Determine Client Requirements and Expectations

This assessment task focuses on determining client requirements and expectations for financial planning services. It covers topics such as informing clients about the financial planning process and services, obtaining relevant information on the client's existing financial situation, and preparing necessary documentation. The assessment also includes tips on building rapport with clients and explaining fees.

Determine Client Requirements and Expectations
Assessment Task
FNSFPL506
Your details:
Name:
Address:
Phone:
Company name
Email:
Your Assessment Task
Keep a copy of your Assessment Task for a period of 12 months.
Submit your assessment to our Education Team via [e-mail]
Plagiarism Statement
All assessments must be your own work and not a result of plagiarism or
collaboration with other students or workmates.
Assessment
The pass mark is 70% for each element. If you do not achieve this, you will receive
feedback via your email address and be asked to resubmit your Assessment Task for a
second marking. Assessment tasks will not be returned to you.
Task Assessments Elements Target
Mark
Pass
Mark
Actual
Mark
1 Inform client of the financial planning process and
services FNSFPL506.1 49 34
2 Obtain relevant information on client's existing financial
situation FNSFPL506.2 77 54
3 Determine client expectations and requirements with
respect to financial planning service offered by the
representative
FNSFPL506.3 16 11
4 Prepare and update necessary documentation where
required FNSFPL506.4 17 12
Total 159 111
Assessor’s Initials: ____________________
Assessment Date: ____________________
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Introduction Name: ____________________
Objective The objective of this assessment is to determine client requirements
and expectations for the practical client situation described in the
case study assigned to you.
Scope To achieve this objective, you will need to:
 Inform client of the financial planning process and services,
 Obtain relevant information on client's existing financial
situation,
 Determine client expectations and requirements with respect to
the financial planning service offered by the representative, and
 Prepare and update necessary documentation when required.
The assessment tasks in this assessment will allow you to
demonstrate your knowledge and skills in these elements
Assessment
process
Start by:
1. Reading the Assessment Task and case study.
2. Type your answers to the assessment tasks into this template
document (hand-written answers are not accepted)
3. Submit your completed document by emailing it to
[e-mail]
Don’t forget to keep a copy and retain it for 12 months.
Need help? If you have any questions, please email the Mentor Support Team at
[e-mail]
Units of
competency
Upon successful completion of these assessments, you will be awarded
two units of competency for FNSFPL506: Determine Client
Requirements and Expectations
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Assessment Task 1 Name: ____________________
1.0 Financial
planning
process and
services
Establishing client rapport at the start of a professional relationship is a
preliminary step in the Financial Service Advice Process.
The first assessment task requires you to inform the client of the financial
planning process and services, as detailed in the case study allocated to
you.
This requires that the:
 Financial planning process and role, and any limits of authority of the
representative are explained to the client,
 The licensees and principals of the organisation and services and
capacity of the organisation, including any relationship to other
financial services are explained to the client,
 Fees and charges are explained to the client and the client's
understanding of these is confirmed before proceeding with delivery
of service,
 Clients with special needs are identified and appropriate action taken
or referral made, and
 Procedures for internal and external complaints handling and
resolution are explained to the client.
For this activity, you should refer to the FSG that accompanies this
assessment task.
In this activity, you are required to prepare for an initial meeting (which is
also the ‘fact finding’ interview) with your clients in the case study by
answering the short answer questions in the spaces provided in the
following pages.
Marks /49
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Assessment Task 1, continued Name: ____________________
Questions Marks
(a) Give some thought to the sort of things you would cover in the first meeting (assume this
meeting will also incorporate the ‘fact finding’ interview). Include any legal requirements
and other documentation that may be helpful in the interview.
Answer:
The things that needs to be covered in the first meeting with the Donna and Dennis are
 The allocation of assets and tolerance of risks;
 Personal details;
 Details of expenditures;
 The distribution of income and consequences of tax at retirement;
 The planning for incapacity;
 The legacy planning;
 The planning for retirement;
In order to provide an appropriate planning it is necessary to determine the financial
condition of the clients. It is legally required to determine the financial situation and the
documents should be gathered that provides the financial information about the client.
/ 5
(b) How might you ask the client to prepare for the first meeting?
Answer:
The client should prepare for the first meeting by deciding the goals and objective of taking
the financial advice. The client should prepare for the meeting by arranging for all the details
regarding expenses, investment and insurances. It is very essential that the client should
have pre-determined goals and objectives before the beginning of the meetings.
/ 5
(c) To establish a relationship with your clients, what strategies might you use to build
rapport during the interview process?
Answer:
The strategies that should be used to build a comfortable and healthy relationship with the
client is to arrange a meeting so that initial contact can be established. The financial
planner should be on time on the meeting and have small discussion initially to establish
the common ground. Then after the client is comfortable the adviser should collect
information that are relevant for the making the advice. The client should be assured that
the personal information collected would be confidential as per the regulatory
requirements. This will provide the clients with confidence for sharing all the information.
The client should be encouraged for asking questions so that all the doubts of the client
can be answered. The adviser should clearly explain the fees structure and other details
in order to avoid ambiguity and establish a trust worthy relationship with the client.
/ 5
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(d) In point form, explain the steps in the financial planning process.
Answer:
The steps in the financial planning process are:
 Establish and define the relationship with the client.
 Collect the client’s information.
 Analyze and assess the client’s financial status.
 Develop the financial planning recommendations and present them to the
client.
 Implement the financial planning recommendations.
 Review the client’s situation. / 6
(e) What details would you provide regarding your licensee and principal?
Answer:
A client deals with the financial planner who is generally an authorised representative of an Australian
Financial Services Licensee. There are thus two parties.
Firstly, there is a party who holds an Australian Financial Services Licence. Broadly, anybody who carries on
the business of providing financial services, must hold an AFS licence. An AFS licence is required if you
provide financial product advice to clients or deal in a financial product. The Federal Government through
provides the AFS licence ASIC.
Secondly, most financial planners operate as authorized representatives of an AFS license holder. What this
means, is that the AFS license holder has authorized the planner to provide advice in respect of certain
products and areas, e.g. insurance, wealth management or superannuation
The relationship between licensee and authorized representative (I) is one of principal and agent or employee.
The authorized representative acts on behalf of, on account of, or for the benefit of the licensee (Mentor
Financial Planning). The principal (Mentor Financial Planning) will be liable for the conduct of the
authorized representative in the same manner and to the same extent as if the principal had engaged in that
conduct.
The details that should be provided are:
 AFS license of the adviser;
 Firms registration number;
 The scope and details regarding service provided;
 The client should be made aware of the details of the principal and should be made aware that the
actions of the authorized representative will bind the principal.
/ 4
Subtotal / 25
Continued
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Assessment Task 1, continued Name: ____________________
Questions Marks
(f) Explain the products and services you can offer the client and the capacity of the
organization.
Answer:
Mentor Financial Planning offers both personal advice and general advice.
Mentor Financial Planning is authorized to provide
financial product advice and arrange the following
services:
risk management and protection of assets;
retirement planning;
retrenchment and redundancy advice;
wealth creation strategies;
access to direct share advice; and
social security.
The organization has the capacity to provide advice risk management and assets protection advice but it
cannot engage in purchase and sale of assets. The organization provides retirement planning but the
entire product that are suggested are not dealt buy the organization. The products that are suggested by
the organization as a part of the wealth creation strategies are not dealt by the organization. The
organization is not licensed as a broker though it provides advice related to shares as a part of the
strategy.
/ 2
(g) What would you tell the client about yourself?
Answer:
I am authorized representative and acts on behalf of, on account of, or for the benefit of the licensee (Mentor
Financial Planning). As a financial planner I have adequate experience and qualifications, conducts
adequate ongoing professional development activities and maintains proper client files I would tell them
about qualifications, experiencein Financial services industry and professional membership I hold.
In summary, the client works with the planner who operates in terms of the strict conditions imposed by the
licensee.
/ 5
(h) List the type of fees you could charge the clients. What are the benefits of explaining
these fees to your clients?
Answer:
We may charge you a fee, based either on the time we spend developing your plan.
Our hourly rate ranges between $100 and $130 plus GST.
Alternatively, we may receive a payment on the value of the funds you invest called brokerage, which
is paid to us by the Financial Product issuer/s. This will be negotiated and confirmed with your adviser
prior to proceeding with the recommendation.
Generally, the payment we receive will be based on the amount you invest. It may vary from one
Financial Product issuer to another.
The benefit of disclosing and explaining the fees to the client is that the client can make proper decision before
hand whether to continue with the financial advisory services. / 5
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(i) How would you assess the client's understanding of the fees and charges before
proceeding with delivery of service?
Answer:
As an Advisor I should be 100 percent transparent when it comes to explaining their
fee structure so clients fully understand how they are paid. I should define which
portion of the fee is paid out to the Mentor Financial services and which portion is
paid out to me. Once I answer all relevant questions and explain the procedure I will
ask for any concerns they have on it. If clients have any concerns about the fees, I
should address to these concerns before moving further. / 2
Subtotal / 14
Continued
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Assessment Task 1, continued Name: ____________________
Questions Marks
(j) Who would you consult with, or refer your clients to, if they had:
i) a deficiency in English Ensure a third party is present who has been appointed to explain
things to client. /1
ii) a need for a variety of
products and service outside
of your authority
The authorised adviser of the products that are outside the current
license.
/1
iii) complex estate planning
situations
Consult a solicitor who works in the areas of preparation of wills and
powers of attorney.
/ 1
iv) unbalanced financial
situations
The client should be referred to an accountant or financial planner for
unbalanced financial situation / 1
v) a disability The client should consult with the government department for receiving
any eligible benefit for the disability / 1
vi) needs of different cultural
backgrounds
The culture, ethnicity and language expert should be consulted
with. / 1
vii) age related needs (i.e. very
young or older age groups)
The age related issues should be referred to experts.
/ 1
(k) Outline the three steps your clients should take if they have a complaint or dispute prior
to contacting ASIC.
Dispute resolution procedure
1. Initially the complaint is referred to the planner.
2. The planner takes full details from the client and investigates the issue.
3. The planner responds to the client with a suggested solution.
4. If the suggested solution is acceptable, then it is implemented.
5. If the planner is unable to resolve the matter with the client, then it is referred to the AFS licensee.
6. The AFS licensee must have an internal dispute resolution procedure that complies with standards made or
approved by ASIC.
7. If the licensee is unable to resolve the matter, it would be referred to an ASIC approved External Dispute
Resolution scheme (EDR) (the licensee must be a member of such a scheme), e.g. the Financial
Ombudsman Service. This is the primary organisation providing ASIC approved external complaints
resolution services for consumers who are unable to resolve a dispute directly with their financial service
provider.
/ 3
Subtotal / 10
Total / 49
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Assessment Task 2 Name: ____________________
2.0 Client’s
existing
financial
situation
The second assessment task requires you to obtain relevant information
on the client's existing financial situation by completing the Fact Finder,
based on the information contained in the Case Study allocated to you,
including:
 Facts and information relevant to the client's particular service
request are obtained and confirmed,
 Client's expectations, requirements and objectives are identified,
with the clients encouraged to disclose relevant information to
determine their personal/financial situation and any special needs,
 Relevant information on investments and assets held by the
client and their current income, expenditure and liabilities situation
are obtained,
 A summary analysis of client's financial position is developed
based on extent of client disclosure and requirements, and
 Risk and fraud indicators are identified accurately and all
information is checked for consistency and potential conflict.
The case study provided is brief in nature so there will be some fields in
the Fact Finder (e.g. telephone number) where the case study does not
provided required information. You may leave these fields blank.
However, in a real client situation you must not leave any fields blank and
provide a warning (e.g. client declined to provide this information).
Current tax rates, levies and offsets can be found at www.taxcalc.com.au
Enter your answers to the questions in the space provided on the
following Fact Finder.
Marks / 77
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Assessment Task 2.1 Name: ____________________
2.1 Personal Details
(a) Contact details
DETAILS CLIENT 1 CLIENT 2 Mark
1. Title: Mr Mrs
2. Given Name: Dennis Donna
3. Preferred Name:
4. Surname: Barker Barker
5. Date of Birth: 01/01/1965 02/02/1966
6. Marital Status: Married Married / 1
Home Address: Address: Lot 3 Wattle Road
Suburb/Town: Hurstbridge
State: Victoria Postcode: 3099
Home Telephone
No.
05684841
Preferred
Contact No.
05684841 /1
(b) Child / dependant details
Name: Megan
/ 1
Relationship: Daughter
Date of Birth: 1990
Current Age: 27
Financially Dependent: Independent
(c) Financial arrangements involving siblings, parents or others
Name:
/ 1
Relationship:
Financial Arrangement
Date Commenced:
Amount of Money:
(d) Relationship history involving financial implications
There is no child support payments that are received by the client. The clients have superannuation
funds.
/ 1
(e) Health details
Do you Smoke: No No
/ 1
State of Health: Excellent Excellent
Are you aware of any
health issues that may
impact your ability to earn
an income? (please
provide details)
There is currently no health issues. There is currently no health issues.
Sub-total / 6
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Assessment Task 2.2 Name: ____________________
2.2 Work Details
(a) Other personal financial arrangements
Donna currently works for full time employment with Best Marketing.
Dennis currently works for full time as a custom furniture maker in Newbolds Pty ltd.
/ 1
(b) Investment Experience
CLIENT 1 CLIENT 2 Mark
Superannuation savings fund that provides a return of
4% p.a.
Superannuation fund that provides a return of 7%.
/ 1
(c) Acting as guarantor
Are you acting, or do you intend to act, as a guarantor for anyone: No
/ 1
(d) Employment details
CLIENT 1 CLIENT 2 Mark
1. Employment Status:  Unemployed Full Time Employed Self Employed Part-time Retired Other Unemployed Full Time Employed Self Employed Part-time Retired Other
2. Employer Name: Newbolt’s Pty Ltd Best Marketing / 1
3. Position Title: custom furniture designer Executive / 1
4. Primary Duties: Building furniture Marketing
5. Work Address: Hurstbridge Hurstbridge
6. Work Phone No.: 45485451 931245672
7. Previous Job None None
8. Employment Security: Secured Secured / 1
9. Are you contemplating
leaving your employer?
There is no intention of leaving the job
in the near future.
There is a plan to retire at the age of
60 years.
10. Do you foresee any
substantial change in
your income in the next
2-5 years?
There is no sudden change in income
is expected in the next 2 to 5 years’
time.
In 2 to 5 years, there is no chance of
change in substantial income.
/ 1
Notes:
Sub-total / 7
Continued
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Assessment Task 2.2, continued Name: ____________________
(e) Previous financial history
Mark
Do you have a previous financial history such as:
 bankruptcy; No
 refusal of credit: No
Explain:
There is no case of bankruptcy and refusal of credit. / 1
(f) Estate planning issues
CLIENT 1 CLIENT 2
Do you have a current
Will?
No No
Date of Will / Last
Reviewed:
/ / /
Power of attorney No No
Type / Name of Attorney?
Do you have Funeral
Plans?
No No
Do you have any specific
intentions regarding your
estate distribution?
There has no specific
intention regarding
distribution of estate.
However, they have the
intention to leave $120000
cash for education of
grandchildren.
There has no specific intention regarding
distribution of estate. However, they have the
intention to leave $120000 cash for education of
grandchildren. / 1
(g) Retirement planning
Retirement Details CLIENT 1 CLIENT 2
Planned Retirement
Age:
65 years 60 years
Retirement Income
required:
$ 40000 (combined)(today’s
dollar)
$40000 (combined) (today’s dollar)
After retirement, do you
intend to work again
either on a full-time or
part-time basis?
Expected Income
$25000
Till age:
Not expected to work
Expected Income
$
Till age:
What capital expenses
will you have in
retirement? (Please
state expense and
value)
No plan
$
Purchase of new car
$30000
Would you like some
assets left to your
estate? (Please detail)
$120000 (combined)
For grandchildren’s education.
$120000 (combined)
For grandchildren’s education.
/ 1
Notes:
Sub-total / 3
Continued
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Assessment Task 2.3 Name: ____________________
2.3 Special Needs
(a) Do these clients have special needs that require consultation with other advisers?
Special Needs Description Mark a deficient in English No
/ 1 variety of products and
services outside authority
No complex estate planning
situations
No unbalanced financial
situations
Yes. They require an income $40000 combined where as it is expected they
will earn $25000 after retirement of Dennis. That means there will be a
shortfall in income of $15000. a disability No needs of different cultural
backgrounds
No age related needs (i.e. very
young or older age groups)
No
(b) Other adviser details
i. Accountant
Name:
Company:
Contact Detail:
Do we have authority to contact?  Yes  No
ii. Solicitor
Name:
Company:
Contact Detail:
Do we have authority to contact?  Yes  No
iii. Will and estate specialist
Name:
Company:
Contact Detail:
Do we have authority to contact?  Yes  No
iv. Other specialist
Name:
Company:
Contact Detail:
Do we have authority to contact?  Yes  No
v. Other specialist
Name:
Company:
Contact Detail:
Do we have authority to contact?  Yes  No
Sub-total / 1
Continued
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Assessment Task 2.4 Name: ____________________
2.4. Client expectations, priorities and objectives
(a) Client expectations and requirements
Description Mark
Reasons for seeking financial advice:
 Relatively small amount,
 Simple financial strategy,
 Limited or preset range of product
 Product specific advice and/or service,
√ Comprehensive financial planning,
 Portfolio advice, or
 Product specific advice and/or service
/ 1
Explain: They have contacted to make financial planning for the coming seven years and make
settlement after retirements.
(b) Client priorities
For example, current income needs, retirement income needs, diversification, tax minimisation, capital growth,
investment security, wealth creation, eliminate mortgage etc
Description Mark
The requirement of the client after retirement are:
 To purchase a car after retirement;
 To have income of $40000 after retirement so that the personal expenses can be settled.
/ 5
(c) Client objectives
i. Short Term (1 to 3 years)
/ 8
 The current objective is to increase superannuation contribution for increasing income after
retirement.
 The current objective is to repay the house mortgage before retirement of Donna.
ii. Medium Term (4 to 7 years)
 To purchase a new car.
 To make sufficient income so that expenses after retirement could be met easily.
iii. Long Term (7 year plus)
 To arrange fund for the contribution for grandchildren education.
Sub-total / 14
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Assessment Task 2.5 Name: ____________________
2.5 Personal balance sheet
(a) Lifestyle Assets
Asset Owner Date Acquired Purchase Price Current Value CGT Impact Debt Net Value Mark
Principal Residence: Joint 750000 130000 620000
/ 2
Contents: Joint 50000 50000
Motor Vehicle(s): Joint 40000 40000
Caravan, Boat, Trailer:
Investment Property:
Other:
Total $710000
Mark
(b) Investment Assets
Asset Reference
Number
Owner Date Invested No of Units Purchase
Value
Current
Value
Retain
Yes/No
CGT
Impact
Debt Net Value Mark
Bank Account Joint 9,000 9,000
/ 4
Term Deposit Joint 15,000 15,000
Cash Management
Fund
Joint 12,000 12,000
Total 36000 $36000
Mark
Note if there are was any stock acquisitions prior to 20/9/1985 Please provide statements if possible.
Sub-total / 6
Continue
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Assessment Task 2.5, continued Name: ____________________
(c) Liabilities
Finance Provider Owner Guarantor Date Commenced Repayment
Amount
Repayment
Frequency
Interest Rate Balance Mark
Home Loan: Mortgage Joint Joint $9100 Monthly 7% 130000
/ 2
Investment Loan:
Personal Loan:
Credit Cards: Bank Joint Joint 8000 Monthly 5% 8000
Other:
Total 17100 138000
(d) Total Gearing (Lending to Valuation Ratio) Total Liabilities ____$138000_________ / Total Assets ____$746000_________ = ____18.50_________% /
1
(e) Contingent Assets (eg. Interest in a deceased estate, future lump sum etc).
Asset Reference
Number
Owner Date Invested Number of
Units
Purchase
Price
Current
Value
Retain
Yes/No
CGT
Impact
Debt Net Value Mark
Aunt’s Estate Dona $119000 119000
Total 119000 / 1
(f) Contingent Liabilities (eg. Leases etc.)
Finance Provider Owner Guarantor Date Commenced Repayment
Amount
Repayment
Frequency
Interest Rate Balance Mark
No contingent liability
/ 1Total
Sub-total / 5
Continued
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Assessment Task 2.6 Name: ____________________
2.6 Personal income and expenses
(a) Income details (Go to www.taxcalc.com.au for assistance and use the current
financial year)
CLIENT 1 CLIENT 2 Mark
Income: $45000 90000
Investment Income: $780 780
Centrelink Income: $2040 15400
Pension/Annuity Income
Other Income:
Less Income Tax $877.80 17930.5
Less Medicare Levy $116.50 1623.6
Add Low Income Tax Offset $445
Total Tax $549.3 19554.1
Total Net Income $47271 86625.9
Marginal Tax Rate / 10
(b) Expense details
COMBINED Mar
k
Food: 6180
/ 3
Entertainment: 6180
Transport/Vehicle: 6180
Council Rates: 1545
Amenities: 3090
Rent: 7725
Mortgage Repayments: 9100
Other(holiday) 10000
Total Net Expenses $50000
(c) Surplus disposable income
COMBINED Mar
k
Annual: $83897
/2Monthly: $6991
(d) Planned major expenses
Nature of Expense Approx. Expense Amount Expected Date Mar
k
Purchase of Car $30000 After retirement
/ 2
Mortgage repayment $130000 During tenure of employment
Grand children education $120000 12 years
Sub-total / 17
Continued
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Assessment Task 2.7 Name: ____________________
2.7 Superannuation and Insurance arrangements
(a) Superannuation
Company Policy
No.
Employer/
Personal
Owner Eligible
Start Date
Contribution
Rate/ Amount
Current Cash
Value
Mark
PP
Superannuation
Fund
Employer Dennis 9.5% $51000
/ 2
MM
Superannuation
Employer Donna 9.5% $220000
Please provide statements if possible.
(b) Insurance within superannuation
Do any of the above policies have insurance attached? Yes No
/ 1
Are any of the above policies preserved? Yes No
As a tax deduction been claimed for part/all? Yes No
Are there any exit fees applicable? Yes No
(c) Leave payments
Type Expected Receipt Date Anticipated Amount
/ 1
Annual:
Long Service:
Other:
Have you recently received a redundancy package? Yes No
If you have recently received a redundancy package, please provide notice of payments.
(d) General insurance
Insurance
Description
Policy
Number
Owner Date
Commencement
Sum
Insured
Premium
Payable
Maturity Date
/ 1
Health, car
and house
insurance
cover
Joint $100000 $9100
(e) Personal insurance
Insurance
Provider
Owner Life TPD Trauma Income
Protection
Premium
Payable
Mark
MM
Superannuation
Donna Yes Yes No No 6750
(17000X9.5%)
This insurance
cover is
available with
the
superannuation
fund.
/ 1
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Sub-total / 6
Continue
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Assessment Task 2.8 Name: ____________________
2.8 Summarise Analysis
For each of the Generic Needs listed in the table below, provide a summary of the client’s
financial position or requirements.
Generic Needs Current Financial Position/Requirements Marks
1. Assets The client currently has total Net Assets worth $746000. This includes life style
assets of $7100000 and investment assets of $36000. The life style assets
includes home, car and contents. Whereas investment assets includes bank
deposit, term deposit and cash management fund. / 1
2. Tax Minimisation The clients have investment assets apart from the superannuation fund. The client
has to pay taxes on the interest income on those investments. The clients expects
to minimize taxes, as they are not satisfied and is of the opinion that the income
from interest is going into taxes. / 1
3. Income The clients have steady income of $90000 of Donna and $4500 of Dennis.
However, it is expected that after retirement they will need $40000 per annum for
living expenses.
/ 1
4. Superannuation The superannuation balance of Dona is $220000 and superannuation guarantee
contribution by the employer is 9.5%. She receives an average return of 7% per
annum from the superannuation balance. Donna is expected to receive $17000
per year for next 7 years as proceeds from the estate of her aunt. This amount will
be transferred to the superannuation fund as personal after tax contribution. / 1
5. Expenses The current expenses of the client is $59100. There is also a planned expense for
purchasing a car after retirement of Donna for $30000. / 1
6. Debt Reduction The clients currently has mortgage amount of $130000. It is expected that the
client will repay the mortgage within 7 years before the retirement of Dennis.
/ 1
7. Investment Planning The clients wants to plan the investment in a manner so that they can reduce their
tax on investment. The comprehensive analysis of the client indicates that the
client has a balanced risk profile.
/ 1
8. Wealth protection The protection of wealth is possible after taking proper protective measures. The
client has taken measures for protecting wealth by taking general and personal
insurance. / 1
9. Estate Planning The client has not made any estate planning this is the area that should be
considered by the client. The only planning they have made is to arrange fund of
$120000 for grandchildren education. / 1
10.Business Planning The clients are not engaged in business so there is no business plan made by the
client. / 1
2.9 Risk, fraud and conflict of interest assessment
Risk and Fraud indicators Comments Mark
1. Conflict of interest risk Eg. Is this client involved in
a financial dispute with another client of the
licensee?
There is no conflict interest risk with the client. / 2
2. Cost/profit risk Eg. Is there a cost or profit risk to
the business in providing advice to the client?
The cost that is charged for providing the financial adviser
services is $2500.
3. Credit risk Eg. Has this client ever been declared
bankrupt?
The client has not been declared bankrupt.
4. Insurance risk Eg. Has this client previously made
a claim on insurance that was declined?
There is no claim that was previously made by the client that
was declined. Therefore, it can be said that the client has no
insurance risk.
5. Litigation risk Eg. Is the client involved in any
legal litigations?
The client is not involved in any ligation so there is no litigation
risk.
6. Opportunity risk Eg. Is there a risk that a better
opportunity will present after a decision has been
made?
The opportunity risk always exists as there is uncertainty in the
planning is involved.
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7. Product satisfaction (value) risk Eg. Is there a risk
that products recommended will contradict
instructions given by the client?
There is no product recommendation risks.
8. Regulatory risk Eg. Will the client act all times
within legal boundaries?
The client is expected to act in all legal boundaries so there is no
regulatory risks.
9. Relationship risk Eg. Has this client entered into a
relationship with another financial adviser?
The client has no relation with another financial adviser so there
is no relationship risks.
10. Reputation risk Eg. Does this person have a
media profile and involved in a major litigation
case?
The clients have good reputation so there is no reputation risks.
Sub-total / 12
Total / 77
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Assessment Task 3 Name: ____________________
3.0 Client
expectations
and
requirements
Determine the client expectations and requirements with respect to the
financial planning service offered by the representative, including:
 Client is encouraged to express and clarify their expectations
from the financial planning process with any concerns identified
and responded to promptly and appropriately,
 Client's income and investment needs, preferences and
priorities are established, and
 Risk issues and tolerance are explored comprehensively and
ethically with the client,
 A determination is made that the service being sought is within
the capability and authority of the authorised representative,
 A referral to another internal representative is made if service
required by client is beyond scope of the representative,
 Specialist advice is sought where necessary or client is referred
to appropriate personnel or organisation where required
services are not available or cannot be provided by the practice,
and
 Client’s risk profile is identified.
Complete your answers in the space provided on the following pages.
(Marks 16)
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Assessment Task 3.1 Name: ____________________
3.1 Identify concerns
Description Mark
(a) How would you encourage your clients to express and clarify their expectations from the
financial planning process?
Answer:
The clients should be encouraged for expressing and clarifying the expectations from the financial
planning process. The encouragement should be made by making them comfortable after
meeting and discussion. The client should be provided a list of questionaries’ and answer that
should try to answer the question that are generally asked. The client should also be
encouraged to ask any related or unrelated question during the period of discussing the
questionnaires’.
/ 2
3.2. Establish investment needs, preferences and priorities
For each of the Generic Needs listed in the table below, provide a summary of the client’s
requirements, preferences, advice team and priorities (i.e. where a ranking of 1 is the highest
priority). In determining the make-up of the team, identify if the services being sought:
1. is within the capability and authority of the adviser,
2. should be referred to another internal specialist, or
3. specialist advice is required
Generic Needs Requirements
(e.g. Income and investment needs)
Preferences
(e.g. retain an emergency fund) Team Rank
(1 to 5)
Marks
1. Assets The client need to purchase a
car.
The client should sell the car and
for the additional fund of $30000,
the client should make a savings
of $3798.29 per year for interest
rate of 4%.
Remarks: Where to Invest?
√ Adviser Internal Specialist
3
/ 1
2. Tax Minimisation The tax is paid on the income
from investment. It is
requirement of the clients to
reduce the tax on investment
income.
The clients can make additional
contribution in the
superannuation in order to avoid
higher tax rate. The income
received on superannuation is
taxed at 15% that is below the
marginal tax rate of 37%
applicable to Donna and 32.5%
applicable to Dennis.
√ Adviser Internal Specialist
2
/ 1
3. Income The client after the retirement of
Donna and Denis will have
shortage of income. The
requirement is to adjust the gap
income.
The gap in income after both the
clients retire is $15000. This gap
can be addressed by income
from superannuation fund and
pensions.
Remarks: Explain How?
√ Adviser Internal Specialist
1
/ 1
4. Superannuation The client has superannuation
and it is required to be
increased.
The client should increase the
contribution in the
superannuation funds.
Remarks: Explain How?
√ Adviser Internal Specialist
4
/ 1
5. Expenses The expenses of the company is
more than the income post
retirement.
The client should plan their
expenses so that the
unnecessary expenses can be
reduced and the balance in Adviser
√ Internal Specialist
2 / 1
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super can last for long.
6. Debt Reduction The client is required to repay
the mortgage loan within 7 year.
In order to achieve this the client
should make additional
repayment that is above the
current repayment amount.
Remarks: Wahts is the impact of
the extra repayment on savings
or expesnse? Explain
√ Adviser Internal Specialist
2
/ 1
7. Investment
Planning
It is the requirement of the client
to make proper planning of
investment.
The client should make
investment planning for
achieving the objective of tax
minimization, purchase of car
and saving money for education
of grandchildren.
Remarks: Where and how much
to Invest?
√ Adviser Internal Specialist
1
/ 1
8. Wealth
protection
The client requires making plan
for protecting wealth.
In order to protect wealth it is
important to be safe guard
against all the contingencies, risk
or uncertainties. This could be
done by taking appropriate
general insurances. The clients
have general insurance but
adviser relating to specific
insurance should be taken from
a specialist. Adviser Internal
√ Specialist
3
/ 1
9. Estate Planning The client requires planning of
estate.
The client should plan for the
estate by making will and giving
power of attorney. Adviser Internal
√ Specialist
4
/ 1
10.Business
Planning
The client currently has no
business.
If the client is expected to start a
business the advice should be
taken from a specialist. Adviser Internal
√ Specialist
5
/ 1
Sub-total / 12
Continue
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Assessment Task 3.3 Name: ____________________
3.3 Investor Risk Profile
The following 3 pages are an example of a typical Risk Profile Assessment tool used to
determine client’s attitudes towards different types of risks. It also helps to determine client
preferences and level of investment experience. Read the following introduction then
complete the Risk Profile Questionnaire to show that the clients are “Balanced” investors.
Your attitude to risk is probably the most important factor to consider before investing. To achieve higher returns,
you will have to be prepared to accept a higher risk of capital loss. This is because the funds and assets that
offer high returns are generally more volatile than those producing lower returns. It is what we call ‘risk/return
trade off’.
We will recommend investment strategies to match your investments to your risk profile. Investing
across the various investment sectors according to your risk profile is called diversification. For
example, instead of investing only in property, or only in shares, you might invest a proportion in both, or
even include cash or fixed interest to create a balanced portfolio.
To determine the most appropriate mix of assets for you to invest in, we need to ask you more detailed
questions about investment goals and the exact timeframe in which you want to achieve them.
By answering the nine questions below, you will have a good idea about your attitude to risk and what
investment sectors are best suited to you.
People who hold assets jointly often have differing views regarding the level of risk they are prepared to accept. If
you have different views to your partner please score your risk profile separately. If you share the same view of
risk you are prepared to accept then please tick the “joint” column indicating your response.
1. If my investment value fluctuated more than 20%, I would find it hard to sleep at night.
Score Client 1
Score
Client 2
Score
Joint Score
1 Strongly Agree
2 Agree
3 Neutral 3 3 3
4 Disagree
5 Strongly Disagree
2. I am willing to accept more risk to possibly achieve higher returns and reach my goals.
Score Client 1
Score
Client 2
Score
Joint Score
1 Strongly Disagree
2 Disagree
3 Neutral 3 3 3
4 Agree
5 Strongly Agree
3. If you had an investment portfolio, how often would you re-arrange it?
Score Client 1
Score
Client 2
Score
Joint Score
1 Any loss of value
2 Less than 3 years 2 2 2
3 3 – 5 years
4 Whenever my investments go up significantly
5 5 years or more
Continue
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Assessment Task 3.3, continued Name: ____________________
4. I am willing to experience the ups and downs of the market for the potential of greater returns over the
long term.
Score Client 1
Score
Client 2
Score
Joint
Score
1 Strongly Disagree
2 Disagree
3 Neutral 3 3 3
4 Agree
5 Strongly Agree
5. Which of the following best describes your attitude to financial risk?
Score Client 1
Score
Client 2
Score
Joint
Score
1 A very low risk taker
2 A low risk taker
3 An average risk taker 3 3 3
4 A high risk taker
5 A very high risk taker
6. Which statement best describes your understanding of financial markets and investments?
Score Client 1
Score
Client 2
Score
Joint
Score
1 I am not familiar and have little interest in them
2 I am not very familiar
3 I have had enough experience to understand the importance of
diversification
4 I understand that markets may fluctuate and that different market
sectors offer different income growth and taxation characteristics
4 4 4
5 I am experienced with all investment sectors and understand the
various factors that influence performance.
7. My main concern is security. Keeping my money safe is more important than earning high returns.
Score Client 1
Score
Client 2
Score
Joint
Score
1 Strongly Agree
2 Agree
3 Neutral 3 3 3
4 Disagree
5 Strongly Disagree
8. How do you normally feel after you have made a significant financial decision?
Score Client 1
Score
Client 2
Score
Joint
Score
1 Very Concerned
2 Concerned
3 A little uneasy 3 3 3
4 Content that I’ve made the right decision
5 Optimistic that the decision I’ve made will provide substantial
benefits
Continue
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Assessment Task 3.3, continued Name: ____________________
9. Investments that have experienced high volatility have generally compensated investors with higher
returns over the long term. If you could invest in a portfolio between 10 and 20 years, which of the
following would most suit you?
Score Client 1 Score Client 2
Score
Joint
Score
1 A portfolio that may have a negative return every 15 years but
a range between 0.2% and 9.1% pa.
2 A portfolio that may have a negative return every 8 years but a
range between –1.1% and 12.01% pa.
3 A portfolio that may have a negative return every 5 years but a
range between –2.5% and 15.3% pa.
3 3 3
4 A portfolio that may have a negative return every 5 years but a
range between –2.9% and 16.3% pa.
5 A portfolio that may have a negative return every 4 years but a
range between -4.2% and 18.9% pa.
Total Score
Client 1
Score
Client 2
Score
Joint Score Mar
k
Add up totals for each question and write the total for each client or for
joint as appropriate.
27 27 27
/ 2
According to the information below, what is your client’s risk profile?
Balanced
an
Average
risk taker
Balanced
an
Average
risk taker
Balanced
an
Average
risk taker / 2
Your Score – Your Risk Profile
38 – 45 Aggressive – A Very High Risk Taker
You are a very aggressive investor prepared to compromise portfolio balance to pursue potentially
long term returns. Your investment choices are diverse, but carry with them a higher level of risk.
Security of capital is secondary to potential for wealth accumulation.
31- 37 Moderately Aggressive – A High Risk Taker
You are a moderately aggressive investor, probably earning sufficient income to invest more funds for
capital growth. Prepared to accept higher volatility and moderate risks, your primary concern is to
accumulate assets over the medium to long term. You require a balanced portfolio, but investments
that are more aggressive may be included
24 – 30 Balanced – An Average Risk Taker
You are a balanced investor who wants a diversified 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 accepted to help you achieve good returns.
17 – 23 Moderately Conservative – A Low Risk Taker
You are a moderately conservative investor seeking better than basic returns, but risk must be low.
Typically an older investor seeking to protect wealth that you have accumulated, you may be prepared
to consider less aggressive growth investments.
9 – 16 Conservative – A Very Low Risk Taker
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 your initial
investment is protected.
Subtotal / 4
Total / 16
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Assessment Task 4 Name: ____________________
4.0 Prepare &
update
documentation
In this final activity, you are required to prepare and update necessary
documentation where required, including:
 All relevant client facts, information and financial/personal
histories are documented, checked and confirmed with the client
and managed confidentially in accordance with company policy
and guidelines and relevant legislation and industry codes of
practice,
 Client records are created or updated when necessary,
 Client documentation, information and histories are filed in a
format and location that is readily accessible.
Complete the following authorities and declarations, then complete a
Client Checklist in the spaces provided on the following pages.
(Marks 17)
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Assessment Task 4.1 Name: ____________________
4.1 Client Statement and Authorisation
I/We hereby declare that the information set out in this form is true and correct to the best of my/our knowledge.
I/We are not aware of any other information and have not disclosed to the person to whom this form is given any
other information which would be relevant to the making of a recommendation by a Mentor Financial Planning
Representative.
I/We give permission for this information to be used for the preparation of my/our financial plan and I/we
understand that the investment recommendations will be based solely on the information supplied in this form.
I/We also acknowledge that:
 I/we have received, read and understood the Financial Services Guide before any advisory services
were provided;
 I/we permit this document to be passed in confidence to any member of Mentor Financial Planning Pty
Ltd;
 Limited Information Provided
I/We have provided limited financial information. I/We have limited the product(s) or objective(s) that
can be advised on to:
 Income planning;
 Investment planning;
 Superannuation planning;
 Estate planning;
If you are seeking limited advice of a particular nature you must make this known at the time of
the interview and you should recognise that the recommendations will only relate to that limited
advice being sought and may not be appropriate considering your overall situation and
objectives.
 Tax File Number Permission
I/We give permission for my/our tax file number(s) as provided, to be held only by Mentor Financial
Planning and be forwarded to financial institutions as requested or as necessary.
 Engagement Application
I/We request that Mentor Financial Planning investigate, research and provide suitable options to the
financial objectives outlined in this questionnaire.
I/We understand that the preparation fee of $____2500_______ is payable for the work to be
undertaken. This fee may be credited against my establishment fee should I/We proceed to implement
any of the recommendations provided by Mentor Financial Planning.
Client 1 Client 2
Signature:
Dennis Barker Donna Barker
Date:
Sub-total / 5
Continue
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Assessment Task 4.2 Name: ____________________
4.2 Adviser Declaration
I declare that:
a) the information contained in the Fact Finder is an accurate and complete record of the
information obtained from the client(s);
b) the client(s) was provided with a copy of the Financial Services Guides before any advisory
services were provided.
c) The information provided by the client(s) will be kept confidential and managed in accordance
with requirements under:
a. Consumer Affairs Act,
b. Consumer Credit Code,
c. industry codes of practice,
d. Privacy Act, and
e. standards set out in company policies and procedures.
Adviser’s Signature Date
Additional Important Information for the Client(s)
If incomplete or limited financial information has been provided:
a) I, as your Adviser, will not be able to undertake a full needs analysis of your individual
investment objectives, financial situation and particular needs;
b) There is a possibility that any recommendation given to you may not be fully appropriate to
your individual objectives and needs, especially those which I, as the Adviser, do not know;
and
c) You as the client must carefully assess the appropriateness of the recommendations to
your own individual investment objectives, financial situation and particular needs before
acting on them.
Sub-total / 1
Continue
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Assessment Task 4.3 Name: ____________________
4.3 Authority to Provide Information
Date / /
To Whom It May Concern
Please accept this letter as my/our authority to provide any information requested and documentation
if required to Mentor Financial Planning (or their representative __________________).
Please accept a photocopy or facsimile of this letter, as the original will remain on file at the offices of
Mentor Financial Planning.
Correspondence should be sent to
Level 2, 349 Collins Street
Melbourne VIC 3000
This authority should remain in force until withdrawn in writing by me/us.
Thank-you.
Client 1
Name
Dennis Barker
Signature
Client 2
Name
Donna Barker
Signature
Client 1
D.O.B. __01_/01___/1965___
Client 2
D.O.B. ___02/_02__/1966___
Address
Lot 3 Wattle Road, Hurstbridge, Victoria
Sub-total / 1
Continue
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Assessment Task 4.4 Name: ____________________
4.4 Client file
checklist
In the table below, develop a Client File Checklist that you can use to
verify that all client file recording and documentation requirements have
been met.
Client Name Denis Barker and Dona Baker
Date of initial interview 01/07/2017
Date Advice presented 10/07/2017
Date of first transaction 05/17/2017
Actions/Documentation Obtained Completed Date Mark
Data
Collection
Forms Personal details √
/ 10
Income Details √
Details of Assets and Liabilities √
Insurance, superannuation details √
Supporting
Documentation
Bank Statement √
Income Statement √
Insurance details documents √
Superannuation details documents √
Subtotal / 10
Total / 17
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