would be in great shape, or one concept and one calculation question, which would be trouble for you or worse yet, 2 calculation questions which could mean zero points for that concept.

Old Format

4 questions: 3 concept correct, 1 calculation incorrect = 75% of available points

New Format

2 questions: 2 concept correct = 100% of available points
2 questions: 1 concept correct, 1 calculation incorrect = 50% of available points
2 questions: 2 calculation incorrect = 0% of available points

The point is, there’s less room for error with the new format of the exam. With the current ten hour 285 question exam, candidates could miss 90 or so questions and still pass the exam. With the new six hour, 170 question format, candidates may only be able to miss about 54 questions. In addition, if you are a little foggy on a topic, lets hope the few questions on that topic relate to the concepts you know!

Same Level of Difficulty

The psychometricians (folks that analyze the exam for difficulty) attempt to statistically equate the level of difficulty for every exam. In other words, if you pass the current exam, you should have passed any previous exams. If you fail the current exam, you should have failed any previous exams. The CFP Board has assured us the computerized version will be equally as challenging as the current exam.

My suggestion when deciding whether to take the July or November exam should be, can you make the time to study for the July or November exam? Don’t let the delivery method of the exam determine when you take it, instead decide when you can devote the most time to studying. Ultimately, your preparation and knowledge will determine your success on the exam!

Joe Gillice
President, CPA, CFP^®