Our Post-Exam Review of the February 2021 CII R06 Exam
Our Post-Exam Review of the February 2021 CII R06 Exam
The exam guide from the February sitting of R06 has been released by the CII, prompting us to see how we did in predicting the questions and model answers in our pre-exam analysis.
You can access the exam guide here.
Case Study 1
Case Study 1 introduced us to Andrew and Carrie, both aged 34, with two small children.
Their financial aims were to:
- ensure adequate protection is in place for their family;
- ensure that they have adequate funds available to purchase a property;
- arrange for some of their holdings to be invested in an ethical manner.
| Question | Our Analysis | |
|---|---|---|
| Question (a) was in two parts: firstly, for 10 marks candidates had to ‘explain why Andrew and Carrie should consider using the cash inherited from Andrew’s uncle as a deposit on their property purchase. Part (ii) asked for six reasons why Andrew and Carrie should take out a repayment mortgage rather than an interest-only mortgage for their new property. | We had provided a table giving the advantages and disadvantages of Andrew and Carrie using the money inherited from Andrew’s uncle; candidates could have used the advantages to answer this question for most of the marks on offer. We also included a question in our ‘self-test questions’ section which provided more of the model answers. Unfortunately, we had not foreseen the second part of the question, but we hope candidates would have been able to use their knowledge to provide enough reasons to gain good marks. |
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| Question (b) was a standalone question for 10 marks and was ‘explain, in detail, to Andrew and Carrie the key benefits of transferring more of their existing cash deposits and investments to Carrie’. | This was all to do with Andrew being an additional rate taxpayer and Carrie being a non-taxpayer. We had covered this extensively, and candidates should have been awarded most, if not all, the marks on offer for this question. | |
| Question (c) was another two-parter; firstly, candidates had to ‘identify the factors, relating to Andrew and Carrie’s current circumstances, that should be taken into account by a financial adviser before recommending suitable protection products’. Part (ii) was for 14 marks and candidates had to ‘recommend and justify a suitable protection policy that could provide a regular income in the event of Andrew suffering a long-term illness’. | We had this question covered in our ‘self-test questions’ at the end of the analysis document. This, along with some of the information given in the fact-finding analysis, would have enabled candidates to score most of the marks on offer. We had the second part of this question covered in full. |
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| Question (d)(i) was ‘explain to Andrew and Carrie why it may be better to invest in ethical investments via a collective investment fund, rather than selecting individual companies for this purpose’ - this was for 8 marks. In part (ii), candidates had to state five reasons why the manager of an ethical investment fund might decide not to invest in a particular company. | Although we hadn’t predicted this exact question, we had included various questions on ethical investment, which could have been used to answer both parts of this question to gain many of the 13 marks on offer. | |
| The last question in the paper tested an area that wasn’t specifically mentioned as one of their aims. This was ‘explain to Andrew why he should consider increasing his personal contributions into his employer’s qualifying workplace pension scheme’. | We hadn’t covered this as part of the analysis for Case Study 1, but we had covered it as part of our model answers for Case Study 2, so we are pleased to say that candidates did have the information to gain 7 of the possible 10 marks on offer. | |
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Case Study 2
Onto case study two where we met Dylan and Susan, both aged 59, with one son and two grandchildren.
Their financial aims were to:
- ensure that they have adequate income in retirement
- arrange for their estates to be passed to their intended beneficiaries in a tax efficient manner using appropriate trust arrangements
- ensure that their investments are suitable for their needs.
| Question | Our Analysis | |
|---|---|---|
| For 12 marks, candidates had to ‘Identify the additional information a financial adviser would require to advise Dylan and Susan on the suitability of their current pensions and investments’. | We had included a fact-finding question and a ‘key factors to consider’ question on this aim, so almost all the CII model answer was contained in this analysis. | |
| For 10 marks, Question (b) asked candidates to ‘identify the factors that would typically influence Dylan and Susan’s capacity for loss’. | We had included the main factors that might influence a client’s ATR; within our model answer were six of the factors in the CII model answer to this question. | |
| Question (c) was in two parts: (i) candidates had to ‘state the factors that a financial adviser should consider when assessing the tax efficiency of Dylan and Susan’s savings and investments’. This was for 10 marks In part (ii), candidates were asked to ‘explain the CGT implications of transferring some of the OEIC held by Susan to Dylan’. This was for 5 marks. | We had covered this aim off in some detail, and included in this, was a table of recommendations and justifications Susan and Dylan could take to improve the tax efficiency of their investments. Within this was most of the information contained in the CII model answer. Most of the model answer to this question was also contained in the table of recommendations. |
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| Question (d) was for 8 marks and asked for the ‘additional information a financial adviser would require to advise Dylan on whether to surrender or retain his investment bond’. Part (ii) was for 6 marks and asked how the ‘Income Tax liability would be calculated if Dylan’s investment bond is surrendered’. | This question has been asked before by the CII and was exactly the question we had in our ‘self-test questions’ at the end of the analysis. This was not a question we had anticipated; however, our initial thoughts were that the question was testing the relatively new HMRC 5-step process for calculating income tax on an investment bond. This is where the tax is calculated on the gain in full, initially taking into account the personal savings allowance and the other tax bands; only then is the annual equivalent gain calculated along with the tax. The model answer is a surprise as this does not mention the PSA or the new process. |
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| Question (e) asked candidates to ‘identify and explain to Dylan and Susan how suitable trust arrangements could be used to assist them with their Inheritance Tax planning objective’. This was for 10 marks. | We are pleased to say most of the model answer was covered in our analysis. | |
| Question (f) stated that ‘Susan is considering making a lump sum contribution to a stocks and shares ISA using some of the money held in her deposit account’. Candidates had to ‘explain the potential benefits to Susan of this course of action’ for 8 marks. | We had provided information on Susan’s current cash holdings, the fact her holdings exceeded the FSCS limit, and that it didn’t match her ATR. Although we hadn’t anticipated this exact question, candidates should have been able to adapt the information given to gain most of the marks on offer. | |
| Finally, Question (g) which for 8 marks asked for the ‘factors a financial adviser should take into account when reviewing Dylan and Susan’s Inheritance Tax planning at their next annual review’. | Our review question was on investments; so although not around IHT planning, if candidates had used our model answer, they would have been awarded 5 of the 8 marks available – this is because some of the factors are always generic, and others just happened to apply to both the IHT and investment angle. | |
Overall, this paper had four ‘factors’ questions, just one ‘recommend-and-justify’ question, and no fact-finding question in Case Study 1. Most of the questions, however, were related to the aims as stated. Anyone using our analysis to study for this sitting of the R06 exam should have been pleased with the help it gave, and we hope it meant good passes all around.
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!
