Tag Archives: cii exams

R06 exam february 2021

R06: February 2021

The case studies for the CII R06 February 2021 exam are now available. If you haven’t yet seen these, click here.

What do I do now?

The exam is on the 3rd February. The case studies are issued in advance of the exam for a reason – to let you to prepare for the exam. So if you have a limited knowledge of ethical investments and ESG, for example, then now is the time to work on this.

The exam will test across a range of different aspects of financial planning that are based on two client case studies. You will not know the actual questions you will face until the exam day but it makes sense to prepare for any eventuality before then.

What areas should I focus on in the CII’s R06 February 2021 exam?

Based on the case studies, you should be prepared to answer questions on the following topics in the CII’s R06 February 2021 exam:

Case Study 1: Andrew and Carrie

• Fact finding about their mortgage plans
• Identifying protection shortfalls and/or
• Life cover and income protection, e.g. recommend and justify a solution for their needs, comment of their current protection arrangements, arranging life to cover the mortgage and family needs
• ESG and ethical investments, e.g. examples of ethical investments, positive and negative screening, dark green and light green funds
• Aspects of the process that apply to all clients, e.g.: the benefits of receiving advice from a financial adviser, what the process would look like when offering them advice on their investments, advantages/disadvantages of different forms of adviser charging

Case Study 2: Dylan and Susan

• Fact find on retirement income and/ or inheritance planning (there is lots of information that we haven’t been given in the case study). e.g. when they plan to retire and how much of a gain is there on Susan’s OEIC?
• Pension death benefits: tax position and options
• Eligibility for state pensions/BR19/ state pension age
• Pension income options: the advantages and drawbacks of lifetime annuities, FAD or UFPLS
• Advantages of Dylan making higher pension contributions / using carry forward
• Potential salary sacrifice arrangement for Susan – how do they work and advantages/drawbacks to such an approach
• IHT calculation
• Describe Dylan’s tax position if he encashes the investment bond
• Inheritance tax planning: outright gifts, writing assets under trust; loan plans, discount gift schemes
• EIS or SEIS schemes: tax treatment
• Protecting their IHT liability using life policies and trusts

How does the CII’s R06 February 2021 exam compare with previous R06 exams?

There are some familiar themes. Case study 1 is a relatively young couple with a family whilst case study 2 is a ‘retirement’ or ‘pre-retirement’ scenario. Both of these are very familiar themes in R06.  Of the two, case study 2 is likely to be the most technically demanding. Having said this, remember that this is a level 4 ‘planning’ exam so it’s no just about the technical bits. And if a question is asked on a technical area, the technical knowledge needed to answer it shouldn’t be particularly ‘heavy’.

Prepare for questions such as the benefits of using a financial adviser (case study 1) and the ever present ‘review’ question (probably case study 2).

In a R06 exam, most of the questions will typically be based on the client’s stated financial objectives. Usually there are 6 to 8 of these spread across the two case studies. This time there are only 6 which is on the low side. This means there may be more than one question against each of the clients financial objectives and/or the examiners will test some generic areas. For example, the benefits of using an adviser, the stages of the advice process or pro’s and con’s of different methods of adviser charging. These apply to any client so there aren’t any clues in the case study that they are coming.

What do I need to do to pass the CII’s R06 February 2021 exam?

  1. Familiarise yourself with the clients’ circumstances. If you are provided with information, you will be expected to use it in some way. You should be able to apply your knowledge to their circumstances – generic answers will not usually score well.
  2. Revise and read around the technical aspects. Google is a good place to start, the CII R06 study text or use our useful R06 talking book.
  3. Be familiar with the technique and style of answers the CII will want. This is NOT just about applying your day job to an exam paper. Click here for a FREE copy of the last R06 exam to see what a past paper looks like. Pay particular attention to the style of questions and model answers provided.

How we can help

If you want to know the types of question that have been asked previously in R06, it’s not to late to download our R06 talking book. If you do, just listen the the financial objectives that link in with this specific exam to hear the types of question and answers based on previous R06 exams. Click here for full details.

And/or

Download our FREE 7 minute podcasts that look at R06 exam technique. Most people who fail R06 will do so by less than 5 marks – make sure you aren’t one of them.

Prepare well and be successful.

Ian Patterson

Ex-examiner and author of the CII’s study texts for CF8, J07 and AF6

R03 exam

R03 exam: how to pass

The CII’s R03 exam, Personal Taxation, has the second lowest pass rate for the core R0 exams. Figures show that R03 has a pass rate of 65%. And do you know what, it will probably feel tough.

The CII R03 exam has 50 questions, and you have 1 hour to complete it. 28 questions are single-response questions that only need one answer. 11 of the 50 are pesky multiple-response question that require more than one answer. These are much harder to answer.

Here are 10 tips to make sure you pass the exam first time – or at least make it more likely!

  1. Put in the hard yards. The CII recommend around 60 hours of study and most people will, unfortunately, need this and perhaps more. Why? Because R03 covers all the main aspects of UK taxation – income tax, capital gains tax and inheritance tax. It also includes the taxation of investments. But it also includes national insurance and VAT and these are likely to be unfamiliar territory for most people.
  2. Work smarter, not harder. It’s not just about how much study you do, but it’s also about the quality of your study. Most people learn best by ‘doing stuff’, rather than just reading (which is passive). For example, use highlighter pens, write summary notes and use the CII online RevisionMate practice questions. You might also use our audio material so that you can learn on the go. Click here for details.
  3. Focus on chapters 9, 10 and 11 of the CII R03 study text.  The CII R03 study text follows the sequence of the syllabus. The questions are not allocated equally across each chapter in the study text so if time is short, why wouldn’t you focus on the chapters that are most heavily examined? These three chapters not only account for all of the tricky multiple response questions (which will require a greater level of understanding), but also half the overall questions in the R03 exam.  Click here to see the R03 exam syllabus.
  4. Focus on the content you don’t know. Most people will be familiar with some elements of the content. As few people read the study text from cover to cover, focus your reading on the bits you are unfamiliar with. Why? The fact is that some knowledge goes a long way. Even if you don’t know the answer to a question, a little knowledge will help you to eliminate one or more of the incorrect answers. This leads me on to the next tip.
  5. Guess! Questions in R03 are marked positively so if you guess and get it wrong, you don’t lose anything. If you get it right then, bingo, one mark closer to the pass mark. Use a process of elimination to reduce the likely number of options but if in doubt, guess. Never leave a question unanswered.
  6. When studying, don’t get bogged down in lengthy complex calculations. A lack of time in the exam will probably be your biggest challenge with R03. That’s the bad news. You have just over a minute to answer each question. So the good news is that the CII can’t expect you to do long complicated calculations because you won’t have time. As a result, when revising, don’t seek out the most complex scenarios because they can’t test you on them.
  7. Practice, practice, practice. There really is no substitute for answering R03 practice questions. Start using these early on in your preparation. Most people learn from their mistakes – so make lots of them during your prep so you don’t make them in the exam.  Don’t leave practice questions until just before you sit the R03 exam.
  8. Complete the R03 CII exam guide at least twice. As I said earlier, time pressure is the biggest issue for many people. Do your practice runs under exam condition so you get a feel about what it’ll be like in the exam. You also get familiar with the tax tables and the information they provide in the exam for you (which you don’t need to remember). The CII exam guide is the best guide there is as to what your actual exam will look like. Click here to access this.
  9. Read the exam questions twice. Trust me, if the question gives you information, you’ll need to use it somehow. The CII doesn’t give information to just ‘pad out’ a question. So read the question twice and ask yourself: ‘how do they expect me to use this information?’.
  10. Take a calculator into the exam. Around 10-15 questions in a typical exam will need a calculator. Whilst many of these are straightforward, you’d be surprised how many people turn up on our workshops and can’t use a calculator. So practice beforehand and make sure you are familiar with your calculator.

R03 exam resources:

Click here for our FREE practice questions

Be prepared. Good preparation leads to success. If you want to know how you can learn on the go and fit it in around everything else, click here for details.

Until the next time.

Ian Patterson

Ex-examiner and author of the CII study texts for CF8, J07 and AF6

R05

CII R05 exam: FREE practice questions

Are you revising for the CII’s R05 exam? Know someone who is? Want to test your R05 knowledge? Then read on…..!

We’ve put together 10 multiple choice questions for you as a taster of what you can expect in the R05 exam. This exam has a pass rate of 79% which makes it the easiest CII R0 exam.

That said, you should still expect to be tested on areas such as state benefits, general insurance products such as PMI, long term care and business assurance so just about everyone will still need to brush-up on the more unfamiliar elements of the syllabus.

Click here for the CII R05 exam syllabus. Be aware. The number of questions you will get in the exam are NOT spread equally across the syllabus.

We’ve helped over 6,000 people prepare for the CII R0 exams over the past 12 months. We don’t sell multiple choice questions but we are here to help as much as we can with your R05 exam.

Now, onto the practice questions. See how well you do on these. You’ll find the answers at the end of the post.

R05 questions

All figures are based on the 2020/21 tax year.

1. John is worried about providing an income for his family if he is unable to work through accident or sickness over the long term. Which protection policy would be MOST suitable?

A. Personal accident and sickness

B. Accident, sickness and unemployment cover

C. Critical illness

D. Income protection insurance

2. Usef, age 68, recently had a stroke and he now needs supervision. Which state benefit will he qualify for as a result?

A. Attendance allowance

B. Personal independence payment

C. Carers’ allowance

D. Disability living allowance

3. A couple want to arrange life cover to meet an inheritance tax liability whilst keeping costs to a minimum. If they write the policy under a suitable trust, the BEST way of arranging the whole of life policy is:

A. as two single life of another policies

B. on a joint life first death

C. on a joint life second death

D. as two single life policies

4. What tax is paid on the proceeds of an offshore life policy on someone who is a UK resident when it is surrendered?

A. Income tax is paid on the full surrender value

B. Income tax is paid on the amount the value exceeds the premium(s) paid

C. CGT on the full surrender value

D. CGT on the amount the value exceeds the premium(s) paid

5. Ami has just received a £1/2 million lifetime transfer from her father. What type of life policy would be MOST suitable to pay the potential inheritance tax liability?

A. Whole of life

B. Level term

C. Decreasing term

D. Gift inter vivos

6.  Here is a description of a benefit provided by an income protection insurance policy: ‘this benefit is paid if someone is unable to return to their previous work, but can undertake some lower paid work elsewhere.’  What is the name of this benefit?

A. Proportionate benefit

B. Recurrence benefit

C. Rehabilitation benefit

D. Waiver of premium benefit

7. The typical survival period on a critical illness policy is:

A. 4 days

B. 28 days

C. 6 months

D. 12 months

8. Mo is concerned about the care and medical treatment he will receive if he loses mental capacity.  His current health is deteriorating, but he still has capacity. What type of new arrangement, if any, would be suitable?

A. Power of attorney

B. Enduring power of attorney    

C. Lasting power of attorney

D. None. His deteriorating health means that it is too late to make any arrangement

9.  Mavis is seeking funding from her local authority towards the cost of her long term care.  Her total income is £200 per week and she has assets of £20,000.  What would the local authority assess her weekly income as being (before the personal expenses allowance is deducted)?

A. £200

B. £212

C. £223

D. £224 

10. With partnership protection, which legal arrangement would NOT normally qualify for IHT business relief?

A. Automatic accrual

B. Buy and sell

C. Cross-option agreement

D. shareholder trust

R05 Resources

Here are some other tips and information that you might find useful:

Click here for tips on how to approach the R05 exam

Preparation tips and exam technique for R05. Click here

Answers: 1: D; 2: A; 3: C; 4: B; 5: D; 6: A; 7: B; 8: C; 9: C; 10: B.

Remember, good preparation is the key. Hope that you found this useful. Until the next time

Ian Patterson

Author of the current CF8, J07, and AF6 CII study texts and ex-examiner

CII R04 exam

CII R04 exam: Free practice questions

Are you revising for the CII’s R04 exam? Know someone who is? Want to test your R04 knowledge? Then read on…..!

We’ve put together 10 multiple choice questions for you as a taster of what you can expect in the R04 exam. This exam is the hardest main R0 exam with a pass rate of just 61%.

Click for the CII R04 exam syllabus. This shows the distribution of questions throughout the R04 exam and where those pesky multiple-response questions are.

We’ve helped over 6,000 people prepare for the CII R0 exams over the past 12 months. We don’t sell multiple choice questions but we are here to help as much as we can with your R04 exam.

What we do offer is unique R04 MP3 audio material, written by the authors of the CII study text. This provides over 5 hours of dedicated R04 material that enables you to fit your study around your business and social life – not the other way around.  Click here for further details.

Now, onto these practice questions. See how well you do on these R04 exam style questions. You’ll find the answers at the end.

R04 questions

All figures are based on the 2020/21 tax year.

Questions 1 to 6 inclusive have only one correct answer.

1. Susan reached her State pension age in 2015.  She started working in 1977, was never contracted out and was always employed. What earnings related State pensions, if any, does Susan receive?

A. None, she didn’t qualify for earnings related pensions

B. S2P only

C. SERPS and S2P only

D. State graduated pension, SERPS and S2P

2. Jamie, who is 46, has earnings of £40,000 after taking into account all allowances.   His employer wants to pay a pension contribution of £90,000 into a pension on his behalf in the current tax year. No other contributions have been paid and he has no unused annual allowance to carry forward.  How much will the annual allowance charge be and who will be responsible for paying it?

A. £10,000 payable by Jamie

B. £10,000 payable by Jamie’s employer

C. £20,000 payable by Jamie

D. £20,000 payable by Jamie’s employer

3. An individual had benefits valued at £2.1 million on 5 April 2006 and applied for primary protection.  What will their primary protection factor be?

A. 28.6%

B. 40%

C. 60%

D. 71.4%

4. Which employee would be an eligible jobholder?

A. Amy, who is age 32 and who has a salary of £19,000

B. Pradeev, who is age 62 and has a salary of £9,000

C. Brian, who is age 18 and who has worked for them for 6 months

D. Laura, who is age 66 and has a salary of £17,000

5. Harry left his company’s defined benefit scheme after completing 18 months of service and he has elected to take a return of his personal contributions.  If the gross refund is £32,000, how much will Harry receive?

A. £16,000

B. £22,000

C. £25,600

D. £32,000

6. How, if at all, will any protected payment increase between the calculation of the starting amount and the date an individual reaches their State pension age?

A. It will not increase

B. It will increase in line with the national average earnings index

C. It will increase in line with the triple lock guarantee

D. It will increase in line with the consumer prices index

The remaining questions – 7 to 10 – have more than one correct answer.

7. Jane was a member of an occupational money purchase scheme for 8 months before she left the scheme last July. What options MUST the scheme offer her?

A. Refund of her contributions

B. Preserved benefit

C. The scheme does not have to offer any preserved benefits

D. A transfer value

8. What are considered to be potential advantages of taking an income via a flexi-access drawdown?

A. Guaranteed level of income

B. Funds remain invested and have the potential to achieve capital growth

C. The member can adjust the income levels to help manage their income tax liability

D. Income is paid tax-free to the member

E. The full tax free cash lump sum can be taken at commencement

9. Sunil is writing a suitability report having recommended a drawdown arrangement to a client. What risk warnings must he include to meet the FCA COBS requirements?

A. The levels of income provided may not be sustainable

B. Annuity or scheme pension rates may be at a worse level in the future

C. Regular reviews must be undertaken

D. There may be tax implications

E. Drawdown pensions are complex and so advice must be taken

10Liam has a SIPP with a current fund value of £350,000.  It holds a commercial property and it borrowed £50,000 to finance this purchase three years ago. If Liam would like to use the SIPP to buy a further residential flat, commercial property and some shares in his own limited company, the SIPP:

A. could borrow a further £150,000 if necessary towards the purchase of a second commercial property

B. is able to purchase the flats

C. can purchase shares in Liam’s limited company

D. scheme administrator will be subject to an unauthorised member payments charge of 40% of the value of the prohibited asset if it invests in taxable property

E. scheme administrator will become liable to the scheme sanction charge of 15% of the value of the prohibited asset if the SIPP invests in taxable property

R04 Resources

Here are some other tips and information you might find useful:

CII R04 exam: the 5 myths. Click here

Five top tips for R0 exam success – part 1. Click here

Five top tips for R0 exam success – part 2. Click here

Answers: 1: C; 2: C; 3: B; 4: A; 5: B; 6: D; 7: B and D; 8: B, C and D; 9: A, B and D; 10: C and E.

Remember, good preparation is the key. If you want to know how to learn on the go, then click here. Hope that you found this useful. Until the next time

Ian Patterson

Author of the current CF8, J07, and AF6 CII study texts and ex-examiner

r02

R02 exam: FREE practice questions

Are you revising for the CII’s R02 exam? Know someone who is? Nothing better to do and want to test your R02 knowledge? Then read on…..!

We’ve put together 10 single-response multiple choice questions for you as a taster of what you can expect in the R02 exam. With this exam, your main challenge isn’t completing it in the time allowed (like R03). It’s more about understanding a very wide range of investments solutions – some of which, you probably won’t have come across before.

We’ve helped over 6,000 people prepare for the CII R0 exams over the past 12 months. We don’t sell multiple choice questions but we are here to help as much as we can with your R02 exam.

What we do offer is unique R02 MP3 audio material. This provides around 4 hours of dedicated material that enables you to fit your study around your business and social life – not the other way around.  Click here for further details.

Now, onto the practice questions. These are based on the 2020/21 tax year. See how well you do on these R02 exam style questions. You’ll find the answers at the end.

Here goes……..

1. In a period when interest rates have fallen substantially, the nominal value of a conventional fixed interest security at maturity will:

A. increase significantly.

B. decrease significantly.

C. remain constant.

D. increase in line with inflation.

2. A government can use fiscal measures to address declining GDP by:

A. reducing the Bank of England’s target inflation rate.

B. increasing the rate of Value Added Tax.

C. reducing the level of gilt issues.

D. reducing the burden of Corporation Tax.

3. A financial adviser has recommended collective investments which are negatively correlated to each other. This will ensure that they:

A. are capable of generating income and growth.

B. have a degree of diversification.

C. have a combined beta of 0.

D. have an alpha with a negative value.

4. Portfolio X consists of blue chip ordinary shares and portfolio Y consists of unlisted shares. What type of risk is likely to be significantly higher for portfolio Y when compared to portfolio X?

A. Market risk.

B. Event risk.

C. Inflation risk.

D. Liquidity risk.

5. If a client has a collective investment where the share price is currently at a significant discount to the net asset value, what type of investment is it?

A. Investment trust.

B. OEIC.

C. Exchange Traded Fund.

D. Unit trust.

6. Alicia has fully surrendered an onshore single premium investment bond with a chargeable gain of £20,000 after 5 years. If she has no other savings income and her income after reliefs and allowances is £36,000, she should be aware that:

A. the full gain would be subject to 20% income tax.

B. the full gain would be subject to an additional 25% income tax.

C. she would have a personal savings allowance of £1,000.

D. she would have a personal savings allowance of £500.

7. A client who invests in a new issue of VCT shares would benefit from its tax treatment because:

A. the proceeds on death will be free of inheritance tax.

B. income tax relief is available at 30% up to a maximum of £200,000 per tax year.

C. shares must only be kept for three years to benefit from income tax relief.

D. an investor can potentially carry back income tax relief to the previous tax year.

8. Neil has agreed to have his portfolio managed on a passive basis. This means that he:

A. believes active fund managers will consistently outperform the benchmark index.

B. believes active fund managers will consistently underperform the benchmark index.

C. has increased his risk profile.

D. has reduced his risk profile.

9. What is the running yield on a corporate bond that has a clean price of £114, a par value of £100 and pays 5.2% income?

A. 4.56%.

B. 5.2%.

C. 7.85%.

D. 8.6%.

10. When agreeing the benchmark for an investment portfolio with a client, what is it always important to do?

A. Select the lowest risk benchmark from the available choices.

B. Use one constructed using Modern Portfolio Theory.

C. Use one that matches the mix of assets in the portfolio.

D. Select a benchmark that is positively correlated with the portfolio’s underlying assets.

R02 Resources

Here are some other tips and information you might find useful:

CII R02 exam: the 5 myths. Click here

How to pass R02. Click here

Answers: 1: C; 2: D; 3: B; 4: D; 5: A; 6: D; 7: B; 8: B; 9: A; 10: C.

Remember, good preparation is the key. Hope that you found this useful. Until the next time

Ian Patterson

Author of the current CF8, J07, and AF6 CII study texts and ex-examiner

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