This free CFP study guide teaches to the CFP® Certification Examination — every one of CFP Board’s 8 Principal Knowledge Domains and the 70 topics beneath them, organized exactly the way the exam is built.[1] It is the broadest exam in financial planning, so this guide is deep: real teaching, worked calculations, and current 2026 tax, retirement, and estate figures — not a summary.
And it’s interactive, not a wall of text: every domain has a built-in checkpoint quiz, hover-able glossary terms, and concept questions, so you learn by doing.
Read it domain by domain, test yourself at each checkpoint, then round out your free CFP study resources with our practice exam and flashcards.
CFP Exam Snapshot
| Detail | CFP® Certification Examination |
|---|---|
| Questions | 170 multiple-choice (4 options each) |
| Format | Two 3-hour sessions (85 questions each), one day |
| Total time | 6 hours (plus a 40-minute break) |
| Passing standard | Criterion-referenced, pass/fail (no fixed % cutoff) |
| First-time pass rate | 65% (March 2026: 67%) |
| Certifying body | CFP Board (Certified Financial Planner Board of Standards) |
| Domains | 8 Principal Knowledge Domains · 70 topics |
The exam weights some domains far more heavily than others — spend your study time accordingly. Retirement, Investment, General Principles, and Tax together are 64% of the exam:[1]
A · Professional Conduct & Regulation
8% of the exam (about 14 questions) — but the ethics content shows up everywhere, because retirement, investment, tax, and estate questions routinely fold in a “what is the CFP® professional’s duty here?” twist. The exam tests the current Code of Ethics and Standards of Conduct (effective October 1, 2019) and the 7-step Practice Standards.[3]
Code of Ethics & Standards of Conduct
The document has two halves: the Code of Ethics (six aspirational commitments) and the enforceable Standards of Conduct (the Duties Owed to Clients, Firms, and CFP Board). The six Code principles are to act with honesty/integrity/competence/diligence, in the client’s best interests, with due care, avoiding/disclosing , maintaining confidentiality, and reflecting positively on the profession.
A key tested distinction is how a planner may describe compensation:
| Term | When it may be used |
|---|---|
| Fee-only | The CFP and ALL related parties receive no sales-related compensation |
| Fee-based | Earns both fees and commissions; must disclose both, must not imply 'fee-only' |
| Commission-only | Compensation is entirely sales-related |
Fiduciary Duty & Conflicts
The is the single most heavily tested concept on the entire exam. It applies at all times when providing — not only during full financial planning — and has three components (mnemonic L-C-I):
| Component | What it requires |
|---|---|
| Duty of Loyalty | Put the client first; avoid material conflicts, or disclose + obtain informed consent + manage them |
| Duty of Care | Act with the care, skill, prudence & diligence of a prudent professional given the client's goals |
| Duty to Follow Client Instructions | Comply with the engagement's terms and the client's reasonable, lawful directions |
For a , disclosure alone is not enough: the CFP must also obtain the client’s informed consent and manage the conflict.
A CFP® professional is always held to the fiduciary standard for Financial Advice — even if the firm only requires Reg BI or suitability.
Must put the client's interest FIRST, at all times; avoid or disclose + consent + manage conflicts.
Must act in the retail customer's best interest at the time of the recommendation — but NOT a full fiduciary.
Recommendation only had to be 'suitable' for the customer. Superseded by Reg BI.
Higher rung = the client’s interest comes first.
The 7-Step Financial Planning Process
The Practice Standards apply when the engagement rises to — Financial Advice that integrates relevant elements of the client’s circumstances (judged by the five Integration Factors: number of elements, portion of assets, time affected, risk effect, and barriers). Memorize the order (mnemonic U-I-A-D-P-I-M):
- 1
1 · Understand the client's circumstances
Gather qualitative (values, goals, risk tolerance) and quantitative (income, assets, cash flow, tax) data. If information is insufficient, limit the scope or terminate — never guess.
- 2
2 · Identify & select goals
Help the client identify, prioritize, and (where needed) revise unrealistic goals; discuss assumptions.
- 3
3 · Analyze current & alternative courses of action
Weigh the client's current path and any alternatives with material advantages/disadvantages.
- 4
4 · Develop the recommendation(s)
Select recommendations designed to maximize the chance of meeting goals; note assumptions, timing, and dependencies.
- 5
5 · Present the recommendation(s)
Present the recommendations and the information considered, so the client can make an informed decision.
- 6
6 · Implement
Establish whose responsibility implementation is; select and recommend specific actions/products.
- 7
7 · Monitor progress & update
Establish monitoring responsibilities, track progress, and update goals and recommendations as circumstances change.
Procedural Rules & Sanctions
CFP Board enforces the Code & Standards through a peer-review process: Enforcement Counsel investigates, then may dismiss, issue a Letter of Caution, settle, or file a complaint with the Disciplinary and Ethics Commission (DEC). The standard of proof is a preponderance of the evidence; appeals go to the Appeals Commission.[4] A CFP must also self-report within 30 days certain events (felony charge, regulatory action, bankruptcy, tax lien, qualifying customer complaints).
| Sanction | Public? | Effect |
|---|---|---|
| Private censure | No (only non-public sanction) | Unpublished written reproach for minor misconduct |
| Public censure / letter of admonition | Yes | Published written reproach |
| Suspension | Yes | Temporary loss of the marks (generally up to 5 years) |
| Revocation | Yes | Permanent loss of the marks (a current certificant) |
| Temporary / permanent bar | Yes | Bars a non-certificant from obtaining the marks |
Regulators, Securities Laws & Reg BI
Know which law does what, and who regulates whom. The four anchor securities laws:
| Law | What it does |
|---|---|
| Securities Act of 1933 | 'Truth in securities' — new-issue registration & prospectus (primary market) |
| Securities Exchange Act of 1934 | Created the SEC; governs the secondary market, exchanges & broker-dealers; insider trading |
| Investment Company Act of 1940 | Regulates mutual funds and other investment companies |
| Investment Advisers Act of 1940 | Regulates RIAs; imposes the fiduciary duty; requires Form ADV |
An RIA registers with the SEC at $100M AUM (must at $110M, withdraws below $90M); mid-sized advisers ($25M–$100M) generally register with the state.[8] holds broker-dealers to a best-interest standard via four obligations — Disclosure, Care, Conflict of Interest, and Compliance — but it is not a full fiduciary duty.[7]
Consumer Protection Laws
Bankruptcy: Chapter 7 is liquidation (a trustee sells nonexempt assets); Chapter 13 is a 3–5 year wage-earner repayment plan. Recent taxes, most student loans, and child/spousal support are generally non-dischargeable, and ERISA-qualified plans are generally fully protected from creditors. Key credit/privacy laws include the FCRA (credit reports), TILA / Reg Z (APR disclosure), ECOA (no credit discrimination), and Gramm-Leach-Bliley / Reg S-P (financial privacy notice + opt-out).
Checkpoint · Domain A
Question 1 of 10
Under the CFP Board Code of Ethics and Standards of Conduct, when does a CFP professional owe a fiduciary duty to a client?
B · General Principles of Financial Planning
15% of the exam (about 26 questions) — the conceptual backbone. Time value of money and the planning process appear throughout the other domains, so master this section early.
Financial Statements & Ratios
The Statement of Financial Position is a net-worth snapshot: at fair market value minus liabilities at outstanding principal equals net worth. The Statement of Cash Flow tracks inflows minus outflows over a period. Know the core ratios cold:
| Ratio | Formula | Target |
|---|---|---|
| Emergency fund | Liquid assets monthly nondiscretionary expenses | 3–6 months |
| Front-end (housing) | PITI gross income | |
| Back-end (total debt) | (PITI + other debt) gross income | |
| Savings rate | Savings (incl. match) gross income | 10–13% |
Economic Concepts
Fiscal policy is government taxing & spending (Congress/President); monetary policyis the Federal Reserve’s control of the money supply. The Fed’s primary tool is open market operations (buying Treasuries is expansionary). The business cycle runs expansion → peak → contraction → trough, and the yield curve can be normal, flat, or inverted (an inversion often precedes recession).
| Type | Examples |
|---|---|
| Leading (predict) | Stock prices, building permits, new orders, money supply, yield curve |
| Coincident (confirm now) | GDP, industrial production, personal income, payrolls |
| Lagging (confirm past) | Unemployment duration, CPI, prime rate, corporate profits |
Time Value of Money
The most-tested skill in the domain. Master the five keys — N, I/YR, PV, PMT, FV — plus P/YR and BEGIN/END mode. Cash outflows are negative.
| Concept | Formula |
|---|---|
| Future value | |
| Present value | |
| Effective annual rate | |
| Real (inflation-adj.) rate | |
| Annuity due | ordinary annuity (BEGIN mode) |
Education Planning & Funding
are the workhorse: after-tax in, tax-free growth and qualified withdrawals, owner-controlled. Contributions are completed gifts that qualify for the $19,000 (2026) annual exclusion, and the 5-year front-load election lets a donor contribute $95,000 at once ($190,000 gift-split). Under SECURE 2.0, up to $35,000of unused 529 funds can roll to the beneficiary’s Roth IRA.
| Vehicle / credit | Key facts |
|---|---|
| 529 plan | Tax-free qualified withdrawals; K-12 tuition up to $10,000/yr; $10,000 lifetime student-loan repayment |
| Coverdell ESA | $2,000/yr; income-limited; K-12 and college; use by age 30 |
| UGMA / UTMA | Irrevocable custodial gift; kiddie tax; counts as a STUDENT asset for aid |
| AOTC | Up to $2,500/yr, first 4 years, 40% refundable |
| Lifetime Learning Credit | Up to $2,000/yr per return (20% of $10,000); unlimited years |
Gift & Income-Tax Strategies
The is $19,000 per donee in 2026 ($38,000 gift-split). Qualified transfers — direct payments of tuition to a school or medical bills to a provider — are unlimited and gift-tax-free, on top of the annual exclusion. Gifted property takes a carryover basis (with the double-basis rule for losses); income shifting is limited by the kiddie tax.
Checkpoint · Domain B
Question 1 of 10
A CFP professional just signed an engagement letter defining the services to be provided. Within the CFP Board's seven-step financial planning process, this activity is part of which step?
C · Risk Management & Insurance Planning
11% of the exam (about 19 questions). Heavy on conceptual traps — taxation of benefits, FIFO vs LIFO, and which risk response fits which exposure.
Principles of Risk & Insurance
Insurance covers only (chance of loss only), never speculative risk. The four risk responses are avoid, reduce, retain, transfer, and the highest-yield rule in the domain is that low-frequency, high-severity exposures are exactly what you transfer (insure):
frequency
frequency
Low frequency + high severity = TRANSFER. This is exactly what insurance exists to handle.
Key doctrines: (no profit; property/health, not life); insurable interest (life = inception only; property = at the loss); subrogation (not life insurance); and the (~2 years). is intent to defraud; morale hazard is carelessness.
Life Insurance
| Policy | Premium | Cash value | Best fit |
|---|---|---|---|
| Term | Lowest initial | None | Temporary, large need (mortgage, income replacement) |
| Whole life | High, level for life | Guaranteed | Permanent need; guarantees; par policies pay dividends |
| Universal life | Flexible | Current interest + floor | Premium & death-benefit flexibility |
| Variable / VUL | Fixed / flexible | Subaccounts (owner bears risk) | Permanent + market upside (a SECURITY) |
Taxation: death benefits are income-tax-free (but in the estate with incidents of ownership — an solves this); a normal policy’s withdrawals are FIFO (basis first, tax-free). A (over-funded, fails the 7-pay test) flips to LIFO + a 10% penalty before . §79 group term life excludes the first $50,000 of employer coverage (not indexed).
Health, Disability & Long-Term Care
Disability: own-occupation pays if you can’t do your occupation (broadest, costliest). The taxation rule is the most-tested point — employer-paid premiums → taxable benefits; employee after-tax premiums → tax-free benefits.
LTC benefits trigger at 2 of 6 ADLs or cognitive impairment. COBRA runs 18 / 29 / 36 months. Original Medicare does not cover custodial long-term care.
| Item | Amount (2026) |
|---|---|
| HSA contribution | $4,400 self / $8,750 family (+$1,000 catch-up at 55) |
| HDHP min deductible | $1,700 self / $3,400 family |
| HDHP out-of-pocket max | $8,500 self / $17,000 family |
| Medicare Part B premium | $202.90/mo base (IRMAA by income) |
| HSA non-qualified penalty | 20% (waived after age 65; still taxed) |
Annuities
Fixed (insurer bears risk), indexed (capped/floored, not a security), and variable (annuitant bears risk; a security needing a prospectus). Non-qualified annuity withdrawals are LIFO — earnings out first as ordinary income, 10% penalty before 59½ — with no step-up at death (IRD). Annuitized payments use the exclusion ratio (basis ÷ expected return).
Property, Casualty & Business
HO-3 is the most common homeowner form (open perils on the dwelling). Floods and earthquakes are excluded from standard policies. The 80% coinsurance rule reduces a partial-loss payout if the home is underinsured.
An umbrella policy adds excess liability — size it at least to net worth. Business solutions include key-person insurance and buy-sell funding (cross-purchase gives survivors a basis step-up; entity redemption does not).
Checkpoint · Domain C
Question 1 of 10
Within the steps of the risk management process, what is the very first action a financial planner should take when helping a client manage pure risk?
D · Investment Planning
17% of the exam (about 29 questions) — the second-largest and most formula-heavy domain. Most missed points here are computational, so know when to use each tool, not just the formula.
Investment Vehicles & Taxation
Qualified dividendsare taxed at preferential LTCG rates (hold > 60 days around the ex-date); REIT and money-market “dividends” are ordinary income. Treasury interest is state-exempt; municipal interest is federal-exempt — compare with the .
Mutual funds must distribute capital gains annually; ETFs are far more tax-efficient via in-kind redemptions. Collectibles cap at a 28% LTCG rate.
Types of Investment Risk
is non-diversifiable (the PRIME risks — purchasing-power, reinvestment, interest-rate, market, exchange-rate) and is measured by . Unsystematic (business, financial, default) risk is diversified away by ~15–30 securities.
Lower → higher risk and expected return. Diversification across these reduces unsystematic risk.
Quantitative Measures & Ratios
The single most-tested decision in the domain is Sharpe vs Treynor:
| Measure | Formula | Use when |
|---|---|---|
| Sharpe ratio | Non-diversified (low ) portfolio | |
| Treynor ratio | Well-diversified (high ) portfolio | |
| Jensen's alpha | Diversified; excess vs CAPM | |
| CAPM (required return) | Required return for systematic risk | |
| Coefficient of variation | Relative risk (lower is better) |
Bond & Stock Valuation
Bond prices and rates move inversely; measures the sensitivity (longer maturity, lower coupon, lower yield = higher duration; a zero’s duration = its maturity). For a premium callable bond, use yield to call. Stock value via Gordon growth (constant-growth dividend discount model): , where .
And the reverse: rates ↓ → bond prices ↑. Longer maturity & lower coupon = greater price swing (duration).
Portfolio Theory & Strategies
The efficient market hypothesisruns weak (technicals fail) → semi-strong (fundamentals of public data fail) → strong (even insiders can’t win). Asset allocation (strategic vs tactical) explains most return variability; asset location (≠ allocation) places tax-inefficient assets in tax-deferred accounts. must avoid the wash sale.
Checkpoint · Domain D
Question 1 of 10
In modern portfolio theory, what primarily allows a combination of two risky assets to have lower portfolio risk than the weighted average of the assets' individual risks?
E · Tax Planning
14% of the exam (about 24 questions). Tax overlaps every domain, so these figures recur in Investment, Retirement, and Estate questions. All figures below are current 2026.[9]
2026 Tax Figures
| Item | Amount (2026) |
|---|---|
| Standard deduction | $16,100 single / $32,200 MFJ / $24,150 HOH |
| Top bracket (37%) | Over $640,600 single / $768,700 MFJ |
| LTCG 0% breakpoint | Up to $49,450 single / $98,900 MFJ |
| NIIT | 3.8% on MAGI over $200k single / $250k MFJ (not indexed) |
| AMT exemption | $90,100 single / $140,200 MFJ |
| QBI (199A) threshold | $201,775 single / $403,500 MFJ |
| Kiddie tax | Unearned income over $2,700 at parent's rate |
The Tax Formula
Memorize the flow: Gross income − adjustments = AGI; minus the greater of the standard or itemized deduction, minus the QBI deduction, equals taxable income; times the rates, minus credits, equals total tax. A credit reduces tax dollar-for-dollar; a deduction reduces taxable income. The estimated-tax safe harboris the lesser of 90% current / 100% prior (110% if AGI > $150k).
Business Entities & Trusts
| Entity | Taxation | Key point |
|---|---|---|
| Sole proprietorship | Schedule C pass-through; 15.3% SE tax | Simplest; unlimited liability |
| Partnership / LLC | Form 1065 K-1 pass-through | Basis = contributions + income + share of debt |
| S corporation | 1120-S pass-through; no SE tax on distributions | Reasonable salary required; 100 owners |
| C corporation | 21% flat + double taxation on dividends | Fringe benefits deductible |
Trusts and estates are separate taxpayers with compressed brackets — they hit 37% at only ~$15,650 of retained income, which is why distributions push income to lower-bracket beneficiaries (limited by DNI).
Property Transactions & Basis
Basis: purchased = cost; to FMV (automatically long-term); gifted = carryover (double-basis rule for losses). §1031 defers gain on like-kind real property only; §121 excludes $250k/$500k of gain on a principal residence (2 of 5 years). The disallows a loss within a 61-day window.
Charitable & Reduction Techniques
Charitable AGI limits: 60% for cash to public charities, 30% for appreciated LTCG property at FMV (which also avoids capital-gains tax — a top strategy). A (age 70½+, up to $111,000 in 2026) goes IRA-to-charity, counts toward the RMD, and is excluded from income.
Checkpoint · Domain E
Question 1 of 10
On a federal individual income tax return, adjusted gross income (AGI) is calculated as which of the following?
F · Retirement Savings & Income Planning
18% of the exam (about 31 questions) — the largest domain. The 2026 plan limits are the most-tested numbers on the entire exam, so spend your time here.[10]
2026 Retirement Plan Limits
| Item | Amount (2026) |
|---|---|
| 401(k)/403(b)/457 deferral | $24,500 |
| Age 50+ catch-up | $8,000 (60–63 super catch-up $11,250) |
| IRA contribution / catch-up | $7,500 / +$1,100 at 50 |
| 415(c) DC limit | $72,000 |
| 415(b) DB limit | $290,000 |
| 401(a)(17) comp limit | $360,000 |
| Highly compensated employee | $160,000 |
Plan Types & Selection
Defined benefit plans put investment risk on the employer and favor older owners; defined contribution plans put the risk on the participant. DC employer contributions vest on a 3-year cliff or 2-to-6 graded schedule; employee deferrals are always 100% vested. A safe harbor 401(k) avoids ADP/ACP testing.
IRAs, SEP & SIMPLE
| Item | Amount / rule (2026) |
|---|---|
| Roth IRA MAGI phaseout | $153,000–$168,000 single / $242,000–$252,000 MFJ |
| Traditional IRA deduction (active) | $81,000–$91,000 single / $129,000–$149,000 MFJ |
| SEP IRA | Up to 25% comp / $72,000 |
| SIMPLE IRA deferral | $17,000; mandatory 3% match or 2% nonelective |
| Backdoor Roth | Nondeductible TIRA → convert; watch the pro-rata rule |
Distributions, RMDs & NUA
The 10% early-withdrawal penalty applies before 59½ (many exceptions). begin at 73 (rising to 75 in 2033); Roth IRAs have nonein the owner’s lifetime; the missed-RMD penalty is 25% (10% if corrected).[11] taxes employer-stock basis as ordinary income and appreciation as LTCG. The SECURE Act 10-year rule empties most inherited IRAs within a decade.
Social Security & Medicare
Full retirement age is 67 (born 1960+); claim as early as 62 (reduced) or delay to 70 (+8%/yr). The 2026 wage base is $184,500 and the COLA is 2.8%.[16] The earnings test withholds $1 per $2 over $24,480 under FRA. Up to 85% of benefits are taxable based on (thresholds not indexed). Medicare Part B is $202.90/mo in 2026.[17]
Checkpoint · Domain F
Question 1 of 10
Under current federal rules, at what age must the owner of a traditional IRA generally begin taking required minimum distributions?
G · Estate Planning
10% of the exam (about 17 questions). Know the 2026 figures and the mechanics of how property transfers, what’s in the gross estate, and how trusts shelter wealth.
2026 Estate, Gift & GST Figures
| Item | Amount (2026) |
|---|---|
| Basic exclusion (estate & gift, unified) | $15,000,000 per decedent |
| Annual gift exclusion | $19,000 per donee ($38,000 split) |
| GST exemption | $15,000,000 (flat 40% on skips) |
| Gift to non-citizen spouse | $194,000 annual |
| Top estate/gift/GST rate | 40% |
| Form 706 deadline | 9 months after death (6-month extension) |
The One Big Beautiful Bill made the permanent and indexed.[12] lets a surviving spouse use the deceased spouse’s unused exclusion via Form 706 — but not for the GST exemption.
Property Titling & Transfers
How an asset is titled controls how it passes — and the basis step-up: community property gets a FULL step-up on both halves, while JTWROS steps up only the decedent’s half. Will substitutes (beneficiary designations, POD/TOD, joint titling) override the will and bypass probate.
Solely-owned (fee simple) assets
Goes through probate
Assets titled to a revocable/irrevocable trust
Avoids probate
Retirement accounts, life insurance
Avoids probate (overrides the will)
JTWROS, tenancy by the entirety, POD/TOD
Avoids probate
Will substitutes (beneficiary designations, joint titling, trusts) override the will and bypass probate.
Estate & Incapacity Documents
Core documents: the will (intestacy if none), a durable power of attorney (survives incapacity; springing vs immediate), an advance medical directive / living will, and a healthcare proxy with a HIPAA release. The gross estate includes JTWROS interests, life insurance with incidents of ownership (§2042), and §2035 transfers within 3 years of death.
Trusts & the Marital Deduction
| Trust | What it does |
|---|---|
| Revocable living trust | Avoids probate — but NO estate-tax or creditor protection |
| Irrevocable trust | Removes assets from the estate; creditor protection |
| ILIT | Owns life insurance so proceeds escape the estate (3-year rule) |
| Bypass / credit shelter | Uses the first spouse's exclusion; appreciation escapes the 2nd estate |
| QTIP | Marital deduction while the first spouse controls the remainder |
The covers transfers to a U.S.-citizen spouse; a non-citizen spouse requires a QDOT. A makes ILIT gifts eligible for the annual exclusion.
Postmortem & Special Circumstances
Qualified disclaimers (within 9 months, no acceptance of benefits) redirect property to a contingent beneficiary. The alternate valuation date (6 months) is usable only if it lowers both the estate and the tax. §6166 allows installment payment of estate tax on a closely-held business, and §303 permits a stock redemption to pay death taxes without dividend treatment.
Checkpoint · Domain G
Question 1 of 10
What is the primary purpose of the probate process when a person dies?
H · Psychology of Financial Planning
7% of the exam (about 12 questions) — the smallest domain, added via CFP Board’s 2021 Practice Analysis and first tested in March 2022. It covers the interaction between the client’s and the planner’s attitudes inside the planning relationship.
Attitudes, Values & Money Scripts
are unconscious, trans-generational money beliefs from childhood. The exam tests all four — and which are problematic:
| Script | Core belief | Outcome |
|---|---|---|
| Money avoidance | Money is bad; I don't deserve it | Lower net worth |
| Money worship | More money solves everything | Overwork, hoarding, revolving debt |
| Money status | Self-worth = net worth | Overspending, financial infidelity |
| Money vigilance | Save, watch, keep private | Generally ADAPTIVE (but excess = anxiety) |
Behavioral Finance
The master distinction: cognitive errors (faulty reasoning — anchoring, confirmation, recency, availability) can be corrected with education and data, while emotional biases (loss aversion, overconfidence, status quo, endowment) are managed — the plan adapts to them. explains that a loss feels about twice as painful as an equal gain, which drives the (selling winners early, holding losers).
Counseling & Communication
Match the client’s stage of change (precontemplation → contemplation → preparation → action → maintenance) — never prescribe an action plan to someone in precontemplation. Motivational interviewingevokes the client’s own reasons to change (avoid the “righting reflex”).
The highest-value skill is active (reflective) listening; use open questions to discover values and empathy (the client’s frame), not sympathy. is the client projecting onto the planner; countertransference is the reverse.
Money Conflict & Crisis Events
Money conflict arises from differing scripts/values between partners, financial infidelity (secretive money behavior), intergenerational inheritance disputes, and divorce. Crisis events — job loss, death, disability, and counterintuitively sudden wealth — overwhelm decision-making. The planner provides stability, discourages rash irreversible decisions, and must recognize the limits of competence: refer clinical issues to a mental-health professional.
Checkpoint · Domain H
Question 1 of 10
A client estimates that a single, dramatic plane crash they saw on the news means flying is extremely dangerous, and they redirect travel savings toward expensive driving trips instead. Which cognitive bias is shaping this faulty risk estimate?
How to Use This Study Guide
A study guide is a map, not the whole territory — use it alongside your CFP Board-registered coursework and our practice tools, weighting your time toward the biggest domains.
A general sequence — always coordinate with tax brackets, Roth conversions in low-income years, RMDs, and IRMAA.
Taxable → tax-deferred → tax-free (Roth last) is the textbook default.
- 1
Read a domain here
Work through one domain at a time, heaviest first (Retirement, Investment, General Principles, Tax).
- 2
Take the checkpoint
The quick check at the end of each domain exposes what didn't stick.
- 3
Drill the gaps
Send your weak domain straight into the free practice exam and flashcards.
- 4
Bookmark & space it out
Come back over several weeks. Short, spaced sessions beat one long cram.
CFP Concept Questions
Common CFP concepts the exam tests — one per domain. Tap any card for a short, exam-ready answer backed by an official source (CFP Board, IRS, SSA, SEC), then test yourself on them as flashcards.
CFP Glossary
Quick definitions for the terms you’ll see most across the CFP exam:
- 1035 exchange
- A tax-free exchange of insurance/annuity contracts: life → life/annuity/LTC, annuity → annuity/LTC — but never annuity → life.
- 529 Plan
- A tax-advantaged education savings plan: after-tax contributions, tax-free growth and qualified withdrawals; owner-controlled; gifts qualify for the annual exclusion (with a 5-year front-load election).
- Adverse selection
- The tendency of those with a higher-than-average probability of loss to seek insurance most aggressively; insurers combat it with underwriting and waiting periods.
- Annual gift exclusion
- The amount you can gift per recipient each year with no gift tax or filing — $19,000 in 2026 ($38,000 gift-split).
- Annuity due
- A stream of payments made at the beginning of each period (BEGIN mode); used when the first education or retirement withdrawal happens at the start of the period.
- Backdoor Roth
- A nondeductible traditional-IRA contribution then converted to Roth; the pro-rata rule taxes the conversion across all pre-tax IRA balances.
- Basic exclusion amount
- The unified lifetime estate and gift tax exclusion — $15,000,000 per decedent in 2026 (made permanent by the One Big Beautiful Bill).
- Beta
- A measure of a security's systematic risk relative to the market; the market's beta is 1.0.
- Crummey power
- A beneficiary's temporary right of withdrawal that converts a trust gift into a present interest so it qualifies for the annual gift exclusion.
- Disposition effect
- The tendency to sell winners too early and hold losers too long — loss aversion in action.
- Duration
- A bond's price sensitivity to interest-rate changes (in years). Longer maturity, lower coupon, and lower yield all raise duration.
- Duty of Loyalty
- Place the client's interests above the planner's and the firm's; avoid material conflicts of interest, or disclose them, obtain informed consent, and manage them.
- Fee-based
- A planner who earns both fees and sales-related compensation (commissions); must disclose both and must not imply 'fee-only.'
- Fee-only
- The CFP and all related parties receive no sales-related compensation; paid solely by client fees. Any commission or 12b-1 fee to a related party disqualifies the term.
- Fiduciary duty
- The obligation to act in the client's best interest at all times when providing Financial Advice. Under CFP Board's standards it has three parts: Duty of Loyalty, Duty of Care, and Duty to Follow Client Instructions.
- Financial Advice
- A communication that would reasonably be viewed as a recommendation that the client take or refrain from a course of action. The fiduciary duty applies to all Financial Advice.
- Financial Planning
- Financial Advice that integrates relevant elements of the client's personal and financial circumstances — it triggers the 7-step Practice Standards.
- Form ADV
- The RIA registration and disclosure document. Part 2A is the plain-English client 'brochure' covering services, fees, conflicts, and disciplinary history.
- ILIT
- Irrevocable Life Insurance Trust — owns a life policy so the proceeds are excluded from the gross estate (subject to the 3-year rule on transferred policies).
- Incontestability clause
- After a policy has been in force a set period (commonly 2 years), the insurer cannot contest it or deny a claim for misstatements (except fraud or nonpayment).
- Indemnity
- Restoring the insured to the pre-loss financial position with no profit. Property and health are indemnity contracts; life insurance is a valued contract.
- Material conflict of interest
- A conflict a reasonable client would consider important. Disclosure alone is not enough — the CFP must also obtain informed consent and manage the conflict.
- MEC
- Modified Endowment Contract — an over-funded life policy that fails the 7-pay test, so living distributions are taxed LIFO with a 10% penalty before age 59½ (death benefit stays tax-free).
- Money scripts
- Typically unconscious, trans-generational money beliefs formed in childhood — money avoidance, money worship, money status, and money vigilance.
- Moral hazard
- Dishonesty or intent to cause a loss in order to collect (e.g., arson). Distinct from morale hazard (carelessness because one is insured).
- NUA
- Net Unrealized Appreciation — on employer stock from a qualified plan, the basis is taxed as ordinary income at distribution and the appreciation as long-term gain when sold.
- Portability (DSUE)
- A surviving spouse's ability to use the deceased spouse's unused exclusion by filing Form 706; it does not apply to the GST exemption.
- Prospect theory
- The behavioral-finance finding that people value gains and losses relative to a reference point and feel a loss about twice as intensely as an equal gain.
- Provisional income
- The income measure that determines how much of a person's Social Security benefit is taxable (up to 85%).
- Pure risk
- A risk with only the chance of loss or no loss (no gain) — the only kind insurance covers. Contrast speculative risk (loss, no loss, or gain).
- Qualified Charitable Distribution (QCD)
- An age-70½+ direct transfer from an IRA to charity, up to $111,000 in 2026; it counts toward the RMD and is excluded from income.
- Real rate of return
- The inflation-adjusted rate: (1 + nominal) ÷ (1 + inflation) − 1. Used to fund goals so growth keeps pace with rising costs.
- Reg BI
- Regulation Best Interest — the SEC standard requiring broker-dealers to act in a retail customer's best interest at the time of a recommendation; higher than suitability but not a full fiduciary duty.
- Required minimum distribution (RMD)
- The minimum amount that must be withdrawn from a traditional IRA/qualified plan each year, beginning at age 73 (SECURE 2.0); Roth IRAs have none during the owner's life.
- Sharpe ratio
- (Return − risk-free rate) ÷ standard deviation; uses total risk, so it is used for non-diversified portfolios.
- Standard deviation
- A measure of total (absolute) volatility — the dispersion of returns around the mean.
- Step-up in basis
- Inherited property receives a fair-market-value basis at the date of death and is automatically long-term. Gifted property instead takes a carryover basis.
- Systematic risk
- Non-diversifiable market risk measured by beta — purchasing-power, reinvestment, interest-rate, market, and exchange-rate risk (the 'PRIME' risks).
- Tax-equivalent yield
- The taxable yield a muni's tax-free yield equals: muni yield ÷ (1 − marginal tax rate). Used to compare munis with taxable bonds.
- Time value of money
- The principle that money available now is worth more than the same sum later because of its earning potential; solved with the five keys N, I/YR, PV, PMT, FV.
- Transference
- When a client unconsciously projects feelings about a significant person onto the planner; countertransference is the planner projecting onto the client.
- Treynor ratio
- (Return − risk-free rate) ÷ beta; uses systematic risk, so it is used for well-diversified portfolios.
- Unlimited marital deduction
- The tax-free transfer of any amount to a U.S.-citizen spouse; a non-citizen spouse requires a QDOT.
- Wash-sale rule
- Disallows a loss if a substantially identical security is bought within 30 days before or after the sale (a 61-day window); the loss is added to the replacement's basis.
Free CFP Study Materials & Resources
Everything you need to prepare for the CFP exam is free here — no paywall, no sign-up. This guide is the foundation; pair it with the rest of our free CFP study materials for active recall, timed practice, and last-minute review:
- CFP Practice Exam — full-length, timed, exam-style questions with explanations.
- CFP Flashcards — active-recall decks for the high-yield facts and 2026 figures.
CFP Study Guide FAQ
The CFP® exam has 170 multiple-choice questions delivered in two 3-hour sessions (85 questions each) on one day, with a scheduled 40-minute break. Total testing time is 6 hours.
The CFP® exam is criterion-referenced and reported only as pass/fail — there is no fixed percentage cutoff and no predetermined pass rate. CFP Board sets a minimum-competency 'cut score' through a standard-setting process. The recent first-time pass rate runs roughly 65%, and the March 2026 administration was 67%.
Professional Conduct & Regulation (8%), General Principles of Financial Planning (15%), Risk Management & Insurance (11%), Investment Planning (17%), Tax Planning (14%), Retirement Savings & Income Planning (18%), Estate Planning (10%), and the Psychology of Financial Planning (7%). The largest is Retirement; the smallest is Psychology.
It is the broadest exam in financial planning — 8 domains and 70 Principal Knowledge Topics, tested with application and case-study questions, not just recall. Most candidates study 250+ hours. It is pass/fail with a first-time pass rate around 65%.
The four E's: Education (CFP Board-registered coursework plus a bachelor's degree, completable up to 5 years after the exam), Exam (pass the CFP exam), Experience (6,000 hours of professional experience or 4,000 apprenticeship hours), and Ethics (background check, Ethics Declaration, and the fiduciary Code & Standards).
Work module by module through the 8 domains, weighting your time toward Retirement (18%), Investment (17%), General Principles (15%), and Tax (14%). After each module, take the checkpoint quiz to find gaps, then drill that domain with our free practice exam and flashcards. Bookmark it and return to flagged sections before exam day.
Yes — the full guide, the checkpoints, the glossary, the practice exam, and the flashcards are 100% free with no account required.
All figures are current for 2026, verified against IRS, SSA, and CMS releases: the 401(k) deferral is $24,500, the IRA limit $7,500, the estate/gift exclusion $15,000,000, the annual gift exclusion $19,000, the Social Security wage base $184,500, and the RMD age 73.
References
- 1.Certified Financial Planner Board of Standards. “About the CFP® Exam — What You'll Be Tested On.” CFP Board. ↑
- 2.Certified Financial Planner Board of Standards. “CFP® Certification Examination — Exam Format.” CFP Board. ↑
- 3.Certified Financial Planner Board of Standards. “Code of Ethics and Standards of Conduct.” CFP Board. ↑
- 4.Certified Financial Planner Board of Standards. “The Enforcement Process & Sanction Guidelines.” CFP Board. ↑
- 5.Certified Financial Planner Board of Standards. “Scoring and Results / Exam Statistics.” CFP Board. ↑
- 6.Certified Financial Planner Board of Standards. “Certification Process — The 4 E's.” CFP Board. ↑
- 7.U.S. Securities and Exchange Commission. “Regulation Best Interest (Small-Entity Compliance Guide).” SEC.gov. ↑
- 8.U.S. Securities and Exchange Commission. “The Laws That Govern the Securities Industry.” SEC.gov. ↑
- 9.Internal Revenue Service. “Rev. Proc. 2025-32 — 2026 Inflation Adjustments.” IRS.gov. ↑
- 10.Internal Revenue Service. “401(k) Limit Increases to $24,500 for 2026; IRA Limit Increases to $7,500.” IRS.gov. ↑
- 11.Internal Revenue Service. “Retirement Topics — Required Minimum Distributions (RMDs).” IRS.gov. ↑
- 12.Internal Revenue Service. “Estate and Gift Tax — What's New.” IRS.gov. ↑
- 13.Internal Revenue Service. “Publication 550 — Investment Income and Expenses.” IRS.gov. ↑
- 14.Internal Revenue Service. “Topic No. 409 — Capital Gains and Losses.” IRS.gov. ↑
- 15.Internal Revenue Service. “Rev. Proc. 2025-19 — 2026 HSA / HDHP Limits.” IRS.gov. ↑
- 16.Social Security Administration. “2026 Cost-of-Living Adjustment (COLA) Fact Sheet.” SSA.gov. ↑
- 17.Centers for Medicare & Medicaid Services. “2026 Medicare Parts A & B Premiums and Deductibles.” CMS.gov. ↑
- 18.Internal Revenue Service. “Notice 2025-67 — 2026 Retirement Plan Limitations.” IRS.gov. ↑
- 19.Internal Revenue Service. “Roth IRAs.” IRS.gov. ↑
- 20.U.S. Securities and Exchange Commission. “Interest Rate Risk — When Interest Rates Go Up, Prices of Fixed-Rate Bonds Fall.” SEC.gov. ↑
Sources for the concept answers
Every answer in the CFP concept questions above is drawn from an official primary source:
- Certified Financial Planner Board of Standards. “What You'll Learn — Certification Coursework.” CFP Board.
- U.S. Securities and Exchange Commission. “Insurance Products — Investor.gov.” Investor.gov.
- U.S. Securities and Exchange Commission. “Diversification — Investor.gov.” Investor.gov.
- Social Security Administration. “Retirement Benefits.” SSA.gov.
- Internal Revenue Service. “Frequently Asked Questions on Gift Taxes.” IRS.gov.
- Internal Revenue Service. “Estate Tax.” IRS.gov.
- Internal Revenue Service. “Credits and Deductions for Individuals.” IRS.gov.
- Certified Financial Planner Board of Standards. “Psychology of Financial Planning.” CFP Board.

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