Our Post-Exam Review of the January 2022 CII R06 Exam
The question paper from the January 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 Vidas and Viktoria, both aged 30, due to be married, with a two-year-old daughter.
Their financial aims were to:
- ensure that they have adequate financial protection arrangements
- arrange a suitable savings strategy to plan for their children’s possible further education
- ensure that they have a strategy in place to purchase a new home
Question Our Analysis
State the additional information that a financial adviser would need to obtain in relation to Vidas and Viktoria’s current pension arrangements, to enable them to assess the suitability of these arrangements. (12 marks) As you can see from their aims, retirement planning or assessing suitability of their investments was not one of the couple’s specific aims so we had not covered this in our analysis.
Explain the benefits to Vidas and Viktoria of receiving ongoing regulated financial advice. (12 marks) This was covered in full in our generic section.
Explain to Vidas and Viktoria how their Lifetime ISAs (LISAs) operate. (10 marks) We had included this in full in our analysis.
State five benefits and five drawbacks of Vidas and Viktoria using Junior ISAs to provide funds for their children’s potential further education costs. (10 marks) We had included the advantages and disadvantages of their using Junior ISAs to provide for their children’s future education costs.
Outline the conditions that should be stated within a written loan agreement between Vidas, Viktoria, and his parents, in relation to the loan they are considering for the house deposit. (8 marks) This was covered in the self-test section of our analysis.
Identify the factors that a financial adviser should consider when establishing a suitable suite of financial protection products to meet Vidas and Viktoria’s requirements. (10 marks) Most of the information in the model was contained in our section on protection – within the model answer for fact-finding and a factors question when considering a sum assured. This is an example of where the same information can be used to answer different question types on the same area.
(i) State the benefits to Vidas of using a multi-asset fund for his ISA investment. (5) (ii) Recommend and justify the actions that Vidas and Viktoria could take to improve the tax efficiency of their current financial arrangements. (10 marks) Part (i) was covered in full. The model answer for part (ii) included pension contributions, salary sacrifice, loss of personal allowance, CGT exemptions, ISA contributions, pension nominations, and making Wills – all of which was covered in our analysis.
Case Study 2
Onto Case Study 2 where we met Tom and Clare, both in their early fifties, with two adult children.
Their financial aims were to:
- ensure their existing investments are suitable
- consider their options in respect of Clare’s inheritance from her father
- ensure they can retire when Tom reaches age 62
Question Our Analysis
Identify the key factors that a financial adviser should take into consideration when recommending how Tom and Clare should utilise the pension plan and lump sum she is due to inherit from her late father. (12 marks) Most of the model answer was included in our model answer for the question: list the key factors that an adviser would need to consider when advising the couple on their retirement planning strategy.
Identify the issues that a financial adviser would need to consider when establishing the tax position for Inheritance Tax purposes in respect of Clare’s late father’s discounted gift trust (DGT). No calculations are required. (10 marks|) We had covered the DGT in the analysis. This did include information on the IHT position for Clare’s father. In the generic section, we had included the tax position of a discretionary trust when it is set up, which included the consequences of it being a CLT. Overall, there was enough information to gain the majority of marks for this question.
Recommend and justify how Clare and Tom could use her share of her late father’s pension fund to assist them with their retirement planning objectives. (10 marks) This question was covered in full within our recommend and justify how Clare could draw flexible benefits from her father’s personal pension as well as the other options available to her.
Explain to Tom and Clare the key reasons why their existing pension, savings and ISA investment holdings may not be suitable for their longer-term objectives. (12 marks) This was testing their choices of funds, and we had covered why their existing fund choices may not be suitable to meet their long-term objectives.
Explain the reasons why Clare may wish to consider retaining her existing credit card debt for the next 12 months. (8 marks) We had included the factors to consider when making any decision to repay their credit card debt which included the majority of the model answer.
State the benefits for Tom and Clare of investing some of the lump sum inheritance from Clare’s father, into both their pensions and ISAs. (13 marks) This was covered in full both in the maximum amount that Tom could pay into his pension as well as why they should increase their personal contributions into both pensions and ISAs.
Identify eight issues that a financial adviser would take into account when reviewing Tom and Clare’s investment portfolio at the next annual review. (8 marks) Our analysis included a review question which covered the majority of the answers in the CII model answer.
Overall, this paper covered the areas that were expected and signposted in the case studies released prior to the exam. The discounted gift trust was signposted in the case study but the question was focused on the IHT position for the father rather than how this investment might be used for Tom and Clare. This is a subtle change of direction for testing and should be considered by future students of the R06 exam.
Students who used our case study analysis to prepare for their exam, however, should have achieved a pass in this sitting.
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!
