Student Name……………..…………………..

Assessment: Complex Financial Advice

FNSFPL602A Determine client requirements and expectations for clients with complex needsFNSFPL508A Conduct complex financial planning researchFNSFPL604A Develop complex and innovative financial planning strategiesFNSFPL605A Present and negotiate complex and innovative financial plansFNSFPL606A Implement complex and innovative financial plans

ASSESSMENT EVENT/SEvent 2 of 2

ASSESSMENT CONDITIONS/ INSTRUCTIONS TO STUDENTS Answers must be typed (not hand written). Start a new page for each Part (e.g. Part A & Part B) Assignments to be submitted electronically through SAKAI

All parts must be completed

DUE DATE – As detailed on Sakai site

Late submissions will not be accepted under any circumstances.

PERFORMANCE MEASURMENT Results will be reported as:- Competent or Not Yet Competent

Question Weighting Competent / Not Yet CompetentPart A 60%Part B 10%Part C 30%

Plagiarism DeclarationI have read the Student Service Guide under Student Responsibilities to “… not engage in plagiarism, collusion or cheating in any assessment event or examination”.

Student Signature…………………………………………Date......................................................

Course: Advanced Diploma Financial Planning15th December 2013 Version 1 Section 734

Meadowbank TAFE – NSI Page 1 of 26 Share point /8/734

Fact FindThe following pages contain the client Case Study Fact Find for your assignment.

About you

Before I make any recommendations, I need to consider your current financial situation and what you would like to achieve now and in the future. This questionnaire will help me do this.

Your details

Your name (s) Wayne & Willow Court

Date 1st July 2013

Please answer the questions as openly as honestly as you can as it will allow me to better understand what you need and what your concerns are. This will then allow me to make sure that any recommendations I make are appropriate for you.

If you do not have all the details of your situation refer to things such as last year’s tax return, superannuation member statements, bank statements, credit card statements and so on.

Any financial advice I give you will be based on the answers you provided me with, further discussions we have, statements you provide me with or I obtain from the relevant third parties and investigations I make into your situation.

If you need any information at any time, would like to discuss your details further or provide me with updated information, please contact me.

My contact details

Practice name: Financial Plus Advisory GroupPhone: 02 8964 1111Fax: 02 8964 2222Email: info@financialplusag.com.auWebsite: www.financialplusag.com.au

Authorised representative of XYZ Financial Planning Pty Limited ABN 99 000 208 327 AFS Licence No. 111111

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Your personal detailsThis section captures information about your personal details, such as your current contact details and how you would like to be contacted by us.

Individual details

Client 1 Client 2

Title Mr Mrs

Surname Court Court

Given name Wayne Willow Harper

Preferred name Wayne Willow

Sex Male Female

Marital status Married Married

Date of birth 10/07/1971 10/07/1971

Tax resident of Australia Australia Australia

Country of residence Australia Australia

Country of citizenship

Australia Australia

Contact details

Client 1 Client 2

Home address 253 Pacific Road, Pacific Bay NSW 2222

253 Pacific Road, Pacific Bay NSW 2222

Work address 111 Pacific Road, Pacific Bay NSW 2222 15 Bay Road, Pacific Bay NSW 2222

Other addressN/A N/A

Mailing address Home Home

Home phone 02 5555 6666 02 5555 6666

Work phone

Mobile phone

Fax

Email wayne@court.com.au willow@court.com.au

Contact me by Any of above Any of above

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About your familyThis section captures information about your family, including your children and other family members that are dependent on you. This helps me consider both you and your family when I make my recommendations.

Dependants/Children

You have no children/dependants at this time You choose not to provide these details now.

1 2 3 4

Surname

Given names

Date of birth

Sex

Is he/she financially dependent on you?

If yes, until when?

Do any of your children have special needs?

Do you have any other financial dependants?

Are there other family matters I should know?

Notes

About your healthThis section captures information on your current state of health and issues I may need to know about as this may impact any advice I provide you, particularly personal insurance.

Client 1 Client 2

How would you rate your current health? Good Good

Do you currently have any personal health, lifestyle or occupation issues that may affect you? No No

If yes, please detail

Have you smoked in the last 12 months? No No

Do you have private health cover? Yes Yes

If yes, what type of cover? Hospital & extras Hospital & extras

Who is your health insurance provider? HBF HBF

Notes

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What’s on your mind?This section captures why you have come to see us and any concerns or goals you may have. This will allow us to determine your needs and objectives advice we provide.

We would like advice on whether the best way forward for us to is to place all of our surplus savings into our home loan or if there is a better alternative so that we can potentially pay off our mortgage sooner through investing the surplus cash flow elsewhere.

At this stage we do not seek any advice regarding any other aspect of our finances.

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Scope of this adviceNow we understand your goals, objectives, timeframes and priorities, we need to confirm what issues you would like us to advise on today, those you want us to address at a later date and any risks this may pose to you.

What will be included in our advice:

At this time, you have asked us to provide advice on:- Investment planning- Gearing/debt management (limited to strategy)

What will not be included in our advice:

After discussions, you have requested the following be excluded from our advice at the moment:

- Superannuation- Insurances- Centrelink- Estate Planning

We will address these in:- You will contact us when you are ready to review the scoped out areas

Risks of not including these in our advice:

By not receiving advice on these matters, the following potential risks may exist:

Your financial portfolio may not be optimally structured and this could lead to financial hardship. You understand and accept this risk.

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What’s important to you?In this section we will start to categorise and detail your goals captured in the What’s on your mind section under specific areas. This will help us to determine priorities for each area and develop an appropriate timeline as a next step.

Timeframe: Short = within a year, medium = 1- 5 years, long = more than 5 years.

Lifestyle and family

Timeframe Priority Amount

NotesScoped out of advice

Debt management

Timeframe Priority Amount

To pay off our loan as soon as we can. Now 1$500,000

(current loan)

Notes

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Investment planning

Timeframe Priority Amount

Seek advice on what we should be doing with our surplus cash flow to pay off our mortgage as soon as possible. We do not see any reason to access this money for a long time.

Long term 1 $52,000pa

Retain cash reserve for emergency money Now 1 $10,000

Notes

Estate planning eg Wills, power of attorney

Timeframe Priority Amount

NotesScoped out of advice

Personal insurance planning

Timeframe Priority Amount

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NotesScoped out of advice – clients’ do not seek wealth protection advice. Warning provided about the risk of not partaking in full needs analysis. Clients understood verbal warning provided that not having a needs analysis completed may lead to financial hardship and are happy to proceed on this basis.

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Superannuation planning

Timeframe Priority Amount

NotesScoped out of advice

Retirement planning

Timeframe Priority Amount

NotesScoped out of advice

Additional things that are important to you

Client 1 Client 2

I would prefer not to pay for your fees out of my own pocket.

I want to control where my money goes after I die.

I want to have a range of options and choices when investing.

I don’t want to spend a lot of time thinking about my investment strategy.

Yes Yes

I would like to easily access my funds if required.

I would like choice on how I receive an income.

I would like to consolidate and co-ordinate everything for my retirement.

I want options, value and peace of mind in my insurance cover.

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I would like to consider having my insurance cover inside my superannuation.

I would like to be able to keep my super fund when changing employers.

Notes

Wayne and Willow are looking for an ongoing relationship with an adviser so they have guidance if their circumstances change and so that they are aware of any adjustments that need to be made to their financial plan.

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Investment planning considerationsThis section captures information about any concerns you have in relation to investment planning and any specific issues you would like to address.

You have no investment planning needs now. You choose not to provide these details now.

How long would you be willing to invest your money for, before you would need to access it?

< 2 years 2 – 3 years 3 – 5 years 5 – 7 years > 7 years

Do you prefer direct (shares) to managed investments?

Yes No Not sure – need advice

Do you prefer any investments?If yes, please give details.

Yes No

Are there any investments you wish to avoid?If yes, please give details.

Yes No

Is borrowing to invest something you’d consider? Yes No

Are you prepared to use your home as security for investment borrowing?

Yes No

Do you have any unused capital losses from previous years? Yes No

If yes, how much? $

Notes

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Superannuation planning considerationsThis section captures information about any concerns you have with your superannuation planning and any specific issues you would like to address.

You have no super planning needs now. You choose not to provide these details now.

Client 1 Client 2

Have you made a personal contribution in the last 3 years?If yes, give details

Have you claim tax deduction from your personal contribution in the last 3 years?If yes, give details

Does your employer allow you to salary sacrifice?

Have you previously received the low rate cap on lump sum super withdrawals?If yes, give details

Do you have lost super funds?

Do you want a lost super search conducted?

Have you received an Employment Termination Payment?

Notes

Retirement Planning ConsiderationsThis section captures information about any concerns you have in relation to your retirement planning and any specific issues you would like use to address.

You have no retirement planning needs now. You choose not to provide these details now.

Client 1 Client 2

When do you plan on retiring?

How much income do you think you will need in retirement?

Which assets will you use to fund your retirement, other than superannuation?

Do you have any planned expenses in retirement?

Will you downsize your home?If yes, amount you will free up

Notes

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Are you willing to consider a trade-off?I am here to help you achieve your goals and objectives if possible and whilst I can help you to understand how you may be able to maximise your current investments, there may still be a gap between where you want to be and what your attitude to risk allows you to achieve. Think about how comfortable you feel with the level of risk you are willing to take across all your investment assets. Whilst you may be comfortable with this, you may not be able to meet you financial or lifestyle objectives.

Let’s say that you are a “cautious” investor, so you don’t want to take big risks. If you have a short timeframe in which to grow your assets, you may not be able to achieve your desired goals and objectives and need to reconsider your options. This may mean a trade-off where you might consider investing a little bit more aggressively or reconsider your goals and objectives. This will give you a greater chance of achieving them.

I can help you understand your options so that you choose what is right for you. Please choose which of the options below you would be willing to consider if it is unlikely that you will achieve your goals and objectives.

If it is unlikely that you will be able to meet your goals, which option would you consider? Client 1 Client 2

Make changes to my current lifestyle now by spending less and saving more. No No

Make changes to my lifestyle at a later stage by spending less eg in retirement No No

Downsize my lifestyle assets, or reduce my planned expenses. No No

Delay my retirement. No No

Increase my exposure to growth assets, giving me increased investment risk. No No

Borrow funds to invest. No No

Reduce the estate I leave to my beneficiaries. No No

Revise my financial goals. No No

Other (provide list below):

Notes

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About your employmentThis section captures information about your current employment situation. This helps me to understand any issues needing consideration when providing you with advice, for example, for advice on insurance, your daily duties may affect your premiums if you work in a high risk industry.

Client 1 Client 2

Occupation type

Employee

Self–employed

Retired

Semi-retired

Retired from ill health

Sole trader

Unemployed

Employee

Self–employed

Retired

Semi-retired

Retired from ill health

Sole trader

Unemployed

Employment type

Permanent full time

Permanent part time

Fixed term

Casual

Contract

Contract end date:……….

Permanent full time

Permanent part time

Fixed term

Casual

Contract

Contract end date:……….

Employer name RPP Hospital RPP Hospital

Number of hours a week 38 30

Occupation Doctor Registered Nurse

Industry Health Health

Main dutiesGeneral practitioner Helping patients

Qualifications Degree in Medicine Degree in Nursing

Do you currently have a salary package in place?If yes, please give details

Yes No Yes No

Notes

If you are a business owner or have other structures such as a family trust, complete Appendix - Business ownership.

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About your income and expensesThis section captures information on your income and expenses to help me understand your current cashflow situation. This allows me to make appropriate recommendations while considering any cashflow shortages or surplus you have. You can provide me with your last tax return if you are unsure of any of the following details.

Income

Income description Wayne$ a year

Willow$ a year

Base salary or wages $150,000 $65,000

Bonus / allowance

Annuity / allocated pension

Rental income

Share / investment income

Foreign pension income

Maintenance income

Current Centrelink or Department of Veterans’ affairs benefit amount

Amount: $Payment name:

CRN:

Amount: $Payment name:

CRN:

Other taxable income

Other non-taxable income

Total $150,000 $65,000

Reportable fringe benefits

Are you expecting your income to change in the foreseeable future?

Provide details

No No

Annual household expenses/surplus

Category

Complete either option 1 or 2:

1. Estimated total annual household expenses. Are loan repayments included? Are insurance premiums for personal risk, included?

2. Estimated annual surplus - after household expenses, loan repayment and insurance premiums. $52,000

3. Are you expecting your expenses to change in the foreseeable future?Provide details

No

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About your assets and liabilitiesThis section captures information about your current financial situation - what you currently own and owe. You can give me current statements rather than completing the tables below.

Personal assets (excluding assets which generate income)

You have no personal assets. You choose not to provide these details now.

DescriptionOwner Estimated market

value $Estimated

Centrelink value $

Retain1 2 Joint Other

Principal residence X $1,000,000 R

Home contents

Motor vehicle 1

Motor vehicle 2

Investment property assets

You have no investment property. You choose not to provide these details now.

DescriptionOwner Date of

purchase / Price $

Estimatedmarket value $

Net incomepa* $

Retain1 2 Joint Other

/ /$

/ /$

/ /$

* This includes the gross rental income less any property expenses (not including loan repayment)

Cash / fixed interest assets

You have no cash/fixed interest assets. You choose not to provide these details now.

DescriptionOwner Market

value $Interest rate %

Maturity date Retain

1 2 Joint Other

Bank East Offset Account

X $50,000 n/a n/a

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Liabilities (including credit cards)

You currently have no liabilities. You choose not to provide these details now.

Lender and Loan type

Owner

Balance o/s $

Interest %pa

Payment amount /

freq

P&I or IO /

Var or Fixed

Retain (R)

Consolidate (C)

Discharge (D)

1 2 Joint

Bank East X $500,000 5.00% $3000 / per month

P&I / Variable

Notes (include details of any associated fees, other benefits and previous history concerns e.g. break costs, and honeymoon rates)Wayne & Willow would like to retain their home loan with Bank East. They have a very flexible products where refinancing can be arranged such as increasing the loan and/or creating additional split(s) with no fees incurred. Their mortgage broker takes care of any loan adjustments required. They only seek advice on the appropriate structure moving forward (if any change is recommended). Their broker will implement.

Investment, superannuation and income stream summary

Investment assets eg shares, managed investments or master trusts

You do not own any investment assets. You choose not to provide these details now.

Investment nameOwner

Type Account number

Balance $

Statementattached1 2 Joint Other

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Superannuation assets

You do not have any superannuation assets. You choose not to provide these details now.

Superannuation fundOwner Account

numberBalance

$Statementattached1 2

Retirement income streams

You do not have any retirement income streams. You choose not to provide these details now.

Fund nameOwner Account

number

Balance(account based)

Incomepa $

Statementattached1 2

Where you have not provided a statement, complete the relevant investment, superannuation or retirement income streams forms in the appendix.

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Insurance summary

Insurance policies

You do not have any insurance policies. You choose not to provide these details now.

Life insured

OwnerInsurance company

Policy number

Type and level of cover

Life / TPD Trauma / IP

Statementattached1 2 Joint

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Insurance needs analysis You do not have any insurance needs. You choose not to provide these details now.

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Estate planningThis section captures any concerns you may have in relation to your estate planning needs. It helps me understand some of the gaps you might currently have, what you would like to achieve and the level of assistance that you need from myself or other parties, such as an estate planning specialist or your solicitor.

Wills

You do not have any estate planning needs. You choose not to provide these details now.

Client 1 Client 2

Do you have a Will? If yes, provide details:

Last updated

Name of Executor

Is it up to date and reflects your current wishes?eg have you remarried or had more children?

Do you have a testamentary trust provision?

Are you concerned about your beneficiaries paying tax on inherited assets?

Would you like information on how to manage this?

Would you like help with your estate planning needs?

Power of Attorney

Client 1 Client 2

Do you have a Power of Attorney?

Type of Power of Attorney

Who is the person named as your Power of Attorney?

Date of execution

Notes

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Planner notes

Risk profile of clients:Both came out as being aggressive investors which translates to a target model portfolio of 100% growth assets and 0% defensive assets.

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Complex Financial Advice Assignment

Each part is to be started on a new page.

Answers to this assignment are to be typed in size 11 Arial font with line and paragraph spacing set to

1.5.

Answers are to be strictly within (+/-10%) length guidelines provided below.

Competency is required in each part to be deemed overall competent.

Students will be allowed a maximum of 1 resubmission

All the necessary information has been provided in the Fact Find – students are not allowed to alter

the circumstances provided to create a better outcome (e.g. cannot assume clients receive

inheritance in 12 months’ time)

Questions

Part A

As a financial planner employed by Financial Plus Advisory Group which is an Authorised representative of

XYZ Financial Planning Pty Ltd you are to prepare a Statement of Advice for Wayne and Willow. You have

the necessary qualifications to provide advice in investment planning and debt management/gearing (limit to

this scope of advice). The core question to address is as to whether there is a better opportunity for them to

pay off their debt sooner rather than placing surplus cashflow into their home loan? Placing the savings into

their loan is to be used as the alternative strategy in the advice document (including modelling) so that

Wayne and Willow can see the benefit of the strategy you are recommending compared to paying down the

mortgage.

The Statement of Advice is not to exceed 50 pages in length.

The following must be included in your advice document and it recommended your SOA is compiled in the

following order.

Page 1 of this assignment signed (plagiarism declaration)1. Cover page of SOA2. Executive Summary (on company letterhead)3. Table of contents4. Scope of advice (scoped in / scoped out & limited information warning)5. Summary of advice (current situation, goals, overview of recommendations, benefits)6. Risk profile (explanation of growth/defensive assets & their risk profile)7. Goals8. Recommended strategy9. Recommended products (remember debt advice to be provided by mortgage broker who you can

assume has recommended Bank East as appropriate with interest rate of 5%).10. Modelling (net worth, tax position & cashflow. Model for 1, 2, 5, 10, 15 & 20 year timeframes)11. Asset allocation (compare to licensee benchmark*)12. Consequence of replacing financial products13. Overall outcomes of our recommendations (best interest duty requirements addressed)14. Alternative strategy15. Advice fees (initial & ongoing)16. Products costs (initial & ongoing)17. Ongoing service offering18. Product & advice costs (you are to determine your SOA fee & ongoing adviser service fee)19. What else you need to know (tax issues, cooling off period, investment portfolio risk, personal

risk, legislative and general risks)

Fact Find V2

20. Next steps21. Authority to proceed22. Disclosure documents23. Assumptions^

*Licensee benchmark for asset allocation (100% growth) provided below

Actual ($) Actual %

Benchmark for Aggressive (100%

Growth) risk profile

Variance

Cash 0.00%

Australian Fixed Interest 0.00%

International Fixed Interest 0.00%

Australian Equities 42.00%

International Equities 39.00%

Direct Property 2.00%

Property Securities 5.00%

Other 12.00%

Total 100.00% 100.00%

^Include table below for assumptions and these figures use for modelling & list other assumptions used (if

any).

Assumptions

Projection start date 01 July 2013

Indexation rate (CPI) 2% per annum. It is applied to all expenses annually.

AWOTE index rate 3% per annum. It is applied to annual “salary/income”.

Income received Investment earnings are assumed to be received annually.

Cost of living Indexed by CPI and recorded in the year of expected outlay.

Interest on loans Interest cost remains constant.

Taxation Current tax rates have been used. The income, capital gains and superannuation tax rates are assumed to remain constant.

Superannuation Earnings taxed at 15%.

Fees Upfront fees taken into account are entry fees and planner servicing fees.Ongoing fees taken into account are management fees / MERs and planner servicing fees.The financial analysis does not take into account any fee-related tax deductions or GST credits that may be available from the products.

Net worth Income* Growth*

Cash 3.00% 0.00%

Aust fixed interest 4.00% 0.00%

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Assumptions

International fixed interest 4.00% 0.00%

Listed property 6.00% 2.50%

Direct property 6.00% 2.50%

Australian shares 5.00% 4.00%

International shares 2.00% 6.00%

Other 6.00% 2.00%

*These are the long term nominal rates of return by asset class.

Part BProvide four (4) file notes detailing your discussion with Wayne & Willow Court covering:

a. Initial meeting

b. Research & advice formulation (strategy & product)

c. SOA presentation meeting

d. Implementation (assume clients proceed with advice in full)

Part CPart C will be completed once you are deemed competent in your assignment. You are required to present the proposed and alternative strategies to a facilitator who will role play the Court’s. The presentation will be 15 minutes in length and the facilitator will ask questions to test your knowledge of the advice you prepared.Part C can be completed either in person at Meadowbank Campus or via the internet however with the latter you will be required to have a camera, microphone and high speed internet connection.

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