How the Wizard Learning AF5 Expected Solution compared with the CII Model Answer

How did we do?
Candidates are sent out a factfind on fictitious clients two weeks prior to the AF5 exam, which contains details of their personal and financial situation, but candidates are only given the client’s financial objectives on the day of the exam itself.

The exam paper goes on to set 8 tasks related to the client’s objectives.

Typically, clients will have between five and seven objectives, split between immediate and longer-term financial objectives.

Based on the information contained within the pre-released factfind, and on a comprehensive breakdown and analysis of what has appeared in past papers, professionals at Wizard Learning use their vast knowledge, experience and skills to predict what the client’s objectives are likely to be.

We then predict the content and style of the 8 tasks that are set, and provide model answers to those tasks, including any calculations that we believe may be expected.

This is an invaluable resource for students preparing for this examination, but ‘the proof of the pudding is in the eating’, so let’s look at how accurate our predictions were for the October 2012 AF5 exam.

First, let’s look at how well we predicted the clients’ objectives:
 

CII October 2012 AF5 Exam Wizard Learning Expected Solution
Immediate objectives Immediate objectives
Management of the monies in the discretionary trust Investment review of existing 'J D Gilbert Will Trust'
To provide financial security for the family in the event of Vanessa’s death or long-term illness To provide financial security for herself and her children in the event of illness or death
To purchase a property in Spain To purchase a holiday home in Spain
  To increase disposable income to meet her objectives
Longer-term objectives Longer-term objectives
To make provision for her children's university education in a tax efficient manner Make provision for the children's university costs
To provide adequate income in retirement Ensure that Vanessa has sufficient income in retirement
To mitigate Inheritance Tax due on her death, whilst maximising the value of the estate passed to her children Minimising the impact of IHT on her estate on death and passing the estate to her children

As you can see, the Wizard Learning successfully predicted all of the financial objectives, in both the immediate and longer-term categories.

The Wizard Learning Expected Solution actually predicted one additional immediate objective, that of ‘increasing her disposable income to meet her objectives’, so those candidates who purchased the Expected Solution prior to the exam would have been well prepared, and well on the way to success.

Now let’s look at how accurate our predictions were in respect of the 8 tasks.

Task 1
We predicted that this would be a fact-finding question, likely to be something like:

Identify additional information required for all objectives

We were right, although it appeared in the exam as Task 2, as follows:

Identify the additional information you would need to discuss with Vanessa in order to advise her on how to meet her

Immediate financial objectives;

Longer-term financial objectives.

Task 2
We predicted that Task 2 or Task 3 would be a risk-based question and, after analysing past papers in the context of this factfind, we predicted it would be something like:

Identify and describe briefly risk associated with…….. and their application to / taxation of….

We were right; Task 3 in the exam was as follows:

Vanessa would like to know more about the risks associated with investments. Excluding market risk, identify the relevant investment risks and describe how they apply to the following:

Cash held within the SDL Bank

The proposed purchase of a holiday home in Spain

Task 3
We predicted that Task 3 or Task 4 might ask the candidate to:

Comment on [one aspect of] their present situation, and identify any weaknesses in their arrangements.

We were right; Task 4 in the exam was as follows:

Vanessa is particularly concerned about the impact that long-term illness or death will have on the family’s situation.

Comment on the current situation and identify any weaknesses in Vanessa’s protection arrangements if she suffered a long-term illness or disability.

Comment on the current situation and identify any weaknesses in Vanessa’s financial arrangements if she died tomorrow.

Task 4
We predicted that there would be a task that asked the candidate to:

Describe the benefits (and perhaps the drawbacks), or the pros and cons of …….

We were right, although it appeared in the exam as Task 1, as follows:

Vanessa has asked you for further clarification on how she can pay for advice. Identify three benefits and three drawbacks for Vanessa for each of the remuneration strategies below:

Fund-based trail fees;

Time-based charging.

Tasks 5, 6 and 7
We predicted that there would be two tasks along the lines of:

Make a recommendation (detail and justify) in respect of….

We were right, in fact there were three:

Task 5 in the exam:
Vanessa has asked for your advice with regard to the ‘J D Gilbert Will Trust’ that was set up on John’s death.

List the principal duties and obligations of trustees.

Explain to Vanessa the Income Tax and Capital Gains Tax treatment of the assets currently held within the trust. No calculations are required.

Detail and justify the reasons why you would recommend placing trust assets into an investment bond for the purposes of tax efficiency and ease of administration.

Task 6 in the exam:
Detail and justify the recommendations you would make in respect of each of the following immediate financial objectives. No calculations are required.

To provide financial security for herself and her children in the event of illness.

To provide financial security for her children in the event of her death.

Task 7 in the exam:
Detail and justify the recommendations you would make in respect of each of the following longer-term financial objectives. No calculations are required.

To make provision for her children’s university education in a tax efficient manner.

To provide adequate income in retirement.

To mitigate Inheritance Tax on her death whilst maximising the value of the estate passed to her children.

Task 8
We predicted that this task could take one of a number of forms:

When should a review be conducted? OR

List the key events which should trigger a financial review OR

List the areas you would specifically address with the client at a review OR

Explain four elements that must be disclosed when explaining your remuneration.

And we were right again, this was Task 8:

When conducting your annual review, list eight areas that you would specifically address with Vanessa.

And finally, did we provide candidates who purchased our Wizard Learning AF5 Expected Solution with answers to these 8 tasks to ensure a pass?  Let’s see…..

Exam Task 1
This asked for benefits and drawbacks of both fund-based trail fees and time-based charging.

Questions of this nature are very hard to predict, and it would be impossible for us to provide lists of the benefits and drawbacks for every product/solution/course of action, or in this case, charging strategy.

However, under our guidance for Task 8 (on reviews) we did draw the candidates’ attention to the different charging strategies, and this would hopefully have prompted them to revisit the pros and cons of the various options. This task was worth 12 marks.

Exam Task 2
This question asked for the additional information you would need to advise the client on her immediate and longer-term financial objectives.  The Wizard Learning Expected Solution covered almost all of the points listed in the CII model answer. 

There were 28 marks available and it is likely that our solution would have scored around 25 or 26 out of 28. 

Exam Task 3
This asked for the risks associated with cash held at the bank and a proposed property purchase in Spain.

When compared with the CII model answer, the Wizard Learning Expected Solution would have scored all 10 marks for the risks associated with the property purchase, and all 8 of the marks available for the risk associated with keeping cash at the bank.  That’s 18 out of 18.

Exam Task 4
Candidates were asked to comment on the current situation and identify any weaknesses in Vanessa’s protection arrangements (death and long-term illness or disability).

While not matching the CII model answer exactly, the Wizard Learning Expected Solution provided enough points to have scored very highly, probably 16 or 17 out of 18, if not full marks.

Exam Task 5
This task asked candidates to list the duties and obligations of trustees, explain the income and capital gains tax treatment of the trust assets, and to detail and justify placing trust assets in an investment bond for tax efficiency and ease of administration.

Our Expected Solution identified 7 out of 8 of the duties and obligations of trustees listed in the CII model answer, plus two additional points not mentioned in the CII model answer, scoring either 7 or 8 out of 8 for this part of the task. 

We covered all but one point listed by the CII on the taxation treatment of trust assets, but provided additional alternative points, scoring 9 or 10 out of 10 for this section.

We did not predict the third part of the question, although the possibility of transferring trust assets to an investment bond was mentioned briefly in a section we included on ‘how the trust could be used to help Vanessa to achieve her financial objectives’. This hopefully prompting students to explore the issue further.

Exam Task 6
Students were asked to detail and justify recommendations in respect of providing financial security in the event or illness or death.

We predicted this question virtually word for word and the solution we provided, while not matching the CII model answer exactly, would have provided enough information for candidates to score 16 or 17 out of 18, if not full marks.

Exam Task 7
Recommendations were required for (a) provision for children’s university education in a tax efficient manner, (b) to provide adequate income in retirement, and (c) to mitigate IHT and maximise the estate passing to her children.

The Wizard Learning Expected Solution listed but one of the points made in the CII model answer in respect of tax efficient education funding, plus some additional points. Our solution was capable of scoring 10 out of 12 of the available marks, or even full marks. Furthermore, we provided ALL of the points listed in the CII model answer, and more, for sections (b) and (c), enough to score full marks.

Exam Task 8
Asked candidates to list 8 areas to address with Vanessa at the annual review – we listed double that number, featuring all of the points in the CII model answer for this task.  Full marks

Summary
So, if you want to give yourself the best possible chance of passing the AF5 exam, invest in the Wizard Learning Expected Solution for your exam sitting, and remember to give yourself enough time in the week prior to the exam to read and memorise the information we provide. It WILL be worth it.

AF5 Expected solution package
The Expected Solution is a detailed analysis by our panel of experts of the fact-find issued by the CII 2 weeks prior to the exam and includes:

  • A detailed analysis of the client’s situation
  • Identification of all financial needs
  • A list of the questions that we feel could be asked together with a detailed solution.

The Expected Solution will be available 7 days prior to the exam by way of a PDF link on your record, we will also email you as soon as it becomes available.

To help with your preparation immediate access to the following are also included:

  • Our R01 to R05 online multimedia courses
  • Our Expected Solution for the previous 2 AF5 exams
  • Two online mock exams designed by our training team to help you assess your technical knowledge and get experience in the technique needed to pass the exam.

Then select AF5 The Expected Solution Package