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7254AFE Financial Planning Fundamentals

   

Added on  2020-02-24

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1202AFE Financial Planning 1Trimester 2, 2017File Note – Statement of AdviceClient's name:Carl MolloyDate of contact:1 August 2017Re:Initial AppointmentFSG and adviser profileCarl was handed Financial Services Guide (FSG) version 4 010217 and my Adviser Profileat the interview on 1 August 2017. The FSG was explained to him.Scope of adviceFull statement of advice (SOA). Specifically, the SOA will provide advice on the achievementof wealth creation and lifestyle goals, personal insurances (that is life, total & permanentdisability (TPD), income protection (IP), trauma and private health insurance),superannuation (including salary sacrifice, personal tax deductible contributions and/or aftertax contributions) and taxation planning where relevant.The SOA excludes any budgeting and cash flow analysis, as well as any advice on debtrepayment, social security and estate planning. Client to be advised on the risks of notreceiving advice in these areas.Current situationCarl is the physiotherapist at Greenslopes hospital with the current CTC of $84000plus superannuationCurrently he has $31000 saved and he wants to leave minimum balance of $5000 inthe bank as an emergency fundHe has an additional $1250 per month of surplus funds to invest He has a car worth $35000 as well as some home contents worth around $25000The Superannuation fund balance of $33,980 and $8,960 in Grand Super and BestSuper funds from his last statements at Uni.The liability Fee-Help debt which currently has balance of $29,800 and the Carlneeds to repay compulsory amount Potential issues / special consideration

1202AFE Financial Planning 1Trimester 2, 2017The issue is related to the Job security in future. The economy is changing that mightbe influence on the job. Job security is the major concern for the Client in the future.Another issue is the increase in liabilities and expenses in future that might impactthe cash flow of the Carl.The Health issues would be the problem at the certain period of time. Apart from thatlife insurance is also compulsory. As per their profile Carl didn’t get any insurancethat would be the major issue in the long run (Edge, 2017).ObjectivesThe Carl has many objectives in short and long run which is related to the financialand non financial aspects. As per the interview and analyses of the profile there arecertain goals and objectives which are mentioned below.Financial goals- 1) Carl has to deposit $105K in 4-5 years of time2) Carl has a holiday goal i.e. 10k in July 2018There are no non financial goals of the Carl from the analysis of the profile ofthe Carl. Risk profileAs per the analysis of the risk profile of the Carl, it is identified that advisor asks Carlabout their insurance portion and Carl was not sure about their insurance plans hewas taken or not. The risks are related to health and life insurance section is highand Carl needs to invest in their insurance and investment plans. Apart from thesuperannuation fund the Carl needs to invest in the insurance part that will gives thegood returns at the time of maturity (Canstar, 2017).

1202AFE Financial Planning 1Trimester 2, 2017Wealth creation recommendations – outside superannuation1.Sum up $105000 for house deposit in next 4-5 years. 2.Purchase of a new house worth $500000 till the end of five years from now, so therequired initial payment by Carl is around $105000 which can be gathered with the helpof obtaining investments in various options from cash deposits, fixed interest, property,Australian shares and international shares. Recommended strategy:It is recommended that the client should invest the savings $26000 in mutual fundswhich are having moderate risk portfolio.On the other side Carl need is to start saving more amount of money than what he issaving already saving. This money should be invested into managed investmentscheme which consists of several types of investments which will results to goodamount of returns at the end of the required period. Carl is having $1000 as current saving per month which is possible to be increase to$1250 from this month so it will result to savings of around $15000 in a year andaround $75000 in five yearsThis monthly saving is needed to be invested into managed investment schemewhich will have good returns in the period of 4-5 years. Managed Investmentscheme- diversified Funds is recommended for Carl due to its liquidity and mixedportfolio combination (Lennon, et al., 2014). Balance Fund approach is considered over the conserved fund approach as it isproviding with only 5.5% of annual returns which will lead to delay in theachievements of Carl’s goal it will take $331 more to save on monthly basis toachieve in 5 years (Moneysmart, 2017).

1202AFE Financial Planning 1Trimester 2, 2017Growth Fund is providing returns of around 9.2% but it is having 75% growth assetsand in the case of adverse situation it may result to loss of the investment. SecondlyCarl’s profile and his behaviour show that he can afford lower risks. Advantages of strategy The client investment is secured so there are least chances of losses in the long termThere is a high possibility of assured returns in this tenure period due to diversifiedinvestments in the Managed investment scheme with diversified funds having 40%defensive and 60% growth assets. This investment needs to review again and again so it doesn’t affect regular workingsof Carl. This investment scheme is also fulfilling the requirements of Carl to purchasehouse in 4-5 years. Disadvantages of strategy Due to high amount of security the opportunity of possible higher returns from otherportfolios are lost. Such as growth funds, high growth funds and single sector fundslike Australian property fund which is having 8% possible returns, internationalproperty funds and Australian share fund 10.5% and international share funds having12% returns. In some extreme situations mutual funds may also results to loss of returns.Alternatives considered In case of high risk capacity: Carl can invest in bit coins, futures of shares in sharemarkets and commodities.

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