Assignment

DFP1B-1v2.1 Financial Planning

Student identification (student to complete)

Please complete the fields shaded grey.

Student number
Student name
Telephone number

Assignment result (assessor to complete)

Result — first submission (Details for each activity are shown in the table below)

Result — resubmission (if applicable)

Result summary (assessor to complete)

		First submission	Resubmission (if required)
Case study assignment questions	Section 1
	Section 3
	Section 4
	Section 6
	Section 7
	Statement of Advice
	Cash flow tables
	Seven–year projections

Feedback (assessor to complete)

[insert assessor feedback]

Before you begin

Read everything in this document before you start your assignment for Financial Planning.

About this document

This document includes the following parts:

• Part 1: Instructions for completing and submitting this assignment

• Part 2: The case study

• Appendix 1: Fact finder and risk profile

• Appendix 2: Financial planning questions (assessment workbook):

– Case study questions

– Statement of advice (SOA) template

– Cash flow tables (financial position after implementation of strategy)

– Five-year projection table

• Appendix 3: Assumptions.

Saving your work

Download this document to your desktop, type your answers in the spaces provided and save your
work regularly.

How to use the study plan

We recommend that you use the study plan for this subject to help you manage your time to complete the assignment within your enrolment period. Your study plan is in the KapLearn Financial Planning subject room.

How to use the sample case study and SOA in KapLearn

The sample case study provides a model to help you prepare your SOA for this assignment. The case study explains the process that is undertaken to develop the SOA with reference to an example and it is a very useful resource. Download the sample SOA and refer to it as you work through the learning materials for this subject.

Before you start work on this assignment, go back to the sample SOA and:

• compare how the SOA matches with the goals and objectives identified in the case study

• consider what information has been included in the SOA

• consider why this information has been included.

This exercise will help you prepare an SOA for this assignment that addresses your client’s goals. Please bear in mind that not all SOAs are exactly alike in their construction, but all have common heading topics within them. Accordingly, there may be minor differences between the sample SOA and the SOA template in this assignment. However, all the required compliance elements will be included in both formats.

Part 1: Instructions for completing and submitting
this assignment

Completing the assignment

The assignment

For this assignment you are required to complete the following tasks:

In your assessment workbook:

• answer the assignment questions as they relate to sections 1, 3, 4, 6 and 7 of the case study

• complete the template SOA for your client, using the data in the case study, the fact finder and risk profile

• complete the two (2) cash flow tables

• calculate the five year projections.

The information and resources that can assist you in answering the questions in this assignment can be primarily sourced from the Foundations of Financial Planning text and the sample case study. Some data will have to be externally sourced, but the assignment template will clearly indicate where this is necessary.

You are expected to analyse the 11 areas covered in the data analysis stage, explained in Topic 2, as well as review the sample case study and sample SOA. Additionally, you will need to weigh up the client’s opinion against your own analysis to determine the important areas that need to be addressed for the client.

Although the case study may indicate that the client does not wish to have advice provided about a specific area, you need still to evaluate the situation, provide clear reasons as to why, or why not, review the area, and make referrals to specialists if necessary in the relevant sections of the template.

You do not have to provide retirement planning calculations and recommendations.

However, you must consider the appropriateness of all the investments held by Jessica. If you recommend any change to her current asset allocation (including those in her superannuation fund), you must explain why this action is appropriate. That is, why there is a need to change the asset allocation, or to replace or sell an investment.

With regard to insurance, you are not expected to provide a detailed analysis of Jessica’s needs. However, this area still needs to be examined. If your analysis shows that she requires additional insurance and could benefit from a review, you should advise her of this. Alternatively, clearly explain why you believe her current cover is sufficient.

More information regarding requirements for providing advice is included throughout the assignment.

Word count

The word count shown with each question is purely indicative. You may exceed the word count by a minimal amount, however, please do not include additional information which is outside the scope of the question.

The Jessica Bigge case study

The case study steps you through the financial planning process, from initial contact with Jessica Bigge, to the development and documentation of a financial strategy as an SOA to meet her needs.

Fact finder and risk profile

The fact finder for Jessica and her risk profile are provided. You will find these in Appendix 1.
The data in these documents has been used to complete some of the sections in the SOA.
You will need to refer to these documents to complete the financial position tables for your client.

Additional research

You will be required to source additional information from other organisations in the financial services industry to find the appropriate product/s to meet Jessica’s requirements, and perhaps to calculate your service fees.

Submitting the assignment

You must submit your completed assignment in a compatible Microsoft Word document. You need to save and submit this entire document — not just Appendix 2: Financial planning questions (assessment workbook).

Do not remove any sections of the document.

Do not save your completed assignment as a PDF.

The assignment must be completed before submitting it to Kaplan Professional Education. Incomplete assignments will be returned to you unmarked.

The maximum file size is 5MB. Once you submit your assignment for marking you will be unable to make any further changes to it.

You are able to submit your assignment earlier than the deadline if you are confident you have completed all parts and have prepared a quality submission.

The assignment marking process

You have 12 weeks from the date of your enrolment in this subject to submit your completed assignment.

Your assessor will mark your assignment and return it to you in the Financial Planning subject room in KapLearn under the ‘Assessment’ tab.

‘Not yet competent’ and resubmissions

Should sections of your assignment be marked as ‘not yet competent’ you will be given additional opportunities to amend your responses so that you can demonstrate your competency to the required level.

You must address the assessor’s feedback in your amended responses. You only need amend those sections where the assessor has determined you are ‘not yet competent’.

Make changes to your original submission. Use a different text colour for your resubmission. Your assessor will be in a better position to gauge the quality and nature of your changes. Ensure you leave your first assessor’s comments in your assignment, so your second assessor can see the instructions that were originally provided for you. Do not change any comments made by a Kaplan assessor.

Units of competency

This assignment is your opportunity to demonstrate your competency against these units:

FNSASICZ503A	Provide advice in financial planning
FNSFPL501A	Comply with financial planning practice ethical and operational guidelines and regulations
FNSFPL502A	Conduct financial planning analysis and research
FNSFPL503A	Develop and prepare financial plan
FNSFPL504A	Implement financial plan
FNSFPL505A	Review financial plans and provide ongoing service
FNSFPL506A	Determine client requirements and expectations
FNSINC401A	Apply principles of professional practice to work in the financial services industry
BSBITU402A	Develop and use complex spreadsheets

We are here to help

If you have any questions about this assignment you can post your query on the ‘Ask your Tutor’ forum in your subject room under the ‘Help’ tab. You can expect an answer within 24 hours of your posting from one of our technical advisers or student support staff.

Part 2: The case study

Introduction

You are a financial planner for EANWB Financial Planning and authorised to provide financial product advice on a range of investments (excluding direct shares), superannuation and retirement planning, and insurance and risk protection.

You are also able to provide taxation information that is incidental to the advice provided. In other words, you can provide information about any potential tax savings or tax benefits that could result from your recommendations, but you must refer the client to a tax professional for specific tax advice.

You do not have the authority to provide estate planning or property advice and you must refer clients to suitable professionals should you identify they need advice in areas for which you have not been appropriately authorised and trained. (Refer to the sample SOA and the wording used regarding tax, estate planning and real estate, as well as the summary of what advice areas are covered, and what are not, at the beginning of the sample SOA.)

Section 1: Meeting your client

The first phone call

Jessica Bigge has agreed to speak with you following a suggestion made to her by her bank’s personal lending officer who knows you and is respectful of the quality advice you provide to your clients. She was in the process of successfully organising a loan to purchase her car at the time.

Jessica is unsure of what is involved in personal financial planning, but concedes that planning for her future financial objectives could be of value. She agrees to have her contact details passed on to you by the bank’s lending officer so that you can tell her about what is involved in the financial planning process, what the possible benefits might be to her, and costs involved.

When you phone Jessica, you provide her with details about the financial planning process, and why you will need to ask her for certain types of financial information. You stress that you work for a licensee (a person authorised by the Government to deal in financial products) and any information she gives you will be treated confidentially. You let her know that this information will only be used to provide the financial advice you consider will meet her needs. You tell her all this information is in the Financial Services Guide (FSG) that you will send her.

Jessica is reassured by your introduction so you proceed. You explain you need her to contribute to the compilation of a financial profile in order to help you work out how she can best meet her financial goals. This means that she will need to tell you what she owns, what she owes, what she earns and her living expenses. She can record all this information in the fact finder you will send her with the FSG. You inform Jessica that the fact finder also includes a risk profile section and the information she provides you will give you sense of her appetite for different financial planning strategies.

You make a date and time with Jessica to come to your office and take down her address and phone numbers. You ask Jessica to bring along to the meeting her completed fact finder and as much financial information as she can, such as income details, expenses, superannuation, insurance details, etc.

When you have concluded the call, you make a file note about the conversation including the date, the potential client’s name, and the name of the person who referred her to you. This is the start of your paper trail. You also complete some of the initial details in your data collection form so that it looks like Table 1.

Finally you write to Jessica, as promised during your initial conversation, and include the fact finder, the FSG and a checklist of the information she needs to bring to the meeting.

Table 1 Personal details

	Client 1				Client 2
Title	Miss
Surname	Bigge
Given & preferred names	Jessica
Home address	18/43 Benton St, Rozelle, NSW.
Business address	n.a.
Contact phone	(02) 7766 5544
Date of birth	15 July 1986
Sex		Male	û	Female		Male	Female
Smoker		Yes	û	No		Yes	No
Expected retirement age	Haven’t really thought about it, but probably 66

The first meeting

Jessica arrives at your office for the meeting. After greeting her and offering her a glass of chilled water, she confirms that she received your package of documents and that she has filled in the fact finder and the risk profile.

You then take her through the key elements of the FSG, including your role and capacity to assist her with her planning needs and your company’s fees. You make sure that Jessica understands this information before you proceed to the next step.

Collecting the data

You learn the following information about Jessica through a process of thorough and polite questioning. From time to time she provides you with a relevant document to confirm her financial situation. You confirm the details in the fact finder as you proceed.

Jessica’s current situation

Jessica, born 15 July 1986, is single with no dependants, and lives in a rented flat for which she pays rent of $460 per week.

Jessica is a marketing manager for a mining engineering company and has been with that firm for six years.

Jessica earns $70,000 p.a. and receives superannuation guarantee (SG) contributions from her employer in addition to this.

Jessica owns a new Mazda CX5 that she recently borrowed $39,000 from the bank to purchase.

The loan is over five years at a fixed rate of 10% p.a. with the repayments being $850 per month. There is a prepayment fee of $175, though this fee is waived if the loan is refinanced to another product with the same bank. The car has full comprehensive insurance with an annual premium of $1500.

Jessica’s needs and objectives

During your conversation with Jessica it becomes apparent that her principal objective is to save for her own home. At this stage she is unsure of the location where she would like to buy but it would be a unit.

On her own calculations, based on what she feels comfortable in borrowing and with her savings, she could afford a unit up to a purchase price of $550,000. She also said that she would like to have saved at least 15% of the purchase price and if possible, be able to purchase her first home in no more than 5 years time.

She is also concerned about the debt she has incurred buying her car and would like to know the benefits and ramifications of paying it off early, particularly in terms of her primary objective of saving for, and purchasing, her first home.

Jessica admits that she knows very little about the sharemarket, how it works, or what it actually means to own shares. However, she is keen to learn more about it following her success with the purchase of Westpac Banking Corporation shares.

Jessica is in good health and believes the insurances within her superannuation fund provide adequate cover.

Jessica does not place superannuation and retirement planning as a priority at the moment, saying that retirement is a long way off and her employer looks after her superannuation anyway.

Jessica does not have a will or powers of attorney in place, and is not overly concerned about the adequacy of her estate planning.

Superannuation

Jessica has $32,000 in her employer’s default superannuation fund, the ABXY Super Fund, and is invested in a ‘balanced’ portfolio. Jessica joined the fund on 19 January 2007.

Jessica does not make any additional contributions to her superannuation fund.

The fund has returned the following, after fees and tax:

2007/08	2008/09	2009/10	2010/11	2011/12	2012/13
–4.5%	-9.5%	8.9%	10.2%	2.1%	8.3%

The investment objective of the fund is to achieve returns after tax and fees that exceed the inflation rate, as measured by the CPI, by at least 3% p.a. over rolling five-year periods.

The asset allocation for Jessica’s balanced growth in her superannuation fund is:

Cash	7%
Australian fixed interest	12%
International fixed interest	10%
Australian equities	30%
Property	18%
International equities	23%

Insurance

Jessica’s superannuation fund provides a death and total and permanent disability (TPD) benefit of $50,000 in addition to her accumulated superannuation value. The premium is $1.50 per week for this level of cover and is deducted from her fund.

Jessica has no other personal insurance cover.

Jessica’s car has full comprehensive insurance with an annual premium of $1500.

Jessica also has home contents insurance cover of $20,000 with an excess of $100 including legal liability cover of up to $20 million. Jessica pays $30 per month from her credit card for this policy.

Jessica has adequate private health insurance cover that she pays $110 per month for on her credit card. This premium includes the private health insurance rebate.

Jessica has advised you that she is comfortable with the insurances she has in place and does not believe that she requires any further advice at this time.

Investments

Jessica has $57,000 in a term deposit earning 4.15% p.a. that is due to mature shortly. She plans to use these funds and future savings towards the purchase of her own home in about 5 years time, or earlier if possible.

Following advice from her uncle at a family barbecue, Jessica purchased 59 Westpac Banking Corporation shares on 25 November 2008 at $16.93. The full dividend received for the year is $1.66 per share fully franked and dividends received are not reinvested.

Jessica also has a small transaction account where her pay is deposited. This account is used to pay various expenses and her credit card. The account, on average, would have $1000 and it does not receive any interest.

Other information

Jessica has a credit card with a limit of $5000 that she uses for all her general expenses and entertainment. However, she does not spend up to her limit and her average expenses are $900 per month, (including home contents and health insurance), which she repays within the interest free period.

Each year Jessica goes on a two-week cruise with a friend, which costs $2500.

In addition, she usually spends two weeks with her family during her employer’s Christmas leave period.

Jessica is very healthy and has taken very little sick leave and has accumulated 54 days sick leave.

Other expenses include a donation to the National Breast Cancer Foundation of $10 per week, tax deductible ‘bucket’ donations of $10 p.a. to disaster relief funds, and accountant’s expenses of $150 p.a.

Jessica does not have any dependants and both her parents are well, fit and active. She has an older brother who is married with two young children and a younger sister who still lives with her parents.

Risk profiling

Jessica completed the risk profile section in the fact finder prior to attending the meeting. The completed fact finder and risk profile are in Appendix 1 of the assignment.

Closing the interview

Prior to concluding your meeting with Jessica, you review the information provided to her to check that it is complete and accurate.

Jessica is naturally curious about the next step in the process. You answer some additional questions she has about what happens next. You explain that with her agreement you will prepare a written report, an SOA, based on the information she has just shared with you. The SOA will be a financial plan detailing a number of actions she could take to meet her financial goals

Jessica agrees to proceed to the next stage of the financial planning process, and you make an appointment with her to present the plan in a fortnight.

There is a series of questions relating to Section 1 in the assessment workbook that you need to answer. Your answers to these questions are your opportunity to demonstrate your ability to establish a relationship with a client.

Section 2: The fact finder and risk profile

After this meeting and when you are in professional practice you would normally take the time now to complete a fact finder.

However, this template has already been prepared for you based on the information given by Jessica. You will find that fact finder and risk profile in Appendix 1.

Take some time now to familiarise yourself with Jessica’s fact finder and risk profile to confirm that all the information recorded is correct. You will need to refer to this data when you are completing the SOA, the cash flow tables and the five–year projections.

Section 3: Analysing the data

The next step in the financial planning process is to analyse the data provided by Jessica. You do this to ensure that you can fully understand her financial situation and needs and are therefore in a position to design a plan that addresses her goals and objectives.

By analysing the data provided under the following headings you can now start thinking of the strategic options that may be appropriate for Jessica, leading you to then preparing a financial planning strategy that is designed to meet her needs:

• current position

• debt management

• risk/protection

• savings

• investment

• retirement funding

• future income stream

• social security issues (if any) and implications

• present and future taxation issues

• estate planning.

There is a series of questions relating to Section 3 in the assessment workbook that you need to answer. You will use your answers for Section 3 to help you decide on your recommendations for Jessica. Your answers to these questions are your opportunity to demonstrate your ability to analyse a client’s needs in preparation for developing a strategy that aligns with their requirements.

Section 4: The strategy

Now that you have analysed the data and selected strategies that could be appropriate, you are in a position to start drafting the preferred strategy you believe is appropriate for Jessica. You will then be able to research and select possible products that can support the implementation of that strategy. All of this information you will use in your SOA for Jessica.

There is a series of questions relating to Section 4 in the assessment workbook that you need to answer. You will use your answers for Section 4 to help you decide on your recommendations for Jessica. Your answers to these questions are your opportunity to demonstrate your ability to develop a strategy that aligns with her requirements.

Section 5: Completing the SOA

When you have determined the financial planning recommendations you believe are appropriate for Jessica’s needs, you then need to prepare her SOA. Use the SOA template provided in the assessment workbook.

Section 6: Presenting the SOA

You meet with Jessica as arranged to present her SOA. You take the time to outline the proposed strategies and recommendations, confirming throughout that Jessica understands the plan and how it has been designed to meet her needs.

Satisfied with your explanation of the plan and responses to each of her questions, Jessica agrees to go ahead with your recommendations.

There is a series of questions relating to Section 6 in the assessment workbook that you need to answer. Your answers to these questions are your opportunity to demonstrate your ability to continue to engage your client.

Section 7: Providing ongoing service

Jessica is not sure she will have time for regular reviews of her financial plan. She expresses the opinion that the advice seems comprehensive with no need at this stage to commit to scheduled reviews.

There is a series of questions relating to Section 7 in the assessment workbook that you need to answer. The questions are your opportunity to demonstrate your ability to work with a client to implement a plan over the longer term.

Appendix 1: Fact finder and risk profile — Jessica Bigge

Important notice to customers

Your planner must act in your best interest and provide appropriate advice when making an investment or insurance recommendation.

Before making a recommendation, the planner needs to ask you about your investment objectives, financial situation and your particular needs.

The information requested in this form will be used strictly for that purpose.

Warning

The planner could make inappropriate recommendations or give inappropriate advice if you fail to fully and accurately complete this form.

Personal and employment details

Personal details
	Client 1				Client 2
Title	Miss
Surname	Bigge
Given & preferred names	Jessica
Home address	18/43 Benton St, Rozelle, NSW
Business address	n.a.
Contact phone	(02) 7766 5544
Date of birth	15 July 1986
Sex		Male	û	Female		Male	Female
Smoker		Yes	û	No		Yes	No
Expected retirement age	Haven’t really thought about it, but probably 66

Dependants (children or other)
Name	Date of birth	Sex	School	Occupation
n.a.

Employment details

Jessica Bigge OccupationMarketing manager Employment status Self-employedûEmployee Self-employed Employee Not employed Pensioner Not employed Pensioner ûPermanent Part-time Permanent Part-time Casual Contractor Casual Contractor Other Government Other GovernmentBusiness status Sole proprietor Partnership Sole proprietor Partnership Private company Trust Private company TrustNotesAny other person to be contacted? e.g. accountant, banker, solicitor, etc.

Income, tax and cash flow

Tax calculation	Client 1	Client 2	Combined	Comments
Income from employment
Salary	$70,000
Salary sacrifice	nil
Salary after salary sacrifice	$70,000
Rental income	n.a.
Unfranked dividends	n.a.
Franked dividends	$98			Westpac Banking Corporation dividends
Franking (imputation) credits	$42
Interest	$2,366			$57,000 at 4.15%
Other income (e.g. taxable benefits, trust income, investment income)	n.a.
Capital gains < 1 yr	n.a.
Capital gains > 1 yr	n.a.
Tax-free component of capital gains	n.a.
Assessable income	$72,506
Deductible expenses	$150			Accountant’s fees
Donations	$530			$520 National Breast Cancer Foundation

$10 bucket donationOther

nil

Taxable income

$71,826

Tax on taxable income

$14,890

FY 2013/14Non-refundable tax offsets (e.g. LITO/SAPTO)

n.a.

Medicare levy

$1,077

Medicare levy surcharge

n.a.

Franking rebate

$42

Refundable rebates and offsets

n.a.

Total tax

$15,925

Cash flow

Client 1Client 2Combined

Comment

Cash flow

Salary less any salary sacrificed amount

$70,000

Non-taxable income

nil

Rental income

n.a.

Unfranked dividends received

n.a.

Franked dividends received

$98

Interest

$2,366

Other income (e.g. taxable benefits, trust income, investment income, social security benefits, etc.)

nil

Total income received before tax

$72,464

Investment expenses

nil

ExpensesMortgage

n.a.

School fees

n.a.

Utilities

n.a.

Personal insurance

nil

Car insurance

$1,500

Paid from credit cardHome contents Insurance

$360

Paid from credit card Includes legal liabilityHealth insurance

$1,320

Paid from credit cardLiving expenses

$9,120

Expenses through credit cardHolidays

$2,500

House maintenance

n.a.

Motor vehicle

Unknown

Paid as part of the expenses through credit cardOther

$23,920

Rent

$10,200

Car repayments

$530

Donations

$150

Accountant’s feesTotal expenses

$49,600

Total income received before tax less total expenses

$22,864

Total tax payable from tax table above

$15,925

Total net cash flow

$6,939

Assets and liabilities

Asset	Owner	Value	Liabilities	Net value	Notes
Personal assets
Family home		n.a.	n.a.
Home contents	Jessica	$20,000	$0	$20,000	Insured value and includes legal liability cover
Car	Jessica	$39,000	$39,000	$0
Total		$59,000	$39,000	$20,000
Superannuation
Employer superannuation	Jessica	$32,000	n.a.	$32,000
Total		$32,000		$32,000
Other assets
Investment property	n.a.	n.a.	n.a.
Savings account	Jessica	$1,000	nil	$1,000	Transaction account
Term deposit	Jessica	$57,000	nil	$57,000
Shares	Jessica	$2,070	nil	$2,070	Westpac Banking Corporation current price $35.08
Total		$60,070	nil	$60,070
Net worth		$151,070	$39,000	$112,070

Liabilities
Loan	Current debt	Percentage tax deductible	Interest only	Repayment
Home loan	n.a.	n.a.
Investment property	n.a.	n.a.
Investment loan	n.a.	n.a.
Personal loan	$39,000	nil	No	$850 per month
Other	n.a.	n.a.
Total	$39,000	$0

Needs and objectives

Details	Comments
Save for her own home	Has been saving towards it using term deposits. Has estimated that she could afford purchase price of up to $550,000 using mortgage and savings. Would like to have saved at least 15% of the purchase price and be in a position to buy in no later than 5 years time
Decrease debt	Concerned about debt — interested in paying off early but requires guidance on the effect (if any) to her primary desire to purchase her first home
Cruise with friend	$2500 annually
Increase sharemarket knowledge	Current knowledge is low
Maintain lifestyle in the event of prolonged illness	To be reviewed
Other

Estate planning

Do you have a will?		Yes	û	No
When was it last updated:	/ /
Do you have powers of attorney?		Yes	û	No

Current superannuation, rollovers, insurances and investments

Superannuation
Member	Jessica
Fund name	ABXY Super Fund
Date of joining fund	19 January 2007
Type of fund	û	Accumulation	Defined benefit	Accumulation	Defined benefit
		Pension	Pensioner	Pension	Pensioner
Contribution (e.g. 5% of salary)	SG	By employer	By yourself	By employer	By yourself
Current value of your superannuation fund	$32,000
Amount of death and disability cover	$50,000
Is there provision for you to top up or salary sacrifice?	û	Yes	No	Yes	No

Superannuation taxation details

Jessica Current value

$32,000

Tax-free component

Taxable component:Taxed element

$32,000

Untaxed element

Preservation:Preserved

$32,000

Unrestricted non-preserved

Restricted non-preserved

Contributions:Non-concessional contributions:Year 1

Year 2

Year 3

Year 4

Concessional contributions:Year 1

SG only

Year 2

SG only

Year 3

SG only

Year 4

SG only

Nominated beneficiaries:
Name	Binding		Non-binding

(Yes/No)Trustee discretion

(Yes/No)Yes/NoAmountNone noted Yes Is there any current flags or splits on a superannuation benefit of yours following a marriage breakdown?Yes/NoNDetails Are you a beneficiary of any current flags or splits of a superannuation benefit following a marriage breakdown?Yes/NoNDetails

Life insurance details
Life insured	Owner	Policy type	Company	Policy number	Death benefit	Comments	Annual premium
Jessica	Superannuation fund	Life	ABXY Super Fund	XTP1234	$50,000	Within superannuation	From superannuation

Disability insurance details
Life insured	Owner	Policy type	Company	Policy number	Death benefit	Comments	Annual premium
Jessica	Superannuation fund	TPD	ABXY Super Fund	XTP1234	$50,000	Within superannuation	From superannuation

Income protection insurance details
Life insured	Owner	Policy type	Company	Policy number	Benefit amount	Waiting period	Benefit payment period	Annual premium
Jessica	n.a.	nil	n.a.

General insurance details
Item covered	Owner	Policy type	Company	Combined policy number	Cover amount	Other benefit	Total annual premium
Car	Jessica	Comprehensive	Ourcover	234907MV	Market Value	nil	$1,500
Contents	Jessica	Contents	Ourcover	438129HC	$20,000	nil	$360 p.a. deducted monthly from credit card
Health	Jessica	Full health	Ourcover	6978/967PH			$1,320 p.a. deducted monthly from credit card

Investment details
Investment type	Company	Purchase date	Units held/fixed rate	Current value	Owner
Term deposit	East Antipodean National Wealth Bank	n.a.		$57,000	Jessica
Shares	Westpac Banking Corporation	25 November 2008	59 shares	$2,070	Jessica
Savings account	East Antipodean National Wealth Bank	n.a.		$1,000	Jessica

Note: An insurance needs analysis is not required for this assignment. These risk needs tables have been included to provide a realistic example of the fact-finder process.

Risk needs

Insurance needs — life
			Jessica
C	Clean-up fund	Settle all outstanding accounts, including credit cards, bills and funeral costs



I	Income fund	The lump sum required to produce a level of regular income that maintains the family’s living standard for a defined period



M	Mortgage fund	The amount necessary to discharge any existing mortgages



E	Education fund	Lump sum determined by calculating each child’s education costs and multiplying by the number of years of school and/or university remaining



R	Retirement fund	The lump sum necessary to provide adequate funding for retirement



less value of realisable assets

less existing life insurance cover
Recommended sum insured
Recommended sum insured (rounded up to the nearest $10,000)

Insurance needs — TPD

Jessica CClean-up fundSettle all outstanding accounts, including credit cards, bills and funeral costs IIncome fundThe lump sum required to produce a level of regular income that maintains the family’s living standard for a defined period MMortgage fundThe amount necessary to discharge any existing mortgages EEducation fundLump sum determined by calculating each child’s education costs and multiplying by the number of years of school and/or university remaining RRetirement fundThe lump sum necessary to provide adequate funding for retirement less value of realisable assets less existing life insurance cover Recommended sum insured Recommended sum insured (rounded up to the nearest $10,000)

Insurance needs — Trauma
	Jessica
Funds required to pay out home mortgage
Estimated medical and rehabilitation costs (including cover out-of-pocket health costs)
Other debts
Other expenses
less existing realisable assets
Recommended sum insured
Recommended sum insured (rounded up to the nearest $10,000)

Insurance needs — Income protection
	Jessica
Gross annual income
SG
Total insurable income
Monthly income (i.e. total insurable income / 12)
Recommended monthly benefit (i.e. 75% of total monthly insurable amount)
Benefit payment period
Waiting period to be served

Acknowledgment

The information provided in this financial fact finder is complete and accurate to the best of my knowledge.

I understand that a policy purchased without the completion of a fact finder, or following a partial or inaccurate completion, may not be appropriate to my needs. I also understand that a policy purchased that differs from that recommended by the planner may not be appropriate to my needs. I acknowledge that the planner has provided me with the completed financial fact finder, signed by me.

Customer(s) signature(s)

Planner’s name

Planner’s signature

Date

Investment attitude details

Please answer the following questions regarding your attitude to financial issues.Are you concerned about the amount of tax that you are paying? Why?Yes/NoI think that I should be able to structure things better to pay less tax like other people seem to do.How important is liquidity (i.e. funds available) to you? Why?Very/Moderately/NotI would like the money available so I can buy a property in the future.If you had funds available for investing, how would you choose to invest them? Why?Term deposits, but don’t know what else is available or how it works.Are there certain sorts of investment that you wish to avoid? Which ones?Yes/NoI don’t really know.

Risk profile

Determining your investor risk profile	Points
This investor risk profile questionnaire has been designed to help you understand the type of investor you are, so that with the help of your planner, you can choose the investments that best match your financial objectives.
Which of the following best describes your current stage of life?
Single with few financial commitments: You are keen to accumulate wealth for the future. Some funds must be kept available for enjoyment, such as cars, clothes, travel and entertainment.	50P
A couple without children: You may be preparing for the future by establishing and furnishing a home. There are a lot of things you need to buy. You are probably better off financially now than you may be in the future.	40
Young family: This is the peak home purchasing stage. You have a mortgage and a very small amount of savings. Probably dissatisfied with your financial position and the amount of money saved.	35
Mature family: You are in your peak earning years and have got the mortgage under control. Many partners also work and any children are growing up and have either left home or require less supervision. You are starting to think about retirement, although it may be many years away.	30
Preparing for retirement: You probably own your own home and have few financial commitments, however, you want to ensure that you can afford a comfortable retirement. Interested in travel, recreation and self-education.	20
Retired: No longer working you must rely on existing funds and investments to maintain your lifestyle. You may be receiving the pension and are keen to enjoy life and maintain your health.	10
What return do you reasonably expect to achieve from your investments?
A return without losing any capital.	10
3–7% p.a.	20P
8–12% p.a.	30
13–15% p.a.	40
Over 15% p.a.	50

If you did not need your capital for more than 10 years, for how long would you be prepared to see your investment performing below your expectations before you cashed it in?
You would cash it in if there were any loss in value	10
Less than 1 year	20
Up to 3 years	30
Up to 5 years	40P
Up to 7 years	45
Up to 10 years	50
How familiar are you with investment markets?
Very little understanding or interest	10
Not very familiar *Would like to know more*	20P
Have had enough experience to understand the importance of diversification	30
Understand that markets may fluctuate and that different market sectors offer different income, growth and taxation characteristics	40
Experienced with all investment sectors and understand the various factors that may influence performance	50
If you can only get greater tax efficiency from more volatile investments, which balance would you be most comfortable with?
Preferably guaranteed returns, before tax savings	10
Stable, reliable returns, minimal tax savings	20P
Some variability in returns, some tax savings	30
Moderate variability in returns, reasonable tax savings	40
Unstable, but potentially higher returns, maximising tax savings	50
Six months after placing your investment you discover that your portfolio has decreased in value by 20%. What would be your reaction?
Horror. Security of capital is critical and you did not intend to take risks	10
You would cut your losses and transfer your money into more secure investment sectors	20
You would be concerned, but would wait to see if the investments improve	30P
This was a calculated risk and you would leave the investments in place, expecting performance to improve	40
You would invest more funds to lower your average investment price, expecting future growth	50
Which of the following best describes your purpose for investing?
You want to invest for longer than five years, probably to the age of 55–60. You are mainly investing for growth to accumulate long-term wealth	50
You are not nearing retirement, have surplus funds to invest and you are aiming to accumulate long-term wealth	40
You have a lump sum, e.g. an inheritance or an eligible termination payment from your employer, and you are uncertain about what secure investment alternatives are available	30
You are nearing retirement and you are investing to ensure that you have sufficient funds available to enjoy retirement	20
You have some specific objectives within the next five years for which you want to save enough money	20P
You want a regular income and/or totally protect the value of your savings	10
Investor profile total points	200

INVESTOR RISK PROFILE SUMMARY

0–50 Defensive

You are a conservative investor. Risk must be very low and you are prepared to accept lower returns to protect capital. The negative effects of tax and inflation will not concern you, provided that your initial investment is protected

51–130 Moderate

You are a cautious investor seeking better than basic returns, but risk must be low. Typically an older investor seeking to protect the wealth that you have accumulated, you may be prepared to consider less aggressive growth investments

131–210 Balanced

You are a prudent investor who wants a balanced portfolio to work towards medium to long-term financial goals. You require
an investment strategy that will cope with the effects of tax and inflation. Calculated risks will be acceptable to you to achieve
good returns

211–300 Growth

You are an assertive investor, probably earning sufficient income to invest most funds for capital growth. Prepared to accept higher volatility and moderate risks, your main concern is to accumulate assets over the medium to long term. You require a balanced portfolio, but more aggressive investment strategies may be included

301–350 High growth

You are an aggressive investor prepared to compromise portfolio balance to pursue potentially greater long-term returns.
Your investment choices are diverse, but carry with them a higher level of risk. Security of capital is secondary to the potential
for wealth accumulation

Appendix 2: Financial planning questions

Case study questions

Section 1: Questions — Establishing relationships with clients

Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to establish a relationship with a client.

Section 1 Part A

Preparation by both the client and the planning team is essential to a successful client meeting. Describe the preparation that should be made to ensure the success of the initial interview held in your office. (250 words)

Answer here

Assessor feedback:

Section 1 Part B

List the documents that you would provide a client during, or prior to, the initial meeting. Explain the contents of each document and why they are necessary. (200 words)

Answer here

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Section 1 Part C

Outline how you would develop rapport with a client during your first meeting. (200 words)

Answer here

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Section 1 Part D

Explain to a client the role of the adviser and the relationship with the licensee. Ensure you use language that your client would understand. (250 words)

Answer here

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Section 1 Part E

How do you/are you going to maintain your knowledge of the industry and your obligations under the relevant legislation? (150 words)

By reading relevant superannuation articles,

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Section 1 Part E

It is important that your clients understand your company’s dispute resolution procedure. Explain, step-by-step, a typical internal and external complaints resolution processes available to a client. (150 words)

Answer here

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Section 2: The fact finder and risk profile

There are no questions for this section.

Section 3: Questions — Analysing the data

Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to analyse a client’s needs in preparation for developing a strategy that aligns with their requirements.

Section 3 Part A

List what you understand to be Jessica’s goals, needs and objectives. Categorise them into short, medium and long-term time frames. They should be specific, measurable and have a nominated dollar value where possible. (250 words)

Goals/need/objectives	Time frame	Dollar value
Saving for House	Long term	$85,000 (15% of $550,000)
Decrease current debt ( Car Loan)	Medium/Long term	$39,000
More knowledge about share market	Short Term	N/A
2 week cruise	Short Term	$2,500

Assessor feedback:

Section 3 Part B

Analyse the data provided by Jessica by answering the following questions. The questions are designed to help you think about the possible issues that any client may have and enable you to show your skill in analysing a case study across the 11 general headings in the data analysis section of the text, and strategy development steps of the financial planning process (refer to Topic 2 and the sample case study and sample SOA).

Think carefully about your responses and do not assume that you are in a position to provide detailed answers to every question. You may not have enough information, it may be outside of your licensee’s designated authority for this case study (i.e. the matter needs to be referred to a specialist adviser), or it is not one of Jessica’s goals or objectives. In addition, the question may not apply to Jessica’s current situation. Where any of the above apply, you still need to make a comment and explain why the question is not relevant at this time.

Make sure you constantly refer to the data you have on Jessica so your responses accurately reflect the information she has provided you.

	The questions	Your response	The assessors feedback
a.	Does Jessica need a debt management solution?	No
a.	If yes, why?

If no, why not?The only debt that Jessica has at the moment is her car loan, she also has $57,000 in a T.D which if she wants can use to pay off her car loan. She is single with no dependants and earns a salary of $70,000 p.a.. Taking all this into consideration Jessica does not need a debt management solution at the moment b.Jessica has stated that she is comfortable with her current insurance arrangements; however, does Jessica have adequate risk protection?

Provide reasons for your answer.Jessica does not have IP cover under her super which does put her at slight risk in case she is made redundant or if she falls sick. Even though she has stated that she is quite healthy an injury or sickness can happen at any time so it is always good to be prepared. She does have a decent amount of sick leave accrued so she can afford to go for a IP policy with a longer waiting period which would be cheaper. At the moment as she does not have any mortgage and any dependants she does not necessarily has to worry about her Death& TPD insurance at this stage. c.Does Jessica have sufficient savings to meet her goals?Based on the current scenario Jessica does not seem to have enough savings to meet her goals. If yes, why/how?

If not, how much does she need? And by when?As Jessica has mentioned in her objectives that she would like to save at least 15% for her house which she intends to buy in round about 5 years’ time and clear off most of her personal loan she needs to try and save a bit more in order to meet her goals , she roughly needs to have round about $124,000 (car loan + initial deposit) saved in round about 5 years’ time to be meet her objectives d.Does Jessica have any investments currently, and what is her appetite for different types of investment?At the moment Jessica has shares with Westpac worth $2070 and a TD worth $57,000. Based on her risk profile it seems like Jessica is someone who is keen on knowing more about different investment options. She seems to be someone who would like to invest in options that provide a stable and a reliable return so that she can save the required amount for her house. What will this mean for any strategy you might recommend?With the strategy for recommendations we have to make sure that the client is provided recommendations that suit her risk profile. As Jessica seems to be a person who likes more of a stable return we have to make sure that the investment recommendations are tailored to suit her needs e.Are there any present and/or anticipated future taxation issues?At the moment she is paying If yes, why and what are they?

If no, why not? f.Has any provision been made for estate planning?No What could be put in place now for any anticipated requirements?Jessica can draw a will if she wishes in case any unforseen incident does occur. For her super benefits she can make a binding nomination by choosing a Legal Personal Representative so that her benefits can be paid as per her will

Section 4: Questions — Developing a strategy

Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to analyse a client’s needs and develop a strategy that aligns with their requirements.

Section 4 Part A

Based on your analysis of the data, describe in general terms, the strategies you think will best meet Jessica’s needs and why. Include what other specialist advice Jessica should source so that her financial plan is comprehensive. (400 words)

Based on jessica’s needs and objectives

Assessor feedback:

Section 4 Part B

You are now in a position to research some products that might meet Jessica’s needs. Information on different products are readily available on the internet. For example, for managed funds, <http://www.morningstar.com.au> provides a fund screener tool that you can use to select funds based on a number of different criteria, (located under ‘Tools’ on the homepage). For term deposits and other investments, go to <www.canstar.com.au>. To ensure the appropriate product(s) for your client, you are expected to research a number of products from different product issuers (more than two). The URL link should be supplied.

List the investment products you have researched here, and indicate why you think each investment you have researched may or may not be suitable for Jessica. At the conclusion of this process you will need to have found at least two (2) products to meet your client’s needs.

The product (name and URL link)	Why you think it may or may not be the ‘best fit’ for Jessica.	Indicate which product/s you will use in your plan
Answer here	Answer here	Yes No
Answer here	Answer here	Yes No
Answer here	Answer here	Yes No
Answer here	Answer here	Yes No
Answer here	Answer here	Yes No
Answer here	Answer here	Yes No
Answer here	Answer here	Yes No

Section 5: Completing the SOA

When you have determined the financial planning recommendations you believe will meet Jessica’s needs then you need to prepare her SOA. Use the SOA template provided in this assignment to produce your SOA for Jessica.

Tip: The assessor is looking for an SOA that is of a professional standard and is suitable for presentation to a client. This means your spelling and grammar needs to be correct and that you have written your recommendations so the client can understand them. Remember: the SOA is an important communication tool you can use to engage your client. A hastily written and poorly presented SOA does not engender client trust or confidence in your expertise or professionalism.

Important instructions for completing the SOA

a. Use the SOA template provided.

SOA preparation software: The use of financial planning software and dealer templates to prepare your SOA is not permitted. Submissions that exhibit excessive reliance on SOA templates may be considered a case of plagiarism or collusion and may not be considered to be a reasonable attempt at the assessment.

b. Your SOA must include strategy recommendations for:

• debt management

• personal investment and savings

• asset allocation (including superannuation).

c. You must prepare an implementation schedule detailing all of the recommendations in the SOA and provide the details in the implementation schedule within the SOA.

d. You must also prepare, using an Excel spreadsheet, a table showing the projected balance of Jessica’s investment portfolio, over a five-year period, before and after your recommendations. This task will be important in showing how your strategies may satisfy Jessica’s primary financial objective.

d. List any assumptions you have made to complete your SOA on the assumptions page at the end of the SOA. Assumptions will generally be made:

• regarding missing background information on the clients

• in regards to calculations of future returns from your recommended investments

• for clarity in relation to any of your recommendations

• for fees relating to the products you have recommended.

e. While you are not required to provide specific recommendations in the following areas for this assignment, you will need to provide, in the ‘Things you need to consider’ section of your SOA, appropriate comments about any issues you have identified. Those areas are:

• personal insurance

• superannuation

• estate planning.

f. Your investment product recommendations will need to be based on the research you conducted in section 4 Part B. Please do not include any product disclosure statements (PDSs) with your assignment submission.

Section 6: Questions — Presenting the SOA

Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to work with a client to present a financial plan, and then take the necessary steps to gain their consent to implement your recommendations.

Section 6 Part A

Identify two (2) concerns that Jessica may have with the advice that you have provided. Prepare responses to these concerns. Ensure that you use language Jessica would understand. (100 words)

Answer here

Assessor feedback:

Section 6 Part B

Outline the techniques that could be used to ensure that your client understands the advice being provided and to gain their agreement to implement the plan. (150 words)

Answer here

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Section 6 Part C

According to legislative requirements, explain how you would present your fee and cost structure to Jessica. (100 words)

Answer here

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Section 6 Part D

List the documentation, if any, that you need to present to your client at this stage of the financial planning process. (50 words)

Answer here

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Section 6 Part E

Provide a summary of all the documentation that you need to keep in the client’s file. (150 words)

Answer here

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Section 7: Questions — Providing ongoing service

Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to work with a client to implement a plan over the longer term.

Section 7 Part A

Jessica is not sure she will have time for regular reviews of her financial plan. She expresses the opinion that the advice seems comprehensive and she believes she could take a ‘set and forget’ approach once it is implemented. Describe how you would respond to Jessica, highlighting why reviews are important. In addition, provide details of the type, form and frequency of the ongoing service that would ideally be provided and the fees/costs associated with this service. (400 words)

Answer here

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The SOA template

An SOA has been commenced for Jessica Bigge, using the data collected in the interviews, her fact finder and risk profile. You will need to complete the remaining sections in the SOA as directed. The SOA starts on the following page. Please review the sample case study and the text as a guide to completing your SOA.

Statement of advice

Prepared for

Jessica Bigge

Prepared by

Authorised Representative Number: 66666

AR Address

AR contact details

Authorised Representative of

EANWB Financial Planning

ABN: 1010101010

Australian Financial Services Licensee

Licence No. 101010

Head office: 88 Money Lane, Accumulation.

You are entitled to receive a statement of advice (SOA) whenever we provide you with any personal financial advice. Personal financial advice is advice that takes into account any one or more of your objectives, financial situation and needs.

This SOA is a record of the personal financial advice provided to you and includes information on the basis on which this advice is given, information about fees and commissions and any interests or associations which might influence the advice.

If this advice includes a recommendation to you to acquire a particular financial product, other than securities, or an offer to issue or arrange the issue of a financial product to you, we will also provide you with a product disclosure statement containing information about the particular product to help you make an informed decision about that product.

Be aware that the advice contained in the following SOA is valid for a period of 30 days only. If the plan is not implemented within this time, it will need to be reviewed for accuracy.

Executive summary

In this section, you need to provide your client with a concise summary of:

• their situation

• their objectives

• your recommended strategy to achieve the objectives

• the outcomes your client can expect from adopting the strategy.

The client should be able to read this executive summary and understand the advice you are giving, the reason/s for underpinning the advice, and be able to determine whether or not their goals have been achieved. There should be sufficient detail to allow the client to make a decision, taking into account any risk/s involved and your fees. It should be written in clear, unambiguous language, without jargon and be appropriate to their level of financial understanding.

Your situation

This is where you need to summarise your client’s current situation.

Answer here

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Your objectives

This is where you need to list your client’s objectives (i.e. their financial and non-financial goals, objectives and needs).

Answer here

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Summary of our strategy and recommendations

For the short term — up to one year

This is where you need to summarise your short-term recommendations for your client.

Answer here

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For the medium term — one to five years

This is where you need to summarise your medium-term recommendations for your client.

Answer here

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Summary of expected outcomes if you implement our advice

For example:

Should you proceed with the recommendations contained within this report, we estimate that:

• You will reduce your debt by $XYZ and/or save $ABC.

• You will build wealth in non-superannuation assets through regular contribution of $X.

Answer here

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Risks in our advice

Answer here Refer to the sample SOA for examples of relevant descriptions that should be included here and under each subheading below.

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Summary of our fees and commissions

Answer here

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Your next steps

Answer here. Refer to the sample SOA for examples of relevant descriptions that should be included here.

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Body

While this section contains similar headings as the executive summary, the information provided is at a greater level of detail and supports the recommendations made. As with the executive summary, it should be written in clear, unambiguous language, without jargon and be appropriate to your client’s level of financial understanding.

Section 1: Important information about you

This section contains information about you that we used in preparing our advice, such as:

• your reasons for seeking advice

• what you would like to achieve

• your personal and financial information.

Present position

Your reasons for seeking advice

Outline why the client sought advice.

Answer here

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What you would like to achieve

Summarise here what you understand to be your client’s main objectives.

Following our discussions, here is what I/we understand to be your main objectives and needs:

Answer here

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Your personal and financial information

Listed below is a summary of your relevant personal and financial details that you have provided.

Personal information

Personal details

	Client 1	Client 2
First name(s)	Jessica
Surname	Bigge
Date of birth	15 July 1986
Marital status	Single
Health status
Smoker status	Non-smoker
Employment status	Permanent
Employer name
Occupation	Marketing manager
Annual salary	$70,000

Summarise the discussion points that could/need to be raised here.

Answer here

Assessor feedback:

Children and dependant details

You currently have no dependants.

Your existing insurance

Personal insurance	$50,000 life/TPD inside superannuation
Car insurance	$1,500
Home contents Insurance	$360
Health insurance	$1,320

Your existing estate planning

Summarise the client’s existing estate planning provisions here.

Answer here

Assessor feedback:

Financial information

Current income and expense details

Income and expenses

	Client 1	Client 2	Total
Assessable income	$72,506
Income after tax	$55,901
Yearly expenses	$49,600
Estimated surplus	$6,939

Discussion points:

Summarise the discussion points that could/need to be raised here.

Answer here

Assessor feedback:

Assets and liabilities

	Value	Liability	Net value
Home
Home contents	20,000
Motor vehicles	39,000	39,000
Personal assets
Employer superannuation	32,000
Savings account	1,000
Term deposit	57,000
Investment assets
Shares	2,070
Net worth	151,070

Discussion points:

Summarise the discussion points that could/need to be raised here.

Answer here

Assessor feedback:

Incomplete and/or inaccurate information warning

Note that if, for any reason, the information on which our advice is based is incomplete or inaccurate, then it may not be appropriate and you should, before acting on the advice consider its appropriateness, in light of your particular circumstances, needs and objectives.

Your risk profile

In this section, you need to provide:

• an overview of the different risk profiles

• asset classes and risk and return

• the client’s risk profile including the appropriate mix of assets (the asset allocation) for the client’s risk profile, the appropriate investment return time horizon for that profile and any specific concerns.

Answer here

Assessor feedback:

Strategy recommendations

This section tells you:

• what our advice is and why it is appropriate for you

• reasons for our recommendations

• what you need to consider and any risks associated with our advice.

Read this section carefully and ask me if you have any questions.

Recommended action — first year

You will use your findings from the analysis you did in Section 4 of the assignment above as the basis for the information you will need to provide in this section.

For each recommendation below; discuss the reasons, risks, advantages and disadvantages.

All recommendations should be listed here. They are to include investment and debt management recommendations. You are not required to provide specific advice to your client about her insurance, superannuation and estate planning needs. However, if after analysis of her situation you believe that advice is required, you need to explain what advice she should seek and why.

Note: Not all of the recommendation boxes below need to be completed. Alternatively, you can add more boxes if required.

Recommendation 1

Answer here

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Recommendation 2

Answer here

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Recommendation 3

Answer here

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Recommendation 4

Answer here

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Recommendation 5

Answer here

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Things you should consider

Answer here. Refer to the sample SOA for examples of relevant descriptions that should be included here and under each subheading below.

Assessor feedback:

Insurance

Answer here

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Estate planning

Answer here

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Taxation issues

Answer here

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Recommended asset allocation

Proposed asset allocation

Your investment assets are invested across various asset classes. The table below summarises:

• Weight: The proposed asset allocation resulting from our recommendations.

• Risk profile weight: The recommended asset allocation for your investment risk profile.

• Variance (weight): The variance between the recommended and proposed asset allocation.

Comments on proposed asset allocation versus your risk profile

Refer to Topic 4 in your subject notes to assist you in completing this section.

Asset allocation after implementation of recommendations

Asset allocation	Weight	Risk profile weight	Variance (weight)
Defensive assets
Australian cash	Answer here	Answer here	Answer here
Australian fixed interest	Answer here	Answer here	Answer here
International fixed interest	Answer here	Answer here	Answer here
Total for defensive assets	Answer here	Answer here	Answer here
Growth assets
Australian equities	Answer here	Answer here	Answer here
Australian property	Answer here	Answer here	Answer here
International equities	Answer here	Answer here	Answer here
International property	Answer here	Answer here	Answer here
Total for growth assets	Answer here	Answer here	Answer here
Grand total	Answer here	Answer here	Answer here

You need to explain the reason for any large, (greater than 10%) variances here. Refer to the sample SOA for a discussion on variances.

Assessor feedback:

Investment and insurance product recommendations

Product recommendations

Note that I can only recommend products on our recommended list, which have been approved by EANWB Financial Planning.

As part of this advice we are not providing any specific recommendations concerning your insurance requirements as you have requested that we do not review them at this time. However, as part of our analysis, we have made comments for your future action.

Use the space below to list the products that you are recommending Jessica invest in, and those that she already has that you are recommending she keep.

Jessica Bigge, following our investment strategy, we recommend that you invest in the
following products:

Answer here

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Relevant research material and PDSs are attached for your attention. It is important that you read these documents carefully and contact us should you have any questions or if there are areas of the document that you do not fully understand. All of these products are on our approved recommended list.

Note: You do not need to include these PDSs as part of your assignment. The above statement is a standard inclusion in an SOA.

Cooling-off period

Details on the cooling-off period for each product are provided in the PDS.

Disclosure of remunerations, commissions and other benefits

How are we paid?

Commissions and fees — upfront, ongoing and financial planning advice fees

If you are charging SOA preparation fees, implementation fees, on-going advice fees, or any other non-product related fees you must provide the details here. You may need to source information outside of the subject notes to complete this requirement. However, you can use the examples of how fees are shared between advisers and licensees from the sample SOA if needed.

If you are not charging these fees you may either delete the table below or fill it in with $0 as the fee charged to make it clear.

Fee type	Initial fee	Initial fee paid to licensee	Initial fee paid to adviser
SOA fee	Answer here	Answer here	Answer here
Implementation fee	Answer here	Answer here	Answer here
Ongoing advice fee*	Answer here	Answer here	Answer here
Total	Answer here	Answer here	Answer here

*If the ongoing service fee is charged as a percentage of the product(s) you may use the table below instead. If you are charging a flat fee, or an hourly fee you should use this table.

Investment recommendations

Summarise all of the products that you have recommended to the client here. Refer to the sample SOA for examples of what to include. You will need to source information outside of the subject notes to complete this table, based on the products you have used (or created).

If you wish to implement the products I have recommended, there may be initial and ongoing fees applicable as detailed below.

Product	Initial fee	Initial fee paid to licensee	Initial fee paid to adviser	Ongoing fees paid to licensee	Ongoing fees paid to adviser
Answer here	Answer here	Answer here	Answer here	Answer here	Answer here
Answer here	Answer here	Answer here	Answer here	Answer here	Answer here
Total	Answer here	Answer here	Answer here	Answer here	Answer here

Note: Please see the sample SOA for directions on completing the answers in the paragraphs below.

Neither EANWB Financial Planning nor I will receive initial or ongoing commission for any investment or superannuation recommendations. Where applicable they will be rebated to you. However, you may also be charged fees for purchasing and investing in some products we recommend.

Product providers will also charge a fee for the management of the funds invested in their products. The annual management fee charged by Answer here is Answer here%. The amount you will be charged will depend on the funds you have invested.

For example, $Answer here invested with them will incur a $Answer here annual management cost.

All details regarding fees and costs are contained in the fund manager PDSs provided. There is no entry fee for depositing funds into this account and no withdrawal fee should you decide to withdraw funds.

Assessor feedback:

Other fees and benefits

EANWB Financial Planning and I may also receive additional benefits. Where the benefits received are greater than $300 in value, they will be recorded in a register that meets the requirements of the Financial Planning Association (FPA) Code of Practice on alternative forms of remuneration. A copy of the register for EANWB Financial Planning is publicly available and can be provided upon your request.

Ongoing services

You need to make sure that your client fully understands what you are offering in terms of ongoing service.

Use the space below to record the details of how you will manage this process.

Answer here (refer to the sample SOA for the sorts of services you could include here).

Assessor feedback:

Implementation schedule

In order to ensure that your recommendations will be implemented efficiently, you need to make sure that all tasks that need to be completed, both by the client and yourself, are itemised in the schedule. The schedule should highlight the priority of each task, as well as the order of completion. The time frame should be as specific as possible.

Jessica Bigge, in order to proceed with our recommendations, you will need to complete the
steps below:

Action	By who	By when
Answer here	Answer here	Answer here
Answer here	Answer here	Answer here
Answer here	Answer here	Answer here
Answer here	Answer here	Answer here
Answer here	Answer here	Answer here
Answer here	Answer here	Answer here
Answer here	Answer here	Answer here
Answer here	Answer here	Answer here
Answer here	Answer here	Answer here

Note: The recommendations contained in this SOA are current for 30 days only. Please contact me for further discussion if you are unable to act on our recommendation within this time frame.

Assessor feedback:

Authority to proceed

By signing this authority to proceed, I/we Jessica Bigge acknowledge the following:

• I/We acknowledge that the information I provided in the financial needs analysis has been used to arrive at the recommendations contained in this SOA.

• I/We have read, understood and retained a copy of the SOA prepared by <Your name> dated <Date>. This document contains information which accurately summarises my/our current situation, investments and financial objectives.

• I/We have been provided with an EANWB Financial Planning FSG.

• I/We have read and understood the PDSs for the recommended products.

• Please note that a cooling-off period may apply to your initial investment or insurance policy. Refer to the PDS.

• I/We acknowledge that the product(s) listed in the table below are to be implemented in my/our name/s:

Product(s)	Amount
Answer here	Answer here
Answer here	Answer here
Answer here	Answer here

• I/We wish to make the following change/s to the recommendations within the SOA

Product(s)	Amount
Answer here	Answer here
Answer here	Answer here
Answer here	Answer here

Signed_____________________________ Date /____ /____

Client Name

Signed_____________________________ Date /____ /____

Client Name

Signed_____________________________ Date /____ /____

Financial Planner

Consent to ongoing contact

I/We consent to being contacted by our adviser on an ongoing basis, in line with the agreed ongoing service review structure detailed within this recommendation. My/our preferred hours of contact are between ____ and ____.

Signed_____________________________ Date /____ /____

Client Name

Signed_____________________________ Date /____ /____

Client Name

Cash flow tables

Use the ‘How to complete a cash flow table’ resource provided in KapLearn for guidance on how to complete the following tables for your client. Additionally, refer to the sample case study and sample SOA.

Financial position after implementation of strategy

Note: The items listed in this template are indicative only and must be adapted to your client’s personal circumstances. There may be other relevant income or expense items that are not included in this template. You should add, delete or substitute items where appropriate.

Income, tax and cash flow

Tax calculation	Client 1	Client 2	Notes
Income from employment
Salary	Answer here		Answer here
Salary sacrifice	Answer here		(state % if applicable)
Salary after salary sacrifice	Answer here		Answer here
Other income
Bank account interest	Answer here		(state % return if applicable)
Interest from other investments	Answer here		(state % return if applicable)
Share dividends	Answer here		(state % return if applicable
Imputation credits	Answer here		(state % return if applicable
Other income liable for tax (e.g. rental income)	Answer here		Answer here
Assessable capital gains	Answer here		Answer here
Total assessable income	Answer here		Answer here
Deductable expenses (e.g. rental repairs)	Answer here		Answer here
Taxable income	Answer here		Answer here
Income tax on taxable income	Answer here		(state tax rates and year applied)
less tax offsets (e.g. LITO/SAPTO)	Answer here		Answer here
plus Medicare levy	Answer here		Answer here
plus Medicare levy surcharge	Answer here		Answer here
less Imputation credits	Answer here		Answer here
less refundable tax offsets	Answer here		Answer here
Net tax payable	Answer here		Answer here

Family cash flow

Client 1Client 2Combined

Comment

Cash flow calculation:

Salary less any salary sacrificed amountAnswer here Answer hereAnswer hereNon-taxable income (e.g. income from a superannuation pension for a person aged over 60, Family Tax Benefits, etc.)Answer here Answer hereAnswer hereInterest incomeAnswer here Answer hereAnswer hereDividends received (excluding franking credits)Answer here Answer hereAnswer hereOther incomeAnswer here Answer hereAnswer hereTotal income received before taxAnswer here Answer hereAnswer hereInvestment expensesAnswer here Answer hereAnswer hereLiving expensesAnswer here Answer hereAnswer hereOther expensesAnswer here Answer hereAnswer hereTotal expensesAnswer here Answer hereAnswer hereTotal income received before tax less expensesAnswer here Answer hereAnswer hereNet tax payable from tax table aboveAnswer here Answer hereAnswer hereTotal net cash flowAnswer here Answer hereAnswer here

Asset

OwnerValueLiabilitiesNet value

Notes

Personal assets

Family homeAnswer hereAnswer hereAnswer hereAnswer hereAnswer hereHome contentsAnswer hereAnswer hereAnswer hereAnswer hereAnswer hereCar 1Answer hereAnswer hereAnswer hereAnswer hereAnswer hereCar 2Answer hereAnswer hereAnswer hereAnswer hereAnswer hereOtherAnswer hereAnswer hereAnswer hereAnswer hereAnswer hereTotalAnswer hereAnswer hereAnswer hereAnswer hereAnswer here

Superannuation

Client 1 superannuationAnswer hereAnswer hereAnswer hereAnswer hereAnswer hereClient 2 superannuationAnswer hereAnswer hereAnswer hereAnswer hereAnswer hereTotalAnswer hereAnswer hereAnswer hereAnswer hereAnswer here

Investment assets

Investment propertyAnswer hereAnswer hereAnswer hereAnswer hereAnswer hereSavings accountAnswer hereAnswer hereAnswer hereAnswer hereAnswer hereTerm depositAnswer hereAnswer hereAnswer hereAnswer hereAnswer hereSharesAnswer hereAnswer hereAnswer hereAnswer hereAnswer hereOtherAnswer hereAnswer hereAnswer hereAnswer hereAnswer hereTotalAnswer hereAnswer hereAnswer hereAnswer hereAnswer hereNet worthAnswer hereAnswer hereAnswer hereAnswer hereAnswer here

Assets and liabilities

Liabilities
Loan	Current debt	Percentage deductible	Interest only	Repayment
Loan	Answer here	Answer here	Answer here	Answer here
Home loan	Answer here	Answer here	Answer here	Answer here
Investment property	Answer here	Answer here	Answer here	Answer here
Other	Answer here	Answer here	Answer here	Answer here
Total	Answer here	Answer here	Answer here	Answer here

Five-year projections

Five-year projection table

In order to show the effect of your recommendations over the period of time the financial goal is required to be satisfied (in this case a maximum of five years), you will need to complete relevant projections over that period. The projection table should show Jessica that the recommended strategies and accompanying products will achieve the savings goal for her unit purchase in the time required, if not earlier.

Required

Use a Microsoft Excel spreadsheet to project the balance of the client’s investment portfolio for five years before and after your recommendations. You should show the comparison between the investment growth for the current investment (e.g. the term deposit) and the recommended investment strategy. For your comparison, you should assume that the term deposit will be rolled over for a five-year term.

You can use the FV formula in Excel to calculate annual balances for the accumulation of the portfolios. At the end of the five year period you should show the net benefit of the strategy on the investment amounts.

Hints for using the FV formula in Excel to predict account balances are provided in your subject notes.

Copy the projections into Table 1 (double-click to open in Excel) and complete the list of assumptions in Table 2.

Please ensure that you use a real rate of return that is appropriate to the client’s portfolio, both current and proposed.

Account balance projections

Table 1

Appendix 3: Assumptions

Table 2

Value	Current situation	Proposed strategy
Return period (monthly or annual)	Answer here	Answer here
Real rate of return: Capital growth	Answer here	Answer here
Real rate of return: Income	Answer here	Answer here
Other	Answer here	Answer here
	Answer here	Answer here
	Answer here	Answer here
	Answer here	Answer here
	Answer here	Answer here

Solution: –

Appendix 2: Financial planning questions

Case study questions

Section 1: Questions — Establishing relationships with clients

Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to establish a relationship with a client.

Section 1 Part A

For preparation of the first meeting it is important to collect the personal data of the client. The personal data of the client is collected by having a conversation over phone. Over the phone the agent need to convince the about the projection of the investment policy. The first and foremost thing that an agent needs to provide is the introduction about the financial planning institution on behalf of which the agent is calling the client. Then he needs to provide general information about the services provided by the company. The agent need to convince the client that he works for a licensee company and all works done by the company are legally approved. Then the agent needs collect personal information of the client by convincing the client about the offers and services provided by his company. It is important to keep the personal information of the clients confidential for the satisfaction o the clients. After that the agents fix a date and time with the client for a face to face interview. After that if the client is convinced to come for a meeting the agent need to maintain all details of the clients and prepared a table showing the details of the clients for further study to convince the client to accept the service provided by the company. The following table is an example of the information table that needed to be prepared by the agents.

Table 1 Personal details

	Client 1				Client 2
Title	Miss
Surname	Bigge
Given & preferred names	Jessica
Home address	18/43 Benton St, Rozelle, NSW.
Business address	n.a.
Contact phone	(02) 7766 5544
Date of birth	15 July 1986
Sex		Male	û	Female		Male	Female
Smoker		Yes	û	No		Yes	No
Expected retirement age	Haven’t really thought about it, but probably 66

Assessor feedback:

Section 1 Part B

List the documents that you would provide a client during, or prior to, the initial meeting. Explain the contents of each document and why they are necessary.

During the first meeting prior to the explanation, the agent provides some bunch of documents which the client needs to fill. This document contains a form with some questionnaires that the client needs to fill. This document also contains the prospectus of the company that tells the client each and every detail about the company and the services provided by the company. These documents also include fees structure for the services provided by the company. After understanding the terms and condition of the company the client need to fill the forms included in the document which includes the details about the financial background of the client. It includes all basic financial information of the client that would help the company to prepare the SOA and report for the client. Hence, it is important to fill the document prior the interview. After filling all the documents the client is taken for a face to face interview with the agent. The document includes the questions about the current financial situation of the client, needs and objectives of the client, superannuation and any insurance cover of the client, any investment done by the client and other important information about the client.

Assessor feedback:

Section 1 Part C

Outline how you would develop rapport with a client during your first meeting.

During the first meeting the client must be provided with a glass of cold water first. After that the client must be provided with the document about the company and the forms that needed to be filled by the client prior the interview. After this, begins the step for explaining the client about the company, its services and achievements in the field in which they are working. Then the agent needs to make the client understand all facts about the service and the fees structure of the service they are providing. The agent must also explain the about the benefits of the service they are providing. Hence, it is very important for the agent to make the client understand each and every thing about the company and the services provided by the company to convince the client to approve for the service. If the agent is unable to make the client understand about the benefits of the plan, the agent fails to convince the client. He needs to convince the clients and make them understand about the service plan politely and gently. The words of the agent must be attractive to convince the client.

Assessor feedback:

Section 1 Part D

Explain to a client the role of the adviser and the relationship with the licensee. Ensure you use language that your client would understand.

The company is a licensee that works as per the regulation of the government and all the work conducted by the company is done as per the law regulating it. The company’s work is to provide advice to its clients about the financial planning of the client. It provides financial advices to its clients that help the client to take proper decision regarding the investments and financial planning. It is a type of company that advices the clients for the betterment of the future. In other words we can say that we provide you with future planning to secure your future and help you to decide your future by planning from right now. I am a licensee agent working with the company and I know how to act my role in planning your future. You can say that I am an advisor who will guide you to plan your future which is my responsibility as being a licensee agent. Hence, my role is to plan your future by advising you about your future financial planning.

Assessor feedback:

Section 1 Part E

How do you/are you going to maintain your knowledge of the industry and your obligations under the relevant legislation?

By reading relevant superannuation articles, it can understand that superannuation is an investment vehicle that accumulates funds for the lifetime working of a person to return the total amount along with interest accumulated on the amount during the period of collection after the retirement of the person. It also offers some tax concessions and a force savings for the person for his future. Hence, superannuation is a mean of saving money for the future use. A person can take loan against the superannuation saved by him. Hence, superannuation is an important instrument for future savings. To understand the working of the industry it is important understand the facts on which the company works. How the company plans the financial investments of the clients and how they support its clients for making their future better. Hence, to understand the industry the first and foremost need is to understand the working of the company and scope of the company in which the agent works.

Assessor feedback:

Section 1 Part E

The company has different systems to solve the disputes resulting in planning of the clients. If the client needs to ask anything about the company and plans of the company, they can contact the licensee at any point of time. They can also go for the 24X7 hotline number which is available to solve all disputes in the mind of the clients. Hence, the client must be provided with the detail understanding of the dispute resolving techniques of the company to get convinced to accept the service of the company. The client is free to complain about the working of the company. In other words it can be said that the client can complain about the service provided to them by the company. The company would take proper steps to resolve the complaints of the clients as soon as possible. If there is any fault in the report and SOA prepared by the company, the client is free to say about that and the company is bound to solve the problems and make the clients understand the facts contained in the reports and SOA of the client. Hence, the company is bound to provide fuller satisfaction to its client and until and unless the client is satisfied with the work of the company, they don’t need to pay the full amount of the fees.

Assessor feedback:

Section 2: The fact finder and risk profile

There are no questions for this section.

Section 3: Questions — analysing the data

Section 3 Part A

Goals/need/objectives	Time frame	Dollar value
Saving for House	Long term	$85,000 (15% of $550,000)
Decrease current debt ( Car Loan)	Medium/Long term	$39,000
More knowledge about share market	Short Term	N/A
2 week cruise	Short Term	$2,500

Assessor feedback:

Section 3 Part B

Think carefully about your responses and do not assume that you are in a position to provide detailed answers to every question. You may not have enough information, it may be outside of your licensee’s designated authority for this case study (i.e. the matter needs to be referred to a specialist adviser), or it is not one of Jessica’s goals or objectives. In addition, the question may not apply to Jessica’s current situation. Where any of the above applies, you still need to make a comment and explain why the question is not relevant at this time.

Make sure you constantly refer to the data you have on Jessica so your responses accurately reflect the information she has provided you.

	The questions	Your response	The assessors feedback
a.	Does Jessica need a debt management solution?	No
a.	If yes, why?

If no, why not?The only debt that Jessica has at the moment is her car loan; she also has $57,000 in a T.D which if she wants can use to pay off her car loan. She is single with no dependants and earns a salary of $70,000 p.a. Taking all this into consideration Jessica does not need a debt management solution at the moment b.Jessica has stated that she is comfortable with her current insurance arrangements; however, does Jessica have adequate risk protection?

Provide reasons for your answer.Jessica does not have IP cover under her super who does put her at slight risk in case she is made redundant or if she falls sick. Even though she has stated that she is quite healthy an injury or sickness can happen at any time so it is always good to be prepared. She does have a decent amount of sick leave accrued so she can afford to go for a IP policy with a longer waiting period which would be cheaper. At the moment as she does not have any mortgage and any dependants she does not necessarily has to worry about her Death& TPD insurance at this stage. c.Does Jessica have sufficient savings to meet her goals?Based on the current scenario Jessica does not seem to have enough savings to meet her goals. If yes, why/how?

Section 4: Questions — developing a strategy

Section 4 Part A

Based on Jessica’s needs and objectives it is found that she does not need any debt solution for her. But if the case of the loan and her aim to buy a house within five years is taken into consideration it is found that she will face a deficit of savings in her future to meet up the planned expenses. She has a term deposit of $57000 which will mature in the near future. But this deposit is not enough to meet her car loan of $39000 along with the deposit of the house which she ahs planed to buy within five years. If she is paying the car loan by the maturity amount of the TD she will fall short for paying the deposit amount for the house. Hence it is recommended that she needs to increase her savings by reducing her recurring expenses. She needs to invest her monthly savings in short term investments that would provide her with more earning to buy her house. In pace of paying the car loan amount she can also go for investing the matured amount of the TD in some better investment that would return her with more money in short term to fulfil her desire to pay her car loan and deposit of the house which amount to $85000 (15% of the total value of the asset). As she is interest to know about some investment schemes that can provide her with better returns and with a stable risks, she can investment in the shares of a banks that seems to rise in the future. She can also go for investment in commodities that seems to increase in values in the future. Hence, she needs proper investment schemes that will increase her funds to meet up her needs and goals. The schemes and investment options are discussed in the answer below.

Assessor feedback:

Section 4 Part B

The product (name and URL link)	Why you think it may or may not be the ‘best fit’ for Jessica.	Indicate which product/s you will use in your plan
http://www.canstar.com.au/managed-investments/compare/regular-income-multisector-balanced/	Jessica can invest in the multi-sector balance funds to increase his return earned	Yes No
http://www.morningstar.com.au/LICs/NewsAndQuotes/CDM	She is already having a life insurance and the return from life insurance comes in long run	Yes No
http://www.canstar.com.au/managed-investments/compare/seasoned-investor-australian-equities-small-cap/	She can invest in the small equities that helps to earn good return	Yes No
http://www.canstar.com.au/margin-loans/compare/shares/	She already has invested in shares and does not have enough fund for this investment	Yes No
http://www.canstar.com.au/margin-loans/compare/managed-funds/	This is the best option to invest because of high rate of return and security of investment	Yes No

Section 6: Questions — Presenting the SOA

Section 6 Part A

Identify two (2) concerns that Jessica may have with the advice that you have provided. Prepare responses to these concerns. Ensure that you use language Jessica would understand. (100 words)

Jessica will still face some problem in choosing the accurate investment scheme for her. Here in the recommendation only the comparison links are provided and the exact investment links are not provided. The first problem she will face is that in which scheme she should invest and the next problem she will face is that in which company she should invest to earn the most in coming five years to meet up her objectives and needs.

Assessor feedback:

Section 6 Part B

Outline the techniques that could be used to ensure that your client understands the advice being provided and to gain their agreement to implement the plan. (150 words)

The client must be made understand about the recommendation be showing them comparisons through PowerPoint presentation and the present rate of growth of the investment. The advisors can make use of the technologies like laptop and tablet PCs to present the demo of the comparison to the clients. Unless the client understands the proper comparison she can’t invest in a mean mere policy. Hence, the advisors are allowed to make fuller utilization of the technologies to make their client understand about the recommendations. They can also use spreadsheets to represent the data of the companies in which the client can invest.

Assessor feedback:

Section 6 Part C

According to legislative requirements, explain how you would present your fee and cost structure to Jessica. (100 words)

As per the legislative requirements i would represent the cost and fees structure of the service to the client in a written document. I would present the prospectus of the company to my client to make her understand about the services provided to her and the fees charged for providing those services. I would break the services into different part along with the fees charged for the service. This will help to make her understand the fees structure more appropriately. Hence, I would try my best to make her understand the fees structure to convince her to avail the service.

Assessor feedback:

Section 6 Part D

List the documentation, if any, that you need to present to your client at this stage of the financial planning process. (50 words)

At the time of the financial planning I need to present the documents regarding the financial status of the client and the documents describing the investment schemes that are appropriate for the client. These documents are present to client to make her understand that which investment scheme is best suited to her.

Assessor feedback:

Section 6 Part E

Provide a summary of all the documentation that you need to keep in the client’s file. (150 words)

From starting with the phone call the document needed to be kept for tracking the clients financial planning are as follows:

Personal information- this document helps to keep the track of the client, her personal details and her contact number for further use.
Form filled up during the first interview that contains the basic financial information and other information of the client.
Report made on the financial status of the client: this document helps to analyse the financial position of the client and make recommendations as per the analysis. This includes the report of the current financial position of the client, the cash flow statement of the client and the financial projection of the client’s financial position.
The SOA made by the advisor for the client. This keeps the record for the services provided by the company to the clients.

Assessor feedback:

Section 7: Questions — providing ongoing service

Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to work with a client to implement a plan over the longer term.

Section 7 Part A

Reviewing of the financial plans is important for a person to decide his or her investment activities. A person cannot proceed with the projection of a proper financial plan. Hence it is important to review the financial report for a better future. Without a proper planning and strategy, it is not a good decision to have any type of investment. The financial position of the person changes from time to time like that of a company. Hence, it is important to review the financial report of the person to decide the steps as per reports. If the client does not review the financial report he cannot proceed with the investment plans. As the client needs to fulfil her desire and objectives, she at least needs a projection of next five years. The company provides an ongoing service with an interval of 3months for the next five years to the client and the fees charged will be paid in instalments with the execution of each interval. Hence, the client gets a easy process of paying the service fees and it does not become a burden on her as it would have happened in case of onetime payment. After every interval of 3 month the client would receive a call and a mail along with the hard copy posted on the Mailing address of the client. If the client has any query she can contact the licensee at any point of time. The company provides a long term service to the client. If the clients want the service to renewed after five years she can do that without any extra charges. The main of the company is the fuller satisfaction of the clients and until the client is satisfied by the service of the company, the company will be at her service at any issues. If she wants she can call the agent to visit her place for financial discussion and any help which she needs regarding her investment planning. Hence, the company provides the best it gives for satisfying the financial planning needs and objectives of the clients.

Assessor feedback:

The SOA template

Statement of advice

Prepared for

Jessica Bigge

Prepared by

Authorised Representative Number: 66666

AR Address

AR contact details

Authorised Representative of

EANWB Financial Planning

ABN: 1010101010

Australian Financial Services Licensee

Licence No. 101010

Head office: 88 Money Lane, Accumulation.

Be aware that the advice contained in the following SOA is valid for a period of 30 days only. If the plan is not implemented within this time, it will need to be reviewed for accuracy.

Executive summary

In this section, you need to provide your client with a concise summary of:

• their situation

• their objectives

• your recommended strategy to achieve the objectives

• the outcomes your client can expect from adopting the strategy.

Your situation

This is where you need to summarise your client’s current situation.

As per the case study done it can be seen that the client has a car loan taken as a personal loan which she wants to be paid by the maturity value of her fixed deposit. She also wants to buy a home with a payment of $85000. She has a term deposit of $57000 in bank and a shares of $2070 in Westpac Banking Corporation. She is also having a balance of $1000 in her savings bank account.

Assessor feedback:

Your objectives

This is where you need to list your client’s objectives (i.e. their financial and non-financial goals, objectives and needs).

My objective is plan the investment of Jessica to increase her earning for 5 years to meet up the planned expenses for paying her personal loan and buying a new house.

Assessor feedback:

Summary of our strategy and recommendations

For the short term — up to one year

This is where you need to summarise your short-term recommendations for your client.

It is recommended that Jessica needs to save more money by reducing her expenses and invest the saved money on proper investment plans to get a high rate of return.

Assessor feedback:

For the medium term — one to five years

This is where you need to summarise your medium-term recommendations for your client.

The client is advice to save her money income by reducing her expenses and investing the money saved on new investment policies to increase her rate of return. As per her target she needs to save an amount of $124000 by the end of 5 years to meet her planned expenses to pay her liabilities and buy a new house.

Assessor feedback:

Summary of expected outcomes if you implement our advice

For example:

Should you proceed with the recommendations contained within this report, we estimate that:

• You will reduce your debt by $XYZ and/or save $ABC.

• You will build wealth in non-superannuation assets through regular contribution of $X.

The client needs to reduce her expenses by $5000 and increase her investments by investing the total amount saved. The client can invest in short term debentures and other policies. This would help the client to meet her target plan for expenses.

Assessor feedback:

Risks in our advice

These advices provided helps to increase the rate of return of the investment made by Jessica. But if she wants to earn more amount of money, the risk incurred increases. She needs to take more risk if she needs to earn more money. Hence, the advices does not provide guarantee of return for high return policies.

Assessor feedback:

Summary of our fees and commissions

We charge fees of $3000 yearly and a commission of 2% for brokerage of investment in shares and other policies.

Assessor feedback:

Your next steps

The next step is to provide you help with the investments and to monitor the investments made by you that would help you to keep you money and future secure.

Assessor feedback:

Body

Section 1: Important information about you

This section contains information about you that we used in preparing our advice, such as:

• your reasons for seeking advice

• what you would like to achieve

• your personal and financial information.

Present position

Your reasons for seeking advice

Outline why the client sought advice.

For securing your future you need to plan your investments and need to plan you saving and financial aspects to earn high yield from investment. To fulfil the target plan, the clients need advices of professional experts which our company provides to secure the money and future of our clients.

Assessor feedback:

What you would like to achieve

Summarise here what you understand to be your client’s main objectives.

Following our discussions, here is what I/we understand to be your main objectives and needs:

Pay up the personal loan amount with the help of the maturity value of the TD

Buy a new house by the end of 5 years.

Haven’t yet planned further

Assessor feedback:

Your personal and financial information

Listed below is a summary of your relevant personal and financial details that you have provided.

Personal information

Personal details

	Client 1	Client 2
First name(s)	Jessica
Surname	Bigge
Date of birth	15 July 1986
Marital status	Single
Health status
Smoker status	Non-smoker
Employment status	Permanent
Employer name
Occupation	Marketing manager
Annual salary	$70,000

Summarise the discussion points that could/need to be raised here.

Jessica is a lady who earns around $70000 annually and is able to save just about $6500 every year. She want to buy a new house by the end of the five years and want to pay her loan amount with her maturity value of the TD that she has in her bank. She is still yet not marred and works as a marketing manager.

Assessor feedback:

Children and dependant details

You currently have no dependants.

Your existing insurance

Personal insurance	$50,000 life/TPD inside superannuation
Car insurance	$1,500
Home contents Insurance	$360
Health insurance	$1,320

Your existing estate planning

Summarise the client’s existing estate planning provisions here.

The client has planned to buy a new house within 5 years and has planned to pay 15% of the total amount of the house as a deposit, i.e. $85000.

Assessor feedback:

Financial information

Current income and expense details

Income and expenses

	Client 1	Client 2	Total
Assessable income	$72,506
Income after tax	$55,901
Yearly expenses	$49,600
Estimated surplus	$6,939

Discussion points:

Summarise the discussion points that could/need to be raised here.

It is found from the table that the Jessica is able to save only $6939 per year which will not be able to help her buy a new house as per her plan. She will have a deficit of $40000. Hence it is important for us to plan her investment to her planned target.

Assessor feedback:

Assets and liabilities

	Value	Liability	Net value
Home
Home contents	20,000
Motor vehicles	39,000	39,000
Personal assets
Employer superannuation	32,000
Savings account	1,000
Term deposit	57,000
Investment assets
Shares	2,070
Net worth	151,070

Discussion points:

Summarise the discussion points that could/need to be raised here.

She wants to buy a new house and want to pay her home loan that would cost her an expenditure of $124000 within 5 years. She is has a deficit of about $40000 as per her ongoing plans.

Assessor feedback:

Incomplete and/or inaccurate information warning

Strategy recommendations

This section tells you:

• What our advice is and why it is appropriate for you

• Reasons for our recommendations

• What you need to consider and any risks associated with our advice.

Read this section carefully and ask me if you have any questions.

Recommended action — first year

You will use your findings from the analysis you did in Section 4 of the assignment above as the basis for the information you will need to provide in this section.

For each recommendation below; discuss the reasons, risks, advantages and disadvantages.

Note: Not all of the recommendation boxes below need to be completed. Alternatively, you can add more boxes if required.

Recommendation 1

The first recommendation is to reduce her expenditure by $5000 annually.

Assessor feedback:

Recommendation 2

Increase her saving by reducing her expenditures.

Assessor feedback:

Recommendation 3

Investing all her savings in new monetary funds that would help her to earn a return of 7%

Assessor feedback:

Recommendation 4

She needs to invest her TD maturity value in new investment plans

Assessor feedback:

Things you should consider

The things that I should consider are the objective of the clients that must be fulfilled for the satisfaction of the client. It is important to see that all the objectives of the client is fulfilled to get the plans of the of the clients complete.

Assessor feedback:

Disclosure of remunerations, commissions and other benefits

How are we paid?

Commissions and fees — upfront, ongoing and financial planning advice fees

If you are not charging these fees you may either delete the table below or fill it in with $3000 as the fee charged to make it clear.

Fee type	Initial fee	Initial fee paid to licensee	Initial fee paid to adviser
SOA fee	$1500	$1000	$500
Implementation fee	$500	$500	$0
Ongoing advice fee*	$1000	$500	$500
Total	$3000	$2000	$1000

*If the ongoing service fee is charged as a percentage of the product(s) you may use the table below instead. If you are charging a flat fee, or an hourly fee you should use this table.

Investment recommendations

If you wish to implement the products I have recommended, there may be initial and ongoing fees applicable as detailed below.

Product	Initial fee	Initial fee paid to licensee	Initial fee paid to adviser	Ongoing fees paid to licensee	Ongoing fees paid to adviser
Advices	$1000	$500	$500	$250	$250
SOA	$1500	$1000	$500	$750	$250
Total	$2500	$1500	$1000	$1000	$500

Note: Please see the sample SOA for directions on completing the answers in the paragraphs below.

Product providers will also charge a fee for the management of the funds invested in their products. The annual management fee charged by Answer here is 2%. The amount you will be charged will depend on the funds you have invested.

For example, $55000 invested with them will incur a $525 annual management cost.

Assessor feedback:

Other fees and benefits

Ongoing services

You need to make sure that your client fully understands what you are offering in terms of ongoing service.

Use the space below to record the details of how you will manage this process.

Our company is going to provide you with services for planning your future investments and will help you to make your future secure. We are going you to provide with a SOA and a Projected investment report by every interval of six month. The company will take care of you investments done and will inform you as per the situational changes. The company will provide you all type of needed help that will help you to invest securely.

Assessor feedback:

Authority to proceed

By signing this authority to proceed, I/we Jessica Bigge acknowledge the following:

• I/We acknowledge that the information I provided in the financial needs analysis has been used to arrive at the recommendations contained in this SOA.

• I/We have been provided with an EANWB Financial Planning FSG.

• I/We have read and understood the PDSs for the recommended products.

• Please note that a cooling-off period may apply to your initial investment or insurance policy. Refer to the PDS.

• I/We acknowledge that the product(s) listed in the table below are to be implemented in my/our name/s:

Product(s)	Amount
John Will managed funds	$55000

• I/We wish to make the following change/s to the recommendations within the SOA

Product(s)	Amount
John Will managed funds	$55000

Signed_____________________________ Date /____ /____

Client Name

Signed_____________________________ Date /____ /____

Client Name

Signed_____________________________ Date /____ /____

Financial Planner

Consent to ongoing contact

Signed_____________________________ Date /____ /____

Client Name

Signed_____________________________ Date /____ /____

Client Name

Cash flow tables

Financial position after implementation of strategy

Income, tax and cash flow

Tax calculation	Client 1	Client 2	Notes
Income from employment
Salary	$70000
Salary sacrifice	nil
Salary after salary sacrifice	70%
Other income
Bank account interest	$2366		4.15%
Interest from other investments	n.a.
Share dividends	$98		Westpac Banking Corporation dividends
Imputation credits	$42
Other income liable for tax (e.g. rental income)	n.a.
Assessable capital gains	n.a.
Total assessable income	$72506
Deductable expenses (e.g. rental repairs)	$680		$520 National Breast Cancer Foundation

$10 bucket donationTaxable income

$71426

FY 2013/14Income tax on taxable income

$14890

less tax offsets (e.g. LITO/SAPTO)

n.a.

plus Medicare levy

$1077

plus Medicare levy surcharge

n.a.

less Imputation credits

$42

less refundable tax offsets

n.a.

Net tax payable

$15925

Family cash flow

Client 1Client 2Combined

Comment

Cash flow calculation:

Salary less any salary sacrificed amount$70000 Non-taxable income (e.g. income from a superannuation pension for a person aged over 60, Family Tax Benefits, etc.)Nil Interest income$2366 Dividends received (excluding franking credits)$98 Other incomenil Total income received before tax$72464 Investment expensesNil Living expenses$14800 Car insurance, home contents insurance, health insurance, living expense, etc.Other expenses$34800 Rent, car repairs, Donations, Accountant’s fees.Total expenses$49600 Total income received before tax less expenses$22864 Net tax payable from tax table above$15925 Total net cash flow$6939

Asset

OwnerValueLiabilitiesNet value

Notes

Personal assets

Family home

n.a.

Home contents

Jessica

$20,000

Insured value and includes legal liability coverCar 1

Jessica

$39,000

Car 2 Other Total

$59,000

$39,000

$20,000

Superannuation

Client 1 superannuation

Jessica

$32,000

n.a.

$32,000

Client 2 superannuation Total

$32,000

Investment assets

Investment property

n.a.

Savings account

Jessica

$1,000

nil

$1,000

Transaction accountTerm deposit

Jessica

$57,000

nil

$57,000

Jessica

$2,070

nil

$2,070

Westpac Banking Corporation current price $35.08Other Total

$60,070

nil

$60,070

Net worth

$151,070

$39,000

$112,070

Assets and liabilities

Liabilities
Loan	Current debt	Percentage deductible	Interest only	Repayment
Loan	n.a.	n.a.
Home loan	n.a.	n.a.
Investment property	n.a.	n.a.
Other	$39,000	nil	No	$850 per month
Total	$39,000	$0

Five-year projections

Five-year projection table

Required

Hints for using the FV formula in Excel to predict account balances are provided in your subject notes.

Copy the projections into Table 1 (double-click to open in Excel) and complete the list of assumptions in Table 2.

Please ensure that you use a real rate of return that is appropriate to the client’s portfolio, both current and proposed.

Account balance projections

Table 1

Appendix 3: Assumptions

Table 2

Value	Current situation	Proposed strategy
Return period (monthly or annual)	Yearly	Yearly
Real rate of return: Capital growth	0%	7%
Real rate of return: Income	4%	7%
Other	nil	Nil

Reference:

Case Study on Jesica

Financial Planning-46549

Solution: –

Reference:

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