Our Post-Exam Review of the January 2019 CII R06 Exam

The CII have released the R06 exam paper from their January sitting so it’s time to look at our pre-exam analysis and see how we did.   

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

Case Study 1

Case Study 1 focused on Mario and Dianne, a married couple with one son.  Mario owned a restaurant and Dianne was employed as a human resources manager.

Their financial aims were to:

• ensure they have adequate income in retirement
• ensure they have adequate financial protection
• ensure their pensions and investments are suitable for their needs

The R06 paper usually starts with a fact-finding question, and this was no exception; delegates had to identify the additional information needed to advise them on the suitability of their current pensions. We generally provide fact-finding answers to each of the stated aims, so we had this covered in full.  It was a good start!

The paper continued with a question on the factors that would typically influence their tolerance for risk.  Risk can be tested in any exam, so we cover various aspects in our generic section with this particular question being one of those we provide an answer for.

The next two questions were on products and funds; firstly for 6 marks, why a range of passive equity tracker funds are likely to be suitable, and the second part asked for the advantages of continuing to fund a personal pension rather than using a stocks and shares ISA for retirement planning. We had included a table which showed the pros and the cons of Mario being invested in passive equity tracker funds, but unfortunately, we hadn’t anticipated the second part of this question.

We then had another fact-finding question on the suitability of their existing level term policy.  The second part of the question asked for the factors that they should be aware of if they decided to repay their mortgage using Mario’s OEICs.  We had considered the use of their savings and investments to repay their mortgage and provided a table of the pros and the cons of them doing this, which could have been used to provide an answer to the second part of this question, but we hadn’t considered the first part of question (d).

The next question asked why Dianne should consider retaining the inherited SIPP for the long term; this was for 7 marks.  We covered the options that Dianne would have with the SIPP, so the answer to this question could easily have been adapted from the information provided.

Continuing with Dianne’s SIPP, the next question asked for four benefits and four drawbacks of her retaining the services of the DFM.  We had anticipated this question and included a table showing the advantages and disadvantages of the funds being managed by a DFM.

Finally, delegates had to outline the tax treatment of a VCT and explain why an EIS might be more suitable for Mario than a VCT.  We had covered this in full and also provided a comparison of a VCT with an EIS.

Case Study 2

Onto case study 2 which involved another married couple, Geoff and Katy, who also had one son and were planning to retire in 6 months’ time when they would both be aged 65.

Their aims were to:

• generate a sustainable income for their joint lifetimes
• assess the suitability and tax efficiency of their current pensions and investments
• ensure their estates pass to their intended beneficiaries on second death

To kick off, delegates had to comment on the suitability and tax efficiency of their existing pensions and investments, and the second part of the question asked for recommendations and the justifications of actions that Katy could take to improve the tax efficiency of her OEIC portfolio.  The marks available for question (a) were an impressive 21.  We had both these questions covered in full, so we feel confident that delegates would have done well on both parts.

The next question asked for an explanation of why Geoff should consider switching the money market fund in his ISA into another fund, and the second part asked for the main drawbacks of his retaining his portfolio of smaller company shares.  We had covered the detail of a money market fund and had some information on his shares, but we hadn’t covered the main drawbacks of his holding this type of investment.

The exam then moved onto Katy and her pension; delegates were asked to explain why using FAD may be a suitable option for her in retirement and asked for 8 benefits of her using her fund to buy an annuity once she retires. We had both parts of this question covered in enough detail for delegates to provide good solid answers.

The couple had a whole of life policy, and the next question asked for the options available to them when it reached their 10-year anniversary, and again we had enough detail for delegates to gain good marks in this question.

Onto the home stretch, and next delegates had to state the actions that the couple could take to ensure that their estates are passed in the way they intended Finally the review question, 8 factors were needed that an adviser should consider in respect of their income requirements at the next annual review.  We had the IHT question covered, as this was clearly one of their aims, and although our review question wasn’t specifically about income requirements, many of the points were generic and would have still been useful in an answer.

All in all, it was another good R06 paper with reasonable signposting in the case study and in the aims to prepare for the majority of the questions in advance.  We are confident that anyone who used our analysis in their preparations for sitting this exam paper would have achieved a 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!