Abbreviated Syllabus

What does the Fellowship Examination cover?

Listed below is an abbreviated syllabus for the Fellowship examination. On submission of your examination entry form you will be sent a full and detailed syllabus. Should you wish to see a copy of the full syllabus prior to this, please contact the Institute.

It is essential that you familiarise yourself with the full syllabus in preparation for the examination.

SYLLABUS STRUCTURE

The syllabus is divided into elements. These are broken down into a series of learning objectives.

Each learning objective begins with one of the following prefixes: know, understand, be able to calculate, analyse or apply. These words indicate the different levels of skill to be tested. Learning objectives prefixed:

Know requires the candidate to recall information such as facts, rules and principles

Understand requires the candidate to demonstrate comprehension of an issue, fact, rule or principle

Be able to calculate requires the candidate to be able to use formulae or tax rates to perform calculations

Analyse requires the candidate to interpret calculations and other information given to assess a Financial Planning situation accurately and understand the relationships between the various components of a complex argument, statement, situation, etc.

Apply requires the candidate to practically apply the previous learning objectives which may include ideas, concepts, formulae, procedures, methods, principles, theories, etc. to Financial Planning related problems with a view to making suitable recommendations to meet the needs of the clients within the range of strategies available. This will involve evaluating technical information or judging best courses of action in problematic situations. This may include synthesis and evaluation.

SECTION ONE - THE PROCESS OF PERSONAL FINANCIAL PLANNING

• 1.01 know the purpose of Financial Planning
• 1.02 understand the role of the Financial Planner
• 1.03 understand the process involved in Financial Planning
• 1.04 know what documents will be required when collecting data about a client
• 1.05 understand and quantify client objectives in terms of needs, preferences, importance and time scale
• 1.06 understand personal information affecting the construction of a financial plan
• 1.07 understand what is involved in the processing and analysing of information
• 1.08 be able to calculate a client’s “net worth”
• 1.09 be able to calculate a clients income and expenditure statement
• 1.10 know what are the main topics which need to be considered when constructing a financial plan
• 1.11 be able to calculate a client’s cash and credit situation against normally accepted criteria
• 1.12 analyse existing cover against personal and property risk and recommend changes as appropriate
• 1.13 analyse the client’s financial situation in terms of savings, investments and risk, and recommend adjustments as appropriate
• 1.14 analyse the client’s provision for retirement and recommend adjustment as appropriate
• 1.15 be able to calculate the client’s tax position and recommend changes as appropriate
• 1.16 analyse the position regarding the disposal of a client’s estate
• 1.17 analyse the strengths and weaknesses of alternative courses of action
• 1.18 apply knowledge to recommend a suitable strategy for a comprehensive financial plan

SECTION TWO - CALCULATIONS INCORPORATING COMPOUND INTEREST AND THE TIME VALUE OF MONEY

• 2.01 know the principle behind the concept of time value of money
• 2.02 be able to calculate problems which require the calculation of compound and other forms of interest

SECTION THREE - PERSONAL Investment Planning

• 3.01 understand in general terms the effects of inflation
• 3.02 understand the main points a client should consider to combat the effects of inflation on income and capital
• 3.03 know the effects of changes in Bank of England interest rates
• 3.04 know the difference between real and nominal assets
• 3.05 understand the common types of risk which a client may face
• 3.06 understand the principles of portfolio planning and asset allocation
• 3.07 know a client’s understanding of, and attitude to risk
• 3.08 understand the major characteristics of common investment products in terms of risk
• 3.09 understand the factors which influence the structure of an investment portfolio
• 3.10 know what information needs to be available before decisions are made regarding asset allocation
• 3.11 understand how a portfolio might be broadly structured
• 3.12 know the basic characteristics of portfolio planning theory, random walk theory and efficient market hypothesis
• 3.13 know why assets are allocated to low and medium risk investments
• 3.14 be able to calculate an investment portfolio appropriate to a client’s requirements
• 3.15 apply knowledge to recommend a suitable strategy for a comprehensive financial plan

SECTION FOUR - CASH AND CREDIT AND/OR DEBT MANAGEMENT

• 4.01 know the major financial outgoings facing a family
• 4.02 know methods of releasing equity on property
• 4.03 know the common methods of mortgage loan repayments
• 4.04 know how interest on repayment mortgages can be applied
• 4.05 understand what may threaten mortgage loan repayments and how these threats can be covered
• 4.06 know what factors should be considered when choosing the suitability of provision for school fees
• 4.07 know the main characteristics of making provision for school fees
• 4.08 be able to calculate the appropriate means of making provision for school fees out of income
• 4.09 be able to calculate the appropriate means of making provision for school fees out of capital
• 4.10 know the potential sources of loan capital (other than by sale of assets) and recommend a choice based on established criteria
• 4.11 know by type, means of supporting charitable work financially and the main characteristics of each method
• 4.12 understand what approaches can be taken to assist a client who is, or about to be, insolvent
• 4.13 know what data on debt needs to be examined prior to recommending possible courses of remedial action
• 4.14 understand an Individual Voluntary Arrangement (IVA) - its advantages and process
• 4.15 understand what steps a creditor can take to recover a debt
• 4.16 know what important personal tax considerations should be taken into account prior to making a financial plan
• 4.17 understand in broad terms the general principles relating to income and capital gains tax planning
• 4.18 know which taxes arise from the transfer of capital during life and on death
• 4.19 know who may be liable to capital gains tax, inheritance tax and stamp duty and Stamp duty reserve tax
• 4.20 understand the effects of domicile and residence on capital taxes
• 4.21 know when a liability to capital gains tax arises
• 4.22 be able to calculate a client’s income and capital gains tax liabilities
• 4.23 analyse a client’s current tax position and liabilities
• 4.24 apply knowledge to recommend a suitable strategy for a comprehensive financial plan which takes account of the clients tax position.

SECTION FIVE - PLANNING FOR RETIREMENT

• 5.01 know the normal sources of income, other than returns on investments, available during retirement
• 5.02 know the major characteristics of State Pension provision
• 5.03 understand the pension opportunities open to employees and self employed individuals
• 5.04 know those who are entitled and not entitled to benefit under an approved occupational scheme
• 5.05 understand pension membership categories
• 5.06 know the important features of all occupational pension schemes about which information needs to be known when advising and additionally that information as appropriate to the client’s need
• 5.07 know the main effects of the legislative changes introduced by the Finance (no 2) Act 1997 (as incorporated in ICTA 1988, Ch III, ss 620) through to Finance Act 2005 in respect of personal pensions and retirement annuities, Small Self-Administered Schemes and Funded Unapproved Retirement Benefits Schemes, including implications of pensions simplification
• 5.08 understand the benefits and major policy options available in a retirement annuity contract
• 5.09 know the major conditions under which Personal Pension Plans operate
• 5.10 know how earnings and eligibility are determined in respect of personal pensions and additionally how these differ for retirement annuities
• 5.11 know the purpose and the main characteristics of Self-Invested Personal Pension schemes, Income Withdrawal plans, Phased Retirement contracts, alternatively secured pensions and unsecured pensions
• 5.12 know the contribution and benefit options normally available in respect of personal pension schemes
• 5.13 understand the limitations of pension products
• 5.14 analyse the major factors which need to be considered when choosing a personal pension plan and the broad principles upon which recommendations are based
• 5.15 understand the major factors which need to be considered when purchasing a life annuity, phased retirement, income withdrawal plans, alternatively secured pensions and unsecured pensions
• 5.16 understand how personal pensions plan holders are treated for tax purposes
• 5.17 know the types of pension separating devises available to the courts upon divorce
• 5.18 apply knowledge to recommend a suitable strategy for the retirement needs of a particular client in a comprehensive financial plan

SECTION SIX - ESTATE PLANNING

• 6.01 understand the main potential consequences of dying intestate
• 6.02 know why it is important to seek professional help in drawing up a will
• 6.03 know the major considerations which need to be taken into account before drawing up a will
• 6.04 know the validity of a will
• 6.05 understand what other matters need to be considered in connection with wills
• 6.06 understand the major characteristics of a trust including its constituent parts
• 6.07 analyse the reasons why a settlor may wish to set up a trust
• 6.08 know the common discretionary powers of trustees and why it is advisable to employ the professional services of a solicitor to draw up the trust
• 6.09 understand ways in which a settlor can influence the discretionary powers of trustees
• 6.10 analyse the major characteristics (including special treatment of income, capital gains and inheritance taxes) of the main types of trust
• 6.11 analyse the appropriateness of any existing trust arrangements and their impact on other areas of Financial Planning
• 6.12 understand the major characteristics of Inheritance Tax
• 6.13 understand the major factors which need consideration when planning for inheritance tax
• 6.14 know what mitigation of inheritance tax can be effected by virtue of trusts and assurance
• 6.15 understand the importance and effects surrounding Enduring Powers of Attorney and Living Powers of Attorney (from 2007)
• 6.16 apply knowledge to recommend a suitable tax planning strategy for a comprehensive financial plan to meet the client’s objectives

SECTION SEVEN - FINANCIAL PLANNING FOR THE BUSINESS OWNER

• 7.01 know the major criteria which needs to be considered before attempting to set up a business
• 7.02 know what legal forms a business can take and be able to describe the major characteristics of each
• 7.03 know the benefits of preparing a business plan
• 7.04 understand the preparation of a business plan designed to raise funds for starting up, or expanding a business
• 7.05 understand the potential sources of funding for starting up or expanding a business
• 7.06 know what financial statements are required by a business
• 7.07 analyse a client’s balance sheet
• 7.08 know why detailed profit and loss accounts are produced in addition to the statutory requirements
• 7.09 analyse a client’s detailed profit and loss account and analyse action as appropriate
• 7.10 apply knowledge to recommend a suitable strategy to meet the clients business needs
• 7.11 understand the purpose and formulae of different types of accounting ratios and measures used to analyse business performance
• 7.12 be able to calculate the value of a small privately owned company
• 7.13 know what factors may increase/decrease the price
• 7.14 understand the liabilities and risks facing a business and its owners
• 7.15 understand appropriate protection strategies for consideration by a client
• 7.16 know the issues to be considered when planning the succession of a small business
• 7.17 understand what other steps, in addition to financial protection strategies, can be taken to ensure the successful succession of a business
• 7.18 know those legal benefits which employers can provide for their employees
• 7.19 know the variations in occupational pension schemes in terms of how they are funded, the benefits they provide and the manner in which they are established
• 7.20 understand the major factors which need to be considered when setting up an occupational pension scheme
• 7.21 know the various types of, and characteristics of occupational pension schemes
• 7.22 know the main characteristics of Value Added Tax
• 7.23 understand how businesses are treated for tax purposes
• 7.24 understand the implications for capital gains tax liability on the sale of a business
• 7.25 understand the main exit routes and characteristics available to a business owner
• 7.26 understand with brief descriptions, what are the potential outcomes facing a business with serious financial difficulties

PROTECTION PRODUCTS

Appendix I

• App 1.01 know the main types of Term Assurance and the major characteristics including tax treatment of each
• App 1.02 understand the major features of a whole life assurance policy
• App 1.03 understand the major characteristics, including tax treatment, of the common types of whole life policies
• App 1.04 understand the various types of health insurance cover and the main characteristics of each
• App 1.05 analyse by example typical uses of protection products
• App 1.06 understand what basic factors need to be considered when choosing a protection product
• App 1.07 understand the basic factors which should be considered when choosing a protection product provider
• App 1.08 apply knowledge to recommend a suitable strategy for a comprehensive financial plan to meet the client’s objectives and which ensures a client is protected against all eventualities

SAVINGS AND INVESTMENT PRODUCTS

Appendix II

• App 2.01 understand the major characteristics of Bank, Building Society and National Savings products
• App 2.02 analyse the major characteristics of securities
• App 2.03 understand the major characteristics of packaged products
• App 2.04 understand how packaged products are treated for tax purposes
• App 2.05 understand why packaged products can suit client needs and circumstances
• App 2.06 apply asset allocation and other knowledge to recommend a suitable strategy for a comprehensive financial plan to meet the client’s objectives

LONG TERM CARE PRODUCTS

Appendix III

• App 3.01 understand the major characteristics of the different types of long-term care products
• App 3.02 analyse the effects and amounts of state benefits that may be available to clients in need of care
• App 3.03 understand the tax treatment of state care benefits
• App 3.04 understand why packaged products and other investments can suit client needs and circumstances
• App 3.05 apply asset allocation and other knowledge to recommend a suitable strategy for a comprehensive financial plan to meet the client’s objectives

Study Aids

To help you in your preparation for the Fellowship examinations we have developed the following system of study and revision:

• Read and understand the full syllabus
• If you are not already a Certified Financial Planner Licensee you should familiarise yourself with the CFP Syllabus and Tuition pack
• Adhere to the standards set out in the CFP Standards for a Comprehensive Financial Plan (available from the Institute)
• Choose the relevant books from the recommended reading list according to your skills and areas of weakness
• Attend the Preparation Days and receive guidance from qualified IFP Fellowship facilitators

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