Our Post-Exam Review of the October 2018 CII R06 Exam

The CII have released the R06 exam paper from their October sitting, so it’s time to look at our pre-exam analysis and see how well we did.

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

Case Study 1

Case Study 1 focused on Tamir and Nahla, a married couple with two children.  Tamir was employed as a marketing director with a basic salary of £70,000.  Nahla was employed as a production manager and received a basic salary of £58,000.

Their financial aims were to:

• ensure that they have adequate financial protection arrangements
• put in place a suitable investment strategy to fund their retirement
• assist their children with deposits for their first homes

The paper usually starts with a fact-finding question, but this time round started with the process that should be followed when providing appropriate financial advice.  We had this information covered in our generic section.

The paper continued with two questions on mortgage protection; firstly the reasons why their existing policy was unsuitable and secondly candidates had to recommend and justify the actions that they could take to improve their existing mortgage protection arrangements.  Both questions gave a total of 19 marks, and we had covered both these areas in our analysis.

Next came two questions on their workplace pension schemes. For 10 marks, candidates had to identify the key reasons why their existing fund choices were likely to be suitable to meet their longer term objectives and for another 10 marks, state why they should consider increasing their contributions.  We covered Tamir’s fund in some detail, but with Nahla, we concentrated on why her chosen fund did not seem to fit her risk profile rather than why it might be suitable.  We did talk in the analysis about increasing their contributions but not specifically the reasons why they should; although, we feel that most candidates would have been able to offer a good answer to this question from their own knowledge and experience.

We then had a question around the income protection policy. 10 marks were available to identify the key information needed to assess its suitability for Tamir.  We did cover this question in our analysis, and we also covered protection products in our generic section, so all the key facts were provided to answer this question.

The final question on Case Study 1 was around saving for house deposits for the children – firstly, using Tamir’s unit trusts to provide tax efficient lump sums and the second part of the question asked for the key drawbacks for Nadim of using a LISA to save for his own house deposit.  We did cover Tamir using his unit trusts for this purpose, and we also included information on LISAs so again this question should not have caused too many issues.

Case Study 2

So, how did we do with Case Study 2?

This one focused on Rick and Sarah; both had been married before. Sarah was in the process of finalising her divorce, and Rick had been widowed 5 years earlier.  Rick had one son, and Sarah had no children.

Their financial aims were to:

• generate a sustainable retirement income
• preserve capital for their intended beneficiaries
• minimise their potential liability to IHT
• improve the suitability and tax-efficiency of their current pensions and investments

This part of the exam did start with the usual fact-finding question. This time, it was on Rick’s defined benefit scheme, which we had fully covered in our generic section.

The second question was for 20 marks split into two questions: (i) asked candidates to outline the key factors that a financial adviser should consider when recommending a suitable strategy for savings and investments as part of their retirement planning, and part (ii) asked students to comment on the suitability of their continuing to hold their fixed-interest investments.  We covered the first part of this question in our analysis, and although we had identified they were overly exposed to this asset class, we didn’t specifically cover part (ii).

The third question was on the pros and cons of Sarah using a pension sharing order rather than an earmarking order, and this was also for 10 marks . We had covered Sarah’s options in full, including the consequences of each method, so this question should have caused no problems.

The buy-to-let property was then tested, specifically on how the rental income and any sale proceeds would be taxed, and both of these areas were also covered in full.

Next came another recommend-and-justify question. Students had to recommend and justify the actions that could be taken to immediately reduce their IHT liability.  We did include information on the steps they could take, but not all of them would have had an immediate effect such as considering AIM or EIS shares.

Next for 12 marks, candidates had to state 6 advantages and 6 disadvantages of Sarah’s using FAD rather than an annuity to arrange her retirement income.  This, we had covered in full, providing the information in table format for ease of studying.

All in all, it was a reasonable paper with only a couple of areas we hadn’t covered specifically.  However the rest of the questions were covered by our analysis, so we are confident that anyone who used this in their preparations would have 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!