Our Post-Exam Review of the September 2023 CII AF5 Exam
Our Post-Exam Review of the September 2023 CII AF5 Exam
The CII has now released the exam guide for the September sitting of AF5 so we can see how we did in our pre-exam analysis.
This article is correct as at 28 November 2023.
If you haven’t already seen the exam guide for September, you can access it here.
This time, the fact-find, released two weeks prior to the exam, concerned Alex, a recent widower, aged 60 in need of financial assistance to review his financial affairs following the sudden death of his wife.
The objectives, given on exam day, were as follows:
Immediate objectives
- To arrange the transfer of Tanya’s financial arrangements to Alex.
- To consider the affordability of Alex reducing his working hours.
- To claim any available State Benefits to assist Alex following Tanya’s death.
Longer-term objectives
- To arrange a suitable investment strategy for Alex’s financial assets, including the inherited funds.
- To put in place suitable arrangements to protect his children in the event of Alex’s death or serious illness.
- To improve the overall tax-efficiency of Alex’s financial arrangements.
| 1. | (a) Identify the additional information that you would require in order to advise Alex on the suitability of his financial arrangements following the loss of his wife. | We supply fact-finding model answers to most of our objectives within the analysis and so this was fully covered. |
| (b) Outline the key requirements that a financial adviser must meet when working with Alex, due to his current vulnerable status. | The requirements for working with a vulnerable customer were covered including examples of good practice. |
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| 2. | (a) Identify the key reasons why Alex’s affordability and capacity for loss may have changed following Tanya’s death. | Our analysis included a self-test question specific to Alex’s attitude to risk following Tanya’s death. Most of these model answers could have been used to answer this question relating to capacity for loss. |
| (b) State why Alex can claim Bereavement Support Payment following Tanya’s death and outline the potential level of benefits which may be available to him. | We included a question on why Alex could be entitled to Bereavement Support Payment. |
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| 3. | (a) Describe in detail the process that Alex should follow and the conditions that must be met to maintain the tax-efficiency of Tanya’s Stocks & Shares ISA. | We included a question on the process of transferring Tanya’s ISA to Alex’s name. These model answers would have picked up the majority of marks on offer here. |
| (b) Recommend and justify how Alex can improve the tax-efficiency of his current financial position, following Tanya’s death. | Analysis was provided in various sections on improving the tax-efficiency of Alex’s financial position including; registering APS on ISA, uses of tax allowances, increasing pension contributions and retaining Tanya’s pension fund. |
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| 4. | (a) Explain in detail the options available to Alex in respect of Tanya’s workplace pension scheme following her death. | We had included a question to ‘Outline to Alex the process for designating Tanya’s workplace pension funds into his name and explain the options available and tax implications of each of these options.’ The model answers would have enabled candidates to answer this exam question in full. |
| (b) Explain the actions that Alex should take in respect of his existing Will, nominations and Powers of Attorney. | Our question ‘Comment on the current situation of Alex’s will and power of attorney.’ Provided model answers which set out the key actions Alex should take. |
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| 5. | (a) Recommend and justify a suitable and tax-efficient trust arrangement that Alex could set up in his Will to protect his children in the event of his death before they reach age 18. | This was covered in full in our ‘Recommend and Justify’ question on why Alex should set up a Bereaved Minors trust in his will. |
| (b) Explain to Alex why he may wish to set up a Critical Illness policy and how this could provide suitable protection for himself and the children in the event of a serious illness. | In our analysis of Alex’s current financial protection arrangements, we had identified critical illness as a shortfall and recommended a level term with critical illness policy. The model answers in these questions could have been adapted to answer this exam question. |
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| 6. | (a) Identify the key financial issues that Alex should consider when deciding if he will reduce his future working hours. | Our question ‘Explain to Alex the financial implications should he reduce his hours.’ covered all the key points. |
| (b) Outline the financial planning considerations that Alex should consider in setting up an appropriate investment strategy for Tanya’s Death-in-Service payment. | Whilst we had not specifically covered this question, we had looked at the implications of various options for investing the DIS payment. Some of these points could have been used to answer this question. |
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| 7. | (a) Explain to Alex why the existing range of pension and investment funds may not be suitable for his current financial needs. | Alex’s pension funds were analysed in detail in the analysis. |
| (b) Explain in detail how Tanya’s pension and investment holdings will be transferred to Alex and how they will be treated for tax purposes following her death. | Our self-test question ‘Explain to Alex the tax position of all Tanya’s assets and death in service benefits on her death and whilst the estate is being settled.’ Would have enabled candidates to pick up the majority of marks on offer here. |
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| 8. | (a) State the reasons why Alex should review his protection arrangements as a matter of urgency following Tanya’s death. | A specific review question on protection was included within the analysis. |
| (b) Identify six key issues that you would discuss with Alex regarding the transfer of Tanya’s assets at the next meeting. | We had included a number of questions relating to future reviews which could have been used to help answer this specific question. |
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A Post-Exam Review of the September 2023 #CII #AF5 Exam. Share on X
Overall this exam sitting did seem fair. All the subjects that were tested were well highlighted in the fact-find. Candidates just had to be careful they were adapting their answers to ensure they were answering the question being asked rather than the question they were hoping would be asked!
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