General tips for the AF5 exam

Before we start to consider the case study in detail, let’s go back to brass tacks and consider the AF5 exam in context. This is an in-depth examination, representing the culmination of the Advanced Diploma. The CII says that it should take at least 150 hours of study… and it is in approximately two weeks’ time. Now, this doesn’t mean that you should start to worry if you haven’t already spent the best part of ten hours a week for the last four months… but it does mean that you are going to have to work smart in this last couple of weeks… and the starting point for this is to understand the examination and what it is likely to throw at you.

So, first things first, you are going to have three hours to complete the exam and in total there are going to be 160 marks up for grabs. This breaks down rather nicely:

• 10 minutes to read the planning objectives and consider how they fit in with what you know of the case study as well as reading through all the tasks and jotting down notes.
• 160 minutes to answer the questions (keeping relatively tightly to one minute per mark so as not to overrun)
• 10 minutes to proof-read, correct and add to your answers.

Don’t underestimate the importance of those ‘book-end’ ten minute sections. In that first 10 minutes, read ALL of the questions and write yourself a few rough notes for each – the things you will need to cover off. When you then arrive at that question, the first few marks are there in your rough notes waiting for you to collect them. Meanwhile, the supercomputer that is the human brain will have been working in the background to find you more answers – even when you aren’t consciously aware of it. If you don’t use that 10 minutes to read all the questions, your brain can’t possibly start trying to find the answers. In terms of the second ten-minute section at the end, make sure you leave lots of space between each of your answers. That way, when you come to the end of the exercise and go back over your paper, you can easily add in little extra snippets that might pick up another mark here and there.

BOTTOM LINE: In this exam, there are almost as many marks available for great exam technique as there are for great technical knowledge.

The aim of this exam is to show that you can construct a comprehensive financial plan for a client with relatively sophisticated needs, and that you can weigh up various options in the process. A blinkered approach won’t get you far – you need to think outside the box a little and remember that there are multiple ways to relieve moggy of her fur. Now, you don’t actually need to construct the full plan – just show that you know what needs to be done in relation to each of the key aspects of the planning process:

• The relationship between adviser and client – things like how you might charge for your services sometimes come up here – the relative merits of fund based fees versus time cost versus flat rate fees, for instance.
• Evaluation of the client’s objectives – the old financial planning equation – ‘Wants – Gots = Needs’. Once we know what they want, we can compare it to what they’ve got to establish what they need. In this stage, we need to ask the clients extra questions to ensure that we really do understand what they want.
• Understanding the client’s financial status – continuing the above, comparing what they have to what we have established they want or need, in order to find the shortfalls.
• Putting forward the appropriate recommendations – which will mean you needing to make a recommendation (or more than one) and, importantly, justify it. To quote the CII examiner: ‘It is anticipated that at each exam session, a significant proportion of the total marks will be allocated to putting forward recommendations supported by relevant evidence. In this exercise, candidates will always be rewarded for thinking logically about the various objectives and potential solutions to the client’.
• Reviewing the financial plan – when should the client have a review and what should be considered in this review?
• Explaining technical terms and concepts along the way

Some of these areas are easy to plan for. The review questions always seem to follow a set pattern, for instance. Either asking you what circumstances would require the clients to undertake a review or what you would need to discuss in the review. As a result, these are relatively easy to prepare for. Other areas are far more difficult to prepare for, not least because you won’t be told what the clients’ actual financial planning objectives are until you get into the exam… all we can do in the meantime is look at their circumstances and try to second guess. Don’t panic too much about this, though, since there are some areas that naturally lend themselves to possible questions and we will do all we can to make sure that you are as well prepared as possible.

Because the questions will naturally follow the financial planning process, in this exam (unlike all the others), it is strongly advised that you answer the questions in the order they are presented. You might like the look of question eight more than question five, but something you write in question five might ultimately influence what you say in question eight.

When writing up your answers, the key is to demonstrate that you can think holistically. Doing one thing will impact on other things and you will get big marks for showing that you know this and you’ve considered it. This said, the most important point of all in this exam is to make sure that everything you say relates to the case study. You might know everything there is to know about a subject but if that subject is not relevant to the clients in the case study, you are going to be scratching around for marks no matter what you do. You will score more marks for giving less technical information but making what you do give directly relevant. In other words, don’t ‘brain dump’.

If you are asked to perform any kind of calculation, make sure that you show every step of your working. You may make a mistake in the overall calculation, leading to the wrong eventual answer, but if you show your working, you will get lots of credit for the steps you got right around the one you got wrong.

The examiners say that they will be expecting you to show relevant knowledge of recent and timely events. We will concentrate on these as we go through to try to spot the areas where current change might have an impact. The good news here is that there are several obvious ones in this case study!

Our detailed AF5 analysis can FOUND HERE