Free CISI Financial Planning & Advice mock exam

Not quite. The answer is C.

The expectations of the client heading sets out what the client must tell the adviser and the potential consequences of failing to do so, and changes in employment or marital status are the standard examples given. Arrangements for handling complaints name the person to approach and confirm the availability of the Financial Ombudsman Service where the client remains dissatisfied. Commission is no longer permitted for investment products, so remuneration is disclosed as a fee, an hourly rate or a percentage of assets. How often investments are looked at again belongs to the frequency of review heading, which also covers how any portfolio is benchmarked.

Not quite. The answer is A.

At the data collection step the financial planning professional and the client identify the client's personal and financial objectives, needs and priorities that are relevant to the scope of the engagement, and material falling outside that agreed scope is excluded. The planner collects sufficient quantitative and qualitative information and documents about the client, so the figures alone would leave the picture incomplete. The objectives and priorities are identified jointly with the client rather than assumed on the client's behalf. Relevance to the scope of the engagement is the boundary, so an indiscriminate sweep of everything the client holds goes beyond what the step requires.

Not quite. The answer is D.

The annual premium limit of £3,600 has applied since 6 April 2013 and works as an aggregate figure across the qualifying policies an individual holds. Qualifying policies issued before 21 March 2012 are protected policies and are not usually caught by the limit at all. A policy issued in the last year is a current qualifying policy and sits squarely inside it. The tax status of the holder is irrelevant, since the limit is measured by the premiums paid rather than by the rate of tax the policyholder pays. An offshore bond is a single premium contract and is non-qualifying from the start, so the qualifying premium limit never applied to it.

Not quite. The answer is D.

Reliance on state benefits is unwise and a plan should record why. The sums are meagre, with universal credit capped at £628.10 a month where a couple live together and either is over 25, and benefits are a matter of government policy that can be withdrawn, reduced or amended at any point. The triple lock applies to the state pension rather than to every benefit, and its future has itself been questioned as public finances have come under strain. Bereavement support payment runs for 18 months rather than 3 years, and the £16,000 savings limit is an eligibility rule for universal credit rather than a statement about relying on state help.

Not quite. The answer is B.

The Pensions Regulator tells individuals to check whether an adviser is registered with the FCA before relying on anything that adviser recommends. Where the adviser turns out to be unregulated, the individual may fall outside the protection of the Financial Ombudsman Service and the Financial Services Compensation Scheme. Contacting the provider at once is the step to take where a transfer is already under way and is thought to be a scam. Hanging up is the response to an unexpected cold call about a pension. Treating a guaranteed return from an unregulated investment as a warning concerns what is being offered rather than who is offering it.

Not quite. The answer is C.

A hybrid arrangement offers money purchase benefits but underpins the member's entitlement with a minimum defined benefit, and whatever the variation only one type of benefit is ultimately provided. At the point benefits are drawn the arrangement ceases to be a hybrid and becomes either a money purchase arrangement or a defined benefits arrangement, according to the benefits actually provided. A money purchase pot paid alongside a separate guaranteed pension describes two arrangements running side by side rather than a hybrid. The type of benefit finally provided follows the benefits themselves and is not a choice handed to the sponsoring employer. Yearly revaluation between the leaving date and normal retirement age is the treatment of preserved benefits held for a deferred member.

Not quite. The answer is A.

Many people reaching retirement find they have more time to pursue interests and take longer holidays, and some clients accordingly see a spike in expenditure in the early years of retirement as a result of increased travel. The period immediately before the retirement date is characteristically one of falling expenditure as mortgages end and children leave home. The final years are not where the travel driven peak sits. Spending spread evenly across the whole of retirement describes a level assumption rather than the pattern actually observed.

Not quite. The answer is B.

Where a client will not take part, the firm should record clearly on the file that the meeting was declined and the reasons given, and should still ask the client to confirm any material changes. Sending out a finalised agenda and obtaining performance data are preparation steps for a review that is going ahead, so neither meets the position where there is no meeting. The suitability report sets out why a recommendation was suitable and is not where a declined review is logged. The file note is what allows the firm to show why the plan was not revisited.