All this week the Brand Financial Training team will be answering the questions put forward by paraplanners around forthcoming exams, studying methods and motivation. This fourth article answers question around AF5.
Q: AF5 seems pretty similar in style to R06, what are the key differences in the way I should answer the questions?
A: This is a great question and one we get asked a lot as R06 and AF5 are similar in many ways so in today’s Q&A we’ll set out set out some of the key differences.
The objective of R06 is to help advisers develop and demonstrate their financial planning capabilities. For AF5, the objective is to develop an understanding of the financial planning process when giving advice to clients. On the face of it, there’s not much difference between these two objectives. Rather, the differences stem from the assumed knowledge that underlies each qualification and the level of difficulty of the exam questions asked.
R06 tests the practical application of technical knowledge and planning skills already gained, typically through previous study of the level 3/4 R0 suite of exams (R01, 2, 3, 4 and 5) whilst AF5 builds on this with additional knowledge and planning skills gained, typically through the level 6 AF suite of exams, in particular AF1, 4 and 7.
So, for AF5, advanced technical knowledge across taxation, trusts, pensions and investments is required. In addition, depending on the fact-find you receive, some business planning knowledge may also be needed. Now that the CII has discontinued their business planning modules – J03 and AF2, this may require you to allocate some additional time to research these topics.
Case Studies v Fact-find
With R06 you receive two case studies two weeks prior to the exam. Each case study comprises a detailed narrative of the clients’ financial situation, along with their financial aims; each case study is usually condensed onto one page, sometimes just slipping into two pages.
For AF5, you receive a single fact-find two weeks prior to the exam. The length of the fact-find is much longer than an R06 case study; typically up to 15 or so pages. There is little in the way of narrative, rather, you are expected to take the facts presented on the fact-find and create your own narrative.
For example, in R06 you may be told that a client is a higher rate taxpayer. In AF5, the client’s various sources of income will be listed, but you will need to work out for yourself what their tax status is. There is therefore less analysis for you to do in R06, because some of it has already been done for you.
In AF5 you are also not told what the financial objectives of the client are. Instead, you’ll need to work these out so that you can focus on the correct areas in your preparation. You’ll then be told what the objectives are in the exam itself.
R06 questions versus AF5 questions
To understand how the R06 questions differ from the AF5 questions, we need to take note of question wording. Typically, the majority of R06 questions will start with ‘State’, ‘Outline’ or ‘Identify’. These essentially involve recalling a list of points which you could, if you make the time, prepare in advance of the exam and memorise.
But there will also be some trickier questions; these will test your ability to apply the information you are given in the case study to the technical knowledge that you have learnt. In short, the CII want to know if you really understand the relevant subject area. These questions will start with ‘Explain’ or ‘Recommend and justify’.
In AF5, the tables are turned. While we do have a few of the easier questions, the majority will require you to demonstrate your understanding and therefore most questions start with ‘Explain‘ or ‘Recommend and justify’.
In addition, in AF5, you’ll need more detail as to why a course of action is appropriate for the client and you’ll be required to provide evidence to support any recommendations So, in summary with AF5 you have to get to know the clients on a deeper level so that you can demonstrate that you truly understand their needs and how various financial planning solutions can (or indeed cannot) help them.
We hope this has given you an insight into the differences between these two exams and the extra knowledge and understanding you’ll need for the AF5 exam.