|Unit Learning Outcome (ULO)||Graduate Learning Outcome (GLO)|
|ULO 1: Communicate with clients effectively to obtain personal information, including negation where appropriate.||GLO1, GLO2, GLO3, GLO4, and GLO5|
|ULO2:Analyse and critically evaluate a comprehensive set of client circumstances as it applies to satisfying the needs and objectives of a client.|
|ULO3:Construct a compliant comprehensive Statement of Advice (SOA) via a popular financial planning software program to meet client requirements in an ethical and professional manner.|
|ULO 4: Present and defend financial planning recommendations.|
Description / Requirements
PART A – Written presentation requirements.
- Prepare a comprehensive SOA to industry standards based on the client scenario provided.
- The SOA should be submitted electronically as threedocuments:
- The firstdocument is the Client Fact Finder which mustbecreated in XPLAN.
- The seconddocument that you are requiredto submit are the insurance quotes using XPLAN.
- The third document is your SOA which will be in the form of a Word document. Where Excel data is used within this Word document it should be pasted into the document using – Paste Special/Microsoft Excel Worksheet Object. Appendices to the SOA are recommended.
- The SOA should be directed to the clients, in the first person.
- You are free to generate as much of your SOA using XPLAN as you wish. However, students will be penalised where standard wording from templates such as XPLAN are simply copied into their SOA.
- All pages must have a footer which includes the student ID and page numbers e.g. page 4 of 8.
- All text based/Word information should in a 12-point Calibri font with a minimum line spacing of
1.15. The assignment should have standard left and right and top and bottom margins.
- Recommendations must be made based on real products, quotes, and prices that you have researched. Finding accurate and detailed insurance quotes through the internet can be difficult, and accordingly it is required that you use XPLAN Risk Researcher to assist with this task. Finding suitable superannuation products on the web is less difficult nonetheless the XPLAN WealthSolver may assist with this task.
- You can assume that the client has been provided with a Financial Services Guide (FSG). Where you recommend a product/service for which a PDS is available on the web you should reference the relevant URL.
- The SOA is limited to 4,500 words in length. The word count excludes the Client Fact Finder,
insurance quotes and any appendices. All general information, projections etc must be in the appendix section.
- You must address all the clients’ objectives in the SOA. The general advice on aged care should be addressed in detail in the appendix section.
Adam and Clare McKenzie 100 Janson Court,
Doncaster VIC 3108
Adam and Clare approach your financial planning practice for some advice. The couple are aged in their 50’s and expect to work until they turn 65 years of age, but both would like to be in a position to be able to retire when Adam turns 63. The couple own investments held outside of superannuation as well as their superannuation accounts. The couple have seen a financial planner previously who has now retired, and they were introduced to you by your client.
Clare is aged 51 (DOB 01/01/1971) and Adam is aged 54 (DOB 03/04/1968). The couple have been married for 15 years.
Adam is a Software Engineer and earns an income of $200k. The following are his employer super contributions for the past 3 financial years:
FY19 – $19,000 FY20 – $19,000 FY21 – $20,000
Clare is a Dentist and earns a salary of $150,000 working 3 days a week. She had taken time off work when the children were younger and is slowly transitioning back to work. She is open to working 4 days per week if necessary. The following are her employer super contributions for the past 3 financial years:
FY19 – $14,250 FY20 – $15,000 FY21 – $15,000
Both Adam and Clare do not currently salary sacrifice or make any additional contributions to super.
Clare and Adam have 3 children – Carly age 12 who is in year 7, and Zack and Mack, twins aged 10 who are in Year 5 this year. They all attend a nearby public school and will continue public school for their secondary school years.
Both Adam and Clare are in good health and are non- smokers.
The couple have lived in their family home for the past 15 years. The house cost them $850,000 and is currently worth $1,600,000. The couple took out a mortgage for $650,000 at the time of purchase.
The couple are making the minimum mortgage repayment each month. Their contents are worth around $120,000 and they have 2 cars. One car (a BMW X5) is used by Adam to commute to work and is worth $90,000 (owned by Adam) and the other car driven by Clare is a Toyota Kluger worth around
The couple also own two investment properties worth $1,800,000, they borrowed $1,300,000 for the investment properties, and own a share portfolio.
Apart from the property loans, they have a portfolio loan secured against their principal place of residence that was used to purchase the share portfolio. The only other liability the couple have is a credit card that typically has around $10,000 owing but is normally paid off at the end of each month to avoid an interest charge. All property loans are held with the Bank of Melbourne.
Clare’s mother lives close to them. She is 80 years old and have just been diagnosed with Dementia. They will have to place her in an Aged Care facility for better care. She is on aged care pension and has
$300k in financial assets (Term Deposit and Cash). Her house is worth $800k. She has no other assets. The couple’s financial details are provided below:
|Item & Detail||Ownership||Market value||Annual Return|
|Investment property – Lilydale (acquired in August 2018 for net $700,000)||Clare||$800,000||Rent $20,000|
|Investment property – Diamond Creek (acquired in December 2020 for net $900,000)||Adam||$1,000,000||Rent $30,000|
|(Rent for both|
|National Australia Bank (NAB): 1,000 shares originally acquired in Aug 2020 for $17.80 each Australia New Zealand Bank (ANZ): 2,000 shares originally acquired in Dec 2018 for $24.64 each||Joint|
|Dividends of 3.5 % on market value|
|– Westpac Bank (WBC): 1,000 shares originally acquired in September 2015 for $29.99 each||?|
|Note: Bank account balance at 1st Apr 2022 held with Bank of Melbourne was $120,000. It is in an offset account offsetting the loan on their principal place of residence.|
Xplan software Report
|Loan||Amount Outstanding||Ownership||Interest Rate||Repayment|
|Home mortgage||$500,000||Joint||2.95% p.a.||$32,000 p.a. (principal & interest – 30 year term)|
|Investment property loan –Lilydale||$570,000||Clare||2.99% p.a.||$30,000 p.a. (principal & interest 30-year term)|
|Investment property loan – Diamond Creek||$700,000||Adam||2.99% p.a||$40,000 p.a (principal & interest 30 year term)|
|Portfolio Loan – Share portfolio||$50,000||Joint||3.00% p.a.||$8,000 p.a (principal and interest 10 year term)|
|Car Loan – BMW X5||$70,000||Adam||5.00%||$12,000 p.a (principal and interest 5 year term and balloon payment of $25,000)|
|Super Fund||Amount||Costs||Returns||Taxable component||Investment Option / Asset allocation||Death Benefit Nomination|
|IOOF Personal Super -Adam SG contributions are paid into this fund|
5-year average return of 7% pa
Multimix – Growth Trust (IOF0097AU)
No nomination made
|IOOF Personal Super -Clare SG contributions are paid into this fund|
ICR 1.07% pa
5-year average return of 7% p.a.
Multimix – Growth Trust (IOF0097AU)
Non-binding nomination made to Adam
The couple have the following personal insurances in place:
|Policy type||Amount of cover||Premium||Comments|
|Life and TPD||$1,000,00 – any occupation TPD||$2,300 p.a. stepped||Clare – PPS Mutual and paid from IOOF Super|
|TPD||$1,000,000 -own occupation TPD (linked to TPD in super)||$700 p.a. stepped||Clare – PPS Mutual and paid from bank account|
|Life and TPD||$1,300,000 – Any occupation TPD||$2,200 p.a stepped||Adam – BT Insurance and paid from IOOF Super|
The couple hold private health insurance, including hospital cover and extra’s, with Bupa Health Insurance. They also have home, contents, and motor vehicle insurance policies. They do not have Trauma and Income Protection insurance.
In the event of their premature death or total or total and permanent disability (TPD), the couple would like all their debts paid out and provide funding to cover the family’s living costs, at least until the children turn 25. Funeral and medical costs can be assumed to be $20,000. Both Adam and Clare have 8 weeks of annual and long service leave outstanding. They would like to have ongoing income in the event of an illness or accident that may prevent them from working. Whilst they have private health cover, they would like a lump sum in the event of a serious illness.
|Home Mortgage||See liability table|
|Investment property loan||See liability table|
|Portfolio Loan||See liability table|
|Car Loan||See liability table|
|All Household expenses (e.g. groceries, utilities, rates, general insurance)||$70,000|
|Children related costs – Tuition and other activities||$30,000|
|Travel and entertainment||$30,000|
|Private Health Cover||$4,500|
|Donations to registered charities||$1, 500 each per year|
The couple each have a basic Will in place that was prepared in 2010. They don’t believe it contains any provisions for a financial or medical Power of Attorney. Clare has the POA – both financial and medical plus advance care directive for her mother.
Xplan software Report
You speak to the couple about asset allocation and risk and return and ask the couple several questions to ascertain their likely risk profile. Both Adam and Clare take an interest in financial markets, and they suppose that they are happy with a growth portfolio. They do not have much time to manage their investments and want a portfolio that is well diversified. Both believe that minimising tax and keeping pace with inflation are important considerations with their investments. After completing a risk profile questionnaire and detailed discussions with the clients, they accept that around 75-85% of their portfolio should be invested in growth investments if they are to retire with a reasonably comfortable lifestyle.
Client objectives & concerns
- Ensure their super fund is well diversified, appropriate for their risk profile, have investment choices when it comes to managed funds, is cost effective, have transparency in costs and has the option of paying for ongoing advice from super.
- They want to minimise tax
- Review their investments both in and outside super. They want appropriate diversification.
- They want to set aside $50,000 for a home renovation next year
- They want to give each child $75,000 when they reach age 25 for a home deposit and seek advice on a suitable investment product
- Always hold $20,000 cash on hand for emergencies
- Ensure they have appropriate personal insurance cover in place – in terms of adequacy, comprehensiveness, and cost effectiveness.
- Plan for their retirement – they would both like to be able to retire when Adam turns 63. They would like to have a combined income of $70,000 p.a. (roughly 50% each) in real terms or today’s value (indexed to inflation) although if required, they could work for a few more years to maximise their retirement nest egg.
- They want to pay off their home loan at retirement and are open to either keeping or selling their investments.
- Clare seeks general advice on how to best manage and structure her mom’s financial assets in
anticipation of placing her in aged care.
- The client is not interested in advice relating to any future social security entitlements
- You have provided the client with a copy of your FSG.
- You are an authorised representative of a practice called You’ll Never Walk Alone Financial Planners. You arelicenced under “Quadruple” – AFSL number 361892
- Your remuneration model consists of the following:
- preparation of a SOA: flat fee of $4,000 plus GST
- ongoing fee: flat fee of $3,300 p.a. including GST
- Your licensee has an Approved Product List (APL) which includes anything that has a research rating of “Recommendation / 3+ stars” and above. The IOOF funds and insurance are listed on the APL.
- The couple’s expenses can be assumed to increase by the CPI (assume 2% p.a.). Their income is expected to be relatively stable and unlikely to increase in the medium term. The couple’s shares and properties can be assumed to increase by 4% p.a. and 2% p.a.
- Assume long-term returns in pension phase will be 5.5% p.a. after fee