R06 | Exam Debrief | January 2022

R06 | Exam Debrief | January 2022
Primate looking into a car wing mirror with reflection with the words R06 exam debrief

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)
Young male and female dressed in business attire

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
Male and female in smart attire

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

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. 

What sort of feedback do BTS receive from the R06 candidates we have supported?

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