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What’s standing in the way of the business financial planning exam?

One of the stepping stones to chartered status is completing at least four of the six exams that make up the Chartered Insurance Institute’s Advanced Diploma in Financial Planning.

Ranging from AF1 to AF6, some of these three-hour exams are more popular than others. AF5, which covers the financial planning process, is compulsory for chartered status so is virtually guaranteed a place among advisers’ exam choices. Anecdotal evidence suggests fewer people are taking AF2 – which covers business financial planning – than units such as AF3, the pension planning unit.

The AF2 exam builds on the diploma-level J03 exam and covers the tax and legal aspects of business. The syllabus includes the different legal forms of business; the impact of bankruptcy and insolvency; business accounts and controls; taxation in relation to business-owners and employees; legal responsibilities of businesses; business protection insurance; and the use of pensions in business planning.

Pensions have acquired a new significance since the Budget changes so it is not surprising many advisers are taking the AF3 exam – without it they cannot advise on pension transfers. But swotting up on the use of pensions in business planning through AF2 could also be worthwhile for some. 

Advisers may deem the other options more relevant, especially if they do not have corporate clients. But some may deal with business owners and studying for AF2 could provide useful knowledge.

CII director of corporate development Steve Aspinall says AF2 is useful for advisers with those sorts of client or those who are looking to move into business-related financial planning. But he advises checking the syllabus first. 

“We find a lot of people haven’t read the syllabus,” he says. “They think ‘That’s about business financial planning. I know about that so I’ll do it,’ rather than understanding what they are going to be tested on.”

Reading-based IFA Beaufort Asset Management adviser Graeme Bone took the AF2 exam in 2012. He had passed the old G10 and G20 exams so rather than cover the same ground with the AFP1 personal tax and trust planning exam, he decided to take AF2 and was among the 49 per cent of candidates who passed that year.

Bone saw AF2 as a way of differentiating himself from other advisers, given its lower popularity. He says it makes sense to consider a business financial planning exam if you have corporate clients or individual clients with a business.

“We look after clients that are companies but we have a greater number of individuals who have companies. They may be directors or 100 per cent shareholders. If you are doing holistic financial planning, thinking about the most efficient remuneration structure for them is important.” 

He adds: “Businesses can be a major part of a person’s wealth. ‘My business is my pension’ is something we hear a lot. So protecting that business and things like shareholder protection are important.”

Bone has passed 10 exams in the past 16 months but says AF2 took the longest to pass because it has the least crossover with the things advisers do every day. 

“It’s still relevant and important but it’s more about background knowledge than the things you come across on a regular basis,” he says.

Bone is happy with the day-to-day applicability of the CII’s exam range but thinks greater everyday relevance could encourage more people to take the AF2 exam. 

“It would also be positive if more IFA practices and networks considered when it might be relevant to have people with business financial planning,” he says. “It would help [AF2] if advisers thought a bit more about exams that could help in advising on Keyman insurance and shareholder protection. It could help with risk management from the firm’s perspective too.”

 Aspinall expects more advisers to work with smaller companies, particularly once the changes to pensions are finalised. These changes are also likely to affect the AF2 exam. 

“The module will evolve to take that into consideration,” he says.

Adviser View

Garry Hale, managing director of HK Wealth Managers and former president of the Personal Finance Society

Garry Hale PFS president 2012

Fewer advisers are sitting the AF2 exam because for many it is not a core area of the business they do. It will obviously benefit advisers who specialise in the corporate market and business planning or those who wish to do so. But as advisers are required to complete four AF exams to qualify for chartered status, they are likely to choose an exam that is more relevant to their business areas.



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There are 8 comments at the moment, we would love to hear your opinion too.

  1. I sat the Business Financial Planning exam (G30, as it was called back then) on my route to Chartered Financial Planner status and found it one of the most valuable papers. I was surprised at the time how few advisers were choosing to pass it.

    As a business owner there was a lot of crossover with the things I was already doing on a day to day basis (accounting, Companies Act compliance, etc) and I acquired a lot of new knowledge relevant to our business owner clients. Definitely a paper I would recommend for advisers working towards Chartered.

  2. I sat G30 in 1998 but spent too much time taking my study manuals to the beach and not reading them so failed by the narrow margin. I finally got round to sitting AF2 last week so fingers crossed I might have done enough this time round! Result in December.

  3. @Martin Bamford
    Wholeheartedly agree. I took G30 too and found it one of the most interesting and informative simply because it wasn’t what I was dealing with day-to-day. It does open the eyes to more opportuinities in what is probably one of the few underserved and great business areas.

  4. I sat the AF5 Last week as my (hopefully) last paper to become Chartered. Although I do operate in the corporate sector and have done so for most of the last 20 years I chose not sit the AF2 paper in no small part because it, along with its sister paper J03, has the reputation of being the hardest AF paper to pass.

    I have no evidence to support this only anecdotal.

    I personally hope to move on to Fellowship so who knows I may yet sit both J03 and AF2 for the extra credits

  5. @Dazzlin – Yes it is the one with the lowest people to pass, but the subject matter is interesting. Worth sitting whether you pass or not all the time the Level 6 is not mandatory, which is why I sat it in 1998, but didn’t resit until now.

  6. There is nothing new here.

    Like Martin, I did G30 back in the day – and I can assure Phil that the paper was a real pig in ’98.

    Back then, before anyone had thought of shoehorning everyone into level 4, the standard to get was AFPC. You did the tax/trusts paper (G10), a ‘planning paper’ (G20 for investments OR G30 for business financial planning) and then one of your choice e.g. G60, G70, H15.

    The reality of course is that where there is choice, most people pick the exams that are most relevant to their business and their clients. Most IFAs major on private clients, so G20 was usually preferred to G30, just as AF3 and AF4 are preferred to AF2.

    The related point is one of stimulation. People are more likely to find a textbook stimulating (!) if its related to their work. Its only really a minority of people who find ‘new’ material stimulating. By contrast, G30 in parts would strike many in IFAland as exceedingly tedious, given its large chunks of accountancy and company tax. I think the major benefit I took away from sitting G30 back then, is that it has subsequently helped me pass other exams far removed from normal private client work…

  7. Sort of related and a bug bear of mine……I have made a plea to the CII, but I would like to see the exam sittings at times other than tax year end and school half term weeks! As a mother with a school age child, it is nearly impossible to take any of the exams. Why can we not have sittings which are say June and November and therefore don’t interfer with much needed holidays and time when we need to be in our businesses focussing on the budgets etc.? 15th April and 14th October are when e.g. AF3 is available. 15th April is too close to tax year end and low and behold it is a school holiday! Please, please could a Director at the CII consider my request on behalf of all us younger IFAs out there who have kids and businesses to run, as well as attaining qualifications! It seems my plea directly to your customer contact centre last year fell on deaf ears.

  8. Anyone who works in the corporate sector should hold the AF2/JO3 combination as compulsory exam. The decision as to whether or not it is taken should not be on ease of subject matter. And I would be wholeheartedly disappointed if the CII were pressed to water it down to “make it more relevant”. It is about understanding the bigger picture and challenges SME’s face. The exam as it stand offers a greater breadth of knowledge than just Keyman / Director Share Protection and actually makes you think about the full picture when dealing with SME owners, and means you can add added value by discussing areas that may not be a “fee charging” event. It differentiates you against advisers that “play in this field”. It’s a market where you need to be top of your game, and know that whatever curve ball an accountant or solicitor of the SME throws at you, you stay standing and are seen as on par to them.

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