View more on these topics

Catriona Standingford: Prove your business financial planning credentials

Are you missing an opportunity to offer planning to clients
who run their own business?

Business financial planning is an area that does not experience a huge take-up in terms of exam entry. But how many individuals in search of personal financial planning also run their own business and may not be aware of the benefits of financial planning for that business? Is this an opportunity being missed?

If this is an area that interests you, the business financial planning exams offered by the Chartered Insurance Institute may be worth a look. The CII offers two units in this area: J03, The Tax and Legal Aspects of Business; and AF2, Business Financial Planning.

J03 is a Level 4 unit examined via a two-hour paper consisting of 15 short-answer questions whereas AF2 is a Level 6 unit consisting of a three-hour paper with a case study structure. Pass rates are relatively low although not as low as for other exams at their level. In 2018 J03 had a pass rate of 59.09 per cent, up from 50 per cent in 2017, and AF2 had a pass rate of 51.66 per cent, up from 48.28 per cent in 2017. It is clear that both units require a great deal of work to secure a pass and should not be underestimated.

This could be an opportunity for those looking for another string to their bow

Syllabus similarities

If you look at the syllabus for each of J03 and AF2, you will see many similarities. Perhaps this is why some candidates choose to sit both. J03’s objective is to “develop an understanding of corporate taxation and business” and the unit covers the main legal forms of business in the UK:

  • Business accounting and the interpretation of accounts
  • Options for financing a business
  • Taxation and allowances
  • Employment law
  • Business protection
  • Pensions

AF2’s objective is to “develop in-depth financial planning skills related to business”. It looks at the main legal forms of business:

  • Bankruptcy and insolvency
  • Business financing
  • Accounts and financial controls
  • Sale and purchase of businesses
  • Taxation
  • Legal responsibilities to employees
  • Suppliers and customers
  • Business protection
  • Pensions

We review each J03 and AF2 paper set in the yearly April and October sittings and, over the years, bankruptcy has been a common J03 question, with ratios also appearing frequently.

The October 2018 paper tested working capital ratio and the quick ratio, so it is important candidates know all the formulae that could come up. Staying with J03, buy-and-sell agreements and cross-option agreements are also tested often, as are key person insurance and knowledge of The Partnership Act 1890. These areas need to be carefully studied and revised.

One area regularly found challenging to revise is the chapter in the manual on employment law; many candidates will not necessarily be dealing with large employers and some of the detail may be new to them.

Catriona Standingford: CII exam on securities and dealing is a real asset

You don’t see quite as much overlap between one paper and the next for AF2 so it is always useful to review exam guides going back a good few sittings.
However, as with J03, the AF2 paper normally has a question that includes business protection, but bear in mind with AF papers it is all about the application of technical knowledge, not just a repetition of facts. Answers should, where possible, be related to the case study.

In AF2 there is often a question on pensions. In October 2018 candidates were tested on: the rules governing a SSAS loan to the business; a calculation to work out the pension contribution needed to buy a property with maximum borrowing; and finally, the tax treatment of the required pension contribution. This question was worth more than 30 per cent of the 80 marks on offer so was significant.

With the number of advisers studying for J03 and/or AF2 being low, this could be an opportunity for those looking for another string to their bow. The J03 manual is the core resource for both J03 and AF2 and, with sittings of both exams in April and October each year, it may be worth considering entering both at the same time.

Catriona Standingford is managing director at Brand Financial Training

Recommended

24

FCA sets out contingent charging ban for DB transfers

The FCA has proposed a ban on contingent charging for defined benefit transfers in its latest attempt to stop unsuitable advice. The decision to put forward a ban for consultation this morning marks a change of direction for the regulation, which had decided not to tighten the rules on contingent charging – under which advisers […]

Show me the money: The Wellesley Grove Journal

A weekly account of the curious goings-on in the world of financial services Show me the money! When this WGJ correspondent was a little ’un they used to ask adults why the production of more money couldn’t solve all the world’s financial problems. Despite being shot down, WGJ knew there was some merit to the […]

Outgoing RBS chief heads to troubled Australian bank

Royal Bank of Scotland chief executive Ross McEwan will take the top job at National Australia Bank. The move follows the resignation of NAB’s former leader, Andrew Thorburn, in the wake of the nation’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. While NAB is headquartered in Melbourne, it has not […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com