Assignment - Superannuation and Retirement Planning

Case study - Nathan and Mary Davidson

Section 1: Establish the relationship with the client and identify their objectives needs and financial situation

Part A- Establish relationship

Apart from the initial contact with the Davidson's at your retirement seminar, you have met with them twice in order to gather the information you need to assess their situation and provide them with advice.

Briefly explain at least five (5) strategies you are likely to use with a client in order to make sure that they are comfortable with you and the interview process. (200 words)

Part B- Adviser obligations

Referring directly to yourself and your licensee, explain what an FSG is and why it is necessary. Provide details of the law you must comply with and the information the FSG must contain, including your complaints procedure. (250 words)

Part C-Tax and cash flow

Using the information you have gathered from your clients (i.e. the information provided in the case study and fact finder) complete the table below and determine their cash flow position and annual savings capacity.

You can assume that the clients have no tax deductions or liabilities other than those stated in the case study or fact finder.

Section2: Analyse client objectives, needs, financial situation and risk profile to develop appropriate strategies and solutions

Part A-Gaps in information

Identify any gaps in your data collection based on the fact finder in Appendix 1 and the summary of information provided. From the interviews, are there any other issues that would need to be followed up with Nathan and Mary? (100 words)

Part B- Risk profile

Identify the Davidsons's likely risk profile based on the information they have provided. Identify any concerns that you may have with their responses compared with the information in the case study.

• Suggest questions you could use to clarify the responses.
• Justify why you do or do not think that the score and the resulting risk profile category is an accurate reflection of their tolerance to risk, and decide on a profile for each. (250 words)

Part C - Strategies

Summarise appropriate retirement strategies for Nathan and Mary.

• Consider superannuation and non-superannuation assets and strategies.
• Provide a detailed explanation of why you consider these attests and strategies to be appropriate.
• Include the lump sum amount that Nathan and Mary will need at retirement to achieve their income goal, and strategies to help them reach that goal.
• Provide a summary of other recommendations that you will include in your SOA for Nathan and Mary. (500 words)

Section 3: Specialist knowledge

Part A - Product research

Nathan and Mary have stated they are happy with their current superannuation funds. Provide a summary of the type of research that you might conduct to ensure the suitability of these funds for the clients' future retirement needs. (250 words)

Part B - Client queries on superannuation contributions

Nathan and Mary have a number of questions about superannuation contributions after the seminar they attended and following their research. Respond to their questions, basing your answer on their personal situation. You may be required to re-educate the clients where they are confused or misunderstand the superannuation rules.

Question 1: Nathan is confused about taxation of superannuation contributions. He has friends who write a cheque, send it to their superannuation fund and claim a tax deduction. He asks:

Am I correct in assuming that we can both claim personal tax deductions for any superannuation contributions we make? Could you explain the tax deduction rules that apply to our situations, how much can we contribute and when can we start?

Answer Nathan's questions. (250 words)

Question 2: Mary asks: We read an article recently that said Nathan can split the superannuation contributions he makes to my superannuation account. Is that correct, and if so, how does it work? Answer Mary's question.

Question 3: Nathan is concerned about tax payable if they invest any of their cash savings into superannuation. He says: I've heard that some people have had to pay tax at the highest tax rates on superannuation contributions. Can we be sure we won't fall into that trap? Answer Nathan's question. (150 words)

Part C -Client queries on superannuation benefit payments

Question 1: Mary asks: When and how can we access our superannuation? Can we get it if we are still working? Explain the rule that applies in their circumstances. Explain when and under what circumstances they will be able to access their superannuation. (200 words)

Question 2: Nathan asks: I understand that we are too young to access our superannuation any time soon. In general terms, please explain how we would be taxed right now if we were old enough and retiring and we took our money out as a lump sum. I don't want to commit to something that will work against us.

Discuss the situation if the lump sum was taken at retirement after age 60 and just before age 60. Include a brief explanation of components of the lump sum. How they are taxed? What other matters relate to them? (200 words)

Question 3: Mary asks: I don't like the idea of paying lump sum tax and then losing some benefits. Tell us more about these income stream options. How do they work? What are the rules that apply and how much tax do we pay if we could do it now?

Discuss this in broad terms and explain the situation immediately before and after reaching age 60. Assume Mary and Nathan will continue to work until age 60 and then retire. (300 words)

Section 4: The statement of advice

You must now prepare an SOA based on the recommendations made, which will be used to record this advice (including amendments, if any) for Nathan and Mary. Remember that the SOA must be of a standard that is compliant and would be suitable to present to a client.

Attachment:- Retirement Planning Assignment.rar