AF7 Exam 9th February 2021
Did you sit the AF7 exam yesterday? Maurita Black, our wonderful new consultant did and here she shares her thoughts on what the exam paper looked like and what her thoughts are:
Remote invigilation – how did it go?
Firstly, I am very pleased to report that there were no technology issues – I was using my desktop PC at home. I followed the instructions on the email sent by the CII about half an hour before my designated exam time. The room scan (I used my portable webcam) and uploading of my ID was straightforward and took less than 10 minutes to complete.
To my surprise, when all this was completed, I was taken straight into the exam. Having not done an online exam before I thought I might have to wait until the designated time, but we were straight in there. Once in the exam, all the technology worked exactly as expected. It is a good idea to have a look at the practice written paper the CII provide the link to in your confirmation of exam booking email (the example is for AF1 but follows the exact same format and everything is in the same place on the screen) to familiarise yourself with what to expect beforehand. It’s also a good idea to have all the necessary software downloaded well in advance of the exam and all the system checks completed – you don’t need any surprises on the day!
Any curveballs?
From what I can remember / pull together from my scribbled notes…The 1st 4 questions were worth a total of 30 marks and were the kind of thing we have come to expect as standard – in fact Q1 (in the main) seemed to be lifted from the October 2020 exam and asked for the 8 factors you would consider when advising someone with GMP.
Q2 covered uncrystallised death benefits in a DB scheme v’s a PPP being paid from a divorced man (Paulo) to his 2 children who were under the age of 18. They wanted to know what could be paid and the income tax treatment.
Q3 asked about the 6 factors the FCA expect an adviser to consider when providing abridged advice.
Q4 the person in the question was a member of an underfunded DB scheme but had received her CETV and it had not been reduced. The question asked what the employers covenant meant and the significance of that in respect of the decision not to reduce the CETV.
Then came the case studies:
Case study 1 was a couple each of whom were within 1 year of NRA of their pension DB pension schemes. We had all their usual information provided re: health / longevity / non-financially dependent kids and grandchildren / income and annual capital needed in retirement / State Pension entitlements (she would have full state pension but his was projected to be £135 p/w) etc. as well as full details of both DB schemes.
Q5 asked what we would need to consider when looking at the 2 schemes and deciding which one we would transfer and which one we would keep in the DB scheme
Q6 asked why the man should consider contributing to Class 3 NIC’s
Q7 Here they wanted 5 benefits and 5 drawbacks of using the LTA for income rather than transfer everything to the flexi-access drawdown and take income from that. We were told that the outcome of the advice was to crystallise his DB scheme (the substantially larger of the 2) and place enough into a single life LTA to provide £8,000 income and put the remainder into a flexi-access drawdown plan.
Case Study 2 were 2 married ladies with young children. One of them was staying at home to look after the kids until the youngest went to primary school and the other had been employed but was furloughed and had then been made redundant. She has just become self employed. She has a DB scheme with a sizeable CETV (£1.01M from memory). The had a mortgage and no savings and were starrting to run up bills on credit cards but as yet hadn’t missed any payments.
Q8 asked for detail as to why they would not be exempt from the contingent charging ban.
Q9a asked for the FCA requirements when preparing a cash-flow model
Q9b asked to specifically relate to the case study and why it would be important to revisit and review their cash flow on a regular basis
Q10 The outcome of the process was that the ladies had decided to take the entire CETV as an UFPLS (she was 55), clear their mortgage and debts and place the remainder into a cash deposit account as an emergency fund. It asked what the risks were with this decision.
Conclusion
I would normally finish exams (whether written or multi choice) with loads of spare time to go back and amend and re-check my answers. With this exam (for me) time was definitely an issue. I had two and a half minutes left at the end to go back and recheck and add to / amend answers which just wasn’t enough for a good and thorough review. Had I had even an extra 15 minutes, I think I could have rejigged a few answers and added more content to others and felt a bit more comfortable.
The million dollar question then – do I think I have passed? With this paper, some questions I know I will have done well in, some I know I have done not so well in, but because there were a few questions I haven’t seen before, although I wrote what I did know and related it as much to the case study as possible, I haven’t seen the marking scheme so don’t know whether I’ve given the examiner exactly what they were looking for or not!
I’ve now got the dreaded (2 MONTH) wait to see whether I’ve done enough…fingers crossed!
You will have heard us use the expression ‘doing the doing’ many times and this is why we sit, know and understand these exams. We believe that peak performance can only be achieved through delivering high quality levels of resources and flexibility, a breadth and depth of knowledge and strong partner loyalty with our customers.
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