Beginner’s Guide to CPWA Certification Exam

CPWA Certification

CPWA certification may not be for everyone. Let’s have a glimpse of a few facts about the CPWA examination, and then we will go into detail –

  • Do you know that CPWA certification is structured in such a way that it can address the wealth management of the high net-worth individuals of US $5 Million or more!
  • Do you know that to get the final certification of CPWA or Certified Private Wealth Advisor®, you need to spend a week at the University of Chicago Booth School of Business!
  • The courseware of CPWA is quite dynamic. It consists of four parts – Human Dynamics, Wealth Management Strategies, Client Specialization, and Legacy Planning.
  • Certified Private Wealth Advisor certification is not for everyone. You need to have some experience handling high net-worth clients (we will discuss this in detail later).
  • CPWA is being offered by Investment Management Consultants Associations (IMCA).
  • Fees for CPWA are much more than any other course in the financial domain. It’s more than the US $7000 subject to some exceptions.

The volunteers of IMCA design CPWA in such a way that it can address the challenges faced by professionals in managing the wealth of high net-worth individuals. In this article, we will cover everything that you need to know about CPWA. If you have a few minutes to spare, consider reading this article completely, and you don’t need to go anywhere to know about CPWA.

CPWA Certification Exam

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Let’s get started.

About CPWA

Very few courses in the financial domain deal with the life goals of high net-worth individuals. The ultimate motto of all financial courses is to teach students to learn the subjects. But while designing CPWA, volunteers understood that only subjects and concepts would not require makeable wealth managers. Thus, Certified Private Wealth Advisor® is unique in its way. CFA and CFP are also very recognized financial certifications that deal with wealth management. But CPWA is the best of the lot in creating wealth managers of high net-worth individuals.

  • Roles: CPWA is designed for people who are already advanced professionals. CPWA will enable them with the skills and expertise to help them deal with the challenges they face while handling high net-worth individuals. Thus, it’s not for every finance professionals.
  • Exam: To be able to become a CPWA, you need to do the following –
  • Meet all the eligibility criteria to be accepted for the program
  • Complete a 6-month online prestudy
  • Complete an education program
  • Pass a certification examination
  • Sign a license agreement &
  • Satisfy on-going renewal requirements

Candidates can sit for an exam at the end of each class by pencil and paper or delivered by computer at more than 190 AMP assessment centers situated throughout the US and Canada. There are no deadlines, but the candidates should meet the prerequisites. For international locations, candidates are scheduled on a first-come, first-served basis.

CPWA certification examination includes a four-hour examination. You need to answer 125 multiple-choice questions and 10 non-scored pre-test questions.

  • CPWA Exam Dates: The exam dates for Certified Private Wealth Advisor® need to be scheduled by the candidates. Once IMCA confirms the eligibility of the candidates, AMP will send a postcard and an email detailing about the website and a phone number to schedule for the examination. Candidates may go to goAMP.com and click on “Schedule/Apply for an Exam.” Candidates may also choose to call AMP at 888-519-9901 to schedule an examination appointment.
  • The nitty-gritty: You need to study hard to be able to clear the CPWA exam. You need to cover a lot – specifically 4 core papers and a total of 11 subjects (details are given in the following section).
  • Eligibility: All candidates need to do the following to be eligible under CPWA certification –
  • Fill up and submit an application that includes contact information, work experience (including 5 years of financial services experience), and disclosure of complaints and regulatory actions. Once you apply, a background check would be conducted by IMCA’s legal stuff.
  • You need to pay the appropriate fee with the application. The application is valid for 2 years. The application is reviewed to see whether it meets the prerequisites and the program requirements. Candidates are given notification if the application is accepted or denied. If the application is denied, applicants can appeal within 60 days of non-acceptance of application (it is called a notice of appeal). Within 30 days after notice of appeal, the applicants have to explain why their applications should be accepted.
  • After acceptance of an application, the applicants need to complete a classroom education program.
  • There would be then a second background check. After that, candidates have to sign and submit a license agreement and agree to adhere to IMCA’s Code of Professional Responsibility and Rules and Guidelines for the Use of the Marks.

Why Pursue CPWA Certification?

There are very specific reasons for which you should decide to pursue CPWA. As mentioned before, not every finance professional should pursue CPWA. It’s for a selected few, and you would understand this while submitting your application and the rigorous pre-requirements you need to adhere to. Imagine, you need to have at least 5 years of experience in financial services to even apply for Certified Private Wealth Advisor®.

Here are the reasons for which you should pursue CPWA. If the reasons mentioned below don’t go with your reasons for pursuing CPWA, you should reconsider your decision.

If you have been handling high net-worth individuals over the US $5 million, you need specific strategies to manage and increase their wealth. CPWA is customized so that you would become a master strategist in handling the money of high net-worth individuals.

What top companies have to say about CPWA Certification?

  • Mike Johnson, who is the Partner of Plante Moran Financial Advisors, advises financial professionals to get certified under Certified Private Wealth Advisor®. He also mentioned that if you have high net-worth clients who need a holistic approach to deal with their wealth, you can help them achieve the same by doing CPWA certification. He also remarked that CPWA certification helps financial advisors take the mentality of CFO to solve various issues of high net-worth clients. You may ask why you should listen to Mike! Here’s why. Mike is of the partners of Plante Moran Financial Advisors, manages a firm which handles a gamut of US $9 billion of assets. Plante Moran Financial Advisors has 16 partners, 7 relationship managers, and a total of 112 staff provide financial services to high net-worth clients.
  • Kevin M. Sanchez, a Senior Institutional Consultant of UBS Institutional Consulting, says that CPWA certification provides in-depth education on the issues high net-worth individuals face along with managing their investment portfolioInvestment PortfolioPortfolio investments are investments made in a group of assets (equity, debt, mutual funds, derivatives or even bitcoins) instead of a single asset with the objective of earning returns that are proportional to the investor's risk profile.read more. Certified Private Wealth Advisor® helps solve family dynamics, transitioning a business, unique tax situations, and complex estate planning. He also mentions that CPWA certification fine-tunes any financial advisor’s knowledge so that s/he can do a great job in consulting her/his clients.
  • Helen Moody, the Executive Vice President of Focus Wealth Management, Ltd. Virginia says that CPWA certification has taught her a lot as she decided to join. She passed out of CPWA in 2011. She remarks that CPWA certification has taught her to “deal with a lot of very big moving pieces for high net-worth clients with complicated situations.” Her firm Focus Wealth Management, Ltd., serves over 115 families. The average net-worth of those families is the US $5 million to $10 million, and their investments ranging from the US $1 million to $3 million. So, you can understand why it is important to listen to her regarding CPWA certification!

CPWA Exam Format and Exam Weights/Breakdown

CPWA exam format is unique and one of its kind. You need to sit for four hours of exam and answer 125 multiple-choice questions and 10 non-scored pre-test questions. Each question is related to an area of work performed by a private wealth advisor. To create these questions, volunteers do a job analysis of the tasks of private wealth advisors. Each question is given four options to choose from. You need to find the correct one from the four. There are many types of questions which can be given in the examination –

  • One best response
  • Direct question
  • Incomplete statement
  • Complex multiple-choice
  • Situational Set

The purpose behind asking these questions is to ensure that candidates have all the skills, knowledge, ability to calculate complex problems, and the capacity to recall. The candidates who can successfully answer these questions are the ones whose judgment in dealing with complex, dynamic issues should be trusted.

Now, let’s look at the core papers and their corresponding subjects. These papers and subjects are the results of job analysis of the tasks of private wealth advisors. Online pre-study education programs and readings should cover these subjects and topics.

We will also mention the percentage of subject coverage in each paper and corresponding subjects.

Let’s get started.

CPWA Certification EXAM WEIGHTS

Human Dynamics (15%)

Ethics (5%)

In Ethics, you will learn –

  • Knowledge to act and develop recommendations, knowledge to disclose all the information, knowledge to provide clients with the necessary material information, knowledge of the actions necessary in protecting confidentiality, knowledge of full compliance, knowledge to maintain a high level of professional, ethical conduct, knowledge of the rules in case of violation of a code of professional responsibility and skill to apply a code of professional responsibility to specific client situations.

Applied Behavioural Finance (5%)

In this, you will learn –

  • Knowledge of the history and evolution of behavioral finance and neurological research & the relevance to financial decision making
  • Knowledge of behavioral biases and how they may impact client decision making
  • Knowledge of investor personality types and how they may impact client decision making

Family Dynamics (5%)

In this, you will learn –

  • Knowledge of resources and skills required to identify issues and opportunities relative to family dynamics, skill to identify and assess collective and individual values, goals, and objectives of family members; knowledge of key family roles and positions, skill to identify issues or unique situations, skill to identify family conflicts and dynamics, skill to develop a family education plan, knowledge of elements necessary to conduct a successful family meeting, skill to help clients develop a family mission statement and knowledge of when and how to incorporate the appropriate family office infrastructure.

Wealth Management Strategies (33%)

Tax Strategies and Planning (14%)

In this, you will learn –

  • Knowledge of tax rate structures, income tax calculations for individuals, estimated tax requirements, tax implications, tax issues, alternative minimum tax (AMT), planning implications, income tax deductions and limitations specific to charitable giving, etc.
  • Skill to review and interpret tax forms, calculate charitable deductions in light of limitations, identify planning opportunities associated with maximizing interest deductions, skill to calculate the tax liability of an option exercise, etc.

Portfolio Management (12%)

In this, you will learn –

Risk Management and Asset Protection

In this, you will learn –

  • Knowledge of insurance coverage types for the unique activities and assets of high net-worth clients, knowledge of self-insuring as a strategy, knowledge of creditor protection strategies, etc.
  • Skill to identify common gaps in coverage for high net-worth clients, compare insurance policy pricing and structures, skill to explain and compare various entities for asset protection purposes, etc.

Client Specialization (30%)

Client Focus: Executives (10%)

In this, you will learn –

Client Focus: Closely Held Business Owners (10%)

In this, you will learn –

  • Knowledge of the financing issues associated with closely held businesses at various stages of a business lifecycle, knowledge of closely held business succession and exit strategies, knowledge of different valuation methodologies for the sale of the business, etc.
  • Skill to initiate conversations on family dynamics relative to closely-held business succession planning, skill to determine which buy-sell agreements, skill to determine which buy-sell agreements are appropriate based on entity structure and intended exit strategy.

Client Focus: Retirement (10%)

In this, you will learn –

Legacy Planning (22%)

Charitable Giving and Endowments (7%)

In this, you will learn –

  • Knowledge of rules for and taxation of donor-advised funds, knowledge of rules for and taxation of contributions to and distributions from charitable lead trusts, knowledge of unrelated business taxable income (UBTI) as it pertains to the taxation of the operation or investments of a private foundation, etc.
  • Skill to identify whether a given charity is public versus private, skill to identify the tax character of the property being donated, skill to plan charitable contributions to maximize deductions based on client goals, etc.

Estate Planning and Wealth Transfer (15%)

In this, you will learn –

  • Knowledge of incapacity planning strategies, knowledge of the concept of powers of appointment, knowledge of various aspects of post-mortem planning, etc.
  • Skill to evaluate a client’s current estate plan, skill to evaluate the best course of action for lifetime gifts vs. transfers at death, skill to understand and interpret estate planning documents, etc.

CPWA Exam Fees

As per the fees are concerned, you need to pay for the following to be able to do the registration for the CPWA program –

  • You need to pay for the application first.
  • You also need to pay for tuition for a six-month pre-study, including textbooks and all online materials in the e-Campus.
  • You are also required to pay for the five-day tuition and in-class program at The University of Chicago Booth School of Business.
  • If in-class programs, you need to pay for board and room.
  • You need to also pay the exam fee on – first attempt.
  • You need to also pay the certification fee (the certification fee is valid for two years). For recertification, you need to pay the fee again.

If you are an Investments & Wealth Institute® member: $6,995, for new members: $7,390, Certification Program: $6,995, annual membership: $395,  and for non members: $7,995

CPWA Pass Rate

As every year the passing score changes, there’s no information available about how much percentage passed or failed.  The passing score is decided by using the Modified Angoff Method. It’s applied during the performance of a passing point study by a panel of experts. Experts evaluate each question to determine how many correct answers are necessary to demonstrate the knowledge and skills required to pass that examination section.

CPWA Study Material

For six months of pre-study, all textbooks and online materials are provided by the institute.

Strategies to Pass the CPWA Exam

As it’s not like any other financial course, you need to be already an expert in the field. The job of CPWA is to clear the rust and dust from your already established skill-sets and experience. You can imagine why CPWA certification requires 5 years of work experience in financial services! All you need to do is to have a strong way of doing CPWA and prepare well to clear the exam in one go.

This has been a guide to CPWA Certification. Here we discuss what the CPWA exam is, why you should pursue it, its fees, passing rates, exam format, etc. You may also have a look at the following articles –

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Comments

  1. Tabish Silvia says

    Very informative piece of work. Great work sir. Sir will you please explain me the differences between CPWA and CIMA. I am really very tired of searching these certifications. Please guide me with some study material. Thanks in advance

  2. Bruno Cole says

    Thanks for providing this useful information. I was searching for this since long time but finally found it in your website thanks for sharing this article.

    • Dheeraj Vaidya says

      Many thanks Bruno! And I am glad you found this useful.