The CII J11 October 2020 Exam in Review

The J11 exam (Wrap and Platform services) is the last exam paper we are going to review from October 2020 and the last time, in fact, that we will be reviewing J11; October was the last sitting of this unit, which has now been withdrawn.

Two hours were allowed for the sitting, made up of short-answer questions and two essay questions, carrying a total of 110 marks. Section A had 50 marks, and Section B had 60 marks.

The paper from October 2020 can be found here.

Section A

The first section was made up of six questions:

Question 1 asked for 10 features of a platform that would benefit an advised client with an income-producing investment portfolio, compared to investing directly in funds from different providers.

Question 2 asked for the FCA’s definition of a platform service and also the main regulatory permissions relevant to a platform provider.  The question gave 9 marks in total.

Question 3 was also in two parts: firstly, candidates had to identify the main investment risks to a client of using a platform and in (b), the ways in which the risks provided in the answer to part (a) can be reduced by an adviser. In total, the question gave 10 marks.

Question 4 asked for 3 benefits and 3 drawbacks to a firm of using more than one platform.

Question 5 asked for a brief description of the main stages of the re-registration process where a collective is being migrated between two different providers, and the fund is available on both provider’s platforms. This was for 7 marks.

Finally, Question 6 in this section gave candidates information regarding a company currently operating a workplace platform to fulfil auto-enrolment obligations. The company was considering expanding the functionality to include investment products. The question asked for 8 features that would benefit the employees in respect of investment planning.

Section B

Onto Section B, which comprised two case studies.

The first one, Question 7, introduced us to Andras, who had received a £75,000 inheritance and was considering using an adviser for the first time.

The questions were in four parts and were as follows:

1. The benefits and drawbacks of using a personal pension as a long-term investment vehicle for retirement planning compared to a stocks and shares ISA. This was for 8 marks.
2. The features of a platform that could help the firm when conducting its annual client review as part of its ongoing advice proposition. This was for 10 marks.
3. The main factors that an authorised advisory firm would consider when undertaking due diligence on potential third party DIM providers for use on a platform. This was for 6 marks.
4. The specific risks of using a DIM service on a platform and this was for 6 marks.

Question 8 introduced us to Rania, aged 66, who was about to retire.  Rania had no adviser, and her portfolio was administered on a D2C platform.

The questions were:

1. Legacy data and historical information that would be accessible via the platform’s transaction history function. This was for 9 marks.
2. The main risks to Rania of using the D2C platform’s tools as part of her retirement income planning. This was for 10 marks.
3. The reasons why a fund management group would offer retail and institutional share classes of the same fund on a platform. This was for 5 marks.
4. The costs and charges that Rania is likely to pay on her D2C platform; this last question was for 6 marks.

Once again, this paper seemed fair with a good mixture of application and advisory-based knowledge with some technical and regulatory information being tested too.

Comparison with the October 2019 Paper

Let’s compare this paper to the topics that were tested in the previous paper, which was in October 2019.

The paper can be found here:

• How platforms can support advisers delivering a centralised investment proposition
• Risks of being able to transact on an execution-only basis to the client and adviser
• Systems and controls a platform should have in place to prevent financial crime
• Disadvantages of using a third-party wrapper for an IFA using a platform
• The FSCS limits for collectives held in an ISA
• Benefits to employees of having a workplace ISA
• Main risks a platform would face after dealing with issues migrating technology
• Transaction charges that might be applicable on platforms
• Business risk of adopting a new platform and how it could be mitigated
• Pension withdrawal options and their tax treatment for clients
• Factors a firm should consider when moving pension clients, who are taking income, to a new platform
• Main areas typically covered in a platform’s terms and conditions
• Main areas to consider for due diligence on a potential new platform provider
• Ways in which a platform could help increase engagement with a new client group
• Benefits to a new client group of using a platform compared to directly held funds

So that is it for the J11 unit – the last paper!  We do hope that all candidates who sat it in October last year achieved a pass.