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

It’s that time again; the CII have released the exam paper from their October 2017 R06 exam. So how did we do in our pre-exam analysis? This is helpful reading for those who are revising for the CII R06 exam.

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

Case Study 1

Case study 1 focused on Matthew and Linda, who are married and in their early 40’s/late 30’s with two dependent children aged 8 and under. Key facts from the case study included that Matthew is employed with a salary of £110,000 p.a. and is member of his employer’s DB pension scheme with 4 x salary death in service benefit. Linda works part time; earning £7,500 p.a. and plans to recommence full-time work in two years’ time. They have a joint, interest-only £220,000 mortgage with no repayment vehicle in place. They have limited savings and wish to make provision for university costs for their children. They have not received any form of financial advice before and think they have a medium attitude to risk.

Their goals were described as:

1. Ensure they have sufficient income in retirement
2. Provide financial security for their family in the event of death or illness
3. Ensure their mortgage is repaid before they retire
4. Make financial provision for their children’s future university education

The paper started, as is usually the case, with a fact-finding question for 12 marks.  Candidates had to state the additional information needed to advise them on Goal 1 – the retirement objective.  This was a great start, as our analysis tackled this question first with a full list of bullet points.

Next, for 10 marks, candidates had to explain the benefits of receiving advice from a financial adviser.  This question has been asked numerous times before, and there was a big clue in the case study to suggest this would be asked again.  The model answer to this question was in our generic section.

We then had the ‘recommend and justify’ questio – this time a protection product to cover Matthew and Linda should they die or become seriously ill.   As you would expect, we had this covered in full too.

The exam continued with the benefits of using salary sacrifice, which again has been asked before, so the model answer is covered in the generic section.

Similarly, the question on target date funds and lifestyling was also covered in full.   Junior ISAs made an appearance; main features were required and how they could be used for the children’s future. Our analysis included a table of pros and cons which covered main features.

The final question on Case Study 1 was around the benefits and drawbacks of their continuing to fund their ISAs to use as a mortgage repayment vehicle.  We had this covered too with, spookily, the exact number of advantages and disadvantages that the exam required!

The only thing we didn’t prepare for with Case 1 was the maximum tax-relievable pension contribution Matthew could make – which was for 7 marks.

Case Study 2

The second case study focused on Nigel and Mona, a married older couple.  Nigel had two non-dependent children from his first marriage.  Key facts from the case study were that Nigel earns £175,000 p.a. and Mona earns £17,000 p.a.  Nigel is a member of his employer’s DB pension scheme and intends to retire in March 2018.  Mona has a personal pension and recently opted out of her employer’s auto-enrolment scheme.  Mona’s mother, Agnes, recently moved into a nursing home.

Their financial aims were described as:

1. Minimise any potential liability to IHT
2. Maximise tax efficiency
3. Make financial provision for Agnes’s care arrangements
4. Ensure they have adequate income in retirement

The first question asked what the benefits are of Nigel being in his employer’s Sharesave scheme.  Our coverage of the scheme extended to the detail on how they work but, within this, candidates should have easily picked out 5 benefits to Nigel for the 5 marks on offer.

The paper then asked for 5 pros and 5 cons of Mona using drawdown rather than a lifetime annuity.  There were 10 marks on offer here, and although we had the client wrong, we did have information on Nigel transferring to a personal pension to take advantage of pension freedoms, so some marks would have been available here, but we didn’t cover lifetime annuities.

The exam proceeded with a question on deeds of variation, and we are pleased to say we included 8 bullet points on these and 8 marks were available.

Recommending actions they could take to minimise their IHT liability was covered with 10 bullet points towards the total of 12 marks on offer.   Similarly, the potential for State benefits for Agnes gave 6 marks, and these were covered in our analysis.

Onto the home stretch, and the ‘recommend and justify’ question for this couple was on how they could improve the tax position of their savings and investments.  We had 7 bullet points to help towards the total marks of 12.

Finally, the review question and candidates had to identify 7 issues that an adviser should discuss with the clients at the next annual review.  We covered this with 9 bullet points – some of which were specific to the circumstances, with others being generic.  There should be no excuse not to get maximum marks here!

There were two areas we missed on Case Study 2; private residence relief and the information needed to advise on the retention or surrender of their investment bond.  However, we are confident that candidates would have used their own knowledge and experience to pick up the majority of the marks on offer, but even if that wasn’t the case, a well-prepared candidate using our analysis should have comfortably achieved 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!

Over to You…

If you’re planning on sitting R06 in January, on what areas will you focus your revision?