CII R06 — Financial Planning Practice Companion Quick Reference
Compact CII R06 Financial Planning Practice reference for case-study analysis, recommendation structure, tax, protection, pensions, investments, and estate planning.
This Quick Reference supports independent preparation for CII R06 — Financial Planning Practice Companion using the official exam code CII R06. It is designed for rapid case-study preparation: extract facts, identify planning issues, justify recommendations, and avoid common applied-answer traps.
R06 task focus
CII R06 is primarily an application and suitability exam. Strong answers usually:
| R06 skill | What to do in practice | Common weak answer |
|---|---|---|
| Use the case facts | Link each point to the client’s age, family, tax status, employment, health, goals, assets, liabilities, attitude to risk, and time horizon | Generic product descriptions |
| Prioritise needs | Deal with urgent risks first: debt, emergency fund, protection, wills, pension deadlines, tax year planning | Listing every possible product |
| Recommend clearly | State what the client should do, why, and any key conditions or drawbacks | “They should consider…” with no conclusion |
| Show suitability | Match objective, affordability, tax position, risk profile, capacity for loss, and access needs | Ignoring risk or liquidity |
| Explain consequences | Include benefits, limitations, costs, tax, loss of guarantees, and review needs | One-sided advantages only |
| Use current tax rules | Apply the tax tables and rules relevant to your sitting | Quoting outdated allowances or rates |
Case-study triage workflow
Use this sequence when working through the case-study information supplied for your sitting.
| Step | Output you need | High-yield questions |
|---|---|---|
| 1. Identify clients and dependants | Family tree, ages, relationships, financial dependency | Who relies on whom? Are partners married/civil partners? Are there children, elderly parents, or blended-family issues? |
| 2. Build the balance sheet | Assets, liabilities, ownership, tax wrappers, liquidity | Who owns each asset? Is it taxable, pension, ISA, business, property, or cash? |
| 3. Build the income statement | Earnings, benefits, expenditure, surplus/shortfall | Is the plan affordable? Is income secure? Are bonuses/dividends variable? |
| 4. Map stated objectives | Short, medium, and long-term goals | What must happen, what is desirable, and what is aspirational? |
| 5. Identify risks | Death, illness, unemployment, longevity, inflation, investment loss, tax, care costs | Which risk would cause immediate financial failure? |
| 6. Check existing provision | Protection, pensions, investments, employer benefits, state benefits, wills, trusts | Is current provision suitable, sufficient, in trust, nominated, and reviewed? |
| 7. Prioritise actions | Immediate, near-term, long-term recommendations | What must be done before investing surplus capital? |
| 8. Prepare answer blocks | Recommendation, reason, tax, drawback, review | Can each point be awarded as a distinct applied mark? |
Command words: answer style
| Command | Exam response style |
|---|---|
| Identify / state / list | Short, distinct points. No long explanation unless asked. |
| Outline | Point plus brief context. |
| Explain | Why or how the point applies to the client. Link to case facts. |
| Recommend | Specific action plus justification. Include conditions and drawbacks where relevant. |
| Justify | Give reasons the recommendation is suitable for this client, not just generally good. |
| Calculate | Show workings, units, and final answer. Label assumptions. |
| Comment / evaluate | Balanced assessment: benefits, risks, constraints, alternatives, and priority. |
| State additional information required | Fact-find gaps only. Do not recommend products unless asked. |
High-yield answer formula
For most advice questions, build each recommendation as:
- Action: what should be done.
- Client link: why it fits the stated objective or need.
- Tax/technical point: relief, exemption, charge, wrapper, or regulatory issue.
- Risk/drawback: cost, access, underwriting, investment risk, loss of guarantees.
- Review trigger: retirement, birth, death, divorce, house move, tax change, market movement, health change.
Example structure:
Recommend increasing pension contributions, subject to affordability and annual allowance checks, because the client is a higher earner seeking retirement provision. Contributions may receive tax relief and may reduce taxable income, but pension funds are inaccessible until permitted pension age and investment value can fall. Review annually and after any income change.
Fact-find gap checklist
| Area | Additional information commonly required | Why it matters |
|---|---|---|
| Personal details | Marital/civil partnership status, dependants, health, smoker status, domicile/residence where relevant | Tax, estate planning, underwriting, dependency |
| Employment | Employment status, benefits, sick pay, death-in-service, pension scheme, bonus/dividend pattern | Protection and retirement planning |
| Income/expenditure | Net income, essential and discretionary expenditure, surplus, debt payments | Affordability and emergency fund |
| Assets | Ownership, cost base, unrealised gains/losses, income yield, liquidity, tax wrapper | Tax efficiency and risk |
| Liabilities | Mortgage type/rate/term, secured/unsecured debt, early repayment charges | Protection need and debt strategy |
| Pensions | DB/DC details, contributions, nominations, protected benefits, charges, fund choice, retirement age | Retirement income and transfer/consolidation issues |
| Protection | Sum assured, term, basis, exclusions, trusts, premiums, employer benefits | Death/illness shortfall |
| Investments | Objectives, time horizon, attitude to risk, capacity for loss, experience, ethical preferences | Suitability and asset allocation |
| Tax | Marginal income tax rate, CGT position, dividend/savings income, pension allowance position | Wrapper and contribution decisions |
| Estate | Wills, LPAs, beneficiaries, gifts, trusts, business assets, IHT exposure | Estate distribution and tax |
| Objectives | Priority, amount, timescale, flexibility | Recommendation order |
| Soft facts | Client concerns, preferences, behavioural issues, vulnerability indicators | Suitability and communication |
Planning priority ladder
Use this as a default order, then adjust for the case facts.
| Priority | Planning area | Typical R06 reasoning |
|---|---|---|
| 1 | Immediate affordability and debt | No plan is suitable if premiums/contributions are unaffordable or high-interest debt is unmanaged |
| 2 | Emergency fund | Prevents forced investment sale or borrowing after income shock |
| 3 | Protection | Death, illness, and income loss can derail all other goals |
| 4 | Legal housekeeping | Wills, LPAs, nominations, trusts, ownership structure |
| 5 | Employer benefits | Often cost-effective; may include pension matching, death-in-service, sick pay |
| 6 | Tax-efficient saving | ISA, pension, CGT planning, spousal/civil partner planning where appropriate |
| 7 | Retirement income | Contribution adequacy, asset allocation, decumulation choices |
| 8 | Estate/IHT planning | Gifts, trusts, whole-of-life cover, business relief planning where suitable |
| 9 | Advanced/high-risk planning | VCT/EIS/BR-type planning only if suitable for risk, wealth, liquidity, and tax position |
Core calculations
Use the rates, allowances, and tax tables applicable to your sitting. Show workings even when the final number is simple.
Net worth and surplus
\[ \text{Net worth} = \text{total assets} - \text{total liabilities} \]\[ \text{Monthly surplus} = \text{net monthly income} - \text{monthly expenditure} \]\[ \text{Emergency fund target} = \text{essential monthly expenditure} \times \text{chosen number of months} \]Protection shortfall
[ \text{Life cover need} = \text{debts to clear}
- \text{capitalised dependant income need}
- \text{known future costs}
- \text{existing suitable cover/assets} ]
[ \text{Income protection shortfall} = \text{required net monthly income}
- \text{continuing income}
- \text{existing insurance benefit} ]
Mortgage and property
\[ \text{Loan-to-value} = \frac{\text{mortgage balance}}{\text{property value}} \times 100 \]Pension contributions
\[ \text{Gross pension contribution} = \frac{\text{net personal contribution}}{1 - \text{basic-rate relief}} \]\[ \text{Additional tax relief} = \text{gross contribution} \times (\text{marginal tax rate} - \text{basic rate}) \]Check relevant UK earnings, annual allowance, carry forward, tapered annual allowance, and money purchase annual allowance where applicable.
Investment return and inflation
\[ \text{Real return} \approx \text{nominal return} - \text{inflation rate} \]\[ \text{Future value} = \text{present value} \times (1 + \text{growth rate})^{\text{years}} \]Estate and IHT exposure
[ \text{Taxable estate} = \text{estate value}
- \text{debts}
- \text{reliefs}
- \text{exemptions}
- \text{available nil-rate bands} ]
Protection planning matrix
| Need identified | Suitable options | Key suitability points | Common traps |
|---|---|---|---|
| Mortgage debt on death | Decreasing term assurance for repayment mortgage; level term for interest-only or fixed debt | Match term and amount to liability; consider joint-life vs single-life | Ignoring separate needs for each partner |
| Family income after death | Family income benefit or level term assurance | Income-style benefit can match dependency period | Only covering mortgage and ignoring childcare/living costs |
| Whole-life IHT liability | Whole-of-life assurance, often written in trust | Can provide liquidity for estate tax; premiums must remain affordable | Failing to write policy in trust where appropriate |
| Income loss due to illness/disability | Income protection | Match deferred period to employer sick pay and emergency fund; benefit usually linked to earnings | Confusing income protection with critical illness cover |
| Serious illness lump sum | Critical illness cover | Helps repay debt or fund adaptations after specified illness | Conditions/exclusions; no payout for non-listed illnesses |
| Private medical treatment | Private medical insurance | Speeds access to eligible treatment; does not replace income | Treating PMI as income protection |
| Business owner death/illness | Key person, shareholder/partnership protection, relevant life cover | Valuation, ownership, tax, trust/cross-option arrangements matter | Ignoring business continuity and share purchase funding |
| Existing life policies | Review sum assured, term, ownership, beneficiaries, trust status | May be cheaper to retain old cover if health changed | Cancelling before replacement is accepted |
| Client has health issues | Underwriting, exclusions, ratings, guaranteed insurability options if available | Existing cover may be valuable | Assuming new cover is available or affordable |
Pension and retirement reference
| Area | R06-ready points | Suitability traps |
|---|---|---|
| Defined benefit pension | Provides scheme income, often with spouse/dependant benefits and inflation features | Transferring may lose guarantees and requires specialist consideration |
| Defined contribution pension | Flexible contributions, tax relief, investment choice, beneficiary nomination | Investment risk, charges, sequencing risk near retirement |
| Employer contributions | Often valuable; may include matching or salary sacrifice | Ignoring affordability or annual allowance implications |
| Carry forward | Can allow unused annual allowance from earlier tax years if conditions are met | Requires current-year eligibility and accurate records |
| Tapered annual allowance | Relevant for higher-income clients | Need income details before recommending large contributions |
| MPAA | Relevant after certain flexible pension access events | Can restrict future money purchase contributions |
| Pension consolidation | May simplify administration and reduce charges | Could lose guarantees, protected benefits, low charges, or exit penalties |
| Retirement income | State Pension forecast, DB income, annuity, flexi-access drawdown, UFPLS, phased retirement | Ignoring tax, longevity, inflation, investment risk, and sustainability |
| Annuity | Secure income; options include escalation, guarantee period, joint life, impaired life | Less flexibility; rates/options must match health and dependant needs |
| Drawdown | Flexible income and death benefit planning | Fund can run out; needs reviews and suitable investment strategy |
| Pension commencement lump sum | Usually available within current rules and scheme limits | Taking cash unnecessarily may reduce retirement income |
Investment and wrapper selection
| Wrapper/product | When it may fit | Key tax/liquidity points | R06 cautions |
|---|---|---|---|
| Cash deposit | Emergency fund, short-term goals, low risk capacity | Liquid; interest may be taxable depending on allowances/status | Inflation risk; unsuitable for long-term growth need alone |
| Cash ISA | Tax-efficient cash for short-term/low-risk funds | Income tax-free; access depends on product terms | Annual subscription limits apply |
| Stocks and shares ISA | Medium/long-term tax-efficient investment | Income and gains tax-free; accessible | Investment risk; not for short-term essential spending |
| Pension | Retirement funding, tax relief, possible employer contribution | Tax relief; tax treatment on withdrawal under pension rules | Restricted access; annual allowance and earnings checks |
| General investment account | Flexible taxable portfolio | CGT/dividend/savings tax planning required | Use allowances, losses, ownership planning, and bed-and-ISA where suitable |
| Onshore/offshore investment bond | Tax deferral, trust/estate planning, withdrawals within bond rules | Chargeable event gains and top-slicing may be relevant | Tax can be complex; not automatically better than collectives |
| National Savings and Investments | Capital security where government backing is valued | Product-specific tax treatment and access | Returns may not meet long-term objectives |
| VCT/EIS/high-risk tax schemes | Experienced investors with high risk tolerance and tax planning need | Tax reliefs depend on qualifying rules | Illiquidity, high risk, loss of relief, not suitable for cautious clients |
| Investment bond in trust | Estate planning and controlled access for beneficiaries | Trust taxation and chargeable events need care | Wrong trust type can conflict with access needs |
Attitude to risk, capacity for loss, and time horizon
| Concept | Meaning | Exam application |
|---|---|---|
| Attitude to risk | Psychological willingness to accept investment volatility | Use questionnaires plus discussion; do not rely on score alone |
| Capacity for loss | Financial ability to absorb loss without failing objectives | Lower where money is needed for essential spending, debt, or near-term goals |
| Risk required | Risk needed to achieve the target return | If required risk exceeds attitude/capacity, change objective, contribution, timescale, or spending |
| Time horizon | Period before funds are needed | Short term usually favours cash/low volatility; long term may support growth assets |
| Liquidity need | Need for access without penalty or market timing risk | Keep emergency/known expenditure outside volatile investments |
| Diversification | Spread by asset class, geography, sector, manager, wrapper, and tax treatment | Reduces concentration risk but does not remove market risk |
Tax planning quick matrix
Avoid fixed allowance figures unless they are supplied for your sitting. Apply the current rules and show the client-specific effect.
| Tax area | Planning ideas | R06 traps |
|---|---|---|
| Income tax | Pension contributions, salary sacrifice, use of allowances, timing income, spouse/civil partner planning where valid | Recommending pension contributions without checking earnings/allowances |
| Dividend tax | Use ISA/pension wrappers, review company extraction strategy, use allowances where available | Treating dividends as tax-free |
| Savings income | Match cash interest to tax status and allowances | Ignoring high-rate taxpayer position |
| CGT | Use annual exemption, offset losses, phase disposals, transfer between spouses/civil partners where appropriate, bed-and-ISA | Forgetting base cost, ownership, and previous losses |
| IHT | Wills, exemptions, PETs, CLTs, regular gifts out of income, trusts, life cover in trust | Taper relief applies to tax on certain gifts, not to the gift value itself |
| Pension tax | Contributions, carry forward, annual allowance, MPAA, tax on withdrawals | Ignoring the impact of flexible access |
| ISA | Tax-free income/gains within the wrapper | Subscription limits and transfer rules |
| Investment bonds | Tax deferral, chargeable events, top-slicing | Assuming withdrawals are tax-free in all circumstances |
| Business tax planning | Employer pension contributions, relevant life cover, business protection | Need company accounts, ownership, and tax advice where appropriate |
Estate planning and intergenerational planning
| Action | When relevant | Key points to mention |
|---|---|---|
| Make or update wills | Almost always, especially marriage, divorce, children, blended families | Controls distribution; can appoint guardians and executors |
| Lasting Powers of Attorney | Clients want continuity if they lose capacity | Property/financial affairs and health/welfare decisions |
| Expression of wish / pension nomination | Pension death benefits | Not the same as a will; keep updated after life events |
| Write life cover in trust | Need quick payment outside estate or to chosen beneficiaries | Can avoid probate delay and may help IHT planning |
| Review property ownership | Couples, second marriages, unequal contributions | Joint tenancy vs tenants in common affects estate distribution |
| PETs | Lifetime gifts to individuals | Donor must survive required period for full IHT effect; affordability and loss of control |
| CLTs | Gifts into certain trusts | Possible lifetime tax and periodic/exit charges |
| Regular gifts out of income | Surplus income gifting | Must be regular, from income, and leave donor with normal standard of living |
| Gifts with reservation | Donor keeps benefit from gifted asset | May remain in estate for IHT purposes |
| Whole-of-life policy | Known IHT liability or estate liquidity need | Premium affordability and trust structure |
| Business/agricultural relief | Business or qualifying assets | Qualification and investment risk must be checked |
Suitability report content checklist
For R06 written answers, think like a suitability report even when not asked to draft one.
| Section | What to include |
|---|---|
| Client objectives | Specific, prioritised, quantified where possible |
| Existing position | Relevant assets, liabilities, income, policies, pensions, tax status |
| Recommendation | Product/action, amount, term, contribution, wrapper, ownership |
| Reason why suitable | Link to objective, risk profile, capacity for loss, affordability, tax status, time horizon |
| Alternatives considered | Why another route was not preferred |
| Tax treatment | Reliefs, exemptions, taxable events, pension limits, IHT implications |
| Costs and charges | Premiums, adviser/product/platform/fund charges where relevant |
| Risks and disadvantages | Investment loss, inflation, access, underwriting, exclusions, surrender penalties, loss of guarantees |
| Implementation steps | Application, underwriting, trust, nomination, transfers, cancellation timing |
| Review | Frequency and triggers |
Common scenario signals and likely advice areas
| Case-study signal | Likely advice areas | High-yield points |
|---|---|---|
| Young family with mortgage | Life cover, income protection, CIC, emergency fund, wills, guardianship | Protect debt and income before long-term investing |
| Unmarried partners | Wills, ownership, nominations, life policies in trust | Intestacy and IHT treatment may differ from spouses/civil partners |
| High earner with surplus income | Pension, ISA, CGT planning, tax-efficient investments | Check tapered annual allowance and access needs |
| Self-employed client | Income protection, pension, emergency fund, business continuity | No employer sick pay/death-in-service unless separately arranged |
| Company director | Employer pension contributions, relevant life, key person/shareholder protection | Need company structure, shareholding, profits, and remuneration details |
| Near retirement | Cash-flow planning, State Pension forecast, pension options, asset allocation, tax on withdrawals | Sequence income tax efficiently; do not ignore longevity/inflation |
| Large cash holding | Emergency fund plus ISA/pension/investment plan | Cash may be low risk but exposed to inflation |
| Concentrated shareholding | Diversification, CGT planning, risk reduction | Tax must be balanced against concentration risk |
| Recent inheritance | Goals, tax wrappers, debt repayment, IHT planning, gifting | Do not invest before clarifying objectives and time horizon |
| Health concerns | Protection underwriting, existing policy review, impaired-life annuity | New cover may be expensive or unavailable |
| Estate above IHT thresholds | Wills, gifts, trusts, life cover, business relief, expenditure gifts | Must assess affordability and control needs |
Recommendation drawbacks: points candidates often miss
| Recommendation | Do not forget to mention |
|---|---|
| Increase pension contributions | Access restrictions, annual allowance, investment risk, affordability |
| Pension transfer/consolidation | Loss of guarantees, exit penalties, protected benefits, advice requirements |
| Drawdown | Fund depletion, sequencing risk, ongoing reviews, charges |
| Annuity | Loss of flexibility, inflation risk if level, death benefit options |
| ISA investment | Market risk, time horizon, annual subscription limits |
| Investment bond | Chargeable event taxation, surrender penalties, charges, complexity |
| VCT/EIS | High risk, illiquidity, loss of relief, suitability for sophisticated/high-risk clients only |
| Repay mortgage | Opportunity cost, early repayment charges, loss of liquidity |
| Whole-of-life cover | Premium affordability, reviewable premiums if applicable, underwriting |
| Trust planning | Loss of control, trust taxation, administration, choice of trustees |
| Gifting | Loss of access, survival period, gifts with reservation, impact on donor’s security |
Exam technique checklist
Before the exam:
- Prepare a one-page profile for each client in the case study.
- List objectives in priority order.
- Identify fact-find gaps by planning area.
- Pre-build likely recommendation blocks, but do not force them into the exam if the question asks something else.
- Practise calculations using the tax tables and assumptions for your sitting.
- Prepare balanced advantages and disadvantages for each likely recommendation.
During the exam:
- Answer the question asked, not the one you expected.
- Use client names and facts to make points specific.
- Make one clear point at a time.
- If a question asks for benefits, do not include drawbacks unless relevant to explanation.
- If a question asks for drawbacks, do not write generic benefits.
- For calculations, show enough workings to gain method credit.
- For “additional information” questions, ask for missing facts; do not give advice.
- For “recommend and justify” questions, include a clear recommendation, not only a list of options.
Final readiness prompt
Take one timed CII R06 case study and produce, without notes: a client fact summary, priority objectives, fact-find gaps, protection shortfalls, pension issues, investment/tax recommendations, estate planning actions, and three drawbacks for each recommendation. Then compare your answer against the question wording and refine for specificity.