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Assignment Insurance and Risk Protection (DFP2) Student identification (student to complete) Please complete the fields shaded grey. Student number

Assignment result (assessor to complete) Result â&#x20AC;&#x201D; first submission (Details for each activity are shown in the table below)

Parts that must be resubmitted:

Result â&#x20AC;&#x201D; resubmission (if applicable)

Result summary (assessor to complete) First submission Fact Finder

Section 2

Section 3 Case study assignment questions

Section 4

Section 5

Demonstrated

Not yet demonstrated

Demonstrated

Not yet demonstrated

Demonstrated

Not yet demonstrated

Demonstrated

Not yet demonstrated

Feedback (assessor to complete) [insert assessor feedback]

Resubmission (if required)

Before you begin Read everything in this document before you start your assignment for Insurance and Risk Protection (DFP2v2).

About this document This document includes the following parts: • Instructions for completing and submitting this assignment • The case study • Insurance and risk protection assessment: – Fact finder and risk profile template – Case study questions – Cash flow – Assumptions.

Instructions for completing and submitting this assignment 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 Insurance and Risk Protection (DFP2v2) subject room.

Completing the assignment You are required to complete the following tasks in this assignment document: • complete the fact-finder template for your clients (the risk profile template is included in this document for you to view, but you are not required to complete the risk profile template for this assignment) • answer the assignment questions as they relate to sections 3, 4 and 5 of the case study The information and data you need to do this work is presented as a case study. Some data will have to be externally sourced; the templates clearly indicate where this will be necessary.

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.

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Additional research You will be required to source additional information from other organisations in the financial services industry to find the right product/s to meet the Dalgar’s requirements, and to calculate your service fees.

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 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 Insurance and Risk Protection (DFP2_v2) subject room in KapLearn under the ‘Assessment’ tab.

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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 the assessor.

Units of competency This assignment is your opportunity to demonstrate your competency against these units: FNSASICX503

Provide advice in life insurance

FNSINC501

Conduct product research to support recommendations

FNSIAD501

Provide appropriate services, advice and products to clients

FNSCUS506

Record and implement client instructions

FNSCUS505

Determine client requirements and expectations

FNSASIC305

Provide Tier 2 personal advice in general insurance

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.

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The case study— Stephan and Marie Dalgar Section 1 — Meeting your client The first phone call Stephan and Marie Dalgar are a young married couple with one child. Recently John, a business associate of Marie, who also has a young family, was seriously injured in a vehicle accident that has resulted in uncertainty about his ability to return to work. Stephan and Marie have also learned that, due to inadequate insurance cover, the family of the injured work colleague are now under financial stress. They do have some insurance cover themselves, but are now unsure if it is adequate or suitable for their needs. Recalling a positive experience Marie had with you a few years ago on another financial matter, she asks Stephan to give you a call to see if you can help them with their insurance needs. Over the phone you explain to Stephan and Marie the financial planning process and why you will need to ask the couple for certain types of financial information. You stress that any information they give you will be treated confidentially and will only be used to help you recommend appropriate courses of action that the Dalgar’s should consider to ultimately meet their needs. You tell them information concerning privacy, you and your firm’s capability, and mention that other disclosure issues are in their firm’s financial services guide (FSG) that you will send to them. You go on to explain that part of the information gathering will include the need to complete a financial profile. This means that they will need to tell you what they own, what they owe, what they earn and their living expenses. All this information will be recorded in a fact-finder form you will compile. You arrange a date and time for them to come to your office. You ask them to bring along to the meeting as much financial information as they can, including income details, expenses, insurance details, superannuation and investments. You also ask them to think about what specific financial goals they want achieved and any issues they wish to ask about at the meeting. When you have concluded the call, you make a file note about the conversation including the date, the potential clients’ names, and any other items that were discussed. This is the start of your paper trail. You also complete some of the initial details in the data collection form as shown in Table 1. Finally you write to Marie and Stephan, as promised during your initial conversation, and include the FSG and a checklist of the information they need to bring to the meeting.

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Table 1 Personal details Client

Client 2

Title

Mrs

Surname

Dalgar (née Smeg)

Dalgar

Given and preferred names

Marie

Stephan

Home address

30 Crune St Caringbah NSW 2229

Business address

n.a.

Contact phone

(02) 9544 7766

Age

Sex

Male



Female



Male

Female

Smoker

Yes



Yes

Expected retirement age

Probably around the same time as Stephan retires

Probably around age 65

The first meeting Stephan and Marie arrive at your office for the meeting as arranged. After making them comfortable you go through the key elements of your FSG and explain your role and capacity to assist them with their insurance needs.

Collecting the data You gather the following information about Stephan and Marie through a process of thorough and polite questioning. From time to time, one or the other provides you with a relevant document to confirm their financial situation. You confirm the details in the fact finder as you proceed.

Stephan and Marie’s current situation Stephan, age 36, is married to Marie, who is 32. Marie follows netball and is a keen weekend player in a local competition. Marie and Stephan have one child, a boy named Harry, who was born 12 months ago. Stephan and Marie purchased their home about three years ago for $675,000 and they have a mortgage of $440,000. The mortgage is a variable interest loan with an interest rate of 5.48% p.a. which is linked to a bank offset account (Note: An offset account is one that allows the credit balance of the offset account to offset the interest owing on an outstanding loan or mortgage, reducing the interest payable). The mortgage has 22 years remaining and their minimum mortgage repayment is $2920 per month. Any excess income they have is paid into the offset account. The current amount available in their offset account is $32,000. Stephan works full-time as a chemical engineer for an agricultural supplies company that sells agricultural chemicals, seed and fertilisers and takes regular interstate business trips to rural and regional Australia. He has worked full-time for his employer for ten years and earns $145,000 p.a. with additional superannuation guarantee (SG) contributions from his employer paid into the employer’s default fund.

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Marie has recently returned to work on a part-time basis (3 days a week) following maternity leave. She is a marketing manager for a local engineering company and has been with the same firm for ten years as well. She earns $60,000 p.a. with additional SG contributions from her employer paid into the employer’s default fund. Marie advises during the meeting that she feels she would like to change her current employment, and is considering starting up her own consulting business from home. This would enable her to spend more time with their son. They currently use a childcare centre, as well as Marie’s mother, to look after Harry when Marie is at work. The childcare fees are $88 per day (not including the Child Care Rebate), which Marie utilises two days per week for 48 weeks per year. These expenses are not included in their day-to-day living expenses. Marie’s mother minds Harry for one day a week at no cost. Once Harry starts school, Marie and Stephan hope to send him to the local independent school at a total cost of $65,000 for his whole school life. Other than their cash in the bank, superannuation holdings and house contents, the only other assets they have are their motor vehicles. A 2010 Ford Focus, currently valued at $11,000, is used by Marie and Stephan drives a 2009 Holden HSV performance vehicle, currently valued at $33,000. Both cars are fully paid off and are comprehensively insured. All motor vehicle expenses (except insurance) are included in the clients’ living expenses.

Superannuation Stephan has $260,000 in his employer’s default superannuation fund, the ASSF Super Fund, and is invested in a balanced portfolio. He joined the fund on 1 February 2004. Marie has $114,000 in her employer’s default superannuation fund, the CISF Super Fund and is invested in a balanced portfolio. Marie joined the fund on 19 January 2004. Neither Marie nor Stephan make any additional contributions to their superannuation funds.

Insurance Stephan’s default superannuation fund provides a death and total and permanent disability (TPD) benefit which is currently equal to his annual income (excluding SG contributions). The premium for this cover is $0.90 p.a. for each $1000 of cover or part thereof, and is deducted from his superannuation contributions. The ASSF Super Fund will allow a member to increase their benefit to twice the member’s annual salary at this premium rate. The fund will allow a further increase in cover to a maximum of $750,000. However, the premium will increase to $1.00 per $1000 for any amount of cover that is over twice the member’s annual salary. Stephan’s superannuation fund can provide income protection cover with a 30 to 90-day waiting period, and a two-year to age 65 benefit period. He has not taken out this cover. Marie’s default superannuation fund also provides a death and TPD benefit and she currently has cover of $120,000 for each of life and TPD. The premium for this level of cover is $143 p.a. deducted from her superannuation contributions. The CISF Super Fund allows for members to further increase their cover to a maximum of $2 million and on the following premium scale: • ≤ $500,000 — $1.19 p.a. per $1000 of cover • $500,001 to $1 million — $1.45 p.a. per $1000 of cover • $1 million to $2 million — $1.65 p.a. per $1000 of cover. Marie and Stephan have no other personal insurance cover. They have full comprehensive insurance on their vehicles with a total annual premium of $2800 p.a. Marie and Stephan also have combined home building and contents insurance cover of: • $100,000 home contents • $750,000 home building.

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Their home was built under an earlier version of the local building code. Additionally, the home was purchased in a market much lower than the current one and is estimated to cost much more than the $675,000 purchase price to replace. The policy has a contents excess of $500 and a building excess of $1100. The policy also includes legal liability cover of up to $20 million. Marie and Stephan pay $145 per month for this insurance. The Dalgars have adequate private health insurance cover; this is the family cover option and includes hospital cover with a $500 excess. They pay a premium of $270 per month for this cover. This premium includes the private health insurance rebate. The above vehicle, home and contents and health insurance payments are not included in their general living expenses.

Other information Stephan and Marie have a credit card with a limit of $15,000 that they use for all their general expenses and entertainment. However, they never spend up to their limit and always repay within the interest free period. They estimate their average monthly living expenses are $6900 per month. Stephan and Marie used to go on regular annual holidays and spent over $10,000 per trip. However, since the start of their mortgage and the birth of Harry they now plan to take a holiday every two years spending about $5000, in addition to their general living expenses. Stephan advises he is quite healthy and has accumulated 78 days sick leave. However, he advises that he was diagnosed with asthma symptoms in the past for which he was prescribed medication. He has not experienced a return of these symptoms during the past couple of years. Marie took all her accumulated annual and long service leave as part of her maternity leave. Other expenses include a donation by Marie to the National Breast Cancer Foundation of $50 per month and Stephan makes a tax deductible donation to Plan B of $50 per month. They each make tax deductible ‘bucket’ donations of $50 p.a. to disaster relief funds, and accountants’ expenses come to $150 p.a. each. These expenses are also in addition to their general living expenses.

Needs and objectives During your conversation with Stephan and Marie it becomes apparent that their main objective is to protect their home and to provide for their son Harry. Marie commented that she is very concerned that they may not be able to maintain their lifestyle if either of them died or suffered a prolonged illness. She would like to make sure that if anything were to happen to them that Harry would be well taken care of. At this time they are not yet concerned with superannuation and retirement planning, believing that it is still a long way off and that they will have time to address this part of their financial plan in the future. Marie and Stephan have a full and comprehensive estate plan that Stephan insisted on when they were married, and was updated when they purchased their house and on the birth of Harry. Also, Marie’s mother has agreed to increase her care of Harry to three days per week if anything was to happen to Marie (i.e. death or total and permanent disablement).

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Closing the interview Prior to closing the interview, you review the information provided by Marie and Stephan to check whether it is complete. You answer some additional questions they have about what happens next and what your likely costs will be, and explain that with their agreement you will now prepare a written financial plan, called a statement of advice (SOA), based on the information collected and their stated objectives. The SOA will describe possible risk management strategies and insurances they should consider, and the reasons behind your recommendations. Stephan and Marie agree to proceed to the next stage of the financial planning process, and you make an appointment to present the SOA in a fortnight. Please note, you are not required to complete a Statement of Advice as part of your assignment.

Section 2 — The fact finder The first step is to complete the fact finder for Stephan and Marie. This is in your assignment at Insurance and risk protection assignment section 2. Note to completing the fact finder: As this is a ‘risk’ assignment, you must complete the ‘Risk needs’ section. However, where information has not been provided in the case study background, you may leave these sections blank.

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Section 3 — Analysing the data The next step in the financial planning process is to analyse the collected data. You do this so that you can fully understand your clients’ needs and therefore design a financial plan that addresses their goals and objectives. By analysing the data provided under the following headings you can start preparing a financial planning strategy that will meet your clients’ needs: • Review the fact-finding stage • Current position • Debt management • Risk/protection • Savings • Present and future taxation issues. Note: There are a series of questions relating to section 3 in the assignment that you must answer. Use your answers for section 3 to help you decide on your recommendations for Stephan and Marie. Your answers to these questions are your opportunity to demonstrate your ability to analyse clients’ needs in preparation for developing a strategy that aligns with their requirements.

Section 4 — The strategy Now that you have analysed the data, you are in a position to think about appropriate strategy options and start drafting appropriate strategies for them. This should include levels of cover and researching possible products that can support the implementation of those strategies. You will use all of this information in your SOA for the couple. Note: There are a series of questions relating to section 4 in the assignment that you must answer. You will use your answers for section 4 to help you decide on your recommendations for Stephan and Marie. Your answers to these questions are your opportunity to demonstrate your ability to analyse your clients’ needs and develop a strategy that aligns with their requirements.

Section 5 — Presenting the SOA You meet with Stephan and Marie as arranged to present the SOA. You take the time you need to reiterate their financial situation and stated objectives and to explain the proposed strategies and recommendations, confirming regularly that both Stephan and Marie understand each component of the plan and how it meets their needs. Even though satisfied with your explanation of the SOA and responses to each of their questions, they have a key concern about one of the products you have selected with regards to the cost of premiums. Before they agree to your recommendations you have to negotiate this part of the plan with your clients. Note: There is a series of questions relating to section 5 in the assignment that you must answer. Your answers to these questions are your opportunity to demonstrate your ability to continue to engage your clients.

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Assignment The fact finder Use the data collected in the interviews to complete the fact finder template on the following pages. Note: As investment strategies are not required for this project, it is not necessary to complete the risk profile section of the fact finder.

Fact finder â&#x20AC;&#x201D; Stephan and Marie Dalgar Use the data collected in the interviews to complete the fact finder template on the following pages. Note: As investment strategies are not required for this project, it is not necessary to complete the risk profile section of the fact finder.

Important notice to clients Your planner must have reasonable grounds for making investment or insurance recommendations. 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.

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Section 2 â&#x20AC;&#x201D; The fact finder Personal and employment details Stephan Dalgar

Marie Dalgar

Answer here

Assessor feedback:

Resubmission required? No

Employment details Occupation Employment status

Business status

Self-employed

Employee

Self-employed

Employee

Not employed

Pensioner

Not employed

Pensioner

Permanent

Part-time

Permanent

Full-time

Casual

Contractor

Casual

Contractor

Other

Government

Other

Government

Sole proprietor

Partnership

Sole proprietor

Partnership

Private company

Trust

Private company

Trust

Notes

Answer here

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Income, tax and cash flow Tax calculation

Marie

Stephan

Combined

Comments

Salary

Answer here

Salary sacrifice

Answer here

Salary after salary sacrifice

Answer here

Rental income

Answer here

Unfranked dividends

Answer here

Franked dividends

Answer here

Franking (imputation) credits

Answer here

Interest

Answer here

Other income (e.g. taxable benefits, trust income, investment income)

Answer here

Capital gains < 1 yr

Answer here

Capital gains > 1 yr

Answer here

Tax-free component of capital gains

Answer here

Assessable income

Answer here

Deductible expenses

Answer here

Donations

Answer here

Other

Answer here

Taxable income

Answer here

Tax on taxable income

Answer here

Non-refundable tax offsets (e.g. LITO/SAPTO)

Answer here

Medicare levy

Answer here

Medicare levy surcharge

Answer here

Franking rebate

Answer here

Refundable rebates and offsets

Answer here

Total tax

Answer here

Income from employment

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Cash flow Marie

Stephan

Combined

Comment

Salary less any salary sacrificed amount

Answer here

Non-taxable income

Answer here

Rental income

Answer here

Unfranked dividends received

Answer here

Franked dividends received

Answer here

Interest

Answer here

Other income (e.g. taxable benefits, trust income, investment income)

Answer here

Total income received before tax

Answer here

Investment expenses

Answer here

Mortgage

Answer here

School fees

Answer here

Utilities

Answer here

Personal insurance

Answer here

Car insurance

Answer here

Home building/Contents insurance

Answer here

Health insurance

Answer here

Living expenses

Answer here

Holidays

Answer here

House maintenance

Answer here

Motor vehicle

Answer here

Motor vehicle

Answer here

Other

Answer here

Child care

Answer here

Donations

Answer here

Accountantâ&#x20AC;&#x2122;s fees

Answer here

Expenses

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Total expenses

Answer here

Total income received before tax less total expenses

Answer here

Total tax payable from tax table above

Answer here

Total net cash flow

Answer here

Needs and objectives Details

Comments

Answer here

Estate planning Do you have a will?

Yes

When was it last updated?

Answer here

Do you have powers of attorney?

Yes

Current superannuation, rollovers, insurances and investments Superannuation Member

Stephan

Marie

Fund name

Answer here

Date of joining fund

Answer here

Type of fund

Contribution (9.50% of salary)

Accumulation

Defined benefit

Accumulation

Defined benefit

Pension

Pensioner

Pension

Pensioner

By employer

By self

By employer

By self

Current value of your superannuation fund

Answer here

Amount of death and disability cover

Answer here

Is there provision for you to top up or salary sacrifice?

Yes

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Yes

Superannuation taxation details Current value

Answer here

Tax-free component

Answer here

Taxed element

Answer here

Untaxed element

Answer here

Preserved

Answer here

Unrestricted non-preserved

Answer here

Restricted non-preserved

Answer here

Year 1

Answer here

Year 2

Answer here

Year 3

Answer here

Year 4

Answer here

Year 1

Answer here

Year 2

Answer here

Year 3

Answer here

Year 4

Answer here

Taxable component:

Preservation:

Contributions: Non-concessional contributions:

Concessional contributions:

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Life insurance details Life insured

Owner

Policy type

Company

Policy number

Death benefit

Comments

Annual premium

Answer here

Answer here Answer here

Answer here

Answer here Answer here

Trauma insurance details Life insured

Owner

Policy type

Company

Policy number

Death benefit

Comments

Annual premium

Answer here

Answer here Answer here

Answer here

Answer here Answer here

Income protection insurance details Life insured

Owner

Policy type

Company

Policy number

Death benefit

Comments

Annual premium

Answer here

Answer here Answer here

Answer here

Answer here Answer here

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General insurance details Item covered

Owner

Policy type

Company

Combined policy number

Cover amount

Other benefit

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

Total annual premium

Answer here Answer here

Answer here

Investment details Investment type

Company

Purchase date

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

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Units held/fixed rate

Current value

Owner

Risk needs Insurance needs — Life and TPD Marie ($) C

Clean-up fund

Income fund

Mortgage fund

Education fund

Retirement fund

Stephan ($)

Settle all outstanding accounts, including credit cards, bills and funeral costs Answer here

Answer here

The lump sum required to produce a level of regular income that maintains the family’s living standard for a defined period Answer here

Answer here

Total

Answer here

The amount necessary to discharge any existing mortgages

Lump sum determined by calculating each child’s education costs and multiplying by the number of years of school and/or university remaining Answer here

Answer here

The lump sum necessary to provide adequate funding for retirement Answer here

Answer here

Superannuation

Answer here

Offset account

Answer here

Less existing life/TPD insurance cover

Answer here

Recommended sum insured

Answer here

Recommended sum insured (rounded to the nearest $10,000)

Answer here

Less value of realisable assets

* This amount includes the Child Care Rebate.

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Risk needs Insurance needs â&#x20AC;&#x201D; Trauma Marie ($)

Stephan ($)

Pay out personal debt (credit card)

Answer here

Pay mortgage for 12 months

Answer here

Estimated medical and rehabilitation costs (including cover out-of-pocket health costs)

Answer here

Estimated modifications to home and vehicle

Answer here

Other debts

Answer here

Other expenses

Answer here

Less existing realisable assets

Answer here

Recommended sum insured

Answer here

Recommended sum insured (rounded to the nearest $10,000)

Answer here

Insurance needs â&#x20AC;&#x201D; Income protection Income protection

Marie ($)

Stephan ($)

Gross annual income

Answer here

Superannuation guarantee

Answer here

Total insurable income

Answer here

Monthly income (i.e. total insurable income/12)

Answer here

Recommended monthly benefit (i.e. 75% of total monthly insurable amount)

Answer here

Benefit payment period

Answer here

Waiting period to be served

Answer here

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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 the planner has provided me with the completed financial fact finder, signed by me. Customer(s) signature(s) Planner’s name Planner’s signature Date Note: An investment needs analysis is not required for this assignment. These investment attitude details tables have been included to provide a realistic example of the fact-finder process.

Investment attitude details Please answer the following questions regarding your attitude to financial issues. Are you concerned about the amount of tax that you are paying?

Why?

I think that I should be able to structure things better to pay less tax like other people seem to do.

NOT REQUIRED FOR THIS ASSIGNMENT

How important is liquidity (i.e. funds available) to you?

Why?

Yes/No

Very/Moderately/Not

I would like the money available so I can buy a property in the future.

If you had funds available for investing, how would you choose to invest them? Why? Term deposits, but don’t know what else is available or how it works. Are there certain sorts of investment that you wish to avoid?

Which ones?

Yes/No

I don’t know really know.

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 planner, you can choose the investments that best match your financial objectives. Which of the following best describes your current stage of life? 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.

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.

NOT REQUIRED FOR NOT REQUIRED FOR THIS ASSIGNMENT THIS ASSIGNMENT Page 21 of 31

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.

Mature family: You are in your peak earning years and have got 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.

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.

Retired: No longer working you 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.

What return do you reasonably expect to achieve from your investments? A return without losing any capital

3–7% p.a.

8–12% p.a.

13–15% p.a.

Over 15% p.a.

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

Less than 1 year

Up to 3 years

Up to 5 years

Up to 7 years

Up to 10 years

How familiar are you with investment markets? Very little understanding or interest

Not very familiar

Would like to know more.

NOT REQUIRED FOR THIS ASSIGNMENT

Have had enough experience to understand the importance of diversification

Understand that markets may fluctuate and that different market sectors offer different income, growth and taxation characteristics

Experienced with all investment sectors and understand the various factors that may influence performance

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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

Stable, reliable returns, minimal tax savings

Some variability in returns, some tax savings

Moderate variability in returns, reasonable tax savings

Unstable, but potentially higher returns, maximising tax savings

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

You would cut your losses and transfer your money into more secure investment sectors

You would be concerned, but would wait to see if the investments improve

This was a calculated risk and you would leave the investments in place, expecting performance to improve

You would invest more funds to lower your average investment price, expecting future growth

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Which of the following best describes your purpose for investing? You want to invest for longer than five years, probably to the age of 55–60. You are mainly investing for growth to accumulate long-term wealth

You are not nearing retirement, have surplus funds to invest and you are aiming to accumulate long-term wealth from a balanced fund

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

You are nearing retirement and you are investing to ensure that you have sufficient funds available to enjoy retirement

You have some specific objectives within the next five years for which you want to save enough money

You want a regular income and/or totally protect the value of your savings

NOT REQUIRED FOR THIS ASSIGNMENT

Investor profile total points

Investor risk profile summary 0–70

Conservative — 70% Defensive and 30% Growth

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. 71–130

Moderately Conservative — 55% Defensive and 56% Growth

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

NOT REQUIRED FOR THIS ASSIGNMENT

Balanced — 40% Defensive and 60% Growth

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 — 30% Defensive and 70% 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 — 10% Defensive and 90% 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.

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Section 3 — Analysing the data Case study questions Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to analyse a client’s needs in preparation for developing a strategy that aligns with their requirements. Section 3 Part A List what you understand to be the couple’s goals, needs and objectives. Categorise them into short, medium and long-term time frames. They should be specific, measurable and have a nominated dollar value where possible. (250 words) Goals/need/objectives

Timeframe

Assessor feedback:

Dollar value

Resubmission required? No

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Section 3 Part B Analyse the data provided by the couple by answering the following questions. Think carefully about your responses and do not assume that you are in a position to provide answers to everything. You may not have enough information, it may be outside of your licensee’s designated authority for this case study (i.e. the matter needs to be referred to a specialist adviser) or it is not a goal or objective of your clients. Where this might be the case, make sure you make a comment to that effect where relevant. Make sure you constantly refer to the data you have on Stephan and Marie so your responses accurately reflect the information provided to you. The questions a.

Your response

Do Marie and Stephan need a debt management solution?

Assessors feedback

If ‘yes’, why? If ‘no’, why not? b.

Do Marie and Stephan currently have adequate life and TPD cover? If ‘yes’, why/how? If ‘no’, how much should they have, and why that much?

Is their current life and TPD cover provided through superannuation the best alternate? If ‘yes’, why? If ‘no’, why? What could be the alternative?

Do Marie and Stephan require any other insurance cover? If ‘yes’, what type of cover? How much do they need? How should it be provided? If ‘no’, why?

Is there anything that could impact on Stephan’s and Marie’s ability to obtain insurance cover? If ‘yes’, which cover(s)/why? If ‘no’, why not?

If Marie commences work from home, will this have any impact on her current or recommended insurance cover(s)? If ‘yes’, which cover(s)/why? If ‘no’, why?

The assessors feedback

If Marie commences work from home, would she require any further insurance cover? If ‘yes’, why and what would she require? If ‘no’, why not?

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The questions h.

Your response

The assessors feedback

Are there any present and/or anticipated future issues associated with your recommendations? If ‘yes’, why and what are they? If ‘no’, why not?

Are there any present and/or anticipated future cash flow implications associated with your recommendations? If ‘yes’, why and what are they? If ‘no’, why not?

Are there any taxation considerations with the recommendations?

Assessor feedback:

Resubmission required? No

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Section 4 — The strategy Case study questions Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to analyse a client’s needs and develop a strategy that aligns with their requirements.

Section 4 Part A Based on your analysis of the data, describe in general terms the strategy you think will best meet Marie and Stephan’s needs and why. Include what other specialist advice they will need to source so they can have access to a comprehensive financial plan (up to 500 words). Note: For students who may need assistance determining the approximate premium costs of particular recommendations, please use the internet to research and use the calculations as a guide when answering assignment questions. Answer here

Assessor feedback:

Resubmission required? No

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Section 4 Part B Following your conclusions developed in Section 4 Part A, you are now in a position to research products to meet your clients’ risk management needs. Information on different products and providers is readily available on the internet, or if you are already working for a licensee you may be able to use those from your approved product list. Research and compare three (3) insurance products of each cover type. List them here, and indicate why you think these may, or may not, be the ‘best fit’ for Marie and Stephan. At the conclusion of this process you will need to have selected the product(s) that you think will meet their needs. (Please add rows as required, or leave rows blank that are not needed.) Note: Students needing assistance in estimating insurance premium rates for their recommended insurance covers may use the insurance premium tables within the following superannuation fund websites for this purpose: REST < http://www.rest.com.au/getmedia/8047a452-8120-4a2c-934d-3aa6347c708f/RES0254_REST_SuperInsurance-Guide-FA_WEBSAFE.pdf?ext=.pdf>. HOSTPLUS <http://memberguide.hostplus.com.au/8-insurance-in-your-super>. HESTA <http://www.hesta.com.au/insurance-other-services/insurance.html>. Answer here

Assessor feedback:

Resubmission required? No

Why you think it may or may not be the ‘best fit’ for the couple

The product (name and URL link)

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Indicate which product/s you will use in your plan YES

YES

Section 5 â&#x20AC;&#x201D; Presenting the SOA Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to negotiate aspects of a plan a client is dissatisfied with, and then to gain their consent to proceed with your recommendations.

Section 5 Part A In the space provided, write a script for how you would explain to your clients the rationale for the choice of one product selection over another (200 words). Answer here

Assessor feedback:

Resubmission required? No

Section 5 Part B Your clients reluctantly agree with your choice but it is clear they are not 100% satisfied. How will you proceed with the conversation from this point on? Think about what you aim to achieve from both a client engagement and compliance perspective. (200 words) Answer here

Assessor feedback:

Resubmission required? No

Section 5 Part C Describe how you will conclude this conversation so that you have met all your compliance requirements. (100 words) Answer here

Assessor feedback:

Resubmission required? No

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Assumptions Please list any and all assumptions you have made here: Value

Current situation

Proposed strategy

Answer here

List any other assumptions here: Assumptions

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