Our Post-Exam Review of the January 2020 CII R06 Exam

The R06 exam paper from the January sitting has been released by the CII prompting us to see how we did in our pre-exam analysis.  

You can access the exam guide here.

Case Study 1

Case Study 1 concerned Tom and his wife Lisa with their two young children.

Their first financial aim was to:

Ensure adequate protection is in place for their family

There were various questions relating to this aim.  The first one asked candidates to identify the key factors that a financial adviser should take into consideration to ensure their financial protection needs are met.  This was for seven marks, and candidates using our analysis would have found many factors relevant to this in our model answer on fact-finding.

The following question asked for an explanation of why their existing employer death-in-service schemes may not be suitable to meet their long-term protection needs.  We had covered the fact that their death-in-service benefits would not be sufficient to pay off their mortgage in the event of either death, so candidates should have picked up some marks here.

Candidates were then asked to explain to Tom why he should consider retaining his existing critical illness policy and secondly, describe why a level term policy would be more suitable for them than a family income benefit policy.  We had listed the benefits of Tom’s existing critical illness, which included various reasons why he should retain the plan. We also covered the details of a level term policy.

Their second aim was to:

Ensure that their current investment holdings are suitable and tax-efficient

There were a few questions that appeared to relate to this aim.  Candidates had to recommend and justify the actions that could be taken to improve the tax-efficiency of their existing savings and investments.  This was for 12 marks, and we had covered this in table format.

Two other questions related to pensions; firstly the benefits and drawbacks for Tom of his taking up the option of salary sacrifice, which we had covered in the analysis as well as having supplementary information in the generic section.  Lastly, candidates had to explain why their existing pension fund choices may not be suitable for them, and we had some information on this covered within the section on the suitability of their investments.

The third aim was to:

Ensure that they can repay their mortgage in 20 years’ time

There were two questions that could be linked to this aim.  Firstly, students had to state four benefits and four drawbacks of using Lisa’s inheritance to repay some of their mortgage and also explain why a stocks and shares ISA might be a suitable vehicle to build up funds. We had covered in full the pros and cons of their using Lisa’s inheritance and also included a table of information on using investments to provide a lump sum, which could have been used to answer the second part of the question.

Case Study 2

Onto Case Study 2, which focused on Manuel and Susan, a married couple with one financially independent child.

Their first financial aim was to:

Ensure that their estates are passed to their intended beneficiaries in a tax-efficient manner

Candidates had to explain why retaining the AIM share portfolio could be suitable for them and identify the options available to immediately reduce their potential IHT liability.  The second part of this question was covered in full, as well as details regarding the exemption from IHT for AIM shares once held for two years.

Also within this aim, candidates were asked to describe how a deed of variation could be established, and again we had this covered in full.  Finally, candidates had to state the factors an adviser should consider when reviewing their potential liability to IHT. We had included a model answer for a fact-finding question, and the information in here could easily have been adapted to answer this question. 

Their second financial aim was:

Assess the suitability and tax-efficiency of their current pensions and investments

The first question was fact-finding for this aim; identify the additional information an adviser would need to advise them on the suitability of their current pension arrangements.  This was for 14 marks and was covered in full in our analysis. 

Students were then asked a technical question on whether Manuel would be subject to the reduced tapered annual allowance.  This was for seven marks and just needed an explanation rather than a calculation, which our analysis had covered.  The second part of the question asked for the benefits and drawbacks of Manuel’s retaining his funds within his SIPP, and this we hadn’t specifically covered in our analysis. 

Their third financial aim was to:

Ensure they have adequate income in retirement

We then had further questions relating to Susan: firstly, how her pension benefits would be treated under the Pension Protection Fund; and secondly, explain the reasons she should remain in the defined benefit scheme.  We had covered the PPF in full but did not cover the reasons why someone should stay in a DB scheme.

Overall, this seemed to be yet another reasonable R06 paper with no real curve-balls.  We trust that those using our analysis would have been pleased with the amount of information we provided, which would have helped them score well in this exam.

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!