Tag Archives: ciiaf4

AF4: the essential guide

So you want to pass the CII’s AF4 exam first time? That’s great but the bad news is that AF4 is the third hardest CII AF exam. Of the three written ‘technical’ AF exams (AF1, 4, 7), the pass rate for AF4 is just 50% (the latest published results). This means that you need to focus your preparation in the right areas.

A typical AF4 exam also has a different ‘look’ to the other AF written exams that you need to be familiar with.

To see the full pass rates and how these have actually declined for AF4 over the years, go to this page.

What can we learn from past AF4 exam papers?

A lot. We all know that working through past exam papers is one of the best ways to prepare for the CII’s AF4 exam.

Tip: Don’t just skim through them, start off with a blank sheet of paper and complete at least two of them under exam conditions.

Tip: Start this process towards the beginning of your study, not at the end. Learn about the technical aspects and also about how the examiners’ expect you to set your answers and apply your knowledge. Sure, you’ll make lots of mistakes but view this as a way of learning, not to assess whether you are ready for the exam or not.

The AF exams do tend to cover some similar areas from one exam to another. There will always be exceptions to the rule but if you get a ‘typical’ AF4 exam, there’s a lot to be learned by looking at what is examined, and how. If we take an example AF4 exam paper (May 2022 paper).

Here are some high-level points:

  1. This exam may not resemble what you do in your day job. For example, the syllabus includes direct investments so you might be asked to work out the cover yield, NAV, earnings per share or dividend cover. Most advisers don’t have the FCA permissions to advise on securities, let alone the inclination to do so!
  2. This AF4 exam had 32 questions (or part questions). You won’t find this in other AF exams but this is typical of AF4. Many of them are only worth a few marks (6 or under). This is how the examiners’ are able to test widely across the syllabus – so you need a real breadth of knowledge.

AF4 exam: question types

I’ll mention the types of question that are used in AF4. These are typically very different to the other written AF exams. In the May 2022 paper, only three instructions (or verbs) were used:

  1. List, state or identify. There were 14 questions (or part questions). Typically, this type of question is only worth 3-6 marks.
  2. Comment, outline, describe, or explain. There were 10 questions (or part questions) that used these verbs. These require more analysis and a higher level of detail than the first group of verbs  shown above.
  3. Calculate. There were 5 questions (or part questions).

Tip: In the AF4 exam, the instruction is the examiner telling you what to do. List or state does not need any amplification; a couple of words or short sentence will be fine.

Tip: Around half of this paper needed you to describe, outline or explain. With this type of question, the examiner will usually want you to show what you know, and link this back to the information you have been given. A one or two word answer will not be enough to score well.

Tip: With a calculation question, marks are awarded for demonstrating the correct process. So make sure that your calculation is laid out clearly. One way of doing this is to ‘label’ each step of the process (particularly if there are 10 marks for a question, as in this exam). Believe it or not, you can get most of the marks for doing this even if you get the answer wrong.

AF4: the technical knowledge you will need

Past performance isn’t a guide to future performance. We know this just like we know that a technical exam like AF4 will test across the broad syllabus. Although AF4 has some recurring themes, they will also test some more peripheral areas of the syllabus.

These areas have historically been frequently tested in AF4:

  • Performance measurement, e.g. sharpe and information ratios
  • Direct investments
  • Equity ratios, e.g. dividend yield, NAV
  • Passive investments, ETFs and benchmarks
  • CAPM, alpha and beta
  • Time value of money
  • Macro economics
  • Investment styles, e.g. momentum, vale and GAARP
  • Making client recommendations
  • Analysing company accounts
  • Risk profiling
  • Risks

Getting to the point where you can pass

You know that you are going to have to put in some hard yards with AF4. The CII suggest 150 hours of study is required and unfortunately, many people will need approaching this amount of study. Which begs the question, what will this look like?

For general AF study tips, click here

Free revision material for AF4, click here

Study whilst on the go. Our unique audio material gives you 6 hours of AF4 content that helps you to fit your learning in around the rest of your life. Click here for details.


Best wishes. Prepare well and past first time.

Sam Patterson