Assignment
Superannuation and Retirement Planning (DFP3_v2A4)
Student identification (student to complete)
Please complete the fields shaded grey.
Student number 10327947
Assignment result (assessor to complete)
Result — first submission (Details for each activity are shown in the table below)
Parts that must be resubmitted:

Result — resubmission (if applicable)
Result summary (assessor to complete)
First submission Resubmission (if required)
Section 1 Not yet demonstrated
Not yet demonstrated
Section 2 Not yet demonstrated
Not yet demonstrated
Section 3 Not yet demonstrated
Not yet demonstrated
Section 4 Not yet demonstrated
Not yet demonstrated
Section 5 Not yet demonstrated
Not yet demonstrated
Feedback (assessor to complete)
[insert assessor feedback]
Before you begin
Read everything in this document before you start your assignment for DFP3 Superannuation and Retirement Planning.
About this document
This document includes the following:
• Instructions for completing and submitting this assignment.
• Assignment sections (including fact finder templates, cash flow templates and managed funds calculations).
– Section 1: Establish the relationship with the client and identify their objectives, needs and financial situation.
– Section 2: Analyse client objectives, needs, financial situation and risk profile to develop appropriate strategies and solutions. Identify insurance needs.
– Section 3: Address clients’ questions and concerns about superannuation matters.
– Section 4: Present appropriate strategies and solutions to the client and negotiate a financial plan, policy or transaction. Provide ongoing service where requested by the client.
– Section 5: Agree on the plan, policy or transaction.
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 Superannuation and Retirement Planning (DFP3v2) subject room.
Instructions for completing and submitting this assignment
Word count
The word count shown with each question is indicative only. You will not be penalised for exceeding the suggested word count. Please do not include additional information which is outside the scope of the question.
Additional research
When completing this assignment, assumptions are permitted although they must not be in conflict with the information provided in the Case Studies.
You may also be required to conduct additional research to properly answer some assignment tasks. This includes sourcing additional information from other organisations in the finance industry to ensure the suitability of products or services to meet the clients’ requirements.
Saving your work
Download this document to your desktop, type your answers in the spaces provided and save your work regularly.
• Use the template provided, as other formats will not be accepted for these assignments.
• Name your file as follows: Studentnumber_SubjectCode_Submissionnumber
(e.g. 12345678_DFP1B_Submission1).
• Include your student ID on the first page of the assignment.
Before you submit your work, please do a spell check and proofread your work to ensure that everything is clear and unambiguous.
Submitting the assignment
You must submit your completed assignment in a compatible Microsoft Word document.
You need to save and submit this entire document.
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.
Should your assignment be deemed ‘not yet competent’ you will be give an additional four (4) weeks to resubmit your assignment.
Your assessor will mark your assignment and return it to you in the Superannuation and Retirement Planning (DFP3v2) subject room in KapLearn under the ‘Assessment’ tab.
Make a reasonable attempt
You must demonstrate that you have made a reasonable attempt to answer all of the questions in your assignment. Failure to do so will mean that your assignment will not be accepted for marking; therefore you will not receive the benefit of feedback on your submission.
If you do not meet these requirements, you will be notified. You will then have until your submission deadline to submit your completed assignment.
How your assignment is graded
Assignment tasks are used to determine your ‘competence’ in demonstrating the required knowledge and/or skills for each subject. As a result, you will be graded as either competent or not yet competent.
Your assessor will follow the below process when marking your assignment:
• Assess your responses to each question, and sub-parts if applicable, and then determine whether you have demonstrated competence in each question.
• Determine if, on a holistic basis, your responses to the questions have demonstrated overall competence.
‘Not yet competent’ and resubmissions
Should sections of your assignment be marked as ‘not yet competent’ you will be given an additional opportunity 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:
FNSASICZ503 Provide advice in financial planning
FNSFPL503 Develop and prepare financial plan
FNSFPL504 Implement financial plan
FNSFPL505 Review financial plans and provide ongoing service
FNSASICU503 Provide advice in superannuation
FNSINC501* Conduct product research to support recommendations
FNSIAD501* Provide appropriate services, advice and products to clients
FNSCUS505* Determine client requirements and expectations
FNSCUS506* Record and implement client instructions
* These are prerequisite units of competency for FNSASICU503.
We are here to help
If you have any questions about this assignment you can post your query at the ‘Ask your Tutor’ forum in your subject room. You can expect an answer within 24 hours of your posting from one of our technical advisers or student support staff.
Case study — Nathan and Mary Davidson
You are a financial planner for AFS licensee EANWB Financial Planning. Nathan and Mary Davidson have been undertaking their own research into planning their retirement, and recently attended one of your firm’s retirement seminars. After this seminar they spoke with you about their concerns that they may not accumulate enough money in superannuation to fund their retirement.
You met with them and during your initial meeting you provided them with some basic information, including a fact finder for them to fill out. You then organised a second meeting, at which you collected more information on their current financial situation and spent time clarifying their needs and objectives.
A summary of their financial situation, based on your interviews with the clients, is provided below. The completed fact finder, including the risk profile questionnaire, can be found on page 9 of this assignment.
Current situation
Nathan, age 54, and Mary, age 52, are married and have two children, Jonathan and Sarah, who are nearing the end of their schooling.
They own their own home, valued at $600,000, and have recently received an inheritance from the estate of Mary’s mother.
Although they have cleared their mortgage they still have access to a redraw facility of $100,000. However, they do not want to access this unless there is as an emergency.
Nathan is a full-time sales representative for an agricultural supplies company. He earns $140,000 annually plus superannuation guarantee (SG) contributions from his employer paid into the employer’s default fund.
Mary is primarily a self-employed marketing consultant and has business income net of expenses of $65,000 annually. She also works as a contracted employee in a mining engineering company. Her hours vary, but typically she earns about $5600 annually, plus SG which is paid into the employer’s default fund.
Jonathan and Sarah attend a private school and Nathan and Mary pay $7,000 annually in fees, uniforms, books, school trips etc.
The only other assets they have are their two cars.
Superannuation
Nathan has $270,000 in his superannuation fund and Mary has $99,000. They are both invested in the default balanced option. Further details of their superannuation are in the fact find (Appendix 1).
Neither Nathan nor Mary have made any personal contributions to their superannuation fund.
Nathan’s employer will allow salary sacrificing to superannuation without impacting on any other employee benefits and will maintain his SG contribution based on his pre-salary sacrifice income.
Mary’s employer will not allow her to salary sacrifice to superannuation but does make SG contributions to her superannuation fund.
Nathan and Mary are happy with their current superannuation funds and the underlying investments they are invested in. They do not wish to receive advice in regard to changing their funds or investment portfolios.
Insurance
Nathan and Mary have their life insurance and total and permanent disability (TPD) insurance owned by their superannuation funds.
Nathan and Mary both have self-owned trauma policies and income protection policies. Mary also has business overheads insurance.
Their cars are comprehensively insured and they have home building and contents insurance cover including legal liability cover.
Nathan and Mary have family private health insurance cover.
Further details on their insurance policies are in the fact find.
They have specifically requested that they do not require any advice on their insurance policies.
Investments
Nathan and Mary have not had any investments other than their superannuation. Surplus income had been used to pay off their mortgage.
However, they do have $350,000 in their savings account that was left over from the inheritance from Mary’s mother’s estate after paying off their mortgage. This savings account, which is their bank’s ordinary transaction account, does not pay any interest.
Other information
Nathan and Mary have a credit card with a limit of $30,000 that they use for all their general expenses and entertainment. However, they never spend up to their limit and their average expenses are $7500 per month, which they repay within the interest-free period.
Nathan and Mary take regular annual holidays with their children, and spend about $10,000 per trip.
Other expenses include deductible charity donations and accountant’s expenses of $500 annually.
Needs and objectives
Nathan and Mary are concerned they will not have enough money to provide an adequate income in retirement. They do not want to rely on the age pension and would like to be fully self-sufficient if possible.
After the initial meeting with you, they reviewed their situation and decided they would like you to prepare advice using a retirement income of $80,000 a year (in today’s dollars). They based this figure on their current spending after deleting items that will not apply after retirement (such as school fees) and considering their desired lifestyle in retirement. They have used their bank’s ‘Retirement Projector’ and determined that if they live to age 95 and earn 4% (net of inflation) on their investments they will need almost $1.3 million in retirement savings when Nathan is age 65.
Nathan and Mary would like to channel their surplus income into their retirement planning now that they do not owe anything on their mortgage.
They have ‘parked’ the inheritance money in their savings account and plan to retain $50,000 in a secure investment to support the children in their last years at school and into university. They want to invest the balance in a tax-effective way, and are considering adding it to Mary’s superannuation to help her ‘catch up’ because she earns less than Nathan and took time out of the workforce to raise the children when they were young.
Like most people, they would also like to reduce their overall tax liability.
Closing the interview
Before concluding your meeting, you review the information provided by Nathan and Mary to check that it is complete and accurate and ask if they have any questions.
Nathan and Mary understand from their own research that there are many ways to add money to their superannuation, but are confused about which will be the most appropriate for them.
You advise Nathan and Mary what happens next and explain that, with their agreement, you will prepare a written report based on the information they have shared with you, which will include recommended strategies to help them to achieve their financial goal of having adequate funds for retirement.
Nathan and Mary agree to proceed to the next stage of the financial planning process and you make an appointment to present the plan in a fortnight.
As their financial planner, your task is to prepare a statement of advice (SOA) that will include strategies to meet Nathan and Mary’s goals.
Fact finder
Important notice to customers
Your planner must act in your best interest when making any superannuation and retirement recommendations. Therefore, before making a recommendation, the planner must 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 Mr Mrs
Surname Davidson Davidson
Given & preferred names Nathan Mary
Home address 1 Galbraith Grove, Stanhope Gardens, NSW 1 Galbraith Grove, Stanhope Gardens, NSW
Business address n.a. n.a.
Contact phone (02) 6655 4477 (02) 6655 4477
Age 54 52
Sex ? Male Female Male ? Female
Smoker Yes ? No Yes ? No
Expected retirement age In 11 years, approximately age 65 When Nathan retires
Dependants (children or other)
Name Age Sex School Occupation
Jonathan 17 M Yes
Sarah 18 F Yes
Employment details
Nathan Davidson Mary Davidson
Occupation Sales representative Marketing consultant
Employment status Self-employed ? Employee ? Self-employed ? Employee
Not employed Pensioner Not employed Pensioner
? Permanent Part-time Permanent Part-time
Casual Contractor Casual ? Contractor
Other Government Other Government
Business status Sole proprietor Partnership ? Sole proprietor Partnership
Private company Trust Private company Trust
Notes
Any other person to be contacted (e.g. accountant, banker, solicitor etc.)?
Mary is primarily a self-employed sole trader but is also an employed contractor.
Cash flow statement
Cash flow Nathan Mary Combined Comment
Salary less any salary sacrificed amount $140,000 $70,600 $210,600 Includes for Mary income net of business expenses and income from employment as above
Non-taxable income nil nil
Rental income n.a. n.a.
Unfranked dividends received nil nil
Franked dividends received nil nil
Interest nil nil No interest paid on cash
Other income (e.g. taxable benefits, trust income, investment income) nil nil
Total income received before tax $140,000 $70,600 $210,600
Investment expenses nil
Expenses
Mortgage nil nil
School fees $3,500 $3,500 $7,000
Utilities n.a. n.a. Paid as part of the expenses through credit card
Personal insurance $5,496 $3,564 $9,060 Nathan’s annualised premiums: $3,612 trauma, $1,884 income protection.
Mary’s annualised premiums:
$2,172 trauma, $420 income protection, $972 business overheads.
Car insurance $1,600 $1,600 $3,200
Home building and contents insurance $750 $750 $500
Health insurance $1,422 $1,422 $2,844
Living expenses $45,000 $45,000 $90,000 $7,500 per month through credit card
Holidays $5,000 $5,000 $10,000
House maintenance n.a. n.a. Paid as part of the expenses through credit card
Motor vehicle n.a. n.a. Paid as part of the expenses through credit card
Other
$610 $610 $1,220 Donations
$150 $350 $500 Accountant’s fees
Total expenses $63,528 $61,796 $125,324
Assets and liabilities
Asset Owner Value Liabilities Net value Notes
Personal assets
Family home Nathan/Mary $600,000 $0 $600,000 Redraw of $100,000 available for emergency use
Home contents Nathan/Mary $150,000 $0 $150,000 Insured value
Car Nathan/Mary $11,000 $0 $11,000 2008 Ford Focus
Car Nathan/Mary $16,000 $0 $16,000 2008 Ford Falcon XR6
Total $777,000 $0 $777,000
Superannuation
Employer superannuation Nathan $270,000 n.a. $270,000 Growth option
Employer superannuation Mary $99,000 n.a. $99,000 Balanced option
Total $369,000 $369,000
Other Assets
Savings account Nathan/Mary $350,000 Nil $350,000 Transaction account
Total $350,000 Nil $350,000
Net worth $1,496,000 $0 $1,496,000
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 n.a. n.a.
Other n.a. n.a.
Total $0 $0
Needs and objectives
Details Comments
Accumulate sufficient funds in superannuation to retire in 11 years on $80,000 a year They estimate that they will need $1.3m in superannuation when Nathan is about age 65
Use excess income for retirement saving
Retain $50,000 in a secure investment to support children in their last years at school and into university
Invest balance of Mary’s inheritance for retirement
Reduce overall tax liability
Other
Estate planning
Do you have a will? ? Yes No
When was it last updated: October 2009
Do you have powers of attorney? ? Yes No
Current superannuation, insurances and investments
Superannuation
Member Nathan Mary
Fund name ASSF Super Fund CISF Super Fund
Date of joining fund 1 July 1992 (service date) 1 July 1992 (service date)
Type of fund ? Accumulation Defined benefit ? Accumulation Defined benefit
Pension Pensioner Pension Pensioner
Contribution (e.g. 5% of salary) SG By employer By yourself SG By employer By yourself
Current value of your superannuation fund $270, 000 $99,000
Amount of death and disability cover $720,000 $720,000
Is there provision for you to top-up or salary sacrifice? ? Yes No Yes ? No
Superannuation taxation details
Nathan Mary
Current value $270,000 $99,000
Tax-free component $0 $0
Taxable component:
Taxed element $270,000 $99,000
Untaxed element $0 $0
Preservation:
Preserved $270,000 $99,000
Unrestricted non-preserved $0 $0
Restricted non-preserved $0 $0
Previous years contributions:
Non-concessional contributions:
Year 1 $0 $0
Year 2 $0 $0
Year 3 $0 $0
Year 4 $0 $0
Concessional contributions:
Year 1 SG only SG only
Year 2 SG only SG only
Year 3 SG only SG only
Year 4 SG only SG only
Other contributions:
Small business CGT exempt contributions: $0 $0
Personal injury payments $0 $0
Nominated beneficiaries
Name Binding Non-binding
(Yes/No) Trustee discretion
(Yes/No)
Yes/No Amount
Nathan — Beneficiary is Mary Yes 100% No No
Mary — Beneficiary Nathan Yes 100% No No

Are there any current flags or splits on a superannuation benefit of yours in the event of a marriage breakdown? Yes/No N Details
Are you a beneficiary of any current flags or splits of a superannuation benefit in the event of a marriage breakdown? Yes/No N Details
Life insurance details
Life insured Owner Policy type Company Policy number Death benefit Comments Annual premium
DOES NOT WISH TO BE REVIEWED
Disability insurance details
Life insured Owner Policy type Company Policy number Death benefit Comments Annual premium
DOES NOT WISH TO BE REVIEWED
Trauma insurance details
Life insured Owner Policy type Company Policy number Death benefit Comments Annual premium
DOES NOT WISH TO BE REVIEWED
Income protection insurance details
Life insured Owner Policy type Company Policy number Benefit amount Waiting period Benefit payment period Annual premium
DOES NOT WISH TO BE REVIEWED
General insurance details
Item covered Owner Policy type Company Combined policy number Cover amount Other benefit Total annual premium
DOES NOT WISH TO BE REVIEWED
Investment details
Investment type Company Purchase date Units held/fixed rate Current value Owner
Savings account East Antipodean National Wealth Bank n.a. $350,000 Nathan and Mary
Investment attitude details
Are you concerned about the amount of tax that you are paying? Yes/No
Why? Would like to pay less if possible; think tax rates are too high
How important is liquidity (i.e. funds available) to you? Very/Moderately/Not
Why? They are investing for the long term and have enough cash to meet short-term needs
If you had funds available for investing, how would you choose to invest them? Why?
Not certain looking forward — probably in shares and/or property depending how much was available. That’s one of the reasons we are seeking advice.
Are there certain investments that you wish to avoid? Yes/No
Which ones? Don’t want anything exotic or too risky.
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 adviser, you can choose the investments that best match your financial objectives
Which of the following best describes your current stage of life? Nathan Mary
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 50 50
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 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 35
Mature family. You are in your peak earning years and have 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 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 20
Retired. No longer working and 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 10
What return do you reasonably expect to achieve from your investments?
A return without losing any capital. 10 10
3–7% p.a. 20 20
8–12% p.a. 30 30
13–15% p.a. 40 40
Over 15% p.a. 50 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 10
Less than 1 year 20 20
Up to 3 years 30 30
Up to 5 years 40 40
Up to 7 years 45 45
Up to 10 years 50 50
How familiar are you with investment markets?
Very little understanding or interest 10 10
Not very familiar 20 20
Have had enough experience to understand the importance of diversification 30 30
Understand that markets may fluctuate and that different market sectors offer different income, growth and taxation characteristics 40 40
Experienced with all investment sectors and understand the various factors that may influence performance 50 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 10
Stable, reliable returns, minimal tax savings 20 20
Some variability in returns, some tax savings 30 30
Moderate variability in returns, reasonable tax savings 40 40
Unstable, but potentially higher returns, maximising tax savings 50 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 10
You would cut your losses and transfer your money into more secure investment sectors 20 20
You would be concerned, but would wait to see if the investments improve 30 30
This was a calculated risk and you would leave the investments in place, expecting performance to improve 40 40
You would invest more funds to lower your average investment price, expecting future growth 50 50
Which of the following best describes your purpose for investing?
You want to invest for longer than five years, probably to age 55–60. You are mainly investing for growth to accumulate long-term wealth 50 50
You are not nearing retirement, have surplus funds to invest and you are aiming to accumulate long-term wealth from a balanced fund 40 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 30
You are nearing retirement and you are investing to ensure that you have sufficient funds available to enjoy retirement 20 20
You have some specific objectives within the next five years for which you want to save enough money 20 20
You want a regular income and/or totally protect the value of your savings 10 10
Investor profile total points
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.
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 my planner has provided me with the completed financial fact finder, signed by me.
Customer(s) signature(s)
Planner’s name
Planner’s signature
Date
The Assignment (student to complete)
Section 1: Establish the relationship with the client and identify their objectives needs and financial situation
Section 1: Part A — Establish relationship
Apart from the initial contact with the Davidsons at your retirement seminar, you have met with them twice in order to gather the information you need to assess their situation and provide them with advice.
Briefly explain at least five (5) strategies you are likely to use with a client in order to make sure that they are comfortable with you and the interview process. (200 words)
Answer here
Assessor feedback: Resubmission required?
No
Section 1: Part B — Adviser obligations
Referring directly to yourself and your licensee, explain what an FSG is and why it is necessary. Provide details of the law you must comply with and the information the FSG must contain, including your complaints procedure. (250 words)
Answer here
Assessor feedback: Resubmission required?
No
Section 1: Part C — Tax and cash flow
Using the information you have gathered from your clients (i.e. the information provided in the case study and fact finder) complete the table below and determine their cash flow position and annual savings capacity.
You can assume that the clients have no tax deductions or liabilities other than those stated in the case study or fact finder.
Section 1 Table 2
Tax calculation Nathan Mary Combined Comments
Income from employment
Salary or Income from employment
Salary sacrifice
Salary after salary sacrifice
Rental income
Unfranked dividends
Franked dividends
Franking (imputation) credits
Interest
Other income (e.g. taxable benefits, trust income, investment income)
Capital gains 1 yr
Capital gains 1 yr
Tax-free component of capital gains
Assessable income
Deductible expenses
Donations
Income protection insurance
Business overheads insurance
Other
Taxable income
Tax on taxable income
Non-refundable tax offsets (e.g. LITO/SAPTO)
Medicare levy
Medicare levy surcharge
Franking rebate
Refundable rebates and offsets
Total tax
Cash flow Nathan Mary Combined Comment
Salary less any salary sacrificed amount
Total expenses
Total income received before tax less total expenses
Total tax payable from tax table above
Total net cash flow
Section 2: Analyse client objectives, needs, financial situation and risk profile to develop appropriate strategies and solutions
Section 2: Part A — Gaps in information
Identify any gaps in your data collection based on the fact finder in Appendix 1 and the summary of information provided. From the interviews, are there any other issues that would need to be followed up with Nathan and Mary? (100 words)
Answer here
Assessor feedback: Resubmission required?
No
Section 2: Part B — Risk profile
Identify the Davidsons’s likely risk profile based on the information they have provided. Identify any concerns that you may have with their responses compared with the information in the case study.
• Suggest questions you could use to clarify the responses.
• Justify why you do or do not think that the score and the resulting risk profile category is an accurate reflection of their tolerance to risk, and decide on a profile for each. (250 words)
Answer here
Assessor feedback: Resubmission required?
No
Section 2: Part C — Strategies
Summarise appropriate retirement strategies for Nathan and Mary.
• Consider superannuation and non-superannuation assets and strategies.
• Provide a detailed explanation of why you consider these attests and strategies to be appropriate.
• Include the lump sum amount that Nathan and Mary will need at retirement to achieve their income goal, and strategies to help them reach that goal.
• Provide a summary of other recommendations that you will include in your SOA for Nathan and Mary. (500 words)
Answer here
Assessor feedback: Resubmission required?
No
Section 3: Specialist knowledge
Section 3: Part A — Product research
Nathan and Mary have stated they are happy with their current superannuation funds. Provide a summary of the type of research that you might conduct to ensure the suitability of these funds for the clients’ future retirement needs. (250 words)
Answer here
Assessor feedback: Resubmission required?
No
Section 3: Part B — Client queries on superannuation contributions
Nathan and Mary have a number of questions about superannuation contributions after the seminar they attended and following their research. Respond to their questions, basing your answer on their personal situation. You may be required to re-educate the clients where they are confused or misunderstand the superannuation rules.
Question 1
Nathan is confused about taxation of superannuation contributions. He has friends who write a cheque, send it to their superannuation fund and claim a tax deduction. He asks:
Am I correct in assuming that we can both claim personal tax deductions for any superannuation contributions we make? Could you explain the tax deduction rules
that apply to our situations, how much can we contribute and when can we start?
Answer Nathan’s questions. (250 words)
Answer here
Assessor feedback: Resubmission required?
No
Question 2
Mary asks:
We read an article recently that said Nathan can split the superannuation contributions he makes to my superannuation account. Is that correct, and if so, how does it work?
Answer Mary’s question. (150 words)
Answer here
Assessor feedback: Resubmission required?
No
Question 3
Nathan is concerned about tax payable if they invest any of their cash savings into superannuation. He says:
I’ve heard that some people have had to pay tax at the highest tax rates on superannuation contributions. Can we be sure we won’t fall into that trap?
Answer Nathan’s question. (150 words)
Answer here
Assessor feedback: Resubmission required?
No
Section 3: Part C — Client queries on superannuation benefit payments
Question 1
Mary asks: When and how can we access our superannuation? Can we get it if we are still working?
Explain the rule that applies in their circumstances. Explain when and under what circumstances they will be able to access their superannuation. (200 words)
Answer here
Assessor feedback: Resubmission required?
No
Question 2
Nathan asks:
I understand that we are too young to access our superannuation any time soon. In general terms, please explain how we would be taxed right now if we were old enough and retiring and we took our money out as a lump sum. I don’t want to commit to something that will work against us.
Discuss the situation if the lump sum was taken at retirement after age 60 and just before age 60. Include a brief explanation of components of the lump sum. How they are taxed? What other matters relate to them? (200 words)
Answer here
Assessor feedback: Resubmission required?
No
Question 3
Mary asks:
I don’t like the idea of paying lump sum tax and then losing some benefits. Tell us more about these income stream options. How do they work? What are the rules that apply and how much tax do we pay if we could do it now?
Discuss this in broad terms and explain the situation immediately before and after reaching age 60. Assume Mary and Nathan will continue to work until age 60 and then retire. (300 words)
Answer here
Assessor feedback: Resubmission required?
No
Section 4: The statement of advice
You must now prepare an SOA based on the recommendations made, which will be used to record this advice (including amendments, if any) for Nathan and Mary. Remember that the SOA must be of a standard that is compliant and would be suitable to present to a client.
Important instructions
• What to submit: You have been provided with cash flow templates to use for the assignment SOA. Please include this with your submission.
• Template SOAs and SOA preparation software: Do not use the sample SOA published by ASIC as a basis for your submission. The use of financial planning software and dealer templates to prepare your SOA is also not permitted. Submissions that exhibit excessive reliance on SOA templates may be considered to be plagiarism or collaboration, and may not be considered to be a reasonable attempt at the assignment.
• Assumptions: You must list the assumptions used in your SOA in your assignment submission. These will generally include:
– any assumptions you have made regarding missing background information on the clients
– any assumptions you have used to calculate future income from your recommended investments
– any assumptions used for fees and premiums relating to the products you have recommended.
• Strategy advice: You must provide strategy recommendations in the following areas based on the information given:
– personal investment or debt reduction
– personal insurance
– superannuation
– estate planning.
Use the information on each of these areas given in the subject notes to provide reasons for each of the strategies recommended.
• Product advice: Product recommendations for any personal investment or estate planning recommendations are not required. However, you should recommend an appropriate superannuation and/or life insurance product to implement the advice you have provided. You are required to source, or develop, your own fund details. It is not necessary to include product disclosure statements (PDSs) in your assignment for any products you may recommend in your SOA. Including insurance quotes in the SOA is not required. For insurance recommendations, you may estimate the premiums based on the clients’ ages, health and occupations, but they do not have to be prepared from actual quotes.
• Cash flow projections: You must include detailed cash flow tables using Appendix 1 and Appendix 2 as a template, showing Mary and Nathan’s situation before and after your recommendations. These should be included as Appendices 1 and 2 to your SOA. Remember to include any insurance premiums in the analysis.
• Recommendations: You should include superannuation projections up to the retirement age of your clients before and after your recommendations as Appendix 3 to your SOA. In addition, please show that your strategy will enable your clients to meet their retirement income goal for 21 years (based on Nathan living to age 84 and Mary to age 85).
The SOA template
An SOA has been commenced for Nathan and Mary Davidson, using the data collected in the interviews, their fact finder and their risk profile. You must 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
Nathan and Mary Davidson
Prepared by
Your name
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 and the reason/s 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 without using jargon and in clear, unambiguous language, and be appropriate to their level of financial understanding.
Your situation
Summarise your client’s current situation. Provide a brief statement about their family, employment, health, asset and debt position. (150 words)
Answer here
Assessor feedback: Resubmission required?
No
Your objectives
List your client’s objectives (i.e. their financial and non-financial goals, objectives and needs). Nathan and Mary expressed a desire to address their immediate needs and medium and long-term objectives. Summarise these in point form for Nathan and Mary to confirm. (100 words)
Answer here
Assessor feedback: Resubmission required?
No
Summary of our strategy and recommendations
For the short term — up to one year
Summarise your recommendations for your clients’ short-term goals. Present the strategies in point form to provide a quick picture of your intentions.
Answer here
Assessor feedback: Resubmission required?
No
For the medium term — two to five years
Summarise your recommendations for your clients’ medium-term goals. Include strategies that cannot be considered immediately or require monitoring.
Answer here
Assessor feedback: Resubmission required?
No
For the long term — more than five years
This is where you need to summarise your recommendations for your clients’ long-term goals.
Answer here
Assessor feedback: Resubmission required?
No
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 to $Y through regular contribution of $X.
• Your objective of yyy will be achieved by…
• Align the outcomes with the objectives.
Answer here
Assessor feedback: Resubmission required?
No
Risks in our advice
Identify both financial and non-financial risks that can impact the desired outcome.
Answer here
Refer to the sample SOA for examples of relevant descriptions that should be included here and under each subheading below. Include risks that are specific to your strategies.
Assessor feedback: Resubmission required?
No
Summary of our fees and commissions
Answer here
Assessor feedback: Resubmission required?
No
Your next steps
Answer here
Refer to the sample SOA for examples of relevant descriptions that should be included here.
Assessor feedback: Resubmission required?
No
Body
While this section contains similar headings as the executive summary, the information provided is more detailed and supports the recommendations made. As with the executive summary, it should be written without using jargon and in clear, unambiguous language, and be appropriate to your client’s level of financial understanding.
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
Assessor feedback: Resubmission required?
No
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 understand to be your main objectives and needs:
Answer here
Assessor feedback: Resubmission required?
No
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
Fill the gaps
Client 1 Client 2
First name(s) Nathan Mary
Surname Davidson Davidson
Age
Marital status Married Married
Health status
Smoker status Non-smoker Non-smoker
Employment status Permanent Part-time
Employer name
Occupation Sales representative Marketing consultant
Annual salary $140,000 $70,600
Summarise the discussion points that could/need to be raised here.
Answer here
Assessor feedback: Resubmission required?
No
Children and dependant details
Answer here
Your existing insurance
Fill any gaps.
Personal insurance
Car insurance
Home contents Insurance
Health insurance
Your existing estate planning
Summarise the client’s existing estate planning provisions here.
Answer here
Assessor feedback: Resubmission required?
No
Financial information
Current income and expense details
Income and expenses
Complete the table:
Nathan Mary Total
Assessable income
Net tax payable
Yearly expenses
Estimated surplus
Discussion points:
From the table you have prepared and your cash flow analysis identify questions you will need to ask about their income, lifestyle, expenses and intentions, before you start preparing your strategies. What are the gaps?
(100 words)
Answer here
Assessor feedback: Resubmission required?
No
Assets and liabilities
Value Liability Net value
Home
Home contents
Motor vehicles
Personal assets
Employer superannuation — Nathan
Employer superannuation — Mary
Savings account
Investment assets
Net worth
Discussion points:
Prepare discussion points you will use to obtain a better understanding about how your clients see their situation and future. What are their attitudes to debt, personal assets, investments and superannuation assets that can assist you with your advice? What are the gaps? (100 words)
Answer here
Assessor feedback: Resubmission required?
No
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. Before acting on the advice, you should 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
• the risk/return characteristics of various asset classes
• 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. Discuss their attitudes to investing and any other experience or interests that can support your assessment.
Answer here
Assessor feedback: Resubmission required?
No
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 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 their estate planning needs. However, if after analysis of their situation you believe that advice is required, you need to explain what advice they should seek and why.
Concept. If you use technical terms or concepts in your discussion explain what the terms mean. For example do not assume they know what ‘gearing’ or ‘franking’ means
Note: You do not have to complete all of the recommendation boxes below. You can add more boxes if required.
Recommendation 1
Answer here
Assessor feedback: Resubmission required?
No
Recommendation 2
Answer here
Assessor feedback: Resubmission required?
No
Recommendation 3
Answer here
Assessor feedback: Resubmission required?
No
Recommendation 4
Answer here
Assessor feedback: Resubmission required?
No
Things you should consider
In this section briefly discuss strategies that you did not recommend and that could be considered at another time and what they could do for them.
Answer here
Refer to the sample SOA for examples of relevant descriptions that should be included here and under each subheading below.
Assessor feedback: Resubmission required?
No
Retirement planning
Briefly state what has been achieved with your strategies and highlight what still needs to be addressed or reviewed.
Answer here
Assessor feedback: Resubmission required?
No
Estate planning
You have recorded their estate planning details for completeness of information gathered in the fact finder. You have explained that you cannot provide legal advice. However, if you see deficiencies in their current structure, discuss them briefly and suggest a course of action. (100 words)
Answer here
Assessor feedback: Resubmission required?
No
Taxation issues
My strategies and recommendations have had the following impact on your tax position:
Answer here
Assessor feedback: Resubmission required?
No
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.
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
Comments on proposed asset allocation versus your risk profile
You need to explain the reason for any large (greater than 10%) variances here. Refer to the sample SOA for a discussion on variances. Discuss how the situation will change over time.
Answer here
Assessor feedback: Resubmission required?
No
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.
Use the space below to list the products that you are recommending Nathan and Mary invest in, and those that they already have that you are recommending they keep.
Nathan and Mary Davidson, following our investment strategy, we recommend that you invest in the following products:
Answer here
Assessor feedback: Resubmission required?
No
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, ongoing 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).
Assessor feedback: Resubmission required?
No
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.
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.
Commissions
Our policy on taking commissions from product and service providers is summarised below:
Answer here
Assessor feedback: Resubmission required?
No
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 Professional Practice on alternative forms of remuneration. A copy of the register for EANWB Financial Planning is publicly available and can be provided on your request.
Ongoing services
You need to make sure that your client fully understands what you are offering in terms of ongoing service.
Draft an outline of the level of ongoing service you intend to recommend to Nathan and Mary. In your outline, discuss the type of information that you would regularly provide to Nathan and Mary in relation to their financial planning needs. (250 words)
Answer here (refer to the sample SOA for the sorts of services you could include here).
Assessor feedback: Resubmission required?
No
Ongoing service fee
What would you do to ensure that Nathan and Mary know the specific costs relating to an ongoing service? (100 words)
Answer here
Assessor feedback: Resubmission required?
No
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 you and the client, 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.
Nathan and Mary Davidson, in order to proceed with our recommendations, you will need to complete the steps below:
Action By whom 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: Resubmission required?
No
Authority to proceed
By signing this authority to proceed, I/we Nathan and Mary Davidson acknowledge the following:
• I/We acknowledge that the information I/we 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

SOA — Appendix 1: Current situation
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.
Cash flow statement
Income and expenses
Client 1 Client 2 Notes
Income from employment
Salary
Salary sacrifice (state % if applicable)
Salary after salary sacrifice
Rental income
Unfranked dividends
Franked dividends (state % return if applicable)
Franking (imputation) credits (state franking % if applicable)
Interest (state % return if applicable)
Other income, e.g. taxable benefits
Capital gains 1yr
Capital gains 1yr
Tax-free component of capital gains
Assessable income
Deductible expenses Include income protection premiums if held outside superannuation
Rental expenses, repairs etc.
Taxable income
Tax on taxable income (state year applied)
Non-refundable tax offsets (e.g. LITO/SAPTO)
Medicare levy
Medicare levy surcharge
Franking rebate
Refundable rebates and offsets
Net tax payable
Family cash flow
Client 1 Client 2 Combined
Salary less any salary sacrifice amount
Non-taxable income (e.g. income from superannuation income streams for a person over age 60, Family Tax Benefit)
Interest income
Dividends received (excluding franking credits)
Rental income
Other income
Total income received before tax
Investment expenses
Interest payments
Rental expenses
Other
Living expenses
General living expenses
Home mortgage
Car payment
Credit cards
Holiday
Children’s education
Other loans e.g. personal
Insurance premiums
Other
Total expenses
Total income received before tax less expenses
Net tax payable from the ‘Income and expenses’ table above
Net cash flow
Assets and liabilities
Asset Owner Value Liabilities Net value Notes
Personal assets
Family home
Home contents
Car 1
Car 2
Other
Total
Investment assets
Investment property
Savings account
Term deposit
Shares
Other
Total
Superannuation assets
Client 1 superannuation
Client 2 superannuation
Total
Net worth
Liabilities
Loan Current debt Percentage deductible Interest only Repayment
Loan
Home loan
Investment property
Other
Total
SOA — Appendix 2: Post strategy implementation
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.
Cash flow statement
Income and expenses
Client 1 Client 2 Notes
Income from employment
Salary
Salary sacrifice (state % if applicable)
Salary after salary sacrifice
Rental income
Unfranked dividends
Franked dividends (state % return if applicable)
Franking (imputation) credits (state franking % if applicable)
Interest (state % return if applicabl