AF4 Study Plan (March sitting)

Time to open up the BTS study guide and dive into Chapter 1 - Economic environment and its impact on investment performance and investment decision making.

Economic factors account for many of the risks that clients will face as part of holding different assets or investments and understanding them is important to create a holistic plan and evaluating whether they are right for any particular client based on their circumstances. In this chapter we are however going to recap some of the main themes that will enable you to widen our understanding of the impacts on clients and their investments.

We are therefore going to look at these main areas:

1. Economic, political, and business cycles and their impact on investments
2. Key economic terminology
3. Inflation, interest rates, and other economic factors that create risks for investors

Time to tackle Chapter 2 - Direct Investments.

In Week 1, we have explored some of the economic factors and risks that affect the asset classes. In this week we will therefore be checking our knowledge, and ensuring that we understand the features of each of the investments.

We will also begin to introduce the mathematics required for this exam in this Chapter, with some of the formulas that show the returns from the asset classes, such as yields and holding period returns.

So this week, we are going to look at these main areas:

1. Cash Investments
2. AF4 Calculations
3. Fixed-interest securities
4. Equities
5. Property
6. Alternative investments

Chapter 3, now that we have looked closely at our individual asset classes,  it's time to explore how these asset classes combine within collective investments. This is a meaty topic on the AF4 syllabus, so we recommend giving yourself two weeks to study this chapter.

We look at the wide range of investment opportunities that are available to clients and in later chapters we will look at understanding how we can evaluate their performance.

In this chapter, we will continue to explore some of the mathematical concepts that apply to these investments, continuing to look at returns, but also seeing the effects of gearing, and how taxation works within the rules of the different investments.

Weeks 3 and 4, we are going to be looking at these main areas:

1. Indirect investment products
2. Unit Trusts and OEICs
3. Investment Trusts
4. Life-assurance based investments
5. Property-based investments
6. Private equity
7. Annuities
8. Derivatives
9. Hedge funds and absolute return funds
10. Structured products
11. Sharia-compliant investments
12. ISAs and Pensions

In week 5, we are now going to cover Chapter 4 – Individual Company performance and company accounts. In Week 2, we looked at equities and the number of investment rations that could be used when deciding whether it is worth investing in any firm.

Within your AF4 exam, you may well get an extra from the company accounts and be asked to comment on the various ratios that can be calculated from the data, and the impact of this information on a potential investor. It is therefore important that we understand what makes up a set of company accounts.

In Week 5, we are going to be looking at these main areas:

1. Company Accounts
2. Financial Statements
3. Analysing companies

In week 6, we are now going to cover Chapter 5 -Types of measurement of risk and returns. We’d suggest, if you haven’t already, that you invest in a scientific calculator as you are going to be using this throughout the chapter.

This week we are going to be reviewing some of the theories around the measurement of risk, and calculations to monitor the returns from different investments. All of these are tools used by fund managers in their portfolio construction which we will look at in Week 7.

In Week 6, we are going to be looking at these main areas:

1. Return calculations
2. Risk management
3. Investment theories
4. Measurement of returns

In Week 7, we are now going to cover Chapter 6 – Main principles governing how to construct an investment portfolio, investment theories and management styles.

In this Chapter, we will look at how a fund manager would construct an investment portfolio using the investment theories we have looked at in the previous weeks. We will also look at how we can use benchmarks to monitor portfolio performance, incorporating the risk adjusted measures we saw in Chapter 5.

We are going to be looking at these main areas:

1. Portfolio construction
2. Portfolio optimisation
3. Portfolio create consideration
4. Management styles
5. Performance evaluation

In Week 8, we are going to cover Chapter 7: Portfolio management services and the advice process.

In this chapter, we will be looking at how advisers engage with clients and we will then be moving on to some of the more service and skill-based implications of portfolio management.

We are going to be looking at these main areas:

1. Providing investment advice
2. Risk profiling
3. Defining objectives
4. Asset allocation
5. Fund selection
6. Wrapper selection
7. Platform services
8. Investment Policy statement
9. Investment Reviews
10. Investment management services
11. Drawing income from a portfolio

This looks like a lengthy chapter, however a lot of the concepts within this chapter you will likely already be familiar with such as risk profiling and wrapper selection.

To score high marks on the AF4 paper, you must be able to apply your technical knowledge of investment planning to the scenarios posed in the exam questions, be able to explain the rationale behind your answers and handle a range of formulae-based calculations.

As the application of knowledge is so crucial, it is considered that the case study approach to learning is highly appropriate in preparing for the Advanced Diploma. 

Past papers should be priority in the two weeks leading up to the exam. By sitting past papers under timed conditions you will get a clear indication on where you need to put in any extra effort and they will help you understand the different exam questions format. You will know how they are worded and how to interpret them to provide the correct answers.

You can access free past papers below:

• March 2024
• October 2023
• March 2023
• September 2022
• February 2022

There is also a full specimen paper at the end of the BTS study guide which should be worked through under exam conditions. Once complete, review your answers and establish any areas of development that you will need to cover before sitting the actual AF4 exam.

Prior to your exam sitting, it is important that you are familiar with the software that you will be using for your exam. The CII have provided a demo for On-screen written exams, to ensure that you are familiar with the software. You can access this demo here!

On-screen exams can be sat remotely or at an exam centre. If you are sitting the exam remotely, you will need to check that the computer that you are using has everything you need to access the remote exam system. You can review the minimum system operating requirements by clicking here!

You will also need a special browser to access your exam. You can download the secure browser here before your exam date. 

If you are sitting your exam at a centre, make sure you plan your journey ahead of your exam date, ensuring you have enough time to make it to the centre on time and preventing any unnecessary stress! 

Finally, good luck with your exam! We hope the hard work and time that you have put into your studies pays off.