Our Post-Exam Review of the October 2016 CII R06 Exam

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

Case Study 1

The first case study focused on Alan and Kim, a married couple with 2 young children. Their goals were to:

1. improve the tax‐efficiency of their current financial arrangements;
2. build up a fund to provide deposits for their children’s first homes;
3. ensure an adequate income in retirement; and
4. ensure adequate financial protection for the family

The paper started, as is usually the case, with a fact-finding question – this time on goal number 3: income in retirement.   There were 12 marks available here, and our analysis covered 13 bullet points in answer to this question, so a great start. Anyone sitting R06 should prepare fact-find questions for each of the given aims; we make sure we cover all of them so students are fully prepared.

The next question was split into three:

• Alan’s maximum tax‐relievable pension contribution for the current tax year, which we had covered;
• Five benefits and five drawbacks of using his employer’s salary sacrifice arrangement – for this, we had five disadvantages and two advantages, so we hope seven marks were achieved out of the possible ten on offer;
• The third part was the advantages of continuing to fund his group PP to provide an income in retirement, rather than using a stocks and shares ISA – this one we’re sorry to say we didn’t see coming, but we believe any well-prepared student would have used their knowledge to pick up some of the five marks on offer.

The exam continued with the taxation of their existing OEICs for 10 marks and a recommend-and-justify question on how they could improve the tax‐efficiency of their portfolio for 12 marks – both of these, we are happy to say, we had covered in full.  Candidates also had to recommend and justify a suitable protection policy, in the event of Kim’s death, and again, protection was covered in full.  This part of the exam finished with five advantages of using a stocks-and-shares ISA rather than a Junior ISA to fund goal number two: house deposits, and in our analysis we covered the pros and cons of using Junior ISAs, so we feel this answer could have helped to answer this one.  Finally, candidates had to state the main benefits of investing an inheritance in a diversified investment portfolio, and we are pleased to say that the answer to this is covered in our generic section of the analysis.

Case Study 2

So onto the next case study, which focused on Bisham and Val, both in their 60s with independent children.

Their goals were given as:

1. ensure that their risk profile is suitable for their current circumstances;
2. ensure they have adequate income in retirement;
3. seek to mitigate their potential Inheritance Tax liability.

The questions started with subjects covered in full in our generic section: firstly, the process that should be followed when providing advice on savings and investments for nine marks, and the reasons that an adviser should not solely rely on the output from a computer‐based risk‐profiling tool for six marks.  This was a great start, with hopefully maximum fifteen marks in the bag.

The exam continued with information on whether to surrender or retain the bond, which, we are sorry to say, we didn’t cover, but the rest we got right; covering in full the suitability of their existing investment portfolio for eight marks and how they could mitigate their potential Inheritance Tax liability – again, for eight marks.  It continued to go well with ten marks, covered in full, on a deed of variation.

On to the home stretch, and candidates had to explain the benefits to Val of remaining as a member of her employer’s defined benefit pension scheme, for a chunky ten marks.  We had anticipated that the exam might go down the route of her transferring out of the DB scheme and so had covered the pros and cons of her doing this; the cons could have been used to answer this question turned around so they were used as the benefits of her staying.

Finally, we have the review question, and students had to state the factors an adviser should take into account when reviewing Bisham and Val’s investments.  There is always a review question, and although we covered it for Bisham and Val, it was focused more on the events that could trigger a review rather than on their investments, but we are confident that a well-prepared student could have still answered this well.

All in all, we are pleased to see that our analysis team got it pretty much spot-on in October, and we are confident it would have helped students to achieve a very comfortable pass.

Grab the resources you need!

If you’re studying for your CII R06 exam, and you’re wanting to avail yourself of every opportunity to practise, 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 January, on what areas will you focus your revision?