Free CISI Financial Planning & Advice practice questions

Not quite. The answer is B.

Planning is a process, not a sale: a plan can be delivered by rearranging what the client already holds, so no product need be recommended at all. Calling it cyclical, with the plan revisited as circumstances change, is correct, and is why a review at least once a year is expected. Setting the scope of the plan at the outset is the first step of the recognised six-step process.

Not quite. The answer is B.

Many people assume the state will step in and do not realise how meagre and conditional the benefits are, which is a leading cause of the protection gap alongside affordability and simple optimism. State support for illness and bereavement is a minimum safety net and comes nowhere near replacing earnings. Advisers are free to sell protection policies and insurers sell cover directly online, so neither the ban on adviser sales nor the ban on internet sales exists.

Not quite. The answer is B.

Relief on contributions, a fund free of UK income tax and capital gains tax, and a tax-free commencement lump sum are the three concessions, so proposition IV spoils any combination containing it. Income drawn beyond the commencement lump sum is taxed as non-savings income at the member's marginal rate, and dropping the relief on contributions understates what registration actually delivers.

Not quite. The answer is A.

Nothing can be analysed or advised upon until the planner knows what the client is trying to achieve, so establishing aims and objectives opens the process. Naming an annuity is a product decision belonging at the very end, once funding and suitability have been assessed. Consolidating pots is itself a recommendation that may prove unsuitable, and comparing charges is research that only means something once the objectives are known.

Not quite. The answer is B.

Objectives must be set before anything else, because a solution cannot be judged until the planner knows what it has to achieve; alternatives are then identified, evaluated against those objectives, and the chosen course documented. Starting with alternatives means shopping for products before establishing the need. Evaluating before the alternatives have even been identified reverses two steps and leaves nothing to assess.

Not quite. The answer is A.

Carrying out an agreed action is implementation, the fifth step, whether or not a product is bought. Data collection is the second step and gathers the facts that made the transfer worth considering. Analysis and evaluation is the third step, where the tax position was assessed. Monitoring comes afterwards and checks whether the arrangement remains suitable.

Not quite. The answer is B.

An interest-only mortgage keeps the outstanding debt level throughout the term, so a level term policy, whose sum insured stays constant, is ideally suited. Decreasing term is designed for a repayment mortgage where the debt falls, and family income benefit provides an income rather than the lump sum needed to clear the loan.

Not quite. The answer is B.

The normal minimum pension age rises from 55 to 57 with effect from 6 April 2028. Answers citing 56 or 58 use the wrong age, and 2030 uses the wrong date; the change is to 57 in 2028.

Not quite. The answer is B.

Repaying the mortgage does take out a large housing cost, but the early retirement years commonly produce a spike in spending as newly free time is spent on travel and hobbies, and the later years can bring care costs, so those three are all realistic. Because the pattern is typically a rise and then a fall rather than a steady decline, an automatic reduction in living costs is the assumption a planner must challenge.

Not quite. The answer is B.

Step one requires objectives to be specific, measurable and given timescales so alternatives can be evaluated against them. Objectives left broad, or with no deadline attached, cannot be measured or prioritised. Listing products puts the solution before the need, and listing the risks a client faces describes what the plan must guard against rather than what the client is trying to achieve.