Why aren't more students taking the CFP exam?

CFP Board worries about lack of student follow-through

Aug 12, 2013 @ 3:29 pm

By Mark Schoeff Jr.

Many college students who complete financial planning coursework are not sitting for the exam that would qualify them as certified planners, a trend that worries the organization that grants the designation.

In a survey of 506 students who earned bachelor's and master's degrees in financial planning, 351 had not taken the certification test, according to the Certified Financial Planner Board of Standards Inc.

The study, conducted with San Diego State University and released last week at a CFP Board education conference in Washington, involved students at three state universities who graduated over a five-year period.

Charles Chaffin, CFP Board director of academic programs and initiatives, stressed that the results are based on three institutions and cannot necessarily be generalized to all CFP-registered programs.

“This study is merely providing a basis for CFP Board to work with partner institutions in developing more data that will ultimately help improve students' pathway to CFP certification,” Mr. Chaffin said in a statement on Monday.

Nonetheless, Kevin Keller, the CFP Board's chief executive, encouraged financial planning educators to look beyond metrics such as enrollment, retention and graduation.

“We need your help in bringing your students through [to CFP certification],” he told about 155 people at the conference on Friday. “My challenge to all of you is to increase the induction of your students.”

Nationally, there are 343 CFP Board-registered programs at 213 educational institutions, including 112 at the bachelor's level, 49 at the graduate level and 177 certificate programs.

Requirements for obtaining the CFP designation include obtaining a bachelor's degree in any field, passing the CFP exam and acquiring a certain amount of experience. Once the CFP is granted, the holder must follow ethical guidelines enforced by the CFP Board and earn continuing education credits.

About a third of students who complete the CFP certificate program at DePaul University in Chicago decide not to take the CFP exam, according to Mike McCarthy, director of the school's Financial Education Center. Often, they either never intended to take it or a career change to financial planner didn't materialize.

“They found value [in the certificate] but they didn't sit for the test,” he said. “We don't sugarcoat it up front. We're pretty direct about how hard [the test] is.”

About 6,000 people take the CFP exam annually. It has a 55% pass rate.

The CFP Board emphasizes education in its effort to make planning a recognized profession like medicine, law and accounting.

“We at the CFP Board are making a large long-term bet on the emergence of the financial planning profession by investing in baccalaureate and master's programs,” Mr. Keller said.

The return on that investment decreases when students forgo the CFP exam and fail to add themselves to the roster of CFP mark holders, which now numbers about 68,000 in the United States.

The timing of the dropoff couldn't be worse, Mr. Keller said, given “an aging adviser base that is crying out for more planners.”

He urged professors and other instructors to show students what they can do professionally after passing the exam.

“Providing students a clear career path is important,” Mr. Keller said.

Ron Rhoades, an assistant professor at Alfred State College and curriculum coordinator for its financial planning program, said schools need to do more to ensure that degree-earners sit for the CFP exam.

“We need to encourage it and not let our [graduates] get sidetracked with life's other adventures,” he said. “The more CFPs we have, the better shot we have at becoming a profession because we have a foundational base of knowledge.”

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