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Your Journey to Becoming A Financial Advisor
Welcome To Solo R04
One of the larger modules towards Diploma completion. The aim of the R02 exam is to build knowledge and understanding of asset classes, investment products and the investment advice process.
Main topics covered:
- Introduction to the main asset classes, their behaviours and risks.
- The impact of the macro-economy on different asset classes.
- Main types of risk to investment performance.
- Exploration of investment products available to UK investors, their risks, taxation and suitability.
- Introduction to the main asset classes, their behaviours and risks.
- The impact of the macro-economy on different asset classes.
- Introduction to investment theory.
- The investment advice process. Measuring the performance of investments.
- Take calculator into your exam
- You will be given the most recent tax tables – familiarise yourself with them beforehand!
- RO2 is a computer based exam
- 65 % is the nominal pass mark
- You will have 2 hours to complete your exam
- After submitting, you will notified of a pass or fail immediately. A breakdown of your results will be sent within 15 working days…
- The exam will consist of 100 questions
- 72 in standard format (one answer from four available options)
- 28 in multiple response format (more than one answer from four-six available options).
Course Overview
- 15 hours (1 week)
Introduction, key terms and glossary
Role of government
- Timeline of events
Demographic trends
- Demographic trends
Corporate Environmental Factors
- Corporate Environmental Factors
Incentives, disincentives and attitudes to savings
- Incentives for savings
- Disincentives for savings
- Attitudes for savings
Main Pension Scheme Types
- State Pension
- Defined Benefit Schemes
- Defined Contribution Schemes
Solo 1 Test
- Test 1
- 22.5 hours (1.5 weeks)
Introduction & key terms
Individual Contributions and the provision of tax relief
- Relevant individuals and earnings
- Provision of tax relief
- How tax relief is awarded
- Self Employed - Timing of tax relief
- Salary vs Dividends
- Salary Sacrifice
- Recycling the pension commencement lump sum
Employer Contributions and the provision of tax relief
- Provision of tax relief
- Spreading table
Pension Input
- Pension Input Period
Annual Allowance
- Annual Allowance
- Tapered Annual Allowance
- Carry Forward
- Triggering MPAA Rules
- Not triggering MPAA
- MPAA triggered with contributions
- MPAA triggered part way through PIP
- MPAA in practice
Lifetime Allowance
- History of LTA
- Benefit Crystallisation Events
- After the BCE tests
- Pre A Day benefits
- Post A Day benefits
- Higher Lifetime Allowance
- Divorce Pre April 2006
- Divorce Post April 2006
Tax Treatment of member benefits
- Member Benefit options
- Minimum Pension Age
- Lump Sum Benefits
- Small Post Payments
- Trivial Commutation lump sum payments
- Serious ill health commutation
- Income
Tax Treatment of death benefits
- Who they can be paid to
- Uncrystalised or unused funds
- Defined Benefit Scheme
- Annuity
- Drawdown pension
- Trivial commutation
- Charity
- Guarantees
- Dependent's scheme pension
- Survivor's lifetime annuity
- Dependent's scheme pension
- Survivor's lifetime annuity
- Dependant's capped drawdown
- Dependant's, nominee's or successor's flexi-access drawdown
- Inheritance tax treatment
Transitional Reliefs
- Overview
- Primary Protection
- Enhanced Protection
- Fixed Protection 2012
- Fixed Protection 2014
- Fixed Protection 2016
- Individual Protection 2014
- Individual Protection 2016
- Pension Credits
- PCLS and Primary Protection
- Scheme Specific PCLS Protection
- Transitional Protection and Auto Enrolment
Tax treatment of pension fund investments
- Tax treatment
Unaothorised payments
- What are they
Tax treatment of overseas pension schemes
- Types
- QROPS
- Transferring to a QROPS
- Member payment charge
- Overseas pension scheme from 6th April 2015
- Temporary non residence
- Uncrystallised funds pension lump sum
- Annual Allowance
Solo 2 Tests
- Test 1
- 15 hours (1 week)
Introduction and key terms
Pension Regulator compliance requirements
- The Role of the Regulator
- Gathering information
- Regulation and enforcement action
- Acting against avoidance
- Master Trusts
- Financial Ombudsman Service (FOS)
- The Pension Ombudsman
- The Pension Advisory Service (TPAS)
Pension Protection
- Pension Protection Fund (PPF)
- Entering the PPF
- Insolvency events
- Transfers out within the assessment period
- Compensation levels
- Payment of benefits
- Revalued benefits
- Total commutation of benefits
- Financial Assistance Scheme (FAS)
- Pension Scams
Workplace Pensions
- Pensions Act 2008
- Categorisation of workers
- Postponement
- Exceptions to auto enrolment
- Automatically enrol all eligible jobholders
- Salary Sacrifice
- Minimum Contributions
- Paying below the minimum
- Opting Out
- Automatic Enrolment Pension Schemes
Pensions & Divorce
- Introduction
- Offsetting
- Earmaring
- Pension Sharing
Employment law relevant to pensions
- Age Discretionary Directive
- UK Legislation - Paid Parental Leave
- Financial Services and Markets Act (FSMA) 2000
Bankruptcy law and pension assets
- Impact of bankruptcy
Solo 3 Tests
- Test 1
- 15 hours (1 week. Solo 3 and 4)
Introduction & Glossary
Main Types, attributes and benefits
- Types of DB Schemes
- Topping up defined benefit schemese
- In-house AVCs
Rules and operation
- Setting up the scheme
- Normal pension age
- Bridging pensions
- Eligibility
- Accrual of benefits
- Contributions
Normal retirement, early retirement, ill health and death
- Pension at normal pension age
- Guaranteed Minimum Pension (GMP)
- Pension increase exchange
- The Regulator's principles
- Code of Good Practice
- PCLS at normal pension age
- Early retirement
- Ill-health early retirement
- Benefits on death
Funding methods and issues
- Actuary tasks
- Ongoing scheme valuations
- Other scheme valuations
- Deficits in scheme technical provisions
Role of trustees and others and scheme reporting
- Role of trustees
- Duties and responsibilities of actuaries, administrators and others
Early leavers, transfer issues and considerations
- Refund of employee's contributions
- Preserved pension
- Cash equivalent transfer value (CETV)
- Enhanced transfer value exercises
- Pension transfer rules
- Role of trustees
Advising on pension transfers
- Introduction
- Requiring a personal recommendation
- Appropriate pension transfer analysis (APTA)
- Transfer Value Comparator (TVC)
- Transfer Value Analysis (TVA)
- Future rule changes
Public sector schemes
- Introduction
- Main features
- Benefits offered
- Transfers
Solo 4 Tests
- Test 1
- 15 hours (1 week. Solo 5, 6 and 7)
Introduction & Glossary
Main Types, attributes and benefits
- Definition of money purchase benefits
- Main Types
- Eligibility and condition of membership
- Contributions
- Statutory money purchase illustrations (SMPIs)
Legal bases and their impact on pension planning
- Trust based and contract based schemes
- Master Trusts
- Governance standard for occupational schemes
- Charge Controls
- Relevant multi-employer schemes
- Governance standards for workplace PPP
- SSAS vs SIPP
Factors to consider and benefits
- Normal Pension Age
- Member benefits
- Ill health early retirement
- Wavier of Contribution and pension contribution insurance
- Income protection insurance/Permanent health insurance
- Life Assurance
Benefits on leaving and transfer
- Early leave options
- Transfer Issues
Stakeholder pensions
- Main Features
- Regulation
Solo 5 Tests
- Test 1
- 22.5 hours (1.5 week)
Introduction & key terms
Drawing pension benefits
Small pots and trivial commutation
- Small pots payments
- Trivial commutation by the member
- Trivial commutation lump-sum death benefits
- Valuing benefits for the purposes of commutation
Secured pension options
- Scheme Pension
- Lifetime Annuity
- Comparison between a scheme pension and a lifetime annuity
Uncrystallised funds pension lump sum (UFPLS)
Drawdown pension
- Capped Drawdown
- Review Procedure
- Flexi Access Drawdown
- Short Term Annuity
- Death Benefits
- Transferring a drawdown pension contract
- Risks
- Comparison of pension income options
- Comparison of pension death benefit options
Compliance requirements and consumer protection
- Conduct of Business Sourcebook (COBS)
- Retirement Risk Warnings
- Suitability Reports
- illustrations
- Critical Yields
- Adviser Knowledge Levels
- Guidance Guarantee
Phased retirement
- Introduction
- Phased annuity purchase
- Phased capped drawdown
- Phased flexi-access drawdown
- Choosing how to phase benefits
- 15 hours (1 week)
Introduction & Key Terms
State Pension benefits: historic and current
- Reaching SPA before 6th April 2016
- Reaching SPA on or after 6th April 2016
- Establishing the foundation amount
How the State Pension works
- National Insurance Contributions (NICs)
- Class 3 NICs
- Class 3A NICs
- Increases in payment to the State Pension
- Deferring the State Pension
- Taxation of the State Pension
- Payment of the State Pension overseas
- SPA and proposed changes
- State Death Benefits
- Inheriting SERPS and S2P
Pension Credit framework
- State pension credit entitlement
- Guarantee Credit
- Savings Credit
Solo 7 Tests
- Test 1
- 15 hours (1 week)
Introduction & Key Terms
Accumulating pension savings
- Factors affecting pension planning needs
- Pension Projections
- Capital Requirements
- Income Requirements
- Review
Pension fund investments during accumulation
- Attitude to risk
- Risk categories
- Ethical considerations
- Asset Allocation
- Lifestyle vs Target Date funds
- Self-Investment
- Loans to sponsoring employers
- Borrowing by a scheme
Interpreting client information and objectives in the decumulation phase
- Fact Finding
- Longevity
- Attitude to risk and capacity for loss
- Cash Flow Modelling and Stress Testing
Determining the method and timing of accessing pension benefits
- Benefits and drawbacks of Scheme Pensions
- Benefits and drawbacks of Lifetime Annuities
- Benefits and drawbacks of UFPLS
- Benefits and drawbacks of Capped Drawdown
- Benefits and drawbacks of Flexi-Access Drawdown
Tax planning
- Test 1
- Test 2
- Test 3
Alternative sources of retirement income
- Test 1
- Test 2
- Test 3
Solo 8 Tests
- Test 1
- Test 2
- Test 3