The eight knowledge domains

Every Principal Knowledge Domain, its weighting, and what sits inside it.

The eight CFP knowledge domains, and how many questions each is worthCFP Board publishes eight Principal Knowledge Domains with percentage weightings that sum to 100%. Retirement Savings and Income Planning is the large…
Professional Conduct and Regulation: 8% and the easiest marks on the paperEight per cent of the exam, which is thirteen of the 170 questions on our derived counts. It covers CFP Board's Code of Ethics and Standards of Conduc…
The Code of Ethics: six commitments, and what each rules outSix commitments: act with honesty, integrity, competence and diligence; act in the client's best interests; exercise due care; avoid or disclose and m…
The fiduciary duty: three components, and when it attachesA CFP professional owes a fiduciary duty at all times when providing Financial Advice. It has three components: a duty of loyalty, a duty of care, and…
The seven steps, in order, and why the order is examinedUnderstanding the client's circumstances; identifying and selecting goals; analyzing the current and alternative courses of action; developing recomme…
Conflicts of interest: avoid, or disclose and manageA CFP professional must avoid conflicts of interest, or fully disclose material conflicts and obtain the client's informed consent and properly manage…
When Financial Planning applies, and the Practice Standards with itThe Practice Standards apply when a CFP professional provides Financial Planning, or agrees to. Whether an engagement is Financial Planning turns on h…
Duties owed to firms and subordinatesPart D requires a CFP professional to use reasonable care when supervising others, to comply with the lawful objectives of their firm, and to provide …
Duties owed to CFP Board: reporting, cooperating, complyingPart E requires CFP professionals to provide accurate information to CFP Board, report specified events, cooperate with investigations, comply with th…
The disciplinary process, and the four sanctionsCFP Board can impose a private censure, a public censure, a suspension of up to five years, or a permanent bar. Matters move from investigation to a D…
General Principles: 15%, and the domain everything else attaches toFifteen per cent of the exam, about 25 of the 170 questions on our derived counts. It covers the planning process, financial statements and cash flow,…
The statement of financial position, and how to read one fastA snapshot at a point in time: assets at fair market value less liabilities at outstanding balance, giving net worth. Assets are grouped as cash and e…
Cash flow: where the money actually goesA record of inflows and outflows over a period, usually a year, producing a surplus or deficit. It is the source of the savings rate, the housing and …
Emergency funds: three to six months of what, exactlyThree to six months of non-discretionary expenses - not of income - held in cash or cash equivalents. Single-income households, variable income, poor …
Time value of money: the skill that pays across the whole paperFive variables - number of periods, rate, present value, payment and future value. Given any four you solve for the fifth. The recurring errors are si…
Debt: which to attack first, and when refinancing paysHighest interest rate first is mathematically optimal; smallest balance first often wins behaviourally. Refinancing pays when the interest saved excee…
Education funding: 529 plans and the alternativesA 529 grows tax-free for qualified education expenses, is owned by the donor rather than the beneficiary, and permits a five-year gift election of fiv…
The economics you actually needBusiness cycle phases, monetary and fiscal policy and their effects, the relationship between interest rates and bond prices, the yield curve, inflati…
Consumer protection and bankruptcy, brieflyChapter 7 liquidates non-exempt assets and discharges qualifying debts; Chapter 13 reorganizes into a repayment plan over three to five years. Student…
Business owners: the client whose planning crosses every domainA business owner appears in every domain at once - entity taxation, retirement plan selection, insurance and buy-sell funding, succession and estate l…
Risk Management and Insurance: 11%, and the domain analysts underrateEleven per cent of the exam, about 19 of the 170 questions on our derived counts. It covers risk principles and analysis, life, disability, long-term …
The risk management process, and the four responsesIdentify exposures, evaluate them by frequency and severity, select a response - avoid, retain, transfer or reduce - implement, and monitor. High seve…
Life insurance: term, whole, universal, variableTerm provides pure death benefit for a period. Whole life guarantees premium, death benefit and cash value. Universal life is flexible with interest-c…
How much life insurance: two methods, and when each appliesHuman life value capitalizes the insured's future earnings. The needs approach totals the specific obligations survivors face and subtracts existing r…
Disability insurance: the definition is the policyWhether a policy pays turns on the occupational definition. Own-occupation pays if you cannot perform your own occupation; any-occupation only if you …
Long-term care: two of six activities of daily livingBenefits are typically triggered by an inability to perform two of six activities of daily living, or by severe cognitive impairment, after an elimina…
Health insurance and the health savings accountAn HSA requires enrollment in a qualifying high-deductible health plan and offers a deduction going in, tax-free growth, and tax-free withdrawal for q…
Medicare: four parts, one enrollment window that mattersPart A covers hospital care, Part B outpatient, Part C is Medicare Advantage as an alternative to A and B, and Part D is prescription drugs. Eligibili…
Property and casualty: the coinsurance clause is the questionHomeowners policies typically require insurance to at least 80 per cent of replacement cost; below that, partial losses are settled by a formula that …
Annuities: the exclusion ratio and everything around itAnnuities defer tax on growth and can convert capital into income for life. Annuitized payments are split between return of basis and taxable gain by …
Business insurance: key person, buy-sell and the basis differenceA cross-purchase has the owners buy each other out and gives the survivors a stepped-up basis; an entity redemption has the business buy the interest …
Social insurance: Social Security, Medicare, workers compensationSocial Security provides retirement, disability and survivor benefits; Medicare provides health coverage from 65; workers compensation covers work-rel…
Investment Planning: 17%, and the domain that rewards fluencySeventeen per cent of the exam, about 29 of the 170 questions on our derived counts. It covers risk and return measures, portfolio theory, asset alloc…
Systematic and unsystematic risk, and the eight named typesSystematic risk affects the whole market and cannot be diversified away - purchasing power, reinterest rate, market, exchange rate and reinvestment ri…
Modern portfolio theory, and what correlation actually buysPortfolios are evaluated by expected return and risk together rather than security by security. Combining assets with correlation below one reduces po…
Asset allocation: the decision that dominates everything after itStrategic allocation sets long-term target weights from the client's goals, horizon and risk tolerance. Rebalancing returns the portfolio to those wei…
CAPM: required return, beta, and the security market lineCAPM gives required return as the risk-free rate plus beta multiplied by the difference between the expected market return and the risk-free rate. Bet…
The efficient market hypothesis, in three formsWeak form says past prices are already reflected, so technical analysis cannot add value. Semi-strong adds all public information, ruling out fundamen…
Bonds: price, yield, and what duration is telling youA bond's price and its yield move inversely. Duration measures price sensitivity to a change in yield, rising with maturity and falling with coupon. C…
Valuing equities: dividend models, multiples and the inputs that break themThe constant growth dividend model values a share as next year's dividend divided by the required return less the growth rate. Multiples such as price…
Mutual funds and ETFs: the differences that matter to a planMutual funds price once daily at net asset value and can distribute capital gains to all holders. ETFs trade throughout the day at market prices and a…
Alternatives: real estate, private markets and commoditiesAlternatives include real estate and REITs, limited partnerships, private equity, hedge funds and commodities. They can add diversification, and they …
Options and futures: the four positions and what each risksA call gives the right to buy and a put the right to sell, at a set price by a set date. Buying either risks only the premium; writing a naked call ha…
Sharpe, Treynor, alpha: which measure and whenSharpe divides excess return by standard deviation, Treynor by beta, and Jensen's alpha measures return above what CAPM required. Use Sharpe for a con…
Asset location: which account holds which assetTax-inefficient assets - bonds, REITs, high-turnover funds - generally belong in tax-deferred accounts. Tax-efficient assets and those with the highes…
Tax Planning: 14%, and the domain that touches every other answerFourteen per cent of the exam, about 24 of the 170 questions on our derived counts. It covers the income tax calculation, business entity taxation, ba…
The income tax calculation, line by lineGross income less above-the-line adjustments gives adjusted gross income. Less the standard or itemized deduction and the qualified business income de…
Capital gains, losses and the netting orderGains and losses net within their holding period first, then across. A net capital loss offsets up to USD 3,000 of ordinary income a year, with the re…
Basis: the number that decides the gainPurchased property takes cost basis. Gifted property generally takes the donor's carryover basis, with a dual basis rule where value has fallen. Inher…
Passive activity losses, and why they get suspendedIncome falls into active, portfolio and passive categories. Passive losses generally offset only passive income, with the excess suspended and carried…
The alternative minimum tax, and who still pays itA parallel tax calculation that adds back certain deductions and preference items, applies an exemption and its own rates, and requires you to pay the…
Business entities: liability, taxation and the trade-off between themSole proprietorships and partnerships pass income through with no liability protection. LLCs add liability protection with flexible tax treatment. S c…
Charitable giving: appreciated property, bunching and the AGI limitsDonating long-term appreciated property gives a deduction for fair market value and avoids the capital gain entirely. Cash gifts to public charities a…
Credits beat deductions, and refundable credits beat bothA deduction reduces taxable income, saving your marginal rate. A credit reduces tax dollar for dollar. A refundable credit can produce a refund beyond…
Property transactions: exclusions, exchanges and installment salesA primary residence sale can exclude USD 250,000 of gain, or 500,000 for a couple, subject to ownership and use tests. Like-kind exchanges defer gain …
Retirement Savings and Income: 18%, the largest domainEighteen per cent of the exam, about 31 of the 170 questions on our derived counts - the largest single domain. It covers needs analysis, Social Secur…
Retirement needs analysis, and the assumptions that decide itEstimate the income needed, subtract guaranteed sources, capitalize the shortfall over the retirement period using an inflation-adjusted return, and c…
Social Security: how the benefit is calculatedBenefits are based on the highest 35 years of indexed earnings, converted to an average and run through a progressive formula to give the primary insu…
When to claim: the survivor benefit usually decides itFor a married couple, the higher earner should usually delay to 70 because that benefit becomes the survivor benefit and continues over the longer of …
Qualified plans: 401(k) rules, limits and vestingThe 2026 elective deferral limit is USD 24,500, with an USD 8,000 catch-up from 50 and an enhanced USD 11,250 catch-up for ages 60 to 63. Total annual…
Defined benefit and cash balance plans: who they are forA defined benefit plan promises a benefit and the employer bears the investment risk, with contributions actuarially determined. A cash balance plan i…
Traditional or Roth: the rate now against the rate laterA traditional IRA may give a deduction now with taxable withdrawals later; a Roth gives no deduction and tax-free qualified withdrawals. The decision …
Roth conversions: filling the bracket, not the accountConverting a traditional IRA to a Roth pays tax now to avoid it later. It works where the current marginal rate is below the expected future rate, and…
SEP and SIMPLE plans: the small employer routesA SEP is funded entirely by the employer at a uniform percentage of compensation, up to 25 per cent and the annual additions limit. A SIMPLE allows em…
403(b) and 457 plans: the public and non-profit routesA 403(b) is a defined contribution plan for schools and non-profits, working much like a 401(k). A governmental 457(b) has its own separate contributi…
Required minimum distributions, and the ten-year rule for heirsDistributions must begin at 73, calculated by dividing the prior year-end balance by a life expectancy factor. Most non-spouse beneficiaries must now …
The 10 per cent penalty, and the exceptions that avoid itA 10 per cent additional tax applies to distributions before 59½, with exceptions. Several apply only to IRAs and several only to employer plans, and …
Rollovers: direct, indirect, and the twenty per cent trapA direct rollover moves funds trustee to trustee with no withholding. An indirect rollover pays the participant, triggers mandatory 20 per cent withho…
Nonqualified deferred compensation: the creditor risk is the pointA nonqualified plan defers compensation without contribution limits or nondiscrimination testing, and without ERISA protection. The deferred amount re…
Stock options: ISO and NQSO, and the tax at each stageA non-qualified option produces ordinary income on the bargain element at exercise. An incentive stock option produces no regular income at exercise b…
Drawing income in retirement: order, rate and flexibilityThe conventional order is taxable, then tax-deferred, then Roth. Managing the tax bracket across years usually beats it. The 4 per cent rule is a rese…
Sequence of returns risk: why the order matters when you withdrawWhen withdrawals are being taken, the order of returns matters as much as the average. Poor returns in the early years force selling more shares at lo…
Estate Planning: 10%, and the domain most candidates rushTen per cent of the exam, about 17 of the 170 questions on our derived counts. It covers property titling and beneficiary designations, wills and prob…
Titling: the thing that overrides the willJoint tenancy with right of survivorship and tenancy by the entirety pass to the survivor outside probate. Tenancy in common passes by will. Beneficia…
The four documents every client needsA will directs probate assets and names guardians. A durable power of attorney appoints someone for financial decisions during incapacity. A healthcar…
Wills, and what happens without oneA will directs probate assets, names an executor and nominates guardians for minor children. Without one, state intestacy law decides the distribution…
Probate: what it is, what it costs, and how to avoid itProbate is the court process validating a will, appointing a personal representative, settling debts and distributing remaining assets. It is public, …
Trusts: revocable, irrevocable, and what each achievesA revocable trust can be amended or revoked, avoids probate on funded assets, manages incapacity, and provides no estate tax or creditor benefit. An i…
Incapacity planning: the documents nobody wants to discussA durable power of attorney appoints a financial agent whose authority survives incapacity. A healthcare proxy appoints a medical decision maker. With…
The gift tax: annual exclusion, unified credit and what is not a giftThe 2026 annual exclusion is USD 19,000 per donee, doubled where spouses split gifts. Amounts above it use the lifetime exclusion of USD 15 million. D…
The estate tax calculation, step by stepGross estate less funeral and administration expenses, debts and losses gives the adjusted gross estate. Less the marital and charitable deductions gi…
The marital deduction, portability, and why a trust may still be betterTransfers to a US citizen spouse qualify for an unlimited marital deduction. Portability allows the surviving spouse to use the deceased spouse's unus…
The generation-skipping transfer tax, and why it existsA flat additional tax at the top transfer tax rate on gifts and bequests to a skip person - someone two or more generations below the transferor. The …
Charitable trusts: remainder, lead, and which way the income flowsA charitable remainder trust pays income to a non-charitable beneficiary with the remainder to charity. A charitable lead trust pays charity first wit…
Life insurance in an estate: the ILIT and the three-year ruleA death benefit is included in the estate where the decedent held incidents of ownership. An irrevocable life insurance trust owns the policy instead,…
Business succession: valuation, liquidity and the conversation nobody startsSuccession runs to family, to management, to a third party, or by liquidation. The recurring estate problem is liquidity - a large illiquid interest p…
After death: the elections that still change the outcomeSeveral decisions remain after death: a qualified disclaimer within nine months, the alternate valuation date, electing portability, and choosing the …
Psychology of Financial Planning: 7%, and the newest domainSeven per cent of the exam, about 12 of the 170 questions on our derived counts. It covers client and planner attitudes and biases, behavioral finance…
The biases that appear, and how to spot them in a scenarioThe recurring set is loss aversion, anchoring, recency, overconfidence, confirmation bias, mental accounting, herding, familiarity and status quo bias…
Money scripts: the beliefs clients bring with themMoney scripts are unconscious beliefs about money formed early, usually in childhood. Four patterns recur: money avoidance, money worship, money statu…
Money conflict: couples, families and the planner in the middleConflict usually comes from different money scripts, unequal income or contribution, secrecy, competing goals, or blended family obligations. The plan…
Counseling principles: asking better than tellingActive listening, open questions, reflection and summarizing. The principle underneath is that a client is more likely to act on a conclusion they rea…
Crisis events: divorce, death, job loss and diagnosisIn a crisis the immediate priorities are cash flow, stopping avoidable losses, and deferring every reversible decision. Clients in acute distress shou…
Working across difference: assumptions that do not travelStandard planning assumes a nuclear family, individual goals and a particular attitude to debt and inheritance. Where those do not hold, the technique…