How to Prepare for PFS Exam
How to Prepare for PFS Exam
A Personal Financial Specialist (PFS) is a specialized certification allowing certified public accountants (CPAs) the ability to expand their knowledge, expertise, and service offerings in the financial planning and wealth management space. An accountant is required to be certified with a CPA in order to be eligible to sit for the PFS exam and receive a PFS certification. Certified public accountants enjoy numerous benefits when obtaining a PFS certification, including expanded employment opportunities within wealth management firms, financial corporations, consulting firms, and other financial advisory service firms. Holding the certification allows an individual to use the PFS designation within one’s professional title. A PFS certification also allows individuals to build the credibility and authorization needed to start one’s own financial planning or wealth management practice.
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- What to expect from the Personal Financial Specialist (PFS) exam
- Tips to Prepare for the PFS exam
- 1. Do not focus on memorizing concepts
- 2. Do not cram for the PFS Exam
- 3. Read all test questions carefully
- How to Succeed on PFS Test Day
- 1. Answering every question on the exam
- 2. Sticking to your gut when answering questions
- 3. Take care of yourself the night before the exam
- FAQs
What to expect from the Personal Financial Specialist (PFS) exam
The PFS exam is a multiple-choice exam administered by The American Institute of Certified Public Accountants (AICPA) that covers all areas of the financial planning process. This includes the professional responsibilities and disciplines of personal financial planning, tax planning, estate planning, investments, retirement, and insurance planning, as well as certain niche areas of personal finance such as employee benefits, financial education, and elder planning. This exam can be administered online via a laptop with a proctored program running through your device and webcam or at a local state-sponsored testing center.
The PFS exam is a non-disclosed exam with no questions or answers published after the fact. No study or exam material is allowed to be brought into the testing center or removed from the testing site. The exam lasts five total hours, with a 30-minute break provided. A reference sheet of appropriate tax rates and limits will be provided for all test-taking candidates during the exam. A financial calculator is also required for the exam and must be of one of the following approved models: Hewlett Packard 12C 10B, 10B II+, 17B II+; Texas Instruments TI BAII Plus, TIBAII Plus Professional; Victor V12, Victor 10.
With 160 total exam questions per exam module, half of the test is split into stand-alone multiple-choice questions, while the other half of the exam is dedicated to case studies with accompanying multiple-choice questions. Case studies vary in length, which include short scenarios followed by 2 – 5 multiple-choice questions or longer comprehensive cases with upwards of 12 – 18 related multiple-choice questions. Multiple choice questions are meant to test an individual’s general financial planning knowledge on all topics, while case studies have been put in place to test a candidate’s analytical reasoning skills and their ability to apply financial planning theories and methodology to real-world mock scenarios in a comprehensive manner.
Tips to Prepare for the PFS exam
1. Do not focus on memorizing concepts
Memorization will not get a candidate very far during the PFS exam. With over half of the exam filled with case studies, learning how to apply personal finance and wealth management concepts and theories to a client’s personal financial situation is important for the exam. Focusing on understanding exam material to the fullest extent and applying it to case studies will give you a higher chance of success rather than just memorizing exam information for the test. Practicing industry-related problems with mock case study questions with the same difficulty level as the test is an excellent way to study and prepare for the exam.
2. Do not cram for the PFS Exam
Candidates often report studying for years to learn the material required to take the PFS exam; however, other candidates report studying for only three to five months preceding the exam. Each individual candidate requires different amounts of time to study and prepare for the exam. However, on test day, all questions and answers are identical for all exam participants. Spending thousands of hours studying over an extended period of time will give you the best chance of passing and succeeding on the exam. Reflecting on one’s CPA work experience and the amount of preparation that you have already completed can be a good indicator of how much studying is needed to do well on the test. However, the shorter the study time prior to the exam, the less likely a candidate is to succeed on the exam, making cutting down on one’s study period a substantial risk to take into consideration.
3. Read all test questions carefully
It is important to be diligent when reading exam questions. During the exam, certain verbiage, vocabulary, or terms may confuse candidates. Taking notes and reading exam questions carefully does take extra precious time from the exam; however, during the course of the test, candidates will get more overall questions correct and make fewer simple comprehension mistakes. Writing down extra notes and summarizations while reading a test question is an excellent test-taking strategy that may help you succeed on the exam. This will allow the candidate to understand the question in a writing form, not just from reading comprehension. Another strategy is to eliminate and check off wrong answers from the answer pool. This will allow you to focus on the most likely answers and avoid confusing yourself or wasting time on answer choices that do not fit the problem and cannot be right
How to Succeed on PFS Test Day
When it comes to multiple-choice and case study testing, applying certain testing strategies to exam questions can give you an edge over other test-takers. Below are some tips for the day of the exam.
1. Answering every question on the exam
Answering all questions on the exam, even if educated guesswork is involved, is the proper strategy to implement when taking the exam. Individuals have a 25% chance of guessing an answer correctly rather than a 0% chance when leaving the question blank. Candidates are never penalized for guessing answers to questions on the exam. Another test-taking strategy is to eliminate wrong answer choices from the question-answer pool to have fewer answers to choose from. This increases the chances of picking the correct answer when guessing.
2. Sticking to your gut when answering questions
Typically the first response chosen during a multiple-choice exam is the most accurate or correct answer choice. If time is left at the end of the exam, a strategy could be to look over more complex questions with unsure answers. For these harder questions, it is best to put down an initial guess as the answer and move on to the next question in order to save time on the exam. This way, candidates are able to come back to the more challenging questions at the end of the exam while answering the more straightforward questions first.
3. Take care of yourself the night before the exam
For a student to succeed on the PFS exam, it is essential to have a good night’s rest, wear comfortable clothing, and eat a healthy breakfast before the exam. Each qualified testing center has a different environment; however, many are often known to have intense bright lights and uncomfortable hard chairs. With the hard work and preparation candidates spend on studying for the PFS exam, individuals should feel confident in their ability to succeed and pass the exam, even with the uncomfortable circumstantial environment around them on test day.
Read more: How to Become a Financial Planner
FAQs
For an individual to be eligible to receive a PFS certification, one must be a member of the AICPA and have a registered CPA license issued by a legally constituted state authority. One must have at least two years of full-time teaching or business experience equivalent to 3000 hours in personal financial planning within five years of the CPA/PFS application.
The PFS exam is a test issued by The American Institute of CPAs (AICPA) for CPAs who choose to specialize in various areas of personal financial planning and wealth management.
Candidates often have around 1,000 hours of tax compliance experience and a minimum of 75 hours of personal financial planning education in the five years preceding application for the PFS.
PFS is the abbreviation used for a Personal Financial Specialist. Individuals with this designation can work as tax planners, retirement planners, and personal financial planners. In contrast, CFP is the abbreviation used for a certified financial planner. A CFP allows an individual to offer investment planning and financial planning to their clients.
All registered investment advisors (RIAs), including personal financial specialists, are required to provide the fiduciary standard of care. Certified Financial Planners (CFPs) are also automatically held to a fiduciary standard.
- AICPA. “PFS Credential Handbook,” Page 2. Accessed July 3, 2021. https://www.aicpa.org/content/dam/aicpa/membership/join/downloadabledocuments/pfs-credential-handbook.pdf
- AICPA. “CPA/PFS Eligibility Requirements.” Accessed July 3, 2021. Accessible From: https://www.aicpa.org/membership/join/pfs-eligibility-requirements.html
- AICPA. “PFP Body of Knowledge.” Accessed July 3, 2021. Accessible From: https://www.aicpa.org/interestareas/personalfinancialplanning/membership/pfsbodyofknowledge.html/a>
- FINRA.org. “Personal Financial Specialist (PFS).” Accessed July 3, 2021. Accessible From: https://www.finra.org/investors/professional-designations/pfs
- AICPA. “CPA/PFS Exam.” Accessed July 3, 2021. Accessible From: https://www.aicpa.org/membership/join/pfs-exam.html
