R06 | Exam Debrief | January 2022

Reflecting on the January 2022 R06 Exam Paper

The results from the January CII R06 sitting are due to be released on the 4th March, a little over five weeks after the exam sitting. Whilst we wait for the results, and the detailed CII examiner’s report, the technical team at BTS have already started to look over the questions that came up on the paper. Reflecting on our analysis of the case studies and the questions that appeared on the paper on the day is a key part of how we keep our support as relevant and exam-standard as possible. So, after all the analysing BTS carried out, what was the exam paper like on the day?

The paper was the usual mix of questions and areas we had predicted and built into our analysis. Let’s take another look at the January case studies, the technical areas predicted within them, and the questions asked on the R06 exam paper.

Case Study 1 - Vidas and Viktoria

Possible technical areas BTS recommended candidates revised:

Workplace pension schemes
Target date fund; mechanics / pros and cons of using one
Loss of personal allowance for Vidas; what can he do to regain this
Benefits of making additional pension contributions / salary sacrifice for Vidas
Income protection insurance / CIC / FIB mechanics and comparisons
State benefits for long-term illness
Mechanics of Statutory Maternity Pay
Mechanics of Statutory Sick Pay
Lifetime and Junior ISAs
JISAs v ISAs
Concept of present value / future value calculations
Factors affecting saving for university fees
Collective investment schemes
Multi-asset funds
Using a financial adviser: the process, benefits and risks
Mechanics of an index tracker fund
Benefits and risks of using individual equities as a savings strategy
IHT position of £20,000 loan or gift from Vidas’s parents
The process of house buying and mortgage completion
Capital repayment mortgage
- mechanics, benefits, and drawbacks
Interest-only mortgage
- mechanics, benefits, and drawbacks
House purchase expenses (including Stamp Duty Land tax rules)
Laws of intestacy
Benefits and risk of not having a will
Benefits of getting married
Attitude to risk, tolerance of risk and capacity for loss (They have a medium to high ATR but low reserves)

Questions that came up for CS1 Vidas and Viktoria included:

Additional information required before advising on the suitability of their pension arrangements (12) – not covered specifically but lots of this style of question in the BTS analysis
The benefits of receiving ongoing financial advice (12) – covered
Explain how LISAs work (10) – covered
5 benefits and 5 drawbacks of using JISAs for their children’s education – covered
Key factors to take into account before advising on protection needs (10) – covered
What should be included on a loan agreement (8) – covered
Benefits of using a multi-asset fund (5)- covered
Recommend and justify advice to improve the tax efficiency of the couple’s savings and investments – covered

Case Study 2 – Tom and Clare

Possible technical areas BTS recommended candidates revised:

Pros and cons of using ISAs to repay mortgage
Workplace pension schemes
Benefits of making additional pension contributions
Use of salary sacrifice
Use of carry forward
UK managed fund / money market fund; mechanics / pros and cons of each
Secured v unsecured borrowing
Pros and cons of paying off unsecured debt at 0% interest
Benefits / drawbacks of repaying the couple’s £70,000 mortgage
Options available to Clare as nominee on her father’s pension (lump sum or pension)
Responsibilities of a trustee
Discounted gift trusts
- Concept
- Taxation considerations for the gifted element and discount element
- Implications of father’s death 2 years after establishing
- Options available to trustees of discretionary trust
- Taxation of chargeable gains if bond is surrendered and distributed
- Benefits of assignment of bond segments
Wills
- process of setting up a valid will
- benefits of having a valid will
- laws of intestacy
Use of tax allowances and exemptions for a married couple with different tax rates
Use of tax allowances and how they can be wasted if all assets held in ISAs
Cash flow modelling
Discretionary and advisory fund management
Attitude to risk, tolerance of risk and capacity for loss (Matching investments to ATR TOR and CFL)
Mechanics of a money market fund / Sterling high yield bond fund
Risks associated with all fund choices

Questions that came up for CS2 Tom and Clare included:

Identify the factors to be taken into account before utilising pension fund and cash from Clare’s inheritance (12) – covered
Identify the issues to consider in relation to the IHT position of the inherited DGT from Clare’s father (13) – not directly covered but lots on this DGT and how it works covered
Recommend and justify advice in relation to Clare’s inherited pension fund (8) – not directly covered
Explain key reasons why the couples pension savings and ISA are not suitable for their long term objectives (12) – sort of covered / in a comment on question
Explain reason why to retain Clare’s credit card debt for the next 12 months (8) – covered in a pros and cons question
State the benefits of investing Clare’s inheritance in pensions and ISAs (13) covered
Identify 8 issues in relation to the couple’s investments you should review in the next annual review (8) – covered

BTS R06 Study Toolkit

An R06 pass requires three things:

Good base knowledge from R01 through to R05.
The right question answering techniques honed to perfection.
A thorough analysis of the two exam case studies.

If one of these elements goes awry, then a candidate is likely to have to resit the R06 exam. To help you to build your R06 study plan, again we have put together a range of study and training options in our BTS R06 Study Toolkit.