CFP Exam is Relevant and Effective

(The following was written for Investment Executive's Comment Page in response to Professor Chris Robinson's piece in the February '99 issue of Investment Executive, page 18)

February 17, 1999

Dear Editor:

I would like to address some of the concerns Chris Robinson expressed about the Financial Planners Standards Council's November 14, 1998 Professional Proficiency Examination (PPE).

Perhaps a better understanding of the whole of our qualifying and standard-setting process may alleviate some of the concerns Prof. Robinson has about what he perceives to be deficiencies in our exam.

The effectiveness of our examination as a test of what a financial planner needs to know to competently serve the public is best demonstrated by the fact that the exam is developed by practising financial planners for financial planners. Our PPE is one component of a four-part certification process FPSC uses to determine whether an individual is eligible to hold the Certified Financial Planner (CFP) designation. FPSC requires that each candidate fulfil our requisites in areas of education, examination, experience and ethics prior to earning the right to use the CFP designation.

Each candidate must first qualify to write our examination either by successfully completing an approved educational program or by holding a professional designation and having three years of experience in a field related to financial planning.

By the time individuals qualify to write our exam through educational programs, they will already have been examined through a variety of measurement methods which may include essays, case studies, oral presentations etc. The three years of related experience required of those qualifying by holding a relevant professional designation undoubtedly includes measurement and evaluation of knowledge through performance appraisals, promotions, feedback from clients and on-going professional development requirements of their particular professional association.

Additionally, a candidate must also have two years financial planning work experience (three for those exempted from the educational requirement) and agree to abide by our code of ethics. According to the code, every CFP licensee must maintain the necessary knowledge and skill for competent practice. This commitment to life-long learning is monitored through our annual continuing education requirements.

The examination by itself can, of course, because of time constraints, only test a certain percentage of the knowledge and skills outlined in the CFP syllabus. To ensure fairness to all candidates regardless which exam they write, each examination is developed according to the topic coverage outlined in the examination policies and procedures candidates receive prior to writing the examination. The topic coverage for the exam is based on these policies and developed from a syllabus that outlines 166 topics and additional subtopics including the area on which Prof. Robinson focuses - preparing a financial plan.

The debate about the merit of multiple choice questions continues to be unproductive. Suffice to say there is overwhelming expert opinion that suggests well-designed multiple choice questions can test the ability to analyse, synthesise and evaluate - or in Prof. Robinson's words: test if an individual has the ability to determine "how much life insurance to buy ...". But, Prof. Robinson's suggestion that grading multiple choice responses is simply a matter of checking off the answers is misleading. While the answer sheet is machine-scored, we also undertake a comprehensive review of the examination results with the assistance of a panel of experts and a psychometrist from the University of Toronto. This review ensures pass/fail standards are fair and reasonable. The FPSC certification process adheres to the same principles followed by a wide range of professions and occupations in their certification programs.

Financial Planners Standards Council is a not-for-profit independent organization committed to the protection of the public interest in the area of financial planning. We do not weight exam coverage according to the segments of the financial services industry represented on our Board. A recently commissioned independent research study that asked practitioners to consider areas of knowledge they used to perform their service confirms the validity of our syllabus. And we firmly believe our current examination is a reliable testing mechanism. It is objective, fair, job-related and is based on the knowledge and skills required to practice as a financial planner. Are there alternatives? Yes. Have they been proven to be superior to ours? No.

Our standard-setting process is evolutionary: we are determined to stay abreast of what it is a CFP must know to satisfy the financial planning needs of Canadians in a constantly changing environment. A planner who has earned the right to place the professional marks CFP after his or her name is most certainly qualified to offer the public sound financial planning advice and will be held to the highest of ethical standards.