Our Post-Exam Review of the July 2023 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.
This article is correct as at 29 August 2023.
You can access the exam guide here.
Case Study 1
Case Study 1 introduced us to Declan and Carmen.
Their financial aims were to:
- ensure that they have sufficient income throughout retirement
- set up a suitable trust arrangement to provide funds for their grandchildren
- improve the tax efficiency of their financial arrangements
Question Our Analysis
State the additional information that a financial adviser would require in order to advise Declan and Carmen on the suitability of their financial arrangements to meet their long-term needs. The model answers we included in our fact-finding questions for Declan and Carmen covered the 15 points needed to answer this question in full.
Identify five benefits and five drawbacks for Carmen of paying Class 3 National Insurance contributions to increase her State Pension. We had listed the advantages of Class 3 NICs but not the disadvantages.
Recommend and justify a range of actions that Declan and Carmen can take to improve the long-term sustainability of their income in retirement. We had covered this is full in our ‘Recommend and justify’ questions under Aims 1 and 3.
Declan and Carmen understand that there is a potential Capital Gains Tax (CGT) liability on their unit trust funds.
(i) Explain to Declan and Carmen how they should calculate any potential CGT liability on their unit trust funds. No calculations are required.
(ii) Identify any actions which they could take to reduce the potential CGT liability on a future encashment.(i) The tax implications of the capital gain but not the process of the calculation was covered in our analysis.
(ii) Our questions on the tax-efficiency of their investments under Aim 3 and in the self-test question considered most of the points on offer in the second part of this question.
(i) Explain to Declan and Carmen why they should consider setting up a discretionary trust to pay for their grandchildren’s university costs.
(ii) Explain to Declan and Carmen why they may wish to use an offshore investment bond within the discretionary trust.(i) We had recommended a discretionary trust in our ‘Recommend and justify’ question relating to gifting to the grandchildren so our analysis covered this answer in full.
(ii) We also recommended using an investment bond within the discretionary trust so most marks could have been picked up using our model answers.
Case Study 2
Onto case study two where we met Sam and Kerry.
Their financial aims were to:
- improve the suitability and tax efficiency of their current financial arrangements
- review their protection arrangements and ensure that adequate financial protection is in place
- review their existing investments to take account of their ethical views.
Question Our Analysis
Identify the key factors that Sam and Kerry should consider when deciding on an appropriate level of emergency fund. Whilst we did not consider the factors relating to the level of emergency fund specifically. Our ‘factors’ question on protection needs could have been used as a starting point for this question.
Identify five benefits and five drawbacks for Sam if he agrees to sacrifice his annual bonus into his workplace pension scheme. This exact question was covered in the analysis.
In respect of their retirement planning, explain to Sam and Kerry the advantages of
making monthly pension contributions rather than making lump sum pension
contributions.
We had covered monthly contributions v lump sum contributions in relation to ISAs. This answer could have been adapted for pensions.
Explain to Sam and Kerry why their current mortgage protection policy may not be suitable for their needs and outline how their protection arrangements in respect of the mortgage could be improved. We had identified the weaknesses in their current protection arrangements and commented on the suitability of their current mortgage repayment strategy. The model answers to these questions could have been used to gain full marks here.
Recommend and justify a suitable protection product to provide a regular income to support the family in the event of either Sam or Kerry’s death. Our recommend and justify question in relation to covering childcare costs could have been adapted to answer this question in full.
Outline the key difficulties that Sam and Kerry might encounter when setting up a suitable Environmental, Social and Governance (ESG) portfolio which meets their requirements. This was covered in full in our question on the drawbacks of socially responsible investments.
Explain to Kerry her potential entitlement to Statutory Maternity Pay (SMP) once her employer’s maternity pay of 50% of basic salary ceases in four months’ time. Statutory Maternity pay was not included in the analysis however we had picked this up in full in our email support Q&A document.
Identify eight key issues that a financial adviser should discuss with Sam and Kerry at the next annual review. Our review questions could have been used to pick up the majority of marks on offer for this question.
Overall, this paper offered some easy wins for those candidates who were well-prepared. Most questions were of a standard style for R06 and the technical subjects examined were highlighted in the case studies.
There were a lot of marks on offer for specific topics such as the capital gains on the unit trust and the level of emergency fund required. Care would have been needed on these questions to ensure more general answers were not given and candidates were answering the specific question being asked.
We are confident that anyone who had used our analysis in preparation for their exam could have provided sufficiently in-depth answers to have gained 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!
