How to pass the RO6 Exam the R06– Exam Guide RO6 Technical Paper - Passing the RO6 Exam This is arguably the most important element of the RO6 exam and you need to consider your approach carefully. Key Reasons Why People Fail 1. 2. 3. 4. 5. They run out of time. Technical answers are relevant but can be irrelevant - be careful. Answer structure. Repeating points in the exam. They forget that ALL this exam is doing is testing Financial Planning Practice. It is actually relatively easy to avoid all of these, but don't just dismiss this paper as we find too many candidates know these points but don't actually change their behaviors. Running out of Time This is only a 3 hour exam. At first this might seem like plenty of time and actually it is - but not if you ramble on and don't keep your answers short and concise. Always think about what the question is asking. Understanding what you're being asked From our analysis of the R06 exam, there is actually a reasonably consistent format to the types of questions you will be asked and you should understand what the examiner is looking for and how you will answer the questions. The basic questions that have been in many of the previous R06 exams are: 1. State the additional information to advise your client on a planning area - this is a recurring question and can come up more than once in a case study. 2. Identifying any gaps in the clients current provision - simple assessment of current plans and client objectives. 3. Comment on specific situations - factfind specific 4. Comment on suitability - this is a question around understanding the client's needs and what they currently hold. 5. Recommend and justify a suitable plan - most often protection orientated question to satisfy an identified need - will be in your exam. 1 the R06– Exam Guide 6. Calculations - There have been a few around areas such as IHT, Surrendering bonds etc and we will cover these in the solution You will also see questions relative to stating the benefits and drawbacks of the client doing something - such as repaying loans etc. Technical Answers - Relevant but irrelevant This is a difficult area because you need to give enough in your answer to gain full marks, but remember that this is not a technical exam. We've had many very competent individuals buy our solution because they don't understand why they failed. You need to remember what this exam is trying to assess - Financial Planning Practice - not a technical pension, protection or investment exam. Our solution is all about focusing on, and getting you used to the style of this exam. We provide some technical areas for understanding reasons, mainly because we have candidates from varying backgrounds and experience, but don't concentrate on the technical elements too much! Example Question Explain to David the benefits of taking a retirement income in respect of his defined contribution (aka a PPP etc) pensions by: (i) conventional annuity (6 marks) For this case study David was 63 married to Anne aged 61 and low risk investors. Notice how the answers are always relevant to the clients circumstances. Answer Structure This is a simple question but notice how the answer can be split down so you achieve maximum marks: Facts about annuity which are benefits: Guaranteed Income Can provide capital guarantees Can select level/escalation Can get guarantee income period 2 the R06– Exam Guide Specific Benefits to David's situation Meets Attitude to risk Can provide widow pension for Anne Capital guarantee/guaranteed income period could give to children as inheritance. Lets now look at another question, which again is based around understanding the clients current position and needs. Identify any gaps in John and Alison's provision to meet financial needs in the event of serious illness or long-term disability? (From the case study - John is married to Alison with dependent children). The case study states John's sick pay is 6 months, no existing protection plans in place) Answer: after 6 months John's income ceases. No Income protection in place so no income No cover for childcare costs if Alison is ill They have no critical illness cover May be eligible for state benefits No PMI in place So this is simply a 'State what protection plans these clients could have and why might they need them?' Repeating points in the Exam This is really important - in fact we have found this process to be a huge time saver. Due to the nature of the fact find and the question process from the examiner, we've found that candidates provide lengthy answer to a question, giving lots of extra detail, only to find that a later question addresses many of the points just answered. 3 the R06– Exam Guide There is a simple solution though and we recommend that you do this at the very start of the exam. When you get the question paper, simply spend 5 minutes looking at the questions and write next to them on the question paper the main subject area they're addressing - such as mortgage, family protection, investments, IHT, pensions etc. Some areas are tested more than once but in different ways - such as the impacts of a lack of family protection and then detail, justify and recommendation suitable solutions to their protection arrangements What will this do for you in the exam? • • • • Save you time. Stop you repeating the same points - wasting your time. Enables you to focus your answers on the subject area your actually being asked about. Lets you quickly understand the question paper and if there are any unexpected/random areas being tested so you get chance to think about this as you answer other questions. Remember - the RO6 is positively marked, so you shouldn't lose marks if you provide too much irrelevant information but you might run out of time and lose other marks that you would otherwise have achieved! Summary Taking time to understand the RO6 exam process is extremely important - this is possibly why so many people fail the exam. Bullet point answers are key and they MUST be relevant to the clients situation. What will you get in the solution? We aim to give you a complete overview of the factfind and the areas likely to be addressed in the exam. We will also look at the common question types and devise appropriate questions and model answers which might appear in the exam. The important point here is that you are prepared for the expected question types, and understand the format of the 'required' answers. 4