CHARTERED INSTITUTE FOR

SECURITIES & INVESTMENT

SAMPLE PAPER

Financial Planning & Advice

TIME ALLOWED: 2 Hours 30 Minutes

No copying of any part of this paper is permitted without the prior written
authority of the Chartered Institute for Securities & Investment

© Chartered Institute for Securities & Investment

S001 Financial Planning & Advice
S001 Financial Planning & Advice

How to use this sample paper

These 80 questions should be answered in two hours and 30 minutes in the real
exam, so make sure you time yourself accurately.
Record your answer for each question by circling your selected answer(s).
When you have finished the test, you may check your answers against the Answer
Sheet at the back of this paper.
The exam is scored as follows:
56-80 Pass
48-55 Marginal Fail
0-47 Fail

For those questions you answered incorrectly, the answer sheet will show you the
corresponding learning objective number against which the questions were written,
so you can identify any syllabus areas where you may need to revise further.

Exhibits
During the real exam, certain questions will have an exhibit linked to the question.
The exhibits will contain information on tax rates and allowances. The exhibits will
appear as a box at the bottom of the question screen during the real exam and
therefore appear at the end of the question in this sample exam.
The reference to the exhibit in this sample exam will refer you to a certain exhibit in
the Exhibits paper.

To complete this sample exam please ensure you have also downloaded the
Exhibits paper.

Calculator
Candidates sitting the real exam will be provided with a non-programmable, financial
calculator (Hewlett Packard 10BII Financial Calculator) at exam venues in the UK.
You are strongly advised to ensure that you are comfortable with the functionality of
this calculator prior to your examination.
S001 Financial Planning & Advice

1 A client, Lucy, has just called with a query. During the conversation, she told
you that she has just changed job and her salary has increased by 20%. What
should you do?

A Tell her you will make a note on her file for her next review
B Recommend that an interim review is held as soon as possible
C Tell her you will update her financial plan and send it to her
D Recommend that she does nothing now, but should bring this up at her
next review

2 A financial adviser has made a recommendation to Clark for a unit trust. When
must the suitability report be sent to Clark?

A As soon as possible after the contract is executed

B Before the contract is concluded
C Within 7 days after the contract is concluded
D Within 14 days after the contract is concluded

3 A financial adviser is dealing with a client using the Financial Planning

Standards Board's six stage process. What is the final stage in the process?

A Reviewing progress and modifying the plan as necessary

B Implementing the financial plan
C Producing a written financial plan with recommendations
D Analysing and processing information
S001 Financial Planning & Advice

4 ABC Limited has a 1/60th final salary scheme. Members can have a
commuted tax free lump sum. Which of the following are TRUE in respect of
this scheme? Select ALL that apply.

A An individual will retire with a pension reflecting their salary and level of
service plus a tax free lump sum in addition to their calculated benefits
B The scheme carries all the investment risk
C Benefits are subject to statutory revaluation
D One way for the company to reduce costs would be to increase the
accrual rate for future members

5 Alan needs to be taken into care. To make his change in circumstances as

stress free as possible his long-term care insurance company should meet his
needs by:
Select ALL that apply.

A meeting his claim as quickly as possible

B providing relevant printed documentation, sufficient for him to identify
the persons he needs to contact to deal with any disputes that may
arise
C dealing with any disputes before benefits are required to commence
D providing at least three months' notice of any withdrawal of benefits if a
dispute arises over continued entitlement

6 An eligible jobholder for automatic enrolment into a workplace pensions

scheme is aged at least:

A 18
B 20
C 22
D 25
S001 Financial Planning & Advice

Case Study
Ben is aged 42 and is self-employed. He currently contributes £250 per month to a
personal pension scheme. Ben is looking to start drawing retirement benefits around
the age of 65.
Ben also has a deferred pension from an ex-employer’s final salary scheme. The
current transfer value is £42,000 and Ben is wondering whether to transfer this into
his personal pension to consolidate his pension benefits.
Ben is keen to ensure that he will have sufficient income in retirement, but wants to
ensure that he can access some funds earlier if he needs to.

Case Study Questions 7 – 11

7 Ben has heard about the lifetime ISA (LISA) and is considering investing
£4,000 p.a. in this once it becomes available. Which of the following is TRUE?

A Ben will receive a bonus from the government of 25% of the amount
saved each year subject to a maximum bonus of £1,000 p.a.
B Ben can draw benefits from his LISA from age 55 without forfeiting
allocated bonuses
C Ben can withdraw benefits from the LISA at any time although penalties
may apply
D Ben is not eligible to take out a LISA

8 Ben has heard about the recent changes to state pensions. Which of the
following are TRUE about the state pension that Ben may receive? Select ALL
that apply.

A Ben’s state pension age is currently age 67

B Ben must have a National Insurance contribution record of at least 30
years to qualify for the full state pension
C The state pension increases each year in line with the Consumer Price
Index
D Ben can elect to defer drawing the state pension when he reaches
state pension age
S001 Financial Planning & Advice

9 What is the maximum gross contribution that Ben can pay each year into his
personal pension?

A £3,600 p.a. or his earned income, if higher

B The lower of £40,000 p.a. or his earned income
C The higher of £40,000 p.a. or his earned income
D There is no maximum
Exhibit G

10 Which of the following is CORRECT if Ben proceeds with the transfer of

benefits from his ex-employer’s scheme?

A By transferring to his personal pension, Ben will receive a higher level

of pension commencement lump sum when he draws benefits
B Ben does not need to seek advice from a regulated pension transfer
specialist as his transfer value is below £50,000
C Ben should consider not transferring if the critical yield shown on the
transfer value analysis statement is lower than the projected growth
rate on his personal pension
D Ben can choose how to draw benefits from his personal pension from
age 55

11 Which of the following is TRUE regarding how and when Ben can draw
benefits from his personal pension?

A Ben cannot draw benefits before his 57th birthday except in the event
of serious ill health
B Ben can elect to draw benefits using capped drawdown
C Ben could purchase a variable annuity to provide benefits
D If Ben purchases an annuity, he must provide benefits after his death to
support a surviving spouse or other financial dependants

Case Study Questions End

S001 Financial Planning & Advice

12 Bill is questioning how the assumed benefit from paid-up pension provision
has been calculated as the projection benefit in today's terms has increased
since the last review.
You explain that the following assumptions may have changed. Select ALL

A A lower inflation rate has been used

B Bill's assumed expenditure has increased
C Investment growth rate expectations are higher
D Bill's life expectancy has increased

13 Cara, 61, has approached you for financial advice. Her assets include:
£95,000 cash ISA
£15,000 stocks and shares ISA invested in an American S&P500 tracker fund
£987,000 in a personal pension invested in the lifestyle option with a selected
retirement age of 65
Cara's property is worth £360,000 and she has a medium attitude to risk. Cara
does not think she will purchase an annuity with her pension as she prefers
the flexibility that the new pension options allow. Cara should consider:
Select ALL that apply.

A that the cash ISA investment is most likely to devalue in buying power
over time due to inflation
B the stocks and shares ISA will offer sufficient diversification as it will be
invested in many different US companies
C the lifestyle fund is unlikely to meet Cara's needs if she isn't taking all
funds to buy an annuity at 65
D the tracker fund meets Cara's attitude to risk
S001 Financial Planning & Advice

14 Carolyn wants to ensure that her family are able to attend to her financial
matters and personal welfare in the event of mental incapacity. Which of the
following are TRUE? Select ALL that apply.

A A continuing power of attorney would allow Carolyn's family to look

after her financial and personal welfare matters
B If Carolyn effects a lasting power of attorney, the attorney is unable to
act until it is registered with the Office of the Public Guardian
C The maximum number of attorneys that Carolyn can register is two
D Carolyn can only effect a lasting power of attorney whilst she has
mental capacity

15 Clive has been advised that the key person cover he has to cover the death or
illness of one of his employees meets the Anderson Rules requirements.
Which of the following will apply to the arrangement? Select ALL that apply.

A The policy premiums will be permissable deductions for the company

B An employee of a subsidiary company could be covered by the plan
C The life policy will have a term of no more than ten years
D The plan will not cover any company loans

16 Daniel would like to know what state protection there is in place to help him
with mortgage repayments should he suffer a loss of income. Daniel should
be aware that:
Select ALL that apply.

A he may be able to claim for the first £200,000 of debt and the payments
would cover a repayment rate of up to 5.5%
B he would only be able to claim for the interest element of his mortgage
repayments
C in the event of a successful claim, payments will commence after a
waiting period of four weeks
D the maximum payment term that can be claimed is for a period of two
years
S001 Financial Planning & Advice

17 Edward would like an ethical investment. He needs to be aware that:

Select ALL that apply.

A reducing investment options can increase the risk within the fund
B returns have been historically higher for ethical investments
C ethical investments are always cheaper than non-ethical investments
D ethical investments may not be as well diversified as non-ethical
investments

18 Ellie wants to buy a sports car when she retires in nine years' time. The car
that she wants currently costs £56,000. How much would she need to invest
today at an assumed growth rate of 5.5% p.a. if the price of the car increases
by 4.0% p.a.?

A £48,440
B £48,879
C £48,978
D £49,229

19 Employees with what minimum level of annual earnings must be automatically

enrolled into a National Employment Savings Trust if no employer scheme is
available?

A £3,600
B £10,000
C £11,000
D £15,240
S001 Financial Planning & Advice

20 Erica is considering transferring her defined benefit pension fund. She has
been provided with a transfer value of £75,000. Her adviser is conducting a
transfer value analysis. What should the adviser consider? Select ALL that
apply.

A The length of time before Erica intends on taking her benefits

B If the critical yield is high it means there is a high chance that the
transfer value will match the benefits available from the defined benefit
scheme
C Erica's attitude to risk
D The need for Erica to access benefits flexibly

21 Geoffrey who pays additional rate tax is considering the tax position of his
investment bond and the implications of a full surrender to fund a second
property purchase. He is married and his wife does not pay tax. Which
statements are CORRECT? Select ALL that apply.

A He could take 5% per annum with no further tax liability on full

surrender
B Full surrender of his plan is a chargeable event and a further 20% tax
will be payable
C The bond could be assigned to his wife prior to encashment which
could utilise her personal allowance
D Should he decide to take a partial surrender, any excess withdrawal
would be taxed at 25%
S001 Financial Planning & Advice

22 Graham has a substantial estate and has recently become engaged. He has
already made a will. How would Graham's will be affected in the event of
marriage or subsequent divorce? Select ALL that apply.

A If Graham does not write another will, he may die intestate

B Graham's estate will be distributed as per the will already in place if he
does not make a new will on marriage
C On marriage the will would be revoked and Graham would need to
make a new will if he subsequently became divorced
D If the will was made in consideration of marriage, it will distribute his
estate and include any requests to leave estate to his new spouse

23 Hazeem works for DEF Ltd. They operate a 1/60th defined benefit scheme.
During 2014 Hazeem's earnings were £45,000 and he had 22 years' service.
The following year his earnings had increased to £48,000. The Consumer
Price Index for the relevant period was 3.5%. What was the deemed pension
contribution for 2015?

A £1,323
B £16,500
C £17,078
D £21,160
S001 Financial Planning & Advice

Case Study
Oscar and Annie have been married for three years. They have a daughter, Hannah,
who is aged five. Oscar is employed by a large public limited company as a
Marketing Manager. His salary is £45,000 p.a. and he receives bonuses of £7,000
p.a.. Annie works part-time and earns £10,000 p.a..
Oscar and Annie have a joint building society account with a current balance of
£56,000. Interest is credited monthly at a rate of 0.175% p.m. and is rolled up in the
account. Annie also has a portfolio of shares which she inherited. The portfolio is
currently worth £60,000 and the dividend yield is 3.5% p.a..

Case Study Questions 24 – 27

24 How much is Annie’s estimated income tax liability in 2017 / 2018?

A £0
B £127
C £158
D £339
Exhibit B

25 How much National Insurance contributions will Annie pay in 2017 / 2018?

A £0
B £147
C £220
D £501
Exhibit B
S001 Financial Planning & Advice

26 Interest on Oscar and Annie’s building society account is paid monthly. How
much will this account be worth in exactly three years’ time if interest rates
remain unchanged?

A £56,000
B £59,528
C £59,603
D £59,638

27 Oscar and Annie wrote wills when Hannah was born leaving all assets to the
survivor and then passing to Hannah on the second death. They have not
reviewed their wills since. What action (if any) should Oscar and Annie take?

A Oscar and Annie’s wills are invalid and should be rewritten

B Oscar and Annie should cancel their wills as the laws of intestacy will
distribute their estates in line with their wishes should either (or both)
die
C Oscar and Annie should add codicils to leave an amount up to the
inheritance tax nil rate band to Hannah on the first death
D Oscar and Annie’s wills remain in force and valid and no action is
required at this stage

Case Study Questions End

S001 Financial Planning & Advice

28 How much tax relief will a non taxpayer be able to claim on a gross pension
contribution of £3,600?

A £0
B £660
C £720
D £900

29 Ian and Angela would like to gift some of their unit trusts to their grandson,
Max, to help pay for his university education. As Max is aged 15, they
understand that they may need to use a trust to hold the units. They also want
to maintain some control over the investment to ensure that it is used to pay
for Max’s university education. Which type of trust is likely to be most
appropriate?

A Absolute trust
B Interest in possession trust
C Married Women’s Property Act trust
D Discretionary trust

30 Ivan is due to retire in five years' time. You are reviewing the suitability of the
funds within his self-invested personal pension (SIPP). When recommending
a suitable approach for Ivan, what do you need to consider? Select ALL that
apply.

A The lowest cost solution should always be recommended

B It could be possible that Ivan has a high capacity for loss but a low
attitude to risk
C The SIPP fund performance to date
D When and how Ivan plans to access his pension fund
S001 Financial Planning & Advice

Case Study

John and Jane are married and are both aged 38. Jane is a director of a well-known
fashion firm and earns £85,000 p.a.. She also receives annual bonuses averaging
£20,000. She is a member of the firm's defined contribution pension scheme and
receives death in service cover of 4 x salary. John gave up his job to bring up their
twin boys when they were born five years ago.
Jane is thinking about starting up her own fashion firm in the next few months. As the
children are now spending some time at school, John would help out with
administration and then have more time once the children start school full-time.
Jane and John took out a UK investment bond six and a half years ago on a joint life
second death basis for an initial investment of £60,000. They then topped it up by
£20,000 one year later. The bond is currently worth £110,000. They are thinking of
surrendering the bond to provide capital to set up the business and to fund living
expenses while the business gets established.

Case Study Questions 31 – 35

31 If Jane and John surrender the investment bond, what rate of additional tax
will Jane pay on her share of the chargeable event gain?

A 45%
B 40%
C 25%
D 20%
Exhibit H

32 Which of the following features and options could John include on his income
protection policy? Select ALL that apply.

A Guaranteed insurability options

B Indexation
C Pension contributions
D Unemployment / redundancy cover
S001 Financial Planning & Advice

33 Jane and John would like to ensure that childcare costs could be covered
should John fall ill so that Jane can concentrate on setting up her new
business. Which of the following is TRUE regarding income protection
insurance?

A John does not qualify for income protection insurance as he has no

income
B Any benefit payable would be paid tax free
C Cover can be provided for John but only with a deferred period of 52
weeks
D The maximum benefit provided for John can be based on Jane’s
income

34 Jane is concerned about how the family would survive in the event of her
death, especially as her death in service cover would end if she left her job.
Which is likely to be the MOST appropriate product to protect the family in the
event of her death?

A Income protection
B Whole of life assurance
C Family income benefit
D Level term assurance

35 On what basis should any life cover that is taken out on Jane’s life for family
protection purposes be written?

A Single life basis

B Life of another basis
C Joint life first death basis
D Joint life second death basis

Case Study Questions End

S001 Financial Planning & Advice

36 Janet has a potential inheritance tax liability on her estate and the tax payable
at present will be £50,000. She is considering placing assets into a
discretionary gift trust. Which of the following benefits and implications are
TRUE? Select ALL that apply.

A Should Janet survive for seven years the current gift will fall outside her
estate for inheritance tax purposes
B A gift of £125,000 into a discretionary gift trust may, after a period of
time, mitigate the £50,000 inheritance tax bill if her estate does not
increase in value
C The transfer into the trust is a potentially exempt transfer and if Janet
dies within seven years, tapering relief will apply to the level of tax
payable
D Janet can name a group of potential beneficiaries and the trustees will
have the power to vary benefits
Exhibit E

37 John, 52 and Caroline, 53, have asked you to outline their single-tier state
pension entitlement. Caroline did not work for several years when their
children were both young. You advise them that:
Select ALL that apply.

A they can get a state pension forecast by completing form BR19

B Caroline will not receive credit for the years when she did not work
following the birth of her children
C once in payment, their single-tier state pensions will benefit from the
triple lock
D to qualify for the full single-tier state pension, individuals need 35
qualifying years through contributions or credits
S001 Financial Planning & Advice

38 Jose is a member of a small self-administered scheme (SSAS) with a fund

value of £980,000. His sister is the only other member. They are considering
purchasing their business premises through his SASS. Jose needs to be
aware that:
Select ALL that apply.

A the SSAS can borrow no more than £490,000 to purchase his business
premises
B if the loan is made then the SSAS must charge 1.5% over the average
base rate
C the scheme can lend 5% of scheme assets for the property purchase
D on sale of the commerical property there will be no capital gains tax
payable

39 Katie, 65, has accumulated a pension fund of £1,300,000. She is considering

taking a pension commencement lump sum (PCLS) from the fund. Katie
would like to know when her fund will be tested against the lifetime allowance.
As her adviser, you should advise her that:

A any PCLS taken will be tested against the lifetime allowance but the
remaining funds will not
B if she dies before drawing her funds, the funds will pass to her
beneficiaries with no inheritance tax payable and no test against the
lifetime allowance
C the pension fund will be tested against the lifetime allowance at age 75
if any of the funds remain unused
D designating the funds to a drawdown arrangement is not a benefit
crystallisation event but taking funds from the drawdown arrangement
will be
Exhibit G
S001 Financial Planning & Advice

40 Laura, who works part-time, has applied for a loan and has been
recommended payment protection insurance (PPI) to cover her loan
repayments. Laura should be aware that:
Select ALL that apply.

A it is usually a requirement that PPI is taken out before the loan is

approved
B she may find that only the first 12 or 24 months' loan repayments are
covered
C working part-time is unlikely to affect her ability to purchase PPI but
pre-existing conditions may be excluded
D she should be given a quotation of the monthly premium of the PPI and
the total cost over the loan of the plan

41 Liam is considering investing in a single premium long term care insurance

policy to cover long-term care costs on a pre-funded basis. Which of the
following should he consider? Select ALL that apply.

A It is a regulatory requirement that any adviser he appoints has an

appropriate qualification
B In the event of a dispute over entitlement to benefits which are in
payment, the company is required to give 12 months' notice of the
benefit withdrawal
C Benefits can be reviewed at each fifth anniversary
D A claim will normally be triggered by Liam's inability to undertake a
prescribed number of activities of daily living
S001 Financial Planning & Advice

42 Martha is a member of a defined contribution scheme and would like to

understand how her fund will be taxed in the event of her death and who
would benefit from the fund. You should advise her that:
Select ALL that apply.

A to inherit the funds, the beneficiary must meet the trustee's definition of
a dependant
B if she is under the age of 75, funds can be paid to an individual tax free
C if the funds qualify to be drawn tax free, the funds have to be
designated within two years
D if she is over the age of 75, crystallised or uncrystallised funds will be
tax free

43 Megan, 60, is planning her retirement. She anticipates working part-time from
age 65 before stopping work entirely before the age of 70. For this reason she
does not want to consider an annuity, preferring other more flexible methods
of taking her pension. Considerations for her retirement planning are:
Select ALL that apply.

A lifestyle funds which automatically de-risk funds as Megan approaches

retirement will be the most suitable
B her funds may run out during her lifetime if investment performance is
poor during retirement
C a fund investment solely in fixed interest securities will be the most
suitable for Megan as she approaches age 65
D if Megan decides to crystallise funds via an uncrystallised funds
pension lump sum, further contributions to a money purchase
arrangement may become limited
S001 Financial Planning & Advice

44 Nick is a builder and would like to insure against the event of a third party
making a legal claim against him for injury or negligence. Which of the
following is TRUE of a policy taken out to meet his needs?

A There is no government policy that requires builders to have insurance

for negligence claims
B The plan will cover Nick's contractual liabilities
C The bankruptcy of Nick would prevent a claim on the plan
D The policy will pay the proceeds of any claim to the third party

45 Nina has gross earnings of £52,000. She holds some shares which generated
£4,000. She made a pension contribution of £3,200 net. What is Nina's tax
liability for the tax year 2017 / 2018?

A £7,500
B £8,100
C £8,700
D £8,860
Exhibit B

46 Pardip is considering whether she should accept the role of pension trustee.
Her responsilities would include:
Select ALL that apply.

A certification of the contributions payable

B ensuring that the employer pays the contributions in a timely manner
C ensuring that the scheme obtains professional advice when it is
required
D being held personally responsible should a loss occur in the scheme
resulting from a breach of trust
S001 Financial Planning & Advice

47 Peter is self-employed and was offered payment protection insurance (PPI)

for a loan from his bank however, two years ago he suffered a mild stroke.
What points MUST he consider if he wants to take out this type of cover?
Select ALL that apply.

A The policy will cover his self-employment

B He may be excluded for any pre-existing conditions
C The length of time he needs his policy for
D His loan could be refused if he does not purchase the PPI

48 Sally, 22, is applying for a mortgage and is considering the impact of

redundancy on her income. She wants to incorporate state benefits into her
financial plan. Which of the following are TRUE for Sally? Select All that
apply.

A Sally would always be eligible for the full amount of jobseeker's

allowance
B If Sally has savings of £12,000 this amount will not impact on a claim
for jobseeker's allowance
C Sally should consider protecting her mortgage repayments with a plan
that would pay out in the event of redundancy
D Sally would need to be capable of work to qualify for jobseeker's
allowance

49 Scott requires life cover for £100,000 over the next 18 years. He does not
want to have large premium increases. Which plans could potentially cover
this need? Select ALL that apply.

A A low-cost whole of life policy with a £60,000 with profits whole of life
and £40,000 decreasing term assurance
B A low-cost endowment plan for £115,000 taken out 10 years ago with a
term of 20 years
C A unit-linked whole of life plan with a sum assured of £100,000 on a
maximum cover basis
D Level term assurance for £100,000 with a term of 20 years taken out 2
years ago
S001 Financial Planning & Advice

50 Steven and Nicola have two children and are undertaking a financial review.
You have established they need to apply for life cover to meet their family
protection requirements. The amount of cover needed for Nicola is higher
than that needed for Steven. Which of the following options would be the
MOST effective to meet their family protection requirements with the most
flexibility?

A A joint life second death policy, in trust based on the sum assured
needed for Nicola
B Two single life plans, in trust
C A joint life first death policy using a flexible trust arrangement based on
the sum assured required for Steven
D A family income benefit plan for each, not in trust, based on their
individual income requirements arising from their death

51 Susan, who is a higher rate taxpayer, invested £80,000 on 15 June 2007 into
an onshore investment bond. On 31 August 2015 when the bond was worth
£110,000, she decided to make a withdrawal. How much can be withdrawn
without incurring an immediate tax liability?

A £32,000
B £36,000
C £44,000
D £49,500
Exhibit H
S001 Financial Planning & Advice

52 Terry deferred his state pension in March 2015 whilst Jean deferred hers in
May 2016. As a consequence:
Select ALL that apply.

A both of them will be able to receive a lump sum

B Jean's minimum deferral period is nine weeks
C Terry's minimum deferral period is nine weeks
D Terry's pension will increase by 1% for every five weeks that he has
deferred

53 The key purpose of financial planning is it:

A can be restricted to one or two areas of financial concern

B is a recommendation to undertake a financial transaction
C doesn't involve debt management or damage limitation
D is an evolving action plan resulting from a cyclical process

54 The purpose for an ongoing review of a financial plan is to:

Select ALL that apply.

A ensure the plan is reviewed against objectives at least every six

months
B provide an explanation of what can be done if the client changes their
mind
C provide an investment performance update and review of market
conditions
D consider if any additional action is required
S001 Financial Planning & Advice

55 Tina is applying for a decreasing term assurance plan on her own life and
wants to know the risks associated with such an arrangement and the
circumstances which may mean it will not pay out. Which of the following is
TRUE? Select ALL that apply.

A If Tina dies by her own hand, beneficiaries may not be able to claim
death benefits
B The plan could cease or benefits significantly reduced if premiums are
stopped or missed
C If Tina subsequently suffers a critical illness after the plan is effected
and doesn't advise the life company it may invalidate her cover
D Tina's life assurance need may not reduce in line with the decreasing
term assurance leading to a gap in cover

56 What are the key responsibilities of an independent governance committee

when overseeing an employer-sponsored pension arrangement? Select ALL
that apply.

A It must act in the interests of scheme members and challenge

providers on value for money
B A minimum of seven members, including the chair, must be
independent of the sponsoring employer
C It should ensure that default strategies are designed in members'
interests
D The chair is responsible for producing annual reports which need to be
made publicly available

57 What is the best definition of financial advice?

A An evolving action plan resulting from a cyclical process

B A recommendation regarding a financial transaction at a fixed point in
time
C A financial transaction which the client knows that they need
D Any activity regulated by the Financial Conduct Authority
S001 Financial Planning & Advice

58 What is the MAIN reason that review meetings should take place between
financial advisers and their clients?

A To ensure that the client's objectives are being met

B It is a regulatory requirement
C To enhance the relationship between the client and adviser
D To determine whether there are any further business opportunities

59 What is the minimum number of continuing professional development hours

that a retail investment adviser is required to complete each year?

A 25 hours
B 35 hours
C 50 hours
D 65 hours

60 When considering short-term annuities, a pensions adviser should be aware

that:
Select ALL that apply.

A short-term annuities have a maximum term of five years

B the contract need not cease when the member reaches age 75
C there is always an upper limit on the amount that the annuity can pay
the member
D short-term annuity payments are reassessed every year
S001 Financial Planning & Advice

61 When preparing a financial plan, which of the following is TRUE?

A Each customer goal or objective should be considered in isolation to

fully address the need
B The wider economic universe should not influence your
recommendations as it is hard to predict the direction of interest rates
with any certainty
C Should the customer have insufficient resources to meet all identified
needs, this should be pointed out in the report with an explanation of
what can be achieved
D Full details of the product to be recommended should be in the financial
plan with an exact cost for the customer

62 Which of the following are benefits and characteristics of a contract-based

pension scheme? Select ALL that apply.

A It is less costly for the employer than a trust-based scheme

B It runs on a net pay basis so that the employee receives all tax relief
immediately
C It offers the members the protection of the trustees and their expertise
in selecting funds
D The scheme administration is outsourced to a third party

63 Which of the following are benefits or characteristics of a defined contribution

workplace pension scheme? Select ALL that apply.

A The member knows roughly what they will receive

B It helps retention of staff for an employer
C The member carries all the risks
D The member benefits from statutory revaluing to keep pace with
inflation
S001 Financial Planning & Advice

64 Which of the following are key characteristics of a qualifying non-UK pension

scheme? Select ALL that apply.

A There is no requirement to take an annuity from the proceeds

B Income tax may be payable in the country of residence when benefits
are taken
C On the member's death, proceeds pass to the beneficiaries without
counting towards inheritance tax
D Contributions are unlimited but are restricted by the total amount of
employment income

65 Which of the following are steps of the six step Financial Planning process?
Select ALL that apply.

A Gathering data
B Setting the client's goals and objectives
C Making product recommendations
D Reviewing progress

66 Which of the following are TRUE of a financial plan? Select ALL that apply.

A A review should be undertaken at least every six months

B It should include a contents page
C It will include income and expenditure
D Appendices may be useful to include information such as tax
calculations
S001 Financial Planning & Advice

67 Which of the following are TRUE of ethical investment funds? Select ALL that
apply.

A Engagement funds use positive screening

B Dark green funds apply strict ethical criteria and may not include oil,
banking and pharmaceuticals
C Only a small number of companies place any emphasis around
corporate social responsibility
D Ethical investments have a lower risk of underperformance than non-
ethical investments

68 Which of the following are TRUE when assessing the risk of a customer's
investments against objectives? Select ALL that apply.

A A customer with only a small amount of liquid assets may have a

medium attitude to risk but only a low capacity for loss
B Investing all of the assets of a pension in a commercial property fund
offering consistent returns will be suitable for a cautious investor
C It may be more suitable for a customer who has 30 years until their
retirement to take more risk than they would ordinarily, due to the
longer term
D Pound cost averaging will increase the risk of an investment

69 Which of the following best describes the consumer's change in attitude since
2007?

A Less favourable towards debt, a cautious approach to spending and

less focus on life assurance
B More favourable towards long-term debt, more positive approach to
saving and a greater focus on life protection
C Less favourable towards short-term debt, a more positive approach to
spending, less concerned with life assurance
D Less favourable towards debt, a cautious approach to spending and a
greater focus on protection
S001 Financial Planning & Advice

70 Which of the following is true of a defined contribution scheme? Benefits

depend on:

A the member's final salary

B the member's number of years service
C the scheme accrual rate
D fund performance

71 Which of the following would generally be regarded as being a client asset?

Select ALL that apply.

A Treasury bills
B Zero coupon preference shares
C An offset mortgage
D A full home reversion plan

72 Which types of product would generally be regarded as being a client asset?

Select ALL that apply.

A A debenture
B Loan stock
C A put option
D A call option
S001 Financial Planning & Advice

73 Wing Wah's adviser has recommended that she applies for critical illness
cover. Which of the following statements are TRUE? Select ALL that apply.

A Critical illness cover will pay out in the event of any illness preventing
Wing Wah from working
B Premiums will usually be guaranteed for an initial period and
reviewable thereafter
C Any payment received from the policy will be a chargeable event and
subject to income tax
D Should Wing Wah move to America, the policy is unlikely to pay out in
the event of a claim

74 You are contacting your customer, Logan, with a view to arranging a meeting
with him to review the investment portfolio you set up for him last year. The
portfolio has seen some very good growth and you would like to share this
with him. The purpose of the review is to:
Select ALL that apply.

A review and amend the assumptions used, where relevant, to take

account of changing market conditions, investment returns and future
inflation rates
B rebalance the portfolio back to the recommended weightings,
preventing the portfolio becoming higher or lower in risk than intended
C consider whether the products and product wrappers are still
appropriate and revisit Logan's risk appetite and capacity for loss
D provide illustrations with a detailed overview of products / services
agreed upon including costs, ongoing charges and key terms

75 You are Muriel’s adviser. What potential gaps in coverage should you make
her aware of when selecting a new life assurance policy from your panel of
providers? Select ALL that apply.

A Inadequate coverage for disability

B Decreasing coverage
C Unsure coverage
D Flexible coverage
S001 Financial Planning & Advice

76 You are preparing a report for Mark, a client. You identify a potential conflict of
interest. What action should you take?

A Make a note of the conflict of interest in the file

B Make a note to raise this with Mark at the next meeting
C Ignore it until the conflict of interest is proved
D Raise the issue with Mark immediately

77 You are undertaking a financial plan with your client, Andrew. Andrew is
married to Jill. He has net disposible income that he would like to save for his
retirement. In respect of his retirement needs only, it is important that you
establish:
Select ALL that apply

A Andrew's income need in retirement

B by when does he intend retiring
C Jill's occupation
D whether Andrew has made a will

78 You have established that your customers, Sam and Andy, have annual net
income of £61,000 and annual expenditure of £64,000. Sam is a higher rate
taxpayer whilst Andy pays no tax. Considerations and / or recommendations
in light of this information would include:
Select ALL that apply.

A moving investment funds from a high yield open-ended investment

company to a cash ISA
B reallocating assets between partners to reduce tax liabilities
C utilising tax efficient investment vehicles
D Andy giving up 30% of his personal allowance to Sam
S001 Financial Planning & Advice

79 You have got to the end of a meeting with your customer Keith, 29, and you
have presented recommendations for a pension and income protection.
Although quite keen at the start of the meeting, Keith now appears reluctant to
commit and wants to think about it. Under these circumstances, you should:
Select ALL that apply.

A retain Keith's trust and listen carefully to what he's telling you
B provide a lower cost solution for Keith as it is likely your
recommendation is too expensive
C consider possible reasons and probe Keith to gain understanding
D recommend a stocks and shares ISA for Keith as an alternative as he
can access this before retirement

80 You suggest to Ivan, a successful businessman, group income protection

insurance to consider for his workforce. What advantages will this give his
staff? Select ALL that apply.

A Continued sick pay

B Support and reassurance from the company
C A rehabilitation scheme provided by the insurer
D No income tax payable on the benefit
S001 Financial Planning & Advice

Answer Sheet

Question Number Learning Key

Objective
1 3.8.2 B
2 3.7.2 A
3 3.1.2 A
4 2.1.2 B,C
5 1.2.13 A,B, C
6 2.3.3 C
7 2.7.2 D
8 2.5.1 A,D
9 2.4.3 D
10 2.4.2 D
11 2.4.4 C
12 3.2.3 A,C
13 3.6.2 A,C
14 1.2.12 B,D
15 1.2.4 A,D
16 1.2.5 B,D
17 3.4.1 A,D
18 3.2.2 D
19 2.3.3 B
20 2.4.2 A,C,D
21 1.2.8 C,D
22 1.3.3 A,D
23 2.2.1 D
24 3.5.4 A
25 3.5.4 C
26 3.2.2 D
S001 Financial Planning & Advice

27 3.6.3 A
28 2.2.1 C
29 3.6.3 D
30 2.7.3 B, D
31 1.2.8 D
32 1.2.9 B,C
33 1.2.10 B
34 1.2.7 C
35 1.3.3 B
36 1.2.9 A,B,D
37 2.5.1 A,C,D
38 2.4.4 A, D
39 2.2.3 C
40 1.2.14 B,D
41 1.2.13 A,D
42 2.4.3 B,C
43 2.7.5 B,D
44 1.2.2 D
45 3.5.4 C
46 2.4.1 B,C,D
47 1.2.14 A,B, C
48 1.2.6 C,D
49 1.2.3 A,D
50 1.2.1 B
51 1.2.8 B
52 2.6.1 B,D
53 3.1.1 D
54 3.8.1 C,D
55 1.3.1 A,B,D
56 2.3.2 A,C,D
S001 Financial Planning & Advice

57 3.1.1 B
58 3.8.2 A
59 3.3.2 B
60 2.6.1 A,B
61 3.6.1 C
62 2.3.1 A,D
63 2.1.2 B,C
64 2.2.2 A,B,C
65 3.1.2 A, D
66 3.1.3 B,C,D
67 3.5.9 A,B
68 3.5.10 A,C
69 1.1.1 D
70 2.1.2 D
71 3.5.1 A,B
72 3.5.1 A,B
73 1.2.11 B, D
74 3.8.3 A,B,C
75 1.3.1 A,B,C
76 3.3.2 D
77 3.4.3 A, B
78 3.5.5 B,C
79 3.7.4 A,C
80 1.2.10 A,B,C