Our Post-Exam Review of the January 2016 CII R06 Exam

Now the CII have released the exam paper from their January 2016 R06 exam, it’s time to see how we did in our pre-exam analysis. This will be of interest to those sitting R06 in the near future.

Case Study 1

Case study 1 focused on James and Alex who are married with two children.  Their goals were to: Provide financial security for the family in the event of death or serious illness; Review the suitability and tax-efficiency of their investments; Provide sufficient income for their retirement and provide financial support for their children to help them purchase their first homes.

The exam followed a familiar format with two fact-finding questions and one recommend and justify question – these were covered virtually in full by our analysis and would have provided the majority of marks on offer.

Technical knowledge was then tested on how the new Help to buy ISA works and how a SAYE scheme works and the benefits of James joining his employer scheme.  There were 19 marks on offer here, and we are confident our analysis provided all of them.  

Next, students had to explain to James and Alex the actions that they could both take to improve the tax‐efficiency of their savings and investments. Again, students should have easily picked up the 12 marks here by using our analysis.

Then came a couple of questions on risk; firstly the factors that would typically influence James and Alex’s attitude to investment risk and secondly an outline of the process that a financial adviser should follow, when using a computer‐based risk‐profiling tool, to determine James and Alex’s attitude to investment risk.  Both questions together gave 13 marks. Both these questions have come up before so we had included the answers to them in our generic section of the analysis.  A well-prepared student who had studied this section in full would have been happy when they use these questions come up and should have got full marks.

The review question in any R06 exam should not cause students too much difficulty; this one was on the areas that should be discussed with James at his next review meeting regarding his retirement planning. There were 7 marks here, and although we hadn’t specifically covered a review of retirement planning, we did have a model answer for a review type question which could have been adapted.

The first case study had a total of 77 marks out of the total paper of 150, and we are pleased to say that there was nothing that we hadn’t really thought of.

Case Study 2

So onto the next case study – this one focused on Paul and Ann both aged 55 with one independent child.

Their goals were given as to: Seek to mitigate any future potential Inheritance Tax liability for the benefit of their son; provide an income for Ann whilst she cares for her mother; ensure that they will receive an adequate income in retirement; ensure that both Ann and June receive all of the State benefits to which they are entitled.

The questions started well with a fact-finding one again – students had to state the additional information that a financial adviser would require on Paul’s defined benefit scheme and Ann’s existing personal pension to advise them on their retirement planning.  We had this covered, and we hope that students would have been given the majority of the 12 marks on offer.

The second question was on Ann and the question asked why a flexi‐access drawdown arrangement might be a more suitable option for her, rather than using a lifetime annuity.

We had covered all the options available to her with the pros and cons of each, so all the information was available to answer this question well.

The next thing was to recommend and justify how Paul and Ann could generate a tax‐efficient income from their existing pensions and investments, to supplement Paul’s earnings from his consultancy work, until his occupational pension scheme’s normal retirement age. At this point the paper went a little off-script as the objective only covered Ann’s desire for an income.  As a consequence we had included a table with the recommendations and justifications to provide Ann with an income from their portfolio; however, it did include some ideas that Paul could put in place too.

Next was the (probably dreaded) questions on State benefits – students had to state the eligibility criteria that June had to meet to claim Attendance Allowance and also identify the State benefit to which Ann might be entitled as June’s carer, and explain the eligibility criteria for her to claim. 12 marks were on offer here, which we covered in full.

One area we didn’t see coming was to answer a question asking for six benefits and six drawbacks of using a joint life second death whole of life policy, on a maximum cover basis, in trust for Dominic, to mitigate Paul and Ann’s future potential Inheritance Tax liability.  There were 12 marks here and our feeling is that most if not all advisers would have used their experience and knowledge to have a good stab at picking up most of them.

The next two questions were on suitability; firstly of switching from with profits and secondly on holding high yielding corporate bonds.  These last two questions provided 15 marks and although we had the technical detail of with profits, we didn’t see these particular questions coming.

The total marks available for this case study was 73 out of the total 150.

In summary, the January R06 paper was a fair one with no real curve balls and with the majority of predicted questions coming up.  We are confident that our analysis covered the knowledge needed for students to have easily achieved a pass.

Grab the resources you need!

If you’re studying for your CII R06 exam, and you’re wanting to walk into the exam feeling confident, 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!

Over to You…

If you’re planning on sitting R06 in April, on what areas will you focus your revision?