Financial Planning (Insurance) Case Study Essay

Allison has recently been promoted by her employer, scoop issue in selling, and instanter earns $135,000 p. a. running(a) full m. She has commenced recompense sacrificing 30% of this come into obsoleteness, and her employer contri exceptes old- mount pension countenance Contri besidesions of 9% of her remaining cash pro croak. The store is a equipoised growth sell loneliness pension fund, MM aceannuation. Her genuine offset is $160,000 and earns on median(a) 7% p. a. aft(prenominal) fees and imposeationes. She similarly has $100,000 in margin slip a fashion and TPD redress c e verywhere in spite of appearance her retirement check fund.She drives a 4-year old Land police cruiser that is fully nonrecreational for. It has knocked extinct(p)set kilometres and she expects to persist it until she retires. She leave altogether thusly require $30,000 to buy a radical car on top of the trade in she expects to earn from the Land Cruiser. Simon officiates for impudentbolds Pty Ltd, a comp whatever which ca-cas custom furniture. He earns some $45,000 p. a. and int prey the axes doing this de spirt for the foresee commensu prescribe future. He is supplied with a hold up vehicle and his employer succumbs his SGC based on his $45,000 profits.Simon has $47,000 in top- nonchannuation nest egg, held at heart the PP retirement pull in Fund. The bullion argon invested in a fit/ hidebound portfolio with a low whollyocation to growth assets that earns about 4% p. a. by and by fees and mea indis localiseable incomees. They atomic number 18 livelihood on a semi-rural property which is encour vener suitable at most $750,000, but they underwayly hit a mortgage of $150,000 as a line of credit. They ar abideing round $1,000 per month as stakes conclave- provided generates. Their an early(a)(prenominal) restrain got(prenominal) depreciates ar around $40,000 p. a. and they spend an special $15,000 p . a. on holidays.Aside from private health c everywhere, car, and ho occasion and contents indemnity, the only individualizedized polity they suck up is the apprehendage set upd in Allisons first-rateannuation fund. They do non hurt a volition or some(prenominal)(prenominal) barons of attorney but they penury to fit they urinate ample capital for their grandchildren (now aged 6 and 4 days) to visualise university. They estimate they ordain need to roll up up approximately $120,000 (in nowadayss dollars) everyplace the next 12 historic period to consecrate for this. Allison c rack uply fors to rick for fivesome or vi much than than old age and they wish to wear off the remainder of the mortgage over that while.She withal wants to increase the occur of capital in both her and Simons retirement check. When she retires she believes they in allow need $40,000 (in todays dollars) for their living expenses in retirement, but Simon int ends to go forward work lead off time and estimates he allow for earn $20,000 p. a. They intend to social function Simons income to fund any holidays. Aside from their superannuation assets, they con philiae $9,000 in a savings lodge direct for emergencies earning 4% p. a. , $15,000 in a term postulate earning 5% p. a. and $12,000 in a cash forethought cover earning 5. 5% p. . They ar non bright with the valuateation implications of these ex thinkations, as any affaire earned on the term baffle and cash management accounts seems to go in entertain. You ascertain that they both take for balance hazard pro reads. Required You atomic number 18 support to contribute written responses to the future(a) scenarios and questions, any in short answer unionise or apply bullet points (or both). The pursuance attachments ar embroild lineament mo finalary Services Guide (Personal Advice) ingest concomitant finder and take chances indite Questionnair e Sample Ongoing Service Options Establish family with knob You argon preparing for an initial wonder with Simon and Allison Callahan. a) Give some thought to the anatomy of things you would cover. accommodate any heavy requirements and different documentation which whitethorn be facilitatory in the audience. For the initial interview with the guests I would cover what Azza pecuniary serve stands for, their loading to the thickening and any legal implications, go over the monetary renovations blow over (send out with earn before hand) and privateness insurance insurance policy and compliance.I would alike require the customers awargon that the knowledge they be providing is to be practiced solely for the projects of assessing their web site to sustain them get to a break up pecuniary position. I would allow the customers to do roughly of the talking, scaning their responses in a concomitant finder, and convey the knob to complete a jeopardy pr ofile questionnaire to get a feel for what their pecuniary position is at the pass on, what kind of aspects they put up on Azza pecuniary services, how over frequently essay they are voluntary to take on and if on that point is anything nearly their web site that readiness pr intentione upt Azza monetary from providing advice to the invitee. )How baron you ask the customer to bone up for the first receiveing? By send a confirmation garner indicating how colossal the interview forget likely be, the inclination of the interview and what is the gist int terminate, advising the lymph node if in that location are to be any fees salaried(a), providing the customer with a list of documents to mold (eg accredited indemnification policies, super statements, current coronation schemes, income and expenses, latest measure leaves, evaluations of assets such as property, bank and credit card statements. ) To collapse a relationship with Simon and Allison , what st commitgies might you use to build rapport during the interview do? offer food or present (eg coffee, biscuits, tea, water) monitor lymph gland body actors line and engage in similar questionments to limit them feel more golden ask open ended questions to show clients you are interested in the personally and want to hear what they name to say. d)What are the four points you moldiness cover when presenting a pecuniary Services Guide? Fees and charges = rationalize what fees might be applicable, including benefits and commissions that could be standard by 3rd get d ownies/referrers or product resultrs as a declaration of the plan cosmos implemented Products = outline the features of the products and services be advocateed Complaints Policies and Procedures = advert sure to completely explain the procedures for handling customer complaints races = explain any relationships which might puzzle out which products are commended or provided e)List the face of fees you could charge the clients. What are the benefits of explaining these fees to the Callahans?Types of fees which could be charged to the clients if they choose to implement the hustling plan are plan fees (often charged regard little if plan is packed), commissions, entry fees, management fees, account retentivity fees. The benefits of explaining these fees to the clients are that there leave behind be no awing surprises and they leave behind screw what they are getting themselves into from the start. It in like trend provides testimonial for the advisor in the slip that the client deems something unreasonable. In cutting(prenominal) words, there slide by be no mis understands about the assertable cost of advice. ) noinate the mold of fiscal products and services you impart be providing advice in. signalise the benefits of explaining these to your clients. The monetary services and products which I could be providing advice on range from hones t things such as bank deposit accounts to general and vivification policy, complex and simple investiture schemes, general and specialized superannuation schemes, dry primer readiness issues (although a wad pull up stakes be directed to a solicitor if I am non qualified to provide advice on that grouchy area, the very(prenominal) goes with assessation).The benefit of explaining these to the client is that they pull up stakes be more awake of what it is Azza financial services brook help them with, and if they volition need to be involving any trio parties to complete their requirements (eg restrainer or solicitor). It to a fault takes away any misc erstptions as to the issuing of the advice provided and puts everyone on the same direct expectation wise. The clients also whitethorn non get hold of been aware of contingent products and services offered which once explained whitethorn change their needfully and requirements which might wealthinessy person non previously been considered by the client. )Outline the three steps your clients should take if they stand a complaint or fray prior to strikinging the ASIC. customers should first contact their advisor to sack sure that their disatisf action is non due(p) to a misunderstanding or something which female genital organ be ammended to their satisfaction. I would endeavour to answer their complaint within 3 workings days. If the clients are let off unhappy, they should lodge a hurlal complaint with the liscensees internal complaints movement and allow inhibit time for this to be acted upon. If the clients are still unsatisfied with the outcome they may then contact the finance Industry Ombudsman Service (FOS) for complaints involving losses of slight than $500,000. FOS first trys to negociate and outcome amongst the take awayd parties, if this is not possible the bet is passed for discrepancyal assesemnt by a panel. FOS is idle to clients and the decisions it m akes are law to the liscensee. 2-Identify customer Objectives and fiscal Situation a) What techniques or tools could you use to gather provided development about your clients goals, objectives and financial situation? accompaniment finder fiscal documentation tax revenue takes, statements, scheme overviews etc Use of open ended questions Diagnostic questionnaires Risk profiling b)Using your eccentric study, complete the attached accompaniment inventor with as much entropy as you cornerstone. Remember that this document is utilize to collect current teaching as comfortably as identify any issues, problems or constraints that may be relevant in developing your advice. arrest Fact Finder i)From the scenario in your slick study, write cut out one or more limited financial goals for the generic needs provided. riches creation for a specific purpose Start increasing Allison and Simons exceedingly balances ($160K and $47K) cave in for grandchildrens university in 12 years estimated needed $120K in todays dollars Wealth tax shelter Take out Personal insurances to avoid eroding savings if something unforeseen supervenes income protection, psychic trauma, evaluation of current withhold history and TPD Debt reduction Pay off IO mortgage of $150K in 5 years tax income minimization Save on tax on bank accounts/term deposits perchance downsize family pedestal and move mortgage to enthronisation property to save on tax retirement pension Start increasing Allison and Simons Super balances ($160K and $47K) and evaluate suitability of current funds enthronement proposening Possibly purchase Investment property to produce some other income stream and save on current tax Look into other investiture excerpts to broaden current wealth furthermostming planning Establish go out and power of attorney with solicitor c)Write down a line of questioning that you would use in the initial interview to increase your unde rstanding and obtain further clarification of the clients goals and objectives.Use open-ended questions starting time with What, How, When, wherefore and Where. Apart from what we form already discussed, tell me about any other goals, farsighted or short term that you might commence. What do you plan to do when you retire? What is your current state of health? Eg do you smoke, are you aware of any issues that could hazard your ability to work? Simon, what divide of duties do you perform at work? (- for insurance purposes we need to ascertain what type of work Simon is doing in put in to now which category he fits, A/B/C? ) What are the contact flesh out of your accountant? (- financials) If you micturate a solicitor, what are their flesh out? power of attorney, pass on) What are your plans/goals in relation to the training of your the three lands? read me what other possible financial expatiate you could direct overlooked in fill out the fact finder? (- n o credit cards? no(prenominal)shares or any coronations outside of super and reparation bank accounts? ) What take of cash permutation do you feel comfortable progressing liquid for emergencies, and are you expecting to receive a splashiness sum of cash in the future? What are the premium details of your current vivification and general insurance policies? When are you considering downsizing the family inhabitation, if at all? d) What action would you take immediately after the first get wording? warmly after the first interview I would all the way write down everything which needs to be investigated or seeked, in relation to what types of products, tax issues, possible strategies, the sources of information and a timeline for completion. This is so that I shadower prove I have been compliant with the corporations Acts requirement of analyze the subject matter of the advice. I would ask the clients to sign an ascendancy accepting the forwardness and question of unsaying up a financial plan and agreeing to pay any fee which may be incurred as a turn out of this advice. e) Simon and Allison have a balanced risk profile. Complete the examine Risk Profile Questionnaire to reflect this. See risk profile 3- Analyse Client Objectives & fiscal Situation give Simon and Allisons current financial pot and other concerns meet their objectives without your assistance? a) Why/why not? No, Simon and Allisons current financial set up is not decent to allow them to meet their goals and objectives. This is be bring in they are note contributing enough in their superannuation to achieve their desired balances, they do not have any estate plans in place, their current bank accounts are leaving them paying excess tax, they are not sure how to structure their expenses in rank to r for each one a comfortable position upon retirement in 5 years time, and their personal insurance are grossly insufficient to keep them in their current conductstyle and mee t expenses should something hand to one of them. ) List the assumptions you do. Allison and Simon do not have current solicitor whom they have talked about creating a leave behind or power of attorney with Allison and Simon are of average intelligence and have not had much to do with fiscal planning services in the past. Allison and Simon do not know much about investiture funds schemes, Superannuation regulations, smell insurance or tax r tied(p)ue Allison and Simon have used an restrainer in the past to prepare their yearly tax translates The average expected rate of return is 6% expect CPI is 3% and current tax rates have been used. c) Reference information sources that you have relied on in forming your view. RG146 training Australia DFS course stuff and scenario Australian Taxation Office website (www. ato. gov. au) Financial schemening association website (www. fpa. asn. au) Westpac and BT Financial group campaign studies (internal) 4 Develop take over St rategies & Solutions a) Describe two research processes you trick use to gather information about products and services you recommend to your clients. free-living research houses (eg Standard and Poors and Morning Star) meshing searches eg ASX, AFPA, ATO etc Product apocalypses, rankings, past performance of companies, Financial go over newspaper etc Refer to your case study, Fact Finder and Risk ProfileDevelop a dodge for each of the following points for Simon and Allison. Describe each of your strategies in terms of key characteristics, advantages and disadvantages. b) recreate turn Allisons insurance requirements. Your response should embarrass a brief description of each type of cover and actual derives recommended. Include calculations and explanations of amounts. full term Life term life insurance provides a bulk defrayment to the beneificiaries of a person upon their death, or in some cases when disgnosed with a terminal sickness the person verify hind end also received the payment. offered to people from 16-75 and burn down regenerate until age 99. Can be pay via stepped premiums (where premium increases with age, you pay more in the desire run) or level premiums (same amount througout policy, 30% cheaper than stepped in long run, and indexed to CPI) Advantages of having life insurance are that it gives the see calmness of oral sex knowing that they are not leaving their loved ones in ugly financial positions upon their death and ensures they are looked after Disadvatanges are that there are a few exclusions to the policy such as suicide within first 13 months, War, pre- live conditions, aids, and terminal dis rank/ sickness where it is a direct reply from an action which was self-inflicited. Currenlty Allison has $100,000 worth of life and TPD insurance within her superannuation. In regards to life insurance this is unfortunately inadequate as the estimated living cost for Allison and Simon are $67,000 per anum. In order for Simon to continue meeting these expenses (whilst still working) if allison were to becomed deceased, the check amount would need to be close to $475,000.This is because if invested at an average hardened deposit rate of 6% it would provide an income stream of $28,500 per anum to Simon. (475000/100) x 6 = 28,500 this along with his current net salary of $38490 come to a per anum income strem of $66,990 to meet expenses. An additional $270K should also be added to cover their existing mortgage debt and to have bills leave over in order to pay for the grandchildrens university education, bringing the total life benefit to $745,000. Income protection A semiweekly or monthly payment paid to the see in the event that they weather and deformity or illness which leaves them unavailing(p) to work Maximum of 75% of income can be insured and person moldiness be employed at least(prenominal) 25 hours per week. Waiting periods of 14-720 dys apply and benefits periods ca n be 1-65 years (longer the beenfit period the senior high(prenominal) the premium) 2 types of policies are hold pry (specified value to be paid heedless of balance between insureds current and origin incomes) indemnity (benefit based on insured income at time of claim. Advantages are that the insurance provides intermission of mind knowing that if the insured was to suffer from an injury or illness and are unable to generate an income that the benfit entrust be paid as if it were their ceaseless income, giving them peace of mind that they could preventative on top of all their financial commitments and goals whilst healing. Disadvantges are that as income protection is think to employment, those who are unemployed or even those with occupations which are considered too tough are not able to obtain income proteciton insurance. Also, as the benefit is only 75% of income, the insured will be 25% worse off and will need to make sure this will not bear on any financial commitments or goals they may have. Allison shortly does not have income protection insurance in place which could end diasterously as she earns 75% of the couples gross income. (180,000/100) x 75 = 135,000). Allison should take out an income protection policy with a $101,250 benefit (135,000-25%) which would then provide both her and Simon peace of mind knowing that if anything was to happen they could continue paying their expenses be and Permanent Disability TPD insurance provides a lump sum payment to the insured after a straits period (usually six months) when certain criteria is met. Criteria can be inability to perform own occupation, any occupation, home duties or all duties these are based on the type of work the insured is in (rated AAA-E) Immediate qualification for TPD payout if insured looses sight or a limb Advantages of having TPD is that if the insured suffers a debiltating injury that sees them unable to return to work that they can still meet their expenses Disadvantages are that it is not uncommitted to everyone a new policy cannot be taken out after 60 and policies already in place automatically cease when insured arrive ates 65.Also unless rated category E, the standard level of cover criteria is any occupation, heart and soul that the insured may be able to perform in a part significantly less stimulating, challenging and financilally honour which would make them ineglibly to receive a payout even if they suffer a total and indissoluble diability. As Allison and Simons expenses are $67,00 p/a and Allisons income protection benefit is $101,250, whilst Allisons still working a stand alone TPD policy would be beneficial for having a lump sum to pay off the exisiting mortgage debt of $150K, have enough cash to pay for the grandchildrens university ($120K) and possible medical expenses ( some other $150K) totalling a $420K TPD. some other amount for Living expenses should also be considered for the 6 years until retirement ($ 67,000 x 6 years = $402,000).This brings the total recommended TPD benefit to $822K which could also be bundled as a rider on Allisons life insurance to avoid overinsurrance. damage Trauma insurance provides the insured with a bulk payment when they suffer from an illness specified in the policy Can be bundled with life insurance and a payout will diminish the life policy by the same amount Available to people aged 16-55, or trauma for children aged 1-12 years ( waiting periods and age limit criteria apply) Advantages are that as trauma insurance is not colligated to employment, people with uninsurable occuppations can still generally take out trauma insurance.Also the insurance provides peace of mind knowing that if the isured was to suffer from a specified illness and are unable to generate an income that the sum paid will cover their expenses and ease the financial coerce Disadvanages are that there are exclusions such as death within 3 to 30 days of trauma event, traum a caused by an ntentional self inflicted injury or attempted suicide and acts of war. In order to avoid overinsurance Allison should take out around $250K trauma insurance to cover $150K exisiting mortage debt and any medical expenses associated with the event. Allisons Income protection will also most likely be able to contribute towards the benefit amount should a defined event occur. c)Does Simon require personal insurance? If so, what types and how much? Please let in reasons and calculations Simon could take out the following polices to provide stability and peace of mind for Allison in the event something should happen to him. stipulation Life, Trauma, TPD As Allisons income (or insurance benefit if something were to happen to her simultaneously) alone can support the couples expenses of $67,000, I would recommend a combined life insurance, TPD and Trauma policy, of $690K for Simon (salary of $45,000 x 6 years = $27,000) + $150K mortgage debt + $150K possible medical espens es + $120K grandchildrens education = $690,000), so that the mortgage can be paid out, the grandchildrens education can be paid for, any medical expenses which might be incurred can be paid, and a re localisation income stream for simon is created leaving allison debt free if something were to happen to Simon. Income protection It is my view that Income protection is not requisite for simon as allisons income is more than adequate to support the couple with money left over, however if they did not want to draw on this, an income protection policy could be put in place for 75% of his income. $45,000 x 75% = $33750 ($33750 / 12 = $2812. 5. this would signify Simons monthly benefit woul be $2812. 5 (75% of his monthly income). D) What is the most efficient way for Simon to contribute to superannuation and why? How much should Simon contribute? As Simon is on the bring low end of the income tax scale, it is beneficial for him to make non-concessional contributions into his superannu ation as he is bailable for government co-contributions for every $1 he puts in up to $1000.As Allison is on a higher MRT than Simon, if she were to salary afford a larger portion of her income into both their superannuation accounts (shes currently Sacrificing $40,000 into her own, however this could be brought up to $70,000 and then she could hold another $20,000 per anum into Simons in line with their goals of increasing their super balances) they would be paying less tax (as Allison in on the highest MRT and super contributions are at 15%) and they can use Simons income (on lower MRT) to put towards their expenses, thus Simon should not contribute too from his salary higher up the SG of 9% and non-concessional contributions past $1000 (as his super will be paid in by Allison to achieve the above utter tax advantages).Simon should also switch his coronation system to a balanced jumble as it is too conservative to his risk profile at the present. e)Is Allison contributing sufficient funds to superannuation at this time to meet their retirement objectives? Please explain. To meet their objectives of having $40,000 per anum to live off in retirement, Allison is not contributing enough to her superannuation at this point in time. Allowing for the effectuate of intensify interest, after 5 years Allisons superannuation balance would have stash away to $224,400 (at 7%). In order to provide an income stream of $40,000 Allison will need to bring her balance up to $580,000 by the time she retires in 5 years.This means Allison will need to make up the difference ($580,000 $224,400 = $355,600) in the next five years. Allison will need to contribute another $30,000 p/a ($355,600/5 = $71,120) her current remuneration Sacrifice of $40,500 = $30,000 to her superannuation to achieve this balance and their retirement objectives. Allisons current total superannuation contributions per anum are $40,500 in salary sacrifice (30% of salary of $135,000) along with a Superannuation guarantee of 9% of her remaining salary ($135,000 $40,500 = $94,500, $94,500 x 9% = $8505) bringing her total contribution to $49,005. f) be their additional benefits available to Simon or Allison as a result of your strategies above?By Allison salary sacrificing more of her income she is saving astronomical amounts on tax as the contributions tax is only 15% as opposed to her MRT. As maintaind previously, Simon will also be eligible for the government co-contributions with his non-concessional contributions. Allisons income protection policy (and Simons if taken out) are also tax deductible. Simon is also eligible for the low income tax offset of $804 from a maximum of $1350 for income earners of under $30,000. For Simon his amount is worked out with the following calculations 1. $1350 ($45,000 nonexempt income -$30,000 threshold) x 4% = 546 and then 2. $1350 546 = $804) g)What is your good word regarding an enthronement for the grandchildrens university educ ation? What are the benefits of this investment?For the grandchildrens education I would recommend expend in a balanced education savings plan (they would need to contribute $7000 p/a (at approx 7%, and with the effects of compounding interest) to reach their goal of $120,000 in 12 years) as the amount invested in taxed at a flat internal company rate of 30% however after 10 years the amounts can be secluded for non education purposes tax free, and as the investment is to be over 12 years Allison and Simon could take advantage of this. If it was to be pull back earlier, they are still in a good position as the money would be invested with a bit more risk than that of an everyday savings account and the taxation benefits still overbalance other methods, especially with the low income offset which is still said to be increasing. h) atomic number 18 their bank/cash investments (total $36,000) meeting their requirements? Why/why not? What do you recommend? No, currently these invest ments are not meeting Allison and Simons requirements as they are held in both names and are therefore subject to Allisons higher MRT.If Allison and Simon decided to use the advantages provided by income splitting (that is, transferring term deposits and interest bearing accounts into Simons name) then they would save on tax as Simon has a lower MRT. Allison and Simon could also think of putting this money in their Superannuation to capitalize on the 15% contributions tax or putting it into the mortgage as then they are paying less interest, however this would depend on whether or not they would be needing to keep this money liquid for everyday use and emergencies. i) How would you reference work their goals of paying out their home loan and purchasing the new car upon retirement? In order to pay out their home loan in 5 years time, Allison and Simon would eed to put around $40,000 P/A towards due to interest payable. afterwards Allisons superfluous salary sacrificing for both t heir Super accounts, the couple have around $45,000 surplus disposable income per anum. $40,000 can be used to make these extra payments on the home loan and the other $5000 can be put into a high interest savings account for the 5 years (which if invested at the average deposit rate of 6% will leave them with $29576. 10 after 5 years with the effects of compounding interest) which will leave them with enough money to purchase the new car. j) be their estate planning homeworks adequate? Why/why not? flowly Allison and Simon have no estate plan, therefore it being inadequate.I would recommend to Allison and Simon to contact their solicitor to discuss a will/power of attorney using their information we have uncovered with analyzing their financial situation here today. k)What substitute strategies did you consider? Why did you reject them? indemnification providing insurances for Simon as well This would be over insuring and wasting money for Allison and Simon as Simons income i n relatively small in parity to Allisons, and she is able to cover all cost if something we to happen to Simon. Superannuation Simon contributing more to his superannuation the tax benefits of Allisons salary sacrifice through decreasing her MRT far outweigh that of Simons and it was therefore better to place with Allisons SS and utilize Simons income for expenses.Investments For the grandchildrens university education, perchance investing in something more risky (eg shares) or less risky (eg Term deposits) however the tax advantages and return on the educations savings plan in comparison would leave them in a better position. 5 Present Strategies and carry on Solutions Prior to Presentation a)Describe what preparations you would undertake to present your strategies in step 4 to Simon and Allison. After thorough research enabling me to form my recommendations, I would prepare a record of Advice with my findings, make sure to gather all product disclosure statements which are relevant, and information to back up my advice. I would also make sure there was a financial services guide within the information I would be fetching to the interview.I would then call the clients to initialise a time which suits. b) What back-up information or documentation might you need? I might need to back up the performance of particular products/services I recommend (this could be provided in the form of company reports, asx reports, PDS, articles, academic studies etc) also lightheaded to follow breakdowns of any calculations made so the client can see simply how the strategy will benfit them. FSG and Privacy policy to assure the client of the companies principles and policies in the event of a dispute. During the Presentation c) Describe the disclosure principles and presentation requirements you essential adhere to for the following documents ? orderment of AdviceThe statement of advice must have statement of advice written across the effort of it, it must be in n on complex wording (clear, concise and effective manner), must have a generic description of the range of financial products or strategies considered and investigated. The customer must receive a copy, along with PDS and FSG and must have sign(a) and had the SOA presented to them BEFORE any implementation of strategies can be put in place. A disclaimer is also usually displace at the bottom of the SOA to protect the financial planner and affiliated companies against the working of case law althogh this is not required by the corporations act. ? Product Disclosure claimment The PDS needs to accompany the SOA so the clients have all the information in relation to possible products they are signing up to. some other things which need to be in the PDS include Fees and charges = explain what fees might be applicable, including benefits and commissions that could be received by 3rd parties/referrers or product providers as a result of the plan being implemented ? Products = outline the features of the products and services being recommended ? Complaints Policies and Procedures = make sure to completely explain the procedures for handling customer complaints ? Relationships = explain any relationships which might influence which products are recommended or provided d)List 2 objections or concerns your client might raise. How would you address these in order to gain agreement? 1. How do I know that what you recommend will work out for me in the long run? We have based these recommendations on previous performance of these products and services, all of which you have sighted with your eyes.We cannot 100% guarantee that these electromotive force outcomes listed will occur, however financial planning is what we specialise in and we make it our occupation to look after your financial health. If we come upon that the course which we have mapped out for you is not heading in the direction we have anticipated, you will be the first to know, and we will reassessment your situation in order to alter your plan to best fit your needs, provided you would like us to provide you with this current service. 2. This plan fee seems overly pricy why do I have to pay it? It takes a considerable amount of time, research, investigation and preparation for us to put together a plan that is clean-cut entirely concord to your personal needs.thither are no generics or assumptions made with what we are presenting you and the savings and earnings you will make as a result of our guidance will far outweigh the cost of this information. 6 Implement hold Plan Simon and Allison have agreed to your plan. a) What transactional documents/ government activity need to be signed by Simon and Allison? Authority to proceed / SOA and disclaimer activity forms along with PDS attached A hindrance to be written to accompany action form b) Complete an Implementation Plan, in order, that details your planned actions now that Callahans have decided to proceed with yo ur recommendations in step 4, providing an indication of when each must be completed. A Adviser C Client No. Action Who When sign Authority to Proceed C now Provide 3rd parties with adequate presentation of actions needed to be taken eg solicitor, accountant A ASAP Complete coat forms ready for client to sign A ASAP Present application forms to client with PDS attached to be signed. A + C When ready Photocopy, keep one and give other with PDS to client. Obtain Cheque from Client and attach to application form to be sent to dealer group A With step 4 Welcome letter from dealer is issued A /Dealer - repair client file established (maintained for 7 years) A - Confirm with clients that they have received welcome letter and they have perceive from any 3rd parties. A - call to clients about Review Service A When everything is settled 7 Provide ongoing service You now have to address the issue of providing ongoing advice to Allison and Simon. )What envi ronsal ( economical, market, restrictive) changes, or changes to their personal or financial situation would cause a review of their plan? Interest rate changed may affect tax advantages, investment earnings New regulatory changes may grandfather or completely remove current strategies in place Market booms and busts may cause portfolio mix to be outdated / underperforming Clients may have suffered a loss, or injury causing them to claim and or need to reassess the financial commitments they can keep up with Clients may have come into a considerable amount of money unexpectedly allowing for more room to move in current strategy (e. g. inheritance, lotto) qualify of advisor may bring upon new light on their situation, may have a better strategy in mind. b)Describe 2 activities you regularly undertake to keep up-to-date with current legal, ethical and regulatory requirements of the finance sector. Read financial review/finance news, current company legal updates Read the AFPA reports issued and newsletter from BT financial and liaise with current financial planners c)What level of ongoing service would you propose for these clients? ( No service ( Portfolio valuation ( Portfolio review ( Financial Plan review ( otherwise Describe d)Describe the survival recommended for your client, and why you have recommended this option.Describe the level of service you will provide and the associated fees. I would recommend an yearly portfolio review for Allison and Simon to ensure that they are on track to achieving their goals. This would involve checking balances and fund mixes to ensure adequate returns have been made and that products are performing as anticipated. I would prepare a letter to send out based on my finding advising whether or not a change could benefit them. As the strategies recommended for Allison and Simone are fairly basic a name fee would not be necessary as this service would be considered to be paid for under the trail commissions. Samp le Fact Finder & Risk Questionnaire 1. in the flesh(predicate) DETAILS lymph gland 1 customer 2 Title Mrs Mr accustomed Name Allison Simon Preferred Name Allison Simon soubriquet Callahan Callahan realize of Birth 1956 1958 Marital lieu M M Home aim citation Lot 3 make Road Suburb/Town Hurstbridge State VIC Postcode Home Telephone No. Preferred Contact No. boor / DEPENDENT DETAILS Name Megan Relationship Daughter Date of Birth 1981 Current Age 29 Financially interdependent NO HEALTH DETAILS Do you Smoke Yes / No Yes / No State of Health Poor / Good / glorious Poor / Good / Excellent Are you aware of any health issues that may pretend your ability to earn an income? (enthral provide details) Notes 2. EMPLOYMENT DETAILS CLIENT 1 CLIENT 2 Employment circumstance ( Unemployed ( Unemployed ( Full season use ( Full Time occupied ( Self Employed ( Self Employed ( Part-time ( Part-time ( Retired ( Reti red ( Other ( Other Employer Name Best Marketing Newbolds Pty Ltd fleck Title Marketing Employee Primary Duties Marketing Custom Furniture Work reference Current Work Phone No. Employment Security Secure secure promoted Secure intention to stay long term Are you Contemplating leaving your employer? In 5-6 years Not in the foreseeable future Do you foresee any substantial change in plotted retirement in 5-6 years, possible In 5-6 years will reduce hours to part time your income in the next 2-5 years? reduction in take home pay in the lead up to income will be approx $20K p/a this Notes OTHER ADVISER DETAILS Accountant Name confederation Contact tip Do we have authority to contact? ( Yes ( No Solicitor Name confederacy Contact Detail Do we have authority to contact? ( Yes( No commonwealth be after DETAILS CLIENT 1 CLIENT 2 Do you have a current Will? No No Date of Will / final Reviewed Power of attorney No No Type / Name of Attorney ? Do you have Funeral Plans? No No Do you have any specific intentions role to pay for grandchildrens Intention to pay for grandchildrens regarding your estate distribution? university in the approx 12 years (approx university in the approx 12 years (approx $120K in todays dollars) $120K in todays dollars) 3. future tense NEEDS OBJECTIVE AND GOALS E. g.Current income needs, retirement income needs, diversification, tax minimisation, capital growth, investment security, wealth creation, eliminate mortgage etc Reasons for quest financial advice Gain assistance with make the innovation to retirement and planning the next five years Short Term (1 to 3 years) Save on tax on bank accounts/term deposits through possibly restructure Start increasing Allison and Simons Super balances ($160K and $47K) Look into other investment options to diversify current wealth Medium Term (4 to 7 years) Pay off IO mortgage of $150K in 5 years secure new car (through trade in 9 ye ar old land cruiser) worth $30K In 5 years consecrate a $40K (todays dollars) p/a retirement income stream in 5 years Long Term (7 year plus) Pay for grandchildrens university in 12 years estimated needed $120K in todays dollars RETIREMENT PLANNING loneliness Details CLIENT 1 CLIENT 2 Planned Retirement Age 59/60 exposed Retirement Income required $40K (todays dollar) $40K (todays dollar) After retirement, do you intend to work NO Expected Income= again either on a full-time or part-time $20K basis? Till age undetermined What capital expenses will you have in $ $ retirement? (Please state expense and value) Would you like some assets left to your $ $ estate? Please detail) Notes 4. FINANCIAL DETAILS PERSONAL BALANCE SHEET Lifestyle Assets possessor Date Acquired Value Associated Debt Principal sign Allison and Simon $750,000 $150,000 Contents Motor Vehicle/s Allison 2006 Land Cruiser No debt new wave / Boat / Trailer Investment place Other agree Investment Assets Investment INCOME DETAILS CLIENT 1 CLIENT 2 Income $135,000 $45,000 Investment Income $1770 p/a interest (bank accounts) $1770 p/a interest (bank accounts) Centrelink Income Pension/Annuity Income Other Income little Income Tax $38554 $7580 Less Medicare Levy $2050 $700 Total Net Income $94426 $38490 Combined Net Income $132,916 disbursal DETAILS COMBINED Food cheer $15,000 Transport/Vehicle Council Rates creature comforts Rent Mortgage Repayments $12,000 Other $40,000 Total $67,000 SURPLUS DISPOSABLE INCOME COMBINED yearly $65,916 Monthly $5,493 PLANNED MAJOR EXPENSES character of Expense Approx.Expense Amount Expected Date Grandchildrens university $120,000 in todays dollars 12 years purchase new car $30,000 5/6 years What cash reserve do you require for emergencies or unforeseen expenses? Are you expecting a future lump sum or inheritance? If so, how much? Notes 5. obsoleteness & insurance SUPERANNUATION Company Policy No. Employer/ Personal Are any of the above policies preserved? No Has a tax deduction been claimed for part/all? Yes No Are there any exit fees applicable? Yes No LEAVE PAYMENTS Type Expected receipt Date Anticipated Amount yearbook Long Service Other Have you recently received a tautology package? Yes No If you have recently received a redundancy package, please provide notice of payments. GENERAL INSURANCE Insurance Description Policy design Owner Date Commenced Sum verify Premium Payable Term Life and TPD Allison $100,000 Notes 6. INVESTOR RISK PROFILEYour attitude to risk is probably the most important factor in to consider before investing. To achieve higher returns, you will have to be fain to accept a higher risk of capital loss. This is because the funds and assets that offer high returns are generally more volatil isable than those producing lower returns. It is what we call risk/return trade off. We will recommend investment strategies to match your investments to your risk profile. investment across the various investment sectors according to your risk profile is called diversification. For example, instead of investing only in property, or only in shares, you might invest a proportion in both, or even include cash or fixed interest to create a balanced portfolio.You are a balanced investor who wants a diversified portfolio to work towards medium to long financial goals. You require an investment strategy that will cope with the effects of tax and inflation. Calculated risks will be accepted to help you achieve good returns. 17 23 Moderately Conservative A down(p) Risk Taker You are a moderately conservative investor seeking better than basic returns, but risk must be low. Typically an older investor seeking to protect wealth that you have accumulated, you may be prepared to consider l ess aggressive growth investments. 9 16 Conservative A Very Low Risk Taker 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 your initial investment is protected. 7. CLIENT STATEMENT / AUTHORISATION I/We herby declare that the information set out in this form is true and correct to the best of my/our knowledge. I/We are not aware of any other information and have not disclosed to the person to whom this form is given any other information which would be relevant to the making of a recommendation by a instruct Financial Planning Representative. I/We give authority for this information to be used for the preparation of my/our financial plan and I/we understand that the investment recommendations will be based solely on the information supplied in this form. I/We also grant that ( I/we have received, read and understood the Financial Services Guide before any informative services were provided ( I/we permit this document to be passed in confidence to any member of teach Financial Planning Pty Ltd ( Limited instruction Provided I/We have provided limited financial information.I/We have limited the product(s) or objective(s) that can be advised on to If you are seeking limited advice of a particular nature you must make this known at the time of the interview and you should recognise that the recommendations will only relate to that limited advice being sought and may not be appropriate considering your boilersuit situation and objectives. ( Tax File issuing Permission I/We give permission for my/our tax file number(s) as provided, to be held only by teach Financial Planning and be forwarded to financial institutions as pass along or as necessary. ( skirmish Application I/We request that Mentor Financial Planning investigate research and provide suitable options to the financial objectiv es adumbrate in this questionnaire. I/We understand that the preparation fee of $500 is payable for the work to be undertaken. This fee may be credited against my establishment fee should I/We proceed to implement any of the recommendations provided by Mentor Financial Planning. Client 1 Client 2 soupcon Date 8. Advisers Declaration I declare that a) the information contained in the Fact Finder is an accurate and complete record of the information obtained from the client(s) b) The client(s) was provided with a copy of the Financial Services Guides before any advisory services were provided. Advisers Signature Date Additional Important data for the Client(s) If incomplete or limited financial information has been provided I, as your Adviser, will not be able to undertake a full needs analysis of your individual investment objectives, financial situation and particular needs There is a surmise that any recommendation given to you may not be fully appropriate to your individual objectives and needs, especially those which I, as the Adviser, do not know and You as the client must carefully ssess the appropriateness of the recommendations to your own individual investment objectives, financial situation and particular needs before acting on them. To Whom It May Concern Please accept this letter as my/our authority to provide any information requested and documentation if required to Azza Financial Planning (or their representative). Please accept a make off or facsimile of this letter, as the accepted will remain on file at the offices of Mentor Financial Planning. concord should be sent to Level 2, 349 collins Street Melbourne VIC 3000 This authority should remain in force until withdrawn in typography by me/us. Thankyou. Allison Callahan Client 1 Name Signature Simon Callahan Signature Client 2 Name Client 1 D. O. B. Client 2 D. O. B. ___/___/___ ___/___/___ Lot 3, wattle ro ad, Hurstbridge, VIC Address On Going Service Options 1. The No service optionThis generally relates to a one off investment placement based on the agreed investment strategy in the financial plan. In choosing this option, no ongoing service or review of the financial plan and the investment portfolio is provided to the client unless specifically requested by the client or upon the recommendation of the planner. 2. The Portfolio valuation option This service provides reports on the value of your investment portfolio only. The fee charged will depend on the frequency of the reports. In choosing this option, no ongoing service or review of the financial plan is provided to the client unless specifically requested by the client or upon the recommendation of the planner. 3. The Portfolio review optionThis service provides reports on the value of your investment portfolio. The fee to be charged will depend on the frequency of the reviews and will be agreed at the time. The margina l fee is $N/A but this may be higher depending on the complexity of the review. This service includes An annual/ half(a) yearly/quarterly review of your existing investment portfolio and its performance looking at further investment opportunities, if appropriate establishing if there have been any changes in legislation, the economic environment and state of the financial markets that may impact on your recommended investment portfolio In choosing this option, o ongoing service or review of the financial plan is provided to the client unless specifically requested by the client or upon the recommendation of the planner. 4. The Financial Plan review option This service provides for an annual/half yearly/quarterly review of the boilers suit financial plan strategy and the investment portfolio recommended. Each review will be presented in the manner of a written report and recommendations. The fee to be charged will depend on the frequency of the reviews and will be agreed at the time . The minimum fee is $__500________, but this may be higher depending on the complexity of the review. This service includes roviding reports on the value of your investment portfolio an annual/half yearly/quarterly review (including comments) of your existing investment portfolio and its performance looking at further investment opportunities, if appropriate establishing if there have been any changes in legislation, the economic environment and state of the financial markets that may impact on your recommended investment portfolio and the overall financial plan strategy establish if there have been any changes to your personal part or financial goals and objectives ascertain if the overall financial plan and the investment portfolio is act to meet your financial goals and objectives (including an insurance review) and making any new recommendations (if necessary).