Chartered Institute for Securities & Investment (CISI) Qualifications Wealth Management and Financial Planning Syllabus

Wealth Management and Financial Planning syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Wealth Management and Financial Planning in Chartered Institute for Securities & Investment (CISI) Qualifications, not a summary of it.

1. 1

   The Financial Planning Process

   3 topics

   • Establishing the client relationship
     • Fact-finding and know your client
     • Objectives, time horizon and capacity for loss
   • Attitude to risk and risk profiling
     • Risk tolerance vs risk capacity
     • Suitability and ongoing review
   • Implementation, monitoring and review
2. 2

   Taxation of Investments and Individuals

   4 topics

   • Income tax
     • Personal allowance, bands and dividend/savings allowances
     • Taxation of investment income
   • Capital gains tax
     • Annual exempt amount and rates
     • Disposals, losses and reliefs
   • Inheritance tax
     • Nil-rate band and residence nil-rate band
     • Potentially exempt transfers and reliefs
   • Stamp duty, VAT and the residence/domicile basis
3. 3

   Tax-Efficient Wrappers and Products

   3 topics

   • Individual Savings Accounts (ISAs)
     • Cash, stocks and shares, and Lifetime ISAs
     • Subscription limits and transfer rules
   • Enterprise Investment Schemes (EIS) and VCTs
   • Onshore and offshore investment bonds
4. 4

   Pensions and Retirement Planning

   3 topics

   • State and workplace pensions
     • State Pension and National Insurance record
     • Auto-enrolment and defined benefit/contribution schemes
   • Personal pensions and SIPPs
     • Annual allowance, tapering and carry forward
     • Lump sum and death benefit allowances
   • Retirement income options
     • Annuities and flexi-access drawdown
     • Tax-free cash and uncrystallised funds
5. 5

   Protection and Estate Planning

   3 topics

   • Protection products
     • Life, critical illness and income protection
     • Trusts for life policies
   • Estate planning and wills
     • Intestacy and will structuring
     • Lasting powers of attorney
   • Use of trusts in financial planning

Wealth Management and Financial Planning flashcards for Chartered Institute for Securities & Investment (CISI) Qualifications

18 of 55 cards from the Wealth Management and Financial Planning deck — real questions with worked answers.

1. In the financial planning process, what are the six key stages a CISI adviser typically follows when establishing and running the client relationship?

   1) Establish and define the client relationship; 2) Gather client data and goals (fact-find); 3) Analyse and assess financial status; 4) Develop and present recommendations; 5) Implement the recommendations; 6) Monitor and review the plan.

2. What is the purpose of a 'fact-find' when establishing a client relationship, and what two broad categories of information does it capture?

   It systematically gathers all information needed to give suitable advice. It captures 'hard facts' (objective data: income, assets, liabilities, age, dependants) and 'soft facts' (subjective data: attitudes, goals, risk tolerance, preferences).

3. Why must an adviser assess a client's 'capacity for loss' separately from their attitude to risk?

   Attitude to risk is a psychological willingness to take risk, whereas capacity for loss is the client's objective financial ability to absorb falls in value without jeopardising their standard of living or goals. Suitability requires both, and the lower of the two should generally constrain the recommendation.

4. Distinguish between a client's 'attitude to risk', 'risk capacity' and 'risk required' in risk profiling.

   Attitude to risk = the level of risk the client is psychologically willing to take. Risk capacity = the financial ability to withstand losses. Risk required = the level of investment risk needed to achieve the client's stated goals. A good plan reconciles all three.

5. What is 'risk profiling' and what is a common limitation of using a psychometric risk-tolerance questionnaire alone?

   Risk profiling assesses a client's willingness and ability to take investment risk. A questionnaire alone can be influenced by recent market sentiment, framing and the client's misunderstanding of terms, so it should be supplemented by discussion of capacity for loss and goals.

6. In the implementation stage of financial planning, what does 'implementation' involve and who may carry it out?

   Implementation puts the agreed recommendations into action — e.g. opening accounts, buying products, switching investments and submitting applications. It may be carried out by the adviser directly or coordinated with other providers and product specialists.

7. Why is the 'monitoring and review' stage essential, and what events should trigger a review of a financial plan?

   Circumstances and markets change, so plans can drift from objectives. Reviews should be triggered by regular scheduled dates (e.g. annually) and by 'life events' such as marriage, divorce, birth, redundancy, inheritance, retirement, or changes in tax law.

8. For UK income tax (2024/25), what is the personal allowance and how is it tapered for high earners?

   The personal allowance is $\pounds 12{,}570$. It is reduced by $\pounds 1$ for every $\pounds 2$ of 'adjusted net income' above $\pounds 100{,}000$, so it is fully withdrawn once income reaches $\pounds 125{,}140$.

9. State the three main UK income tax rates and the taxable income bands they apply to for 2024/25 (non-savings income).

   Basic rate 20% on taxable income up to $\pounds 37{,}700$; higher rate 40% from $\pounds 37{,}701$ to $\pounds 125{,}140$; additional rate 45% above $\pounds 125{,}140$ (bands measured after the personal allowance).

10. What are the UK dividend tax rates and the dividend allowance for 2024/25?

    Dividend allowance is $\pounds 500$ (taxed at 0%). Above that, dividends are taxed at 8.75% (basic rate band), 33.75% (higher rate band) and 39.35% (additional rate band).

11. Explain the Personal Savings Allowance (PSA) for income tax in 2024/25.

    The PSA exempts savings interest from tax: $\pounds 1{,}000$ for basic-rate taxpayers, $\pounds 500$ for higher-rate taxpayers, and $\pounds 0$ for additional-rate taxpayers. Interest above the allowance is taxed at the taxpayer's marginal rate.

12. What is the 'order of taxation' of income for UK income tax purposes?

    Income is taxed in this order: non-savings income (e.g. earnings, pensions, rent) first, then savings income (interest), then dividend income last. Allowances/reliefs are applied to give the most beneficial result.

13. What is the Capital Gains Tax annual exempt amount for individuals in 2024/25, and how is a chargeable gain calculated in outline?

    The annual exempt amount is $\pounds 3{,}000$. A gain is broadly: $\text{Gain} = \text{Disposal proceeds} - \text{Acquisition cost} - \text{allowable expenses}$, then reduced by the annual exempt amount before tax is applied.

14. State the Capital Gains Tax rates for individuals in 2024/25, distinguishing general assets from residential property.

    For general (non-property) assets: 10% within the basic-rate band and 20% above it. For residential property (not the main home): 18% within the basic-rate band and 24% above it.

15. What is Business Asset Disposal Relief (formerly Entrepreneurs' Relief) and its rate and lifetime limit?

    It reduces CGT to 10% on qualifying disposals of a business or qualifying business assets, subject to a lifetime limit of $\pounds 1{,}000{,}000$ of gains.

16. Name three common Capital Gains Tax exemptions or reliefs available to UK individuals.

    Examples: Private Residence Relief (main home), transfers between spouses/civil partners (no gain/no loss), gains on ISAs and pensions, gilts and qualifying corporate bonds, and disposals to charity. (Also BADR and Investors' Relief.)

17. What is the UK Inheritance Tax nil rate band, the standard death rate, and the reduced rate for charitable estates?

    The nil rate band is $\pounds 325{,}000$. IHT on the excess is charged at 40% on death, reduced to 36% if at least 10% of the net estate is left to charity.

18. Explain the Residence Nil Rate Band (RNRB) for IHT, its amount and the taper threshold.

    The RNRB is an additional $\pounds 175{,}000$ band available when a residence is passed to direct descendants. It is tapered by $\pounds 1$ for every $\pounds 2$ by which the estate exceeds $\pounds 2{,}000{,}000$.

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