The CII Financial Assess training package tests your knowledge of key financial topics
Question 1
When considering pension transfers and life expectancy the adviser should:
A.Discuss with the client and agree an age based on family history
B.Use a period beyond the client’s average life expectancy
C.Use ceding scheme assumptions from the triennial review
D.Use GAD tables for life expectancy
Question 2
Which of the following applies to investment trusts but not to unit trusts and open-ended investment companies (OEICs)?
A.Capital gains tax
B.Charges
C.Income tax
D.Stamp duty
Question 3
What is the stamp duty and stamp duty reserve tax (SDRT) charge on an exchange-traded fund (ETF)?
A.0.50%
B.1%
C.2%
D.Nil
Question 4
What is the position on contributions to existing child trust funds (CTFs) in the 2021/22 tax year?
A.All future payments will be invested in a Junior ISA
B.Further payments of up to £9,000 a year can be made
C.No further payments can be made
D.Payments can continue at the rate of £3,600 a year
Question 5
Which of the following measures is used in the government's target for inflation?
A.CPI
B.CPIH
C.PMI
D.RPI
Question 6
What is the general tax position of dividends paid from a venture capital trust (VCT)?
A.Dividends are not subject to income tax
B.Dividends are paid tax free but are taxable in the hands of the investor
C.Dividends are paid with a tax credit of 10% which is reclaimable
D.Dividends are paid with a tax credit of 7.5% which is not reclaimable
Question 7
Many financial advisers prefer to conduct the fact-find with a client rather than leaving this to a paraplanner. Why is this?
A.So that during the process they can ask more probing questions
B.So that they can avoid writing a suitability report
C.To formulate an investment strategy with the client at the initial meeting
D.So that they can justify their charges
Question 8
What rate of inflation should a prudent financial adviser assume for UK school fees as a minimum?
A.A fixed 5% a year
B.Based on average earnings
C.Based on the consumer prices index (CPI)
D.Based on the retail prices index (RPI)
Question 9
When advising an employed client, there are a number of tax planning issues that arise. Which of the following would be one of these?
A.The level of his own personal pension contributions and the scope for any increase
B.The level of income protection that he needs
C.The level of pension contributions paid by his employer
D.The National Insurance contributions due on his benefits in kind
Question 10
Which of the following statements relating to the inheritance tax (IHT) 10-yearly anniversary charge is true?
A.The calculation is based on the amount placed into the trust and takes into account any chargeable transfers in the previous seven years
B.The calculation is based on the trust fund value at the 10th anniversary
C.The calculation takes account of chargeable transfers within 10 years of the creation of the trust
D.The calculation uses the nil rate band relating to the date the trust was created
1B. The assumption should include a period longer than the client’s average life expectancy as this better demonstrates the risk of funds not lasting through retirement.
2D. Stamp duty does not apply to unit trusts and OEICs.
3D. There is no stamp duty or SDRT on ETFs.
4B. CTF accounts may be topped up by parents, relations and friends – the current limit is £9,000 in line with Junior ISAs.
5A. The consumer prices index (CPI) is the inflation measure used in the government's target for inflation.
6A. Dividends are not subject to income tax.
7A. A fact-find simply covers hard facts and in order to discover a client's aims and aspirations, more probing questions are needed.
8B. To be prudent, parents should expect school fees and higher education costs to keep rising at least as fast as average earnings, and possibly faster.
9A. The level of his own pension contributions and the scope for any increase would be relevant for assessing tax efficiency.
10B. The periodic charge is calculated based on the trust fund value at the 10th anniversary.