Student Name……………..…………………..

FNSASICU503AProvide advice in

Superannuation Assignment

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 Questions 1 - 3 20%Part B Questions 4 – 6 20%Part C Questions 7 – 9 30%Part D Questions 10 – 12 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 Planning25th October 2013 Version 1 Section 734

Meadowbank TAFE – NSI Page 1 of 25 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) Simon Needs & Kate Needs

Date 15th October 20XX

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

Course: Advanced Diploma Financial Planning25th October 2013 Version 1 Section 734

Meadowbank TAFE – NSI Page 2 of 25 Share point /8/734

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 Needs Needs

Given name Simon Kate Maree

Preferred name Simon Kate

Sex Male Female

Marital status Married Married

Date of birth 15/06/1951 09/11/1951

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 needs@needs.com.au needs@needs.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 to retire when Simon turns 65 and would like to review our current superannuation arrangements to see if we are appropriately invested to meet our retirement goal of an income of $60,000 per annum (in today’s dollars).

We are also interested to see if there are any opportunities available to maximise our retirement funds as we feel as a household we pay a lot in tax.

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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

Notes

Scoped out of advice

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Investment planning

Timeframe Priority Amount

To see if we can better structure our savings in the bank. We do not see any reason to access this money for a long time.

Long term 2 $350,000

Retain cash reserve for emergency money Now 2 $25,000

Notes

Estate planning eg Wills, power of attorney

Timeframe Priority Amount

We would like to ensure our super funds are distributed in line with our current Wills Now 1 n/a

We would like our adult children to pay minimal tax on the benefit amount once we have both passed away

Now 1

Notes

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

To review our current super arrangements in terms of asset allocation and provider to ensure fees paid are competitive.

Now 1

Seek advice regarding any strategies available to reduce our tax liability Now 1

Notes

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Retirement planning

Timeframe Priority Amount

To retire when Simon turns 65.3 years however won’t need to access large lump sum into foreseeable future

1Income

required $60,000 pa

To review if we on track to achieve our retirement lifestyle goal Now 1

Notes

Additional things that are important to you

Client 1 Client 2

I would prefer not to pay for your Yes YesFact Find V12

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.

Yes Yes

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

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

Simon and Kate are looking for an ongoing relationship with an adviser so they have guidance between now and retirement and then into retirement.

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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 NoGeared/leveraged investments

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

Yes NoDate:Amount: $

Yes NoDate: Last JuneAmount: $1500

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

Yes NoTax deductions claimed: $

Yes NoTax deductions claimed: $

Does your employer allow you to salary sacrifice? Yes No Unsure Yes No Unsure

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

Yes No Unsure Date:Amount $

Yes No UnsureDate:Amount $

Do you have lost super funds? Yes No Unsure Yes No Unsure

Do you want a lost super search conducted? Yes No Yes No

Have you received an Employment Termination Payment? Yes* No Yes* No

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? 65 65

How much income do you think you will need in retirement? $65,000 pa

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

Currently have savings in the bank

Do you have any planned expenses in retirement? Buy a new car upon retirement. Funds required $45,000.

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

Yes No$

Yes No$

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 Smart Street Consulting Services Trading under own name

Number of hours a week 38 16

Occupation Business consultant Workplace Safety Adviser

Industry Financial Services HR Services

Main dutiesOptimising businesses performance

Providing guidance on workplace safety incidents

Qualifications Degree in Commerce Degree in Adult Learning

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 Client 1$ a year

Client 2$ a year

Base salary or wages $140,000 $32,500

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 Interest bank account $3750

Other non-taxable income

Total $143,750 $32,500

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. $20,000

3. What % of your total expenses are variable? Not disclosed

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

No

* For a detailed expense table, eg for budget planning purposes, complete Appendix - Detailed household expenses. Completion of the Detailed household expenses appendix is required where providing debt management advice.

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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

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 North X $375,000 1.00 On call

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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 /

Taxdeduct % pa

Retain (R)

Consolidate (C)

Discharge (D)

1 2 Joint Other

Notes (include details of any associated fees, other benefits and previous history concerns e.g. break costs, and honeymoon rates)

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

MLC GoldStar Super X 10000011 $300,000 X

AMP Flexi Lifetime Super X 20000022 $100,000 X

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.

Notes

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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

Notes

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Insurance needs analysis You do not have any life 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: Yes Yes

Last updated 05/05/2012 05/05/2012

Name of Executor Shane Main Shane Main

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

Yes Yes

Do you have a testamentary trust provision? No No

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

Yes Yes

Would you like information on how to manage this? Yes Yes

Would you like help with your estate planning needs? Only with regards to super Only with regards to super

Power of Attorney

Client 1 Client 2

Do you have a Power of Attorney? Yes Yes

Type of Power of Attorney EPoA EPoA

Who is the person named as your Power of Attorney? Kate Needs Simon Needs

Date of execution 05/05/2012 05/05/2012

NotesClients are happy with their Estate planning outside of superannuation

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Planner notes MLC GoldStar Super Account – Simon Needs

- MER 1.45% (no trail commission paid to adviser)- Administration fee $2 per week- Adviser service fee 1.1% (haven’t heard from servicing adviser on this account for 10 years)- Asset allocation 100% MLC Horizon 6 Share Portfolio

AMP Flexi Lifetime Super Account – Kate Needs- MER 2.10%- Administration fee: none applicable- Adviser service fee: no servicing adviser listed- Asset allocation 100% AMP Future Directions Conservative

Risk profile of clients:Both came out as being balanced investors which translates to a target model portfolio of 60% growth assets and 40% defensive assets.

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Superannuation Assignment

Answers to this assignment are to be typed in size 11 Arial font.

Answers are to be strictly no greater than the length stated 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

1. Simon and Kate are approaching retirement. There are several issues that need to be brought to the

clients’ attention as part of their retirement planning. Provide three (3) questions/observations that

you would bring to their attention and why.

(300 words)

2. Based on the current financial year what is their combined (after tax) household income?

Simon’s after tax income =

Kate’s after tax income =

Combined household income =

3. When comparing the figure from questions 2 to their retirement income goal provide commentary on

the conversation you would need to have with Simon and Kate.

(300 words)

Part B4. Provide a table breaking down Simon’s current superannuation account fees.

Add a column to the right of this table showing what the fees would be if Simon moved to the latest

super product from MLC called MasterKey Fundamentals. Your will need to research this products

PDS and investment menu guide available from mlc.com.au. For the purpose of this question you

are to keep his investment option the same (i.e. MLC Horizon 6 Share Portfolio) and assume the

ongoing financial adviser service fee is 0.99%.

5. Do the same as what you did in question 4 for Kate using amp.com.au as your reference source for

their latest product AMP Flexible Super (AMP FS).

6. What would be the combined annual savings if you were to advice Simon and Kate to move their

current super funds to the latest products analysed above?

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Part C7. Explain to Simon and Kate four (4) strategies relating to their superannuation they should consider

implementing. Your explanation is to be in easy to understand language so the clients can

understand the concept. Do not provide any dollar/cent calculations for their specific circumstances.

Each strategy must be different.

(400 words)

8. With each of the four (4) strategies in question 7 provide in dollars and cents how the strategy is likely

to benefit Simon and Kate in the 12 months following the implementation of their plan. Please list

any assumptions you make.

9. Based on the value you expect to deliver (as stated in question 8) provide a one paragraph

justification on how the Statement of Advice fee of $2750 is a worthy investment for Simon and

Kate?

Part D10. Explain to Simon and Kate what their current asset allocation is and how this differs from their risk

profiled target asset allocation.

The benchmark asset allocation for a balanced investor is:

33% Australian equities

29% international equities

8% listed property

12% domestic fixed interest

6% international fixed interest

12% cash

11. Assuming Simon and Kate adjust their asset allocation to be the above and they go ahead with your recommended strategies from question 8, using a table provide a projection for each of their super balances over the next 3 years clearly showing each step and your working.Assume real rate of return (after inflation is accounted for) of 6% per annum after all fees.

12. Based on a real return of 6% per annum and annual drawdown of $60,000 in retirement; at what age would their retirement savings run out (if ever)? Provide a table and graph of your findings. You can combine their super balances at age 65 (from question 11) for modelling purposes. Show working of your calculations for the first two years of retirement.

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