Our Post-Exam Review of the July 2022 CII R06 Exam
The exam guide from the July 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 Dave, aged 50 and Carmel, aged 47. They had two financially independent sons.
Their financial objectives were to:
- improve the tax-efficiency of their current financial arrangements
- set up appropriate protection arrangements to meet their current and future needs
- ensure they can access sufficient funds in a tax-efficient manner to purchase a holiday home in the UK
Question Our Analysis
(a) State the additional information that a financial adviser would need to obtain about Dave and Carmel’s current pensions and investments to enable them to provide appropriate financial advice. (14) We had asked what additional information would be needed to advise Dave and Carmel on this aim which included their investments and pension contributions.
(b) Explain to Dave how a salary sacrifice arrangement would operate and identify the key benefits for him, if he chooses to enter into this arrangement with his employer. (10) We had included the question ‘explain how a salary sacrifice arrangement works’ along with a table of the benefits (and drawbacks) of Dave taking up the offer.
(c) Recommend and justify the actions that Dave and Carmel could take to improve the tax efficiency of their current financial arrangements. (14) We had exactly this question within our analysis so candidates should have scored maximum marks.
(d) Dave and Carmel have decided to fully encash the investment bond to assist with the purchase of a holiday home in the UK.
(i) Explain to Dave and Carmel why they should consider assigning the bond to Carmel prior to encashment. (8)
(ii) Outline the key taxation issues that Dave and Carmel should take into consideration when purchasing and owning a holiday home. (7)
Our question to cover part (i) was ‘what are the benefits of assigning the investment bond to Carmel’ and again, candidates would have scored well if they had used our analysis.
For part (ii), although we had of course considered the holiday home, we had not specifically covered the key taxation issues; we hope candidates were able to use their own knowledge and experience to cover the SDLT and future CGT implications.
(e) Recommend and justify a suitable protection policy for Carmel to provide a lump sum on her death or serious illness. (14) Our question here was ‘recommend and justify a suitable protection policy to enable Dave to repay the interest-only mortgage in the event of Carmel’s death or serious illness’. Anyone using our analysis should have picked up the majority of marks on offer.
(f) Explain to Dave why the global commodities fund might be a suitable long-term holding for his portfolio. (9) Our analysis included information on all of the funds held by Dave and Carmel including the risks attached, and the benefits and drawbacks – all of which could be used to answer this last question on Case Study 1.
Case Study 2
Onto Case Study 2 where we met Mike, aged 63, recently widowed after his wife Kate died in May 2022. They had no children but Kate did have a daughter, Helen, from her first marriage.
Mike’s financial aims were to:
- transfer Kate’s remaining assets into his name
- obtain a tax-efficient income in his retirement
- ensure that Helen can receive a portion of Mike’s estate on his death.
Question Our Analysis
(a) State the specific actions that a financial adviser should take when providing advice to Mike to reflect his current vulnerable status following the loss of his wife. (8) We had included ‘explain why Mike might be considered to be a vulnerable client and what steps might a financial adviser need to take in these circumstances?’
(b) Explain why Mike is entitled to receive the Bereavement Support Payment from the State and identify the benefits he may receive. (6) We had included full information on BSP including the amounts within the case study on Carmel and Dave which could have been used to answer this question.
(c) (i) Outline to Mike the pension benefits that he could receive from Kate’s pension arrangements and explain how each of them will be treated for tax purposes. No calculations are required. (12)
(ii) Explain to Mike how he could use Kate’s defined contribution pension scheme to provide a future tax-efficient benefit for Helen after his death. (7)
We included in our analysis, the options that Mike had available regarding Kate’s pension funds including the tax implications of each of them. This also included the option of nominating Helen as successor with flexi-access drawdown.
(d) Explain the tax treatment of Kate’s ISA portfolio following her death and the actions that Mike needs to take to maintain its tax-efficiency. (10) We had included ‘explain to Mike the process and options regarding moving Kate’s ISAs to his name’ which gave all the relevant detail to answer this question.
(e) Explain the key issues that a financial adviser should consider when calculating whether Mike will be able to afford to retire in the near future. (12) We had included various questions on Mike’s retirement planning including the factors that would need to be considered when advising him.
(f) Explain to Mike why he should write a Will at the earliest opportunity. (11) We had included the question ‘explain in detail to Mike why it is important to write a Will without delay’.
(g) State eight factors that a financial adviser should take into account when reviewing Mike’s financial affairs at the next annual review. (8) We had included the question ’state the factors that an adviser should take into account when reviewing Mike’s estate at the next annual review’ which took into account the majority of the points in the model answer.
Overall, this paper seemed fair and a good test of both technical and practical aspects of financial planning. We are very pleased to see that anyone using our analysis should have gained a good 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!