This is my new assignment and this assignment has three part.
FINANCIAL PLAN PREPARATION
Case study introduction:
Darren and Danielle are both in their 30's and married with 2 children, Adrian aged 1 and Lilly aged 3. They own their own townhouse and have a mortgage of $440,000.
Darren works as a medical scientist earning $90,000 per annum plus Super Guarantee (SG) contribution. Danielle is a self-employed consultant earning $70,000 having recently established her business following maternity leave and hasn't made any superannuation contributions. They are coming to you for advice as they are concerned about their financial affairs and want o tidy things up to get ahead.
The budget discussion you had with them reveals that they expect to be able to save approximately $3,000 per month. They are hoping to get a better grip on their budgeting, are not sure what to do about some debts they have accumulated or how to protect the family in the event of Darren suffering a serious illness.
You have had a comprehensive meeting and discussion with them and completed the relevant sections of the fact find document (enclosed in Reference Material section). They have each completed a risk profile with you which included a detailed discussion about the differences in their risk profiles.
Primary goals:
Darren is concerned about protecting the financial wellbeing of his family given his family history of cancer and the risk of contracting a disease in his new job.
He has a HELP debt of $15,000 and he is not sure whether to pay it off quickly or as per the government schedule. Darren and Danielle have some credit card debt and only a few thousand dollars saved, spread over a couple of bank accounts. Darren has 3 different superannuation accounts and he would like advice on selecting one to consolidate his super into. Danielle would like to resume superannuation payments to herself from her business. They would like to save some money specifically allocated towards giving their 2 children a head start at university. They have only just started making an impact on their mortgage and would like to pay this off sooner than the 25 year term if possible.
They want to know:
- whether to pay off Darren's HELP debt sooner than the minimum prescribed time
- how to protect the family in the event of Darren suffering cancer or contracting an illness due to his job
- consolidation of Darren's superannuation (including keeping current levels of insurance)
- how to best resume superannuation payments to Danielle from her business
- debt management (credit cards and Darren's HELP debt)
- how to save for Lilly and Adrian's university education
- how best to pay off their mortgage sooner than the standard 25 years
Task criteria:
Your task is to help Darren and Danielle meet their goal of tidying up and protecting their current financial affairs along with any other lifestyle goals detailed in the fact find. Your advice will take the form of a Statement of Advice.
There is a significant difference in their risk profile which you need to address and base your recommendation around. Focus is on non-specific product advice rather than product advice for this assessment, therefore no Approved Product List (APL) required. Explanations should be clear and concise and in terms that your clients will understand. Appropriate style and tone should be used as well as writing a clear, concise, and easy to understand customised recommendation to the clients. Use plain English and write in a manner that will maximise the understanding for your clients. Your SOA should not exceed 25 pages excluding appendices. Please use Calibri 12 font, single spacing and 2cm margins. The appendix should not exceed 5 pages.
Please note, appendices only support your strategic advice and will not be separately assessed. An appendix could, for example, include details of any financial projections you have used. A set of standard economic and investment assumptions have also been provided and should be used.
Scope of advice:
Your clients have limited the scope of your advice are in the areas of: Re-budgeting, Debt Management, Savings Plan, Risk profile match with investment portfolio, Superannuation, Personal insurance, Managed Investments, Estate Planning and Centrelink (if applicable) and to include the following:
- Saving for Lilly and Adrian's university education
- Pay off credit card and HECS debt as soon as possible and manage these debts better
- Options on paying off the mortgage sooner
- Review of Darren's superannuation funds (including keeping current levels of insurance and invest to suit risk tolerance)
- Resuming and maximising superannuation contributions for Danielle
- Protection for risk of cancer or disease for Darren
You will not recommend any specific investment or insurance products except for any existing superannuation funds or insurance policies held by the clients. You will recommend generic product groups e.g. managed funds, insurance bonds, income protection etc. These recommendations can only include. generic product features available across this group of products.
The following specific advice areas are also not in the scope of your advice:
- Any type of agricultural schemes or exotic investments
- Self-managed superannuation funds
- Direct shares,
- Derivatives (including structured products) of any kind including discretionary accounts
- Margin lending
Licensing conditions:
You are a fully qualified and accredited financial planner. You are an employee and representative of "St George Financial Planning P/L". You receive a salary and bonus based on achieving agreed key performance measures.
You have agreed a flat fee for service to provide the advice and prepare a Statement of Advice (SOA) to Darren and Danielle. That fee is $3,300, including GST and has already been paid by your clients. Your Financial Services Guide (FSG) was provided to your clients at your first meeting. This enabled you to cover all legislative and compliance requirements.
Any assumptions used MUST NOT change or be in conflict with the existing information contained in the fact find. You should not introduce any new information that significantly alters their current financial situation.
Task Requirements:
1. You have just completed your final notes after step 2 of the Financial Planning Process (FPP). Create a client file for your client's by utilising the resource material analysed in this subject and from your own research. As a guide, you should include (but not limited to) at least S of the following documents and those highlighted as MUST include in your Client File in order to assist you in writing a Comprehensive Statement of Advice (SOA):
Client file checklist
Authorities, Acknowledgements, Declarations, Signatures document (signed & dated) MUST include
- Completed Financial Needs Analysis and Risk Profiler (signed & dated) MUST include
- Initial Meeting Agenda
- Financial Planning Process diagram
- Copy of additional communication (e.g. emails, appointment confirmation letter, copy of diagrams)
- Documents as evidence - i.e bank, super, insurance statements, last tax return, last 2 payslips
- Client file note (on letterhead) summarising the initial meeting and identifying what additional exis e information will be required for you to complete this task to allow you to identify your clients' goals and objectives; MUST include
- State your clients' goals and objectives as SMART by using the SMART goal template provided, then write up each SMART goal into an appropriate goal statement.
- List your client's current expenses by using the cash flow template provided
2. Write an explanation (as per Financial Services Guide) on:
a. How you disclosed all fees charged, including fee for services - i.e. meeting fees, SOA preparation, review & ongoing services and Authorised Representative remuneration and
b. How you disclosed the Dispute Resolution Process to your client/s in the initial client meeting.
PART B
3. In preparation to giving advice to your clients, based on the information in the case study above and Financial Needs Analysis provided, please prepare the following:
a. With reference to your clients' risk profile - provide a pie graph and explanation of the recommended asset allocation to the client's risk profile following completion of the Risk Profile Questionnaire and subsequent discussions with your clients;
b. State key assumptions upon which the Statement of Advice will be based, in addition to assumptions stated in the Financial Needs Analysis provided;
c. Provide a current cash flow analysis with your adjusted proposals and write your recommendations in improving the client's cash flow position referring to your clients current budget, as well as debt reduction/management and savings goals and objectives identified and analysed. This can be achieved by using an budget calculator located on Moodie;
d. Provide an Insurance Needs Analysis of their personal insurance requirements and make recommendations as to the type of insurances they should have and how much cover is required in respect to each. This can be achieved by using an Insurance Needs analysis calculator located on Moodie;
e. State any other strategic options developed to meet the clients' goals and objectives and make justified recommendations in relation to each. Other strategic options may include an assessment of Risk profile match with investment portfolio, Superannuation, Managed Investments and Savings Plans, Estate Planning and Centrelink and the impact of taxation, legislation and the economic environment.
4. Create two client file notes recording a discussion with your clients about how you would conduct the review of your strategies and recommendations and what questions you might ask your clients about these strategies and recommendations. Following this, complete a preliminary statement of advice (SOA) up to (and including) the Strategies and Recommendations section of the SOA template provided on Moodie and Checklist enclosed.
PART C
5. Complete a compliantSOA by utilising the SOA template provided on Moodle and Checklist enclosed.
6. Once the Compliant Statement of Advice (SOA) is written, as agreed with the client, describe what steps you would take as a financial planner and for the client/s to implement the SOA in an implementation schedule each. Students should include reference to:
- Establishingyour implementation plan
- Actions, timing and priorities needed to implement the plan
- Procedures for implementing the plan
- Undertaking and/or supervising the actions needed to implement the plan
7. Describe what steps you would take as a financial planner to review an SOA and provide ongoing service.
Students should include reference to:
- Discussing and confirming arrangements for ongoing service with the client
- Establishing timing and procedures for providing ongoing service
- Undertaking and or supervising the review of the financial plan
- Making modifications to the plan, if required
- Signing off in agreement to opt in for the ongoing services provided in an Oncloinq Service
Agreement
8. Complete the checklist on the next page to ensure your Statement of Advice (SOA) complies with regulatory and legislation requirements and meets organisational guidelines.
Part A - 3 page
Part B - 3 page
Part C - 4 page
in Total 10 pages double spacing approx 3000 words