Our Post-Exam Review of the October 2017 CII AF5 Exam

Now the CII have released the papers for the October 2017 exams, we can see how we did in our AF5 analysis and how accurate we were in our predictions of what might come up.  

If you haven’t already seen the question paper for October, you can access it on the CII website.

The first thing that struck us as unusual about this paper was that more than 50% of the questions were regarding pensions and retirement planning.

Question 1

The first question, as is usually the case, was identifying the additional information needed by an adviser to help the clients with one of their objectives –  this time, the suitability of their savings and investments.   The second part of the first question was describing the process an adviser would follow to ensure that their existing pensions and investments are on track to provide their desired level of income when Alan retires.

Our analysis covered the situation regarding their savings and investments, and the various model answers on risk profile and tax efficiency had enough information that could have been used to answer the first part of the question.  The second part was covered in full in the generic section of our analysis to gain the marks on offer.

Question 2

This question was around protection: part (a) was considering the issues that should be considered before making changes to their existing joint life first death policy, part (b) was describing 5 benefits and 5 drawbacks of them using a DTA and part (c) was to recommend and justify a protection policy to cover child care costs.  Our analysis fully covered part (a) and we also had all the relevant information on the protection products that we thought would be appropriate including a FIB and a DTA.  The student just needed to use this information to answer the specific question being asked.

Question 3

Question 3 was for 9 marks and delegates had to explain a salary sacrifice arrangement including the tax benefits for Alan.  We had this covered with a full explanation and the tax benefits.

Question 4

The fourth question was an explanation of how the gift from Alan’s father would be treated for IHT purposes if he died within the next 7 years and again we had this covered in full.

Part (b) asked how pension contributions from Kim’s father would be treated for tax purposes and five key drawbacks for both of them of him doing this.   We covered the IHT situation of regular gifts from Kim’s father although not specifically regarding making pension contributions.

Question 5

Part 5 was the expected question on Lifetime ISAs –  12 marks for explaining them and 14 marks for recommending and justifying why increasing his GPP contributions would be a more suitable option.  We had the LSIA covered in full and gave a comparison between that and a pension, which would have helped to answer the second part of this question as well as explaining why the GPP would provide an improved income rather than using a different product.

Question 6

This question had three parts: part (a) asked delegates to comment briefly on the factors that Alan should consider when deciding whether to transfer his ATK pension into his new employer’s scheme.  Part (b) was for 10 marks and asked for an outline of the key factors for diversification in a pension fund and part (c) was 8 marks for explaining the key risks of investing in commercial property in his pension.

Part (a) was covered in full.  For part (b) we covered diversification relating to their current savings and investments as well as the main benefits of investing in a diversified investment portfolio so this information could have been adapted.  As for (c) we had mentioned the commercial property fund in the analysis stating the risk of liquidity, but this was really as far as we went here so hopefully delegates would have expanded on this and also have thought of other risks such as how property values and rental income will affect the value of the fund and that valuations are subjective.

Question 7

Question 7 was on the unit trusts and ISAs held by Kim and again had three parts to it:  part (a) required the identification of 4 benefits and 4 drawbacks of using a UK index tracking fund.  Part (b) was around the information needed to work out a CGT liability and part (c) required an explanation of the benefits of buying an ISA using a fund platform.

Part (a) we had covered in full; the answers for part (b) were given in the model answer to a question on how Kim could maximise their ISA allowances by disposing of the unit trusts.  Part (c) we didn’t consider, so we will include information on platforms in our generic section for future students.

Question 8

The final review question was identifying six issues regarding Alan’s new employer pension scheme.  We didn’t cover this specifically but hope students would have been able to pick up most of the marks on offer using their own knowledge and experience.

Grab the resources you need!

If you’re studying for your CII AF5 exam, and you’re aiming for a pass on exam day, you’ll need to avail yourself of all the necessary tools to do so. Grab our free taster analysis to try out one of Brand Financial Training’s resources for yourself.  Click the link to download the AF5 fact-find analysis taster now!

Over to You…

If you’re planning on sitting AF5 in April, which types of questions do you find the most challenging?