Our Post-Exam Review of the July 2017 CII R06 Exam

The CII have released the exam paper from their July 2017 R06 exam, so it’s time to see how we did in our pre-exam analysis – of interest to CII R06 candidates.

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

Case Study 1

The first case study focused on Simon whose wife had recently died.  He had two adult children and his goals were to:

1. Generate sufficient income for his immediate and future needs
2. Establish a method to draw benefits from both his and his wife’s pension plans
3. Protect the tax-efficiency of his wife’s ISA portfolio

The paper started, as is usual, with a fact-finding question; for 12 marks, candidates had to state the additional information they would need to advise Simon on establishing his current and future income requirements. This was also the first question we covered in our analysis with 20 relevant bullet points – this was a great start!

The next question asked why Simon should be treated as a vulnerable customer and the actions an adviser should take when providing advice.  This we had also anticipated and had covered in full for the 6 marks on offer.  The case study had given a clear signpost towards this question stating not only that his wife had died but that he was still recovering from the shock.  It is usually the case that any information like this is put in for a reason.

Next was a question on the mortgage; state three benefits and three drawbacks of Simon repaying his mortgage from the proceeds of his wife’s personal pension. We had covered this, albeit in a slightly different way.  We predicted the question may be around using his pension to repay the mortgage; however, candidates could easily have adapted the answers to the question that was asked.

One of his goals was to protect his deceased’s wife ISA portfolio and, as expected, candidates had to explain the tax treatment of the ISA portfolio following her death and the actions that Simon needed to take to maintain tax‐efficiency. This we also had covered in full so another 10 marks easily achieved.

The recommend-and-justify question in this paper was around how Simon could draw flexible benefits from his wife’s personal pension for 8 marks.  We had covered the complete range of options available to him so again another 8 marks in the bag.

The next question was on the suitability of AIM holdings; we did have some information on the AIM shares, and we also had included information on risk, so we hope this information was useful to answer this question. What we hadn’t seen coming was a question on platforms and the pros and cons of keeping the existing fund choice within her PP.

However, the final question asked candidates to describe how a cashflow model could be used to help Simon in planning his future income needs, as well as having to explain to him the limitations of cashflow modelling and why he should not rely on this as the sole method of planning.  This question has been asked several times in the past so we are always prepared for it; we had the process, as well as the benefits and drawbacks so are confident students should have achieved the full 14 marks on offer.  A good finish to Case Study 1.

Case Study 2

Case study 2 focused on a married couple in their 50s with two sons.  Their financial aims were to:

1. Protect her accrued pension benefits from being subject to a LTA charge
2. Maximise their estate for the benefit of their children
3. Ensure that their investments are tax‐efficient
4. Help their son to fund a deposit for house purchase

The first question was as expected in respect of pension benefits: candidates had to calculate the value for LTA purposes – another great start as we had given this calculation. The second part was recommending how she could protect herself from an excess LTA charge and explain briefly how the protection applies. We are happy to say that our second question was covering fixed protection and the conditions which have to apply for her to claim this – so full marks again.

The other questions we had covered in full related to lending their son an amount of money for a house deposit; we had provided this information in a table covering the pros and cons of them doing this. We also provided, in table format, the answer to the recommend-and-justify question – this time on setting up a life assurance policy to cover their IHT liability.  The income tax efficiency question was also covered in full, so candidates should have picked up the full 10 marks on offer here.

There was a question on risk, which we are pleased to say was also covered in full in our ‘generic’ section.  Candidates had to identify the factors relating to Russell and Laura’s circumstances that would typically influence their attitude to investment risk, and we had this covered for the 8 marks on offer.

Areas which we hadn’t foreseen included a question on explaining the CGT implications of transferring OEICs between spouses, a question on DFMs and the disadvantages of their setting up the life policy.

We are sure that candidates would have used their knowledge and experience to pick up many marks within these questions, but even if that wasn’t the case, on the other areas, a well prepared candidate, using our analysis, would have easily passed the July sitting.

Grab the resources you need!

If you’re studying for your CII R06 exam, and you’re wanting feel like you’ve got this, 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 October, on what areas will you focus your revision?