Investment principles and risk is one of the six core units that make up the CII Diploma in Regulated Financial Planning. It accounts for 20 of the 100 credits that are needed. That makes it one of the ‘meatiest’ units in the diploma suite.
The CII describe R02 as a subject that “develops your knowledge and understanding of investment products and the application of the investment advice process.” This recognises the fact that a robust knowledge of the various investment products available in the marketplace is key when advising clients.
The investment principles covered in R02, spill over into R03, 4, 5 and 6, so can be considered part of the base knowledge needed in order for the subjects covered in the other R0s to make sense.
Many candidates find R02 a tough exam to crack because it covers a wide range of investment topics that they might never have studied before. The R02 exam is two hours long and there are 100 questions to answer; 72 standard multiple-choice questions and 28 multi-response questions.
The national pass rate for R02 in 2021 was 65%, as shown in the table below.
|Recommended study hours
|National pass rate (2021)
|R01 Financial services, regulation and ethics
|R02 Investment principles and risk
|R03 Personal taxation
|R04 Pensions and retirement planning
|R05 Financial protection
|R06 Financial planning practice
The 2021 national pass rates quoted in the table above, published by the CII, show the percentage of candidates who passed the exam during the year, calculated by dividing the number of passes by the number of sittings. This doesn’t tell you whether the sitting was the candidate’s first sitting or a resit. What is does tell you is, of all the sittings in each year, approximately a third of candidates fail this exam. BTS work with many candidates who have previously failed the exam before reaching out for support. Their first question is often – how do I pass the CII R02 exam?
The first thing to say is that many of the questions in R02 may be asking you about a particular subject, for example OEICs, but the answer options often include elements that relate to other investments, such as Investment Bonds.
So, in order to answer the question on the OEIC you have to be clear that features such as ‘the 5% rule’ or ‘top-slicing’ apply to Bonds, not OEICS.
This means that each question could actually be testing application of knowledge from more than one learning outcome.
Add to this the fact that many candidates find the CII question wording tricky to decipher, and the result is often that it feels like more than one of the answer choices could be right! That’s because subjects such as ‘risk’ and ‘most appropriate solution’ are not black and white. Investing is full of grey areas.
Maximising your study time in the right learning outcomes is a must! Some are more heavily weighted than others. The most heavily weighted R02 learning outcomes, include…
L01 which is all about the different asset classes and some alternative investments. L06 which examines the various collectives and investment products. L07 covering the advice process, and L08 focussing in the investment planning principles.
You also need to be ready for the fact that the R02 exam questions will feel wordier than you expect. They are notoriously full of extra text that may not be relevant to the question being asked or are fundamental in being able to identify the right answer!
As we mentioned, R02 has a wide syllabus, so candidates need to make sure that they don’t spend too much of their study effort on one subject at the expense of others. You can pass R02 if you forget a few of the more detailed facts around a particular subject, but your base knowledge must be solid as a rock.
To maximise success in regulated exams, BTS follow a simple model, based on our proven STEP Approach:
View Our R02 Exam overview/toolkit to purchase any R02 Study support including Study Guides, e-Learning modules, online workshops and study buddy.
Find out more in depth help and advise to structure your R02 studies by viewing our R02 Study Plan.
Chat with other R02 candidates in the dedicated BTS R02 online forum room to help keep up to date , find out any new information and gain help and advise from others.