ASSESSMENT 1: Case Study
CASE STUDY: Bill English
You have recently commenced your career in financial planning, working towards the goal of owning your own business, and have accepted a role as Junior financial planner in a small financial planning practice assisting the owner and senior financial planner, Michelle Bell. The practice operates under the name Bell Financial Planning Pty Ltd and Michelle is an authorised representative of Trust Financial Services.
Michelle has agreed to mentor you while you are completing your Diploma of Financial Services, and as part of the duties of your role, you will be involved in the entire client process. As such, you will sit in with Michelle on initial and ongoing client meetings, prepare Statements of Advice in accordance with her instructions, and ensure that the paperwork required to implement the plans is dealt with appropriately.
Bill, age 36, has made a meeting to see Michelle as he has received a $400,000 payout from his late wife Lucy's superannuation fund, which included a payment from the life insurance she held through the fund. She was involved in a fatal accident just over six months ago, leaving Bill to care for their two daughters, Nerissa (8 years old) and Nadia (6 years old). As you would expect, the family is devastated but now that some time has passed since the funeral, Bill has started thinking about the future. He wants to ensure that he makes the most of the payment, and has been referred to Michelle by a workmate, Mike Dubose.
Bill was working full-time for a Engineering company prior to the accident, but has had six months off work as personal and annual leave since the accident. He would like to spend more time with his daughters and feels he is ready to go
back to work on a reduced hour basis, which his employer has agreed to. He will work three days per week, 9 am to 5 pm, on two-thirds of his previous salary, so he expects to now earn $42,000 gross plus 9% p.a. superannuation. Bill has arranged for his parents to care for his daughters before and after school on the days that he works.
Bill would like to continue to work part time until Nerissa is 13 years old, and will then probably go back to full-time work. Ultimately, Bill expects he will retire at 65 and will need about $40,000 p.a. (in today's dollars) at that time to meet his preferred retirement lifestyle.
Lucy's Will was last updated in 2003 and provided for all her assets to pass to Bill. Her estate has now been finalised so any assets that were in her name have passed to him. Bill's Will was also updated in 2003 and states that all his assets are to pass to Lucy; he wonders what will happen to his Will now.
Bill and Lucy owned their home as joint tenants, which is valued at $520,000. There is currently $220,000 outstanding on the mortgage, which is currently paid off at $1,438 per month (interest is 6.15% variable over 25 years). Bill has a bank account with a balance of $412,000 (which includes the payment from Lucy's superannuation fund), as well as $5,000 in a fixed term deposit, which matures next week. He also holds a blue chip share portfolio which he has built up over the past ten years and is now valued at $40,000. He has accumulated $110,000 in superannuation but as his immediate concern is funding for his family. He does not require superannuation advice at this time.
Bill bought a car nine months ago - it is worth $32,000 and he has an outstanding loan of $22,000 with monthly repayments of $540. Lucy's car was owned outright and it is currently sitting in the garage, but Bill has agreed to sell it to a friend for its market value of $10,000. He expects the sale to take place in the next few weeks and will place the proceeds in his bank account.
Bill would like to make sure that the money from Lucy's superannuation fund is invested in the best possible way. The girls attend public schools, and will do so for all of their primary schooling. They will attend the local independent school for their secondary years at a cost of $3,500 (in today's dollars) per student per year. Bill would also like to help them if they go to university and expects that to cost him at least $80,000 in total for both daughters to complete their degrees.
Bill thinks living expenses for himself and his daughters will be about $450 a week (food, petrol, utilities etc.), and that annual bills, such as insurance, registration and rates, would be approximately $4,000 p.a. He would like to continue the annual family holiday to North Stradbroke Island and has budgeted about $1,500 for this on top of normal expenses.
Bill has private health insurance for the family (premiums included in the living expenses above). He has life and total and permanent disability insurance cover in his superannuation fund of $300,000, and income protection insurance, which will provide 75% of his monthly income if he is ever unable to work through illness or injury. At this time he is not requesting advice on his insurance cover.
Bill would like to get the most income that he can and would like advice on how best to use the money from Lucy's life insurance so that he can bring up his daughters with the minimum of worry.
Assessment Requirements
Please demonstrate the application of your knowledge in client communication skills and the first client meeting when answering these questions.
Question 1 Client meeting preparation
a) How would you prepare your room/office before seeing this client?
b) Create a meeting Agenda for this client meeting.
Question 2 The Financial Planning Process
a) Provide a diagram of the financial planning process. (Hand drawn diagrams are preferred)
b) Provide a script showing the conversation for when you will step the client through this process to assist them to understand what you do.
Question 3 The Financial Services Guide
a) When will you present the FSG to the client at the first client meeting? Why?
b) Provide a script showing the conversation for when you will present your FSG to the client.
Question 4 Your role as a financial planner
a) What is your role as a financial planner? How can you assist this client?
Question 5 The first client meeting
a) Discuss how you will facilitate the first client meeting to ensure you have rapport with the client.
Question 6 Client complaints
a) What happens if a client is not happy with your services or they have a complaint after they receive advice from you?
Question 7 The importance of effective communication skills
a) What are effective communication skills in financial planning?
Question 8 Mind Mapping
a) Mind map the clients' situation based on the information provided in your case study. Provide the hand drawn mind map on an A4 size piece of paper for this situation.
Question 9 SMART GOALS
a) Write a list of 3 to 5 SMART Goals for this client.
Question 10 Financial Needs Analysis
a) Which sections of the Financial Needs Analysis do you need to complete for this client's situation.
ASSESSMENT 2: Role Play
You will meet with two clients, a couple, to help them with their financial planning.
This assessment will be organised in the following way:
- you will form into groups of 3 people {make sure you exchange contact details with group members}
- you will not receive the client scenario for you as the Financial Planner
- Your teacher will supply you with 2 scenarios before your group is assessed so if you are playing the client you can prepare for being the 2 clients in your group's simulations. Do not show the profile to the person being assessed who is playing the financial planner - it will negatively impact their assessment result
- each meeting will take 20 minutes (therefore your group will be allocated 1 hour for the 3 simulations)
- you will play the role of a Financial Planner with approximately 1 years' experience.
- you will not be assessed when you play the role of a client
- you must dress appropriately and professionally to present yourself as a Financial Planner or you will not be able to participate in the assessment
- you will be provided with a Client Questionnaire (Financial Needs Analysis/Fact Find) but you must come prepared with other relevant documentation
ASSESSMENT 3: File Note Preparation
Instructions:
- You will partially complete a client questionnaire during the simulated client meeting from Assessment 2. Based on your client questionnaire and your notes obtained from your client meeting you will complete your client ‘File Notes' for the meeting. The File Notes will be an accurate and complete description of your meeting with the client.
- The template for the File Note is provided on the Moodle.
- You will submit your File Note via upload to the Moodle on the same day (see due date above)
You will be assessed on:
- Clear written communication
- Providing written notes on:
- The overall meeting, what happened, what was said and how the client felt
- Identifying the client's issues
- Detail possible options that were discussed with client
- determining any limitations you may have to provide a service to your clients
- identifying any specialist advice you may need to seek to assist you (e.g. legal, accounting)
- Identify next steps you need to take to assist client
- reflect on your professionalism and your communication and interpersonal skills and write about this in regards to your meeting
1. Develop an awareness of the client's situation
2. Obtain relevant knowledge of client's financial position and risk profile
3. Inform client of the financial planning process and services
4. Determine client expectations and requirements with respect to financial markets advice