Assessment Task
Case Study in Financial Planning Strategies for a Specific Client or Clients.
You group will prepare an in-depth report recommending appropriate financial planning strategies for a particular client. The report is to include a detailing of the client's financial planning goals, cash flow and budgeting for the client, the client's borrowing and saving strategies, taxation position, and applicable insurance policies. Data summary for the client's is provided separately.
Overall, you need to construct a Statement of Advice (SOA) and present the report professionally. Presentation and technical content is essential. You report will need to have a Table of Contents.
CLIENT DATA SUMMARY and CLIENT'S SCENARIO as at 31 January 2018
Mr. Jack Smith and his wife Sue Smith, both 62, commenced their manufacturing business in 1975 and have sold the business recently for $3,000,000. Both are in good health.
They are undecided but may sell their Melbourne home and move permanently to the Gold Coast, Queensland where they own an apartment. They have 4 children and 3 grandchildren.
GOALS and CONCERNS:
1. Require $110,000 per annum net of tax on which to live.
2. To provide capital and income growth from their investment portfolio as a hedge against inflation.
3. To leave each of their 4 children a substantial inheritance.
4. Risk of Capital Security.
5. Inflation eroding their wealth.
6. Uncertain economic outlook both domestically and globally.
The present financial situation as at 31 January 2018 is as follows: (both Lifestyle Assets and Investment Assets)
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ASSETS
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CURRENT VALUE ($)
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Cash at Call in the Australian Bank
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3,000,000
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Superannuation-Jack
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300,000
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Superannuation-Sue
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300,000
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Investment Property - Richmond VIC.
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600,000 (Net Rental $18,000)
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Income after costs
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Holiday Apartment-Gold Coast QLD.
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500,000 (Nil income)
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Residential Home-East Melbourne VIC
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1,200,000
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Motor Vehicles, furniture, personal effects
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80,000
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Life Insurance Policy (Jack) - Surrender Value
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10,000
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Additional Information: INSURANCE
Jack has a 30,000 Whole Life policy payable on his death, with a current surrender value of $10,000. He has been contributing to this policy for 30 years. However, as the premium is low $230 per annum, he feels he should perhaps continue with the policy.
ESTATE PLANNING and SUPERANNUATION
Wills were drawn 35 years ago. They have no power of attorney. Both Jack and Sue have superannuation accounts with Australian Catholic Superannuation and Retirement Fund. They are uncertain of the historical returns or fees or where the funds invest their funds.
INVESTMENTS
They own the rental property in Richmond VIC as indicated in the table. No mortgage on the investment property. They will retain the property and have no plans to sell the property.
The majority of their money in the past has been invested in their business. Jack and Sue have a very basic knowledge about investment in share or the share/stock market. They wish to commence a portfolio of investment shares that will produce a steady capital and income growth. Their risk profiling is low to medium, depending on the proposed investments.
CASH RESERVE
The cash account with the Australian Bank is currently paying 2.50% for "at call" monies. They have indicated that this rate appears to be "low"
They wish to retain some cash, and the remaining funds invested in alternative investment strategies.
REQUIRED
You are a qualified financial planner and have the appropriate licenses to provide complete investment advice and have the skills to plan the implementation of you financial plan for the client. (You may need to make assumptions from time to time)
- Provide a Statement of Advice
- Product selection: Australian Specific Shares, Property Investment-Listed and Direct property investments, Government Securities, Cash Management Accounts.
- Review of the clients Superannuation and the strategies to maximize the return for the clients.
- Review of insurance policies.
- Taxation Strategies
- Estate planning.
- Social Security Benefits under Income/assets test?
- What fees or commission will you charge to this client-initial and ongoing service and review?
- You need to show full calculation for investment products, including amount invested, yield and names of companies from the Australian Share Market listed shares.
- You need to discuss the impact of risks on investments.
STRUCTURE
- SOA follow broad structure
- Coversheet
- Table of Contents
- Executive Summary
- Body of SOA
- Clear hierarchy of headings
- Appendices
- Refer to marking guide