Our Post-Exam Review of the April 2018 CII R06 Exam

The CII have released the R06 exam paper from their April sitting, so it’s time to look at our pre-exam analysis and see how well we predicted the questions. This is helpful reading for those who are revising for the CII R06 exam.

If you haven’t seen the paper yet, you can access it here.

Case Study 1

Case Study 1 focused on John and Kate, a married couple with a 7-year-old daughter, Lucy, whom they were planning on sending to a private school. John was self-employed with profits of £50,000 per year, and Kate was a teacher earning £28,000 per year.  Other key facts were that John is considering incorporating his business, and they have not made wills.

Their financial aims were given as:

• Put in place suitable protection in the event of death or serious long-term illness
• Put in place a suitable investment strategy to meet Lucy’s school fees
• Ensure John’s unsecured loan is repaid as soon as possible.

The paper started, as is often the case, with a fact-finding question – this time, for 13 marks, candidates had to identify the additional information that would be needed to advise John and Kate on their aim of building up a fund to meet Lucy’s future school fees. In all our analyses, we cover fact finding for each of the financial aims given, so we had 12 bullet points to answer this first question.

The next question covered their third financial aim, and candidates had to explain, in detail, the drawbacks if the clients decided to consolidate John’s outstanding loan by re-mortgaging their home. Again we had this exact question covered with 7 drawbacks.

There were two pieces of information in the case study, which clearly suggested questions, firstly on incorporating a business and secondly, the fact they had no wills. The incorporation aspect was covered by asking for 5 benefits and 5 drawbacks for John of incorporating his business, which we had covered in full.  For the subject of wills, the exam will often ask what makes a will valid, but for this exam, candidates had to explain why the couple should each set up a will, and this is covered in our generic section.

The question on protection was split into two parts; the first part, for 12 marks, asked candidates to recommend and justify a suitable policy to provide a lump sum in the event of John’s death or if he suffered a serious illness.  This information was given in full in our analysis.  The second part asked for 6 factors that should be considered when identifying a suitable sum assured for the policy recommended in the first part of the question. Unfortunately we hadn’t specifically covered this part, but we hope that candidates will have used their experience and knowledge to gain most of the marks on offer here.

Next came a question on paying school fees. The first part asked for an explanation of how stocks and shares ISA’s could be suitable to build up a fund. There were 10 marks on offer, and we had provided 9 bullet points explaining why funding ISAs would be a suitable way to build up the money needed.  The second part asked for the benefits of using a diversified investment strategy to meet Lucy’s school fees, and in our generic section, we cover why diversification is important.

We feel very confident that anyone using our analysis would have scored well in Case Study 1.

Case Study 2

So how did we do with Case Study 2?

This case study focused on Felix and Sally, both aged 64 with two married and financially independent children.  Felix was employed, earning £70,000 p.a. and was a member of his employer’s defined benefit scheme.  Sally was self-employed with net profits of £30,000 per year. Sally was about to retire and had a personal pension fund valued at £300,000.

Their financial aims were given as:

• Ensure they have sufficient income in retirement
• Improve the tax efficiency of their savings and investments
• Ensure that their savings and investments meet their needs

The first two questions were covered in full in our generic section. Firstly, for 9 marks, candidates had to state the process a financial adviser should follow to provide Felix and Sally with suitable advice on their savings and investments and secondly, identify six reasons why an adviser should not solely rely on a computer-based risk-profiling tool to confirm their ATR – for another 6 marks.  A great start with full answers on each.

Next, the exam asked for a list of factors that Sally should be aware of if she decides to use flexi-access drawdown to take her pension income in retirement. Although we had given plenty of information on Sally’s options for her personal pension, we hadn’t specifically covered this question.  However, we are confident that candidates would have used their own knowledge as well as adapt the information we had provided to give a good answer.

We also hadn’t covered the tax treatment if Sally takes her pension fund in a single transaction using FAD, but fortunately, this was only for 5 marks. 

The recommend-and-justify question was on the actions that could be taken to improve the tax efficiency of their savings and investments; we had covered this in full, so another safe 12 marks for all of those using our analysis.   

Out of the rest of the questions, we covered State pension deferral in full for 6 marks; the information needed to advise Felix whether to surrender or retain his investment bond for another 10 marks, and there is always a review question in R06, and we are pleased to say we had covered this exam session review question in full for a further 8 marks.

The question on the SIP asked candidates to explain how one works, which we had covered and also the benefits of him joining the scheme, which we hadn’t specifically covered, but candidates would have picked up the majority of the marks here as well.

All in all, it was a very good paper with only a couple of areas where we fell down.  However, the rest of the questions were covered by our analysis so we are confident that anyone who used this in their preparations would have achieved a very good pass.

Grab the resources you need!

If you’re studying for your CII R06 exam, and you’re wanting to feel more confident on exam day, grab our free taster analysis to try out one of Brand Financial Training’s resources for yourself.  Click the link to download the R06 case study analysis taster now!