Economic Impacts: Measures of RBA, Role of Regulatory Authorities, Regulatory Framework, Sequencing Risk

This document discusses the economic impacts of RBA measures, the role of regulatory authorities like ASIC, APRA, ASX, ACCC, and AUSTRAC, the regulatory framework for financial service providers, and the concept of sequencing risk in retirement savings. It explores the measures announced by RBA, the functions of regulatory authorities, and the legislative requirements for financial service providers. It also provides strategies for mitigating sequencing risk.

ECONOMIC IMPACTS

TABLE OF CONTENTS
SECTION A.....................................................................................................................................3
Question 1...................................................................................................................................3
Question 2...................................................................................................................................5
Question 3...................................................................................................................................6
Question 4.................................................................................................................................10
Section B........................................................................................................................................11
(A).............................................................................................................................................11
(b)..............................................................................................................................................12
(C).............................................................................................................................................13
(D).............................................................................................................................................13
(e)..............................................................................................................................................14
REFERENCES..............................................................................................................................15

SECTION A
Question 1
a. The measures of RBA impacting Jill and Marcus
With help of the new package of monetary measures announced by reserve Bank of
Australia name the support job creation and recovery of Australian economy from the pandemic
included many different aspects under the package. The major changes listed within this package
were to reduce the cash rate target 20.1 %. In addition to this also there was a reduction within
the target for the yield over the three years Australian government bond to around is 0.1 %.
Along with this the package also highlighted the reduction within the interest rate of new
drawings under the term funding facility 20.1 percent (Qi and Zhang, 2018). Moreover A
reduction of the interest rate over the exchange settlement balances was to zero. Furthermore the
purchase of dollar hundred billion of the government bond of maturity of 5 to 10 years over the
next six month. All these changes and measures might impact Jill and markers goal and
objective. The major concern of Jain was the financial well-being of a parent's gel and markers
as they are both 62 years old and are about to retire. The parents of Jane are having the aspiration
of retirement as they are 62 years old. Marcus is working as a construction worker home and
project manager having income before tax $150000 per annum. Along with this is working as an
administrative assistant and earn $50000 per annum before tax. Now Jane is worried that when
their parents will retire then how they will have their living expense of 60000 per annum will be
managed. Thanks for this approach to a financial planner for seeking the advice. All these
changes by the reserve Bank of Australia will not much effectively goal and objective of Marcus
and Jill. This is particularly because of the reason that the major objective of Marcus and is to
purchase a small house and for this they are having some money and the proceedings of the
earlier house being sold.
B
Discussing role and function of different regulatory authorities
 ASIC- The ASIC that is Australian securities and investment commission is an
independent Australian government body. The Australian securities and investment
commission is an independent commission of the Australian government which AIMS at

managing the national corporate regulator first of the major role of ESIC is to regulate the
company and financial services in order to enforce laws to protect the Australian
consumers and creditors along with investor’s (Sun and Drakeman, 2021).
 APRA- the APRA that is Australian prudential regulation authority is an independent
statutory authority which is aimed at supervising the institutions within the banking
insurance and superannuation filled in Australia. The major in of the APRA is to promote
the financial system stability within Australia.
 ASX- the ASX stands for Australian Securities Exchange and was created by the merger
of the Australian stock exchange and the Sydney futures exchange. The ASX is an
integrated exchange the offering the listing, trading and settlement and post trade
services.
 ACCC- the ACCC that is Australian competition and consumer commission is an
independent started the authority. The major role of this authority is to enforce the
competition and consumer act 2010 and the range of different legislations relating to fair
trading and promoting competition.
 AUSTRAC- AUSTRAC is the Australian government agency which is responsible for
detection differing and disrupting the criminal abuse of the financial systems. This is
being undertaken to protect the community from the serious and financial crimes being
undertaken (Schofield, Shrestha and Cunich, 2018). The main aim of AUSTRAC is to
engage with reporting requirements in order to improve the value of the financial
intelligence being provided to the partner agencies.
Role of regulatory authorities in maintaining GDP growth and unemployment rate
 ASIC- The ASIC has a major role in maintaining or increasing the GDP growth as
suggested by the RBA statement. The reason behind this fact is that this will guide
working within the securities market and will result in increasing profitability.
 APRA- This can also contribute within the aim of RBA in increasing the GDP of the
country. This is pertaining to the fact that this authority regulates working within the
banking sector and it can increase the GDP of the country.
 ASX- This can also assist in attaining the objective of the RBA that is increasing the
GDP and reducing the unemployment rate. This is pertaining to the fact that ASX guides

every company how to deal in share market and this will assist in proper management
and effective increase in profitability.
 ACCC- This regulatory body can also assist in increasing the GDP of the country. The
reason behind this fact is that when the competition will be e-management proper and
effective manner than this will result in increased and profitability of all the companies
which will result in increase and national income of the country.
 AUSTRAC- They can also assist in increasing the GDP or managing the unemployment.
Question 2
Regulatory framework is the legislations that needed to ensure by the financial service
provider in against to deliver the professional level of business practices. The financial service
provides require to fulfil the data protection related requirements. This is about to protect the
personal information. This is a responsibility of the financial service provider to protect the
personal information of the client related to the personal identity or the income related or any
other personal information of the client. This is the legal right of the customers to ensure the
complete security with the personal information of the client in against to undertake the financial
consultancy from the professional. The data privacy is also among the mandatory requirement
that financial serve provider are required to meet in any given situation (Jensen and et.al., 2019).
Data privacy is the legal right of the people undertake the financial or any other kind of service.
The other legislations are such like the consultant should not refer wrong or inappropriate
consultancy. This is also a part of the legal advice. This is a legal right of the customer or the
client to get the proper guidance against undertaking the financial consultancy. Customer has its
own right of getting the right product. In against to undertake the financial consultancy customer
or the client has a legal right to get a proper guidance or the consultancy. In case the entity or the
financial consultant provide the wrong consultancy or the inappropriate consultancy just to earn
more return customer has legal right to sue the consultancy against misleading the fact and
providing the wrong information in against to deliver the consultancy. This is a legislative right
of the customer for getting the right consultancy and not faces any type of fraud.
The fraud related legislation is also applicable over the financial consultant. This is a
legal service that involves financial investment and also related to time. This is a legal right of
the customer for getting the proper and true guidance against utilising the financial resources.
Financial consultant should not get involved in any type of fraudulent actions. Many times the

consultant takes bribe to influence the investment decision making of the client or the customer.
This is an ethical responsibility of the financial consultant to not being involved in any of the
fraudulent activity or action in against to undertake the financial constancy. Contract act is also
applicable over tge financial consultancy service (Fisk, Livingstone and Pit, 2020). Every time
the client or the customer get involved in the consultancy this create a contract between the
consultant and the customer or the investor. The client put a money on the risk of the guidance or
the consultancy suggested. This creates an agreement between both the parties involved in the
consultancy. This is one of the key legislative application apply over the firm and the agreement
made with the client. All the legislation mentioned are the key legislative requirements
applicable over the client and the firm being involved under the financial consultancy.
Obligation
 The different obligations like the compliances are very complicated to adopt.
 The second obligation is it is a time consuming process.
 The third obligation is related to the capital requirements in meeting up the compliances
 The fourth one is risk related obligation.
 Customer protection is always on the priority list when it comes to fulfilling the
compliances.
 All these are developed in such way that customers of company get the complete
advantage against the rights and the authority they own.
Question 3
The sequencing risk is being defined as the risk with auto and timing of the client’s
investment returns are unfavourable which may result in less of money for the retirement. It can
also be defined as the danger that the timing of withdrawal from the retirement account will have
a negative impact on the overall rate of return available to the investors. A diversified portfolio
can protect the savings against the sequence risk (Sultana and et.al., 2020). Hence it is very
essential for the person to have a diversified portfolio so that at time of the retirement they can
use the savings wisely and order to maintain their standard of living. In addition to this the
withdrawal from the account must be during the bear market is more costly than the same
withdrawal which is undertaken when the Bull market. This sequence risk has a lesser impact
over three safest retirement investments. this type of risk is present in those investment options

which have probability of going up and down over the time for instance stock gold or real estate.
This sequence is just a matter of luck. Supporting to the fact that if a person is retiring in the
bullish market then there a possibility that the account may grow larger enough to sustain a
subsequent downturn. In against of this if the person is retiring within the bearish market then
there are chances that the account balances me never recover. In addition to this the sequencing
risk occurs when there is volatility within the market and the cash flows from the investment
portfolio is well. In addition to this sequencing risk occurs when there is presence in both the
accumulation and their retirement faces. This is pertaining to the fact that because the market
volatility and the cash flow from the investment exists in both of the cases that is accumulation
and retirement. in addition to this the sequencing this can also mean that the client is in position
to cut the average retirement spending significantly (Nepal and Paija, 2020).
Example
For instance impact of sequencing risk means that to investors at the same time can experience
the same average share market return for a period of 20 years. But then also one person can run
out of money sooner as compared to the other person. This is all the matter of time which is
shown within the below diagram-
For example the above chart relates to a hypothetical investor and is based on historical
Australian market performance data. The investor within the chart retires at the end of 1992
having an investment balance of $350000. The portfolio was 50% invested within the Australian

equities and the remaining within the Australian bonds. Following the retirement he lived of his
retirement savings by drawing $22530 index to inflation every year. Hence with us it can be
stated that the returns from the investment portfolio faces the sequencing risk to a great extent. It
is very essential for them to control the performance of the portfolio but this is not possible
because it is filled with the share market and the share market is not in control of a person.
Strategies for mitigation of sequencing risk
 The first and foremost method for managing the sequence risk is to spend conservatively.
This is the first option for the management of the sequence risk within the retirement
period. This is pertaining to the fact that every person will spend conservatively that is by
thinking wisely then they can mitigate the sequence risk and have money for their
consumption.
 In addition to this another major strategy for the mitigation of theme sequence risk at
time of retirement is the use of home equity. This home equity is one of the largest
retirement assets which exist to a person (Feng, 2018). This is pertaining to the fact that
home equity involves the large assets which the person is processing and is included in
their wealth. Hence this is the acid which belongs to that person only who is retiring and
they can use it as and when they require. In this is a good method to mitigate the
sequence risk.
 Moreover another major strategy for the effective mitigation of the sequencing risk is the
use of cash reserve bucketing strategies. The marketing strategy was popularised during
the time frame of 1980 and 1990. This is a strategy with regards to the retirement income
planning. In accordance to this strategy the person can have separate assets into bucket of
money for different time periods. The more conservative assets like cash are stored for
the short-term needs (Earl and Burbury, 2019). The mixed investment portfolio can be
stored for the next time period and the equities can be stored for the longer requirement
for longer time duration. This is also good strategy in order to mitigate sequencing risk.
This is pertaining to the fact that when the person is having a variety of different assets
for different time durations then they will use those as it's only within that time duration.
Hence the sequencing risk can be mitigated with help of this bucketing strategy
effectively.

 With the help of further analysis of another strategy identified for mitigating the sequence
risk is the use of buffer asset. This is a good strategy where anything management of
sequence risk is to be used by other is it available outside the financial portfolio which is
drawn after the market downturn. The return on these assets must be correlated with the
financial portfolio for stop the purpose of this proper asset is to support the spending of
the portfolio in situation the portfolio’s value is down. This is a safe strategy in order to
mitigate the sequence risk at the time of retirement.
Analysis of Jill and Marcus situation with respect to current pandemic
With the help of the above analysis it is clear that sequencing risk affects the person's
retirement life to a great extent. In case of the Jill and markers as well the sequencing risk will
affect the retirement period. This is pertaining to the fact that in case both of them will not be
able to buy the house then they will have to suffer for living. In addition to this the proceeds
from the family home have been reserved for the purchase of their smaller property and the funds
which will be left over will be kept as an emergency reserve. Hence there are possibilities that
the parents of Jane might face the sequencing risk. In addition to this their cost of living after the
retirement will be around 60000 for annum (Eagers and et.al., 2018). Hence it is not necessary
that they will be in position to have this much of amount after their retirement.
So it is necessary for them to invest their money and diversify portfolio so that they can
have effective returns time to time which will assist them in managing their retirement life. In
addition to this the use of diversified portfolio will also assist people and managing the expenses
and proper and effective manner. The use of diversified portfolio suggested because in a
diversify portfolio there is a combination of different assets and investment option (Ford and
et.al., 2018). It is not necessary that each and every asset within the portfolio will face the
downside at a single time.
Implication of Jill and Marcus situation with respect to current pandemic
Hence the major implication of market force is that in case if some assets are not working
in proper manner then the people are having some other assets which will be increasing their
profitability. Thus with help of this diversified portfolio Jill and Marcus can spend their
retirement life easily and without any problem. Hence with respect to the current impact of
pandemic over the financial market it is not necessary that and markers will get proper returns
over all the different assets within which they have invested the money.

Question 4
Superannuation system
1
The major impact of changes to the superannuation system made during 2020 to increase the
work test age. With respect to July 2020 person can make voluntary contribution into super
without having to meet the fork test. After the age of 67 compare to the previous age limit of 65.
in addition to this there is also an increase to age limit for the spouse contribution for stop the
government has extended the age limit to allow people up to age of 75 to receive their spouse
contribution. Both these have impacted the superannuation system in effective manner.
2
The potential range of future changes to superannuation is beneficial. The reason underlying this
factors that this will make the retirement of the person easier.
3
These potential future changes will affect Jill and Marcus in an effective manner. The reason
underlying this factors that now Marcus or Jill can have the benefit of the superannuation till the
age of 75.
Social security system
1
The social security in Australia referred to as the system of social welfare payment which is
provided by Australian government to eligible Australian citizen and permanent residence. These
payments are always administered by Centrelink a program of services Australia. There were
different changes being announced by the government with respect to the social services (Ford
and et.al., 2018). The major change was the reduction in the corona virus supplement amount
from dollar 552 dollar 250 per fortnight. In addition to this changes to the job seeker payment
and use allowance income test and the end of some temporary eligibility changes. For the lower
rate of the supplement will reduce the work disincentives which arises from the design of the
payment.
2
The potential range of thing future changes relating to social security within Australia is that
most income support payments like pension and allowance will be increased. This will assist the
people suffering from the current pandemic and will assist them to grow. In addition to this the

family payment such as family tax benefit and child care subsidy will also be improved under the
social security scheme. Hence this will improve the future working of the people who are retiring
and will assist them to have good social security (Kuzich and et.al., 2020).
3
All this potential future changes will affect Jill and Marcus retirement planning. The reason
underlying this fact is that at time of retirement planning they can undertake the benefits which
are being provided by the social security provided by Australian government. And this will
improve the working and the life of both gel and Marcus after retiring.
Section B
(A)
On the basis of the Australia legal structure and system based on Australia Finance
Service License (AFSL). The organisation is liable to allot the license to different financial
institutions or the organisations that are engaged in catering the financial services and practices
to its customers. The role of the organisation has been crucial and essential as it allocates the
services or practices that authorises the business entities to allocate the various finance related
services and practices. The organisation is being involved in catering authorities to the business
ventures for allocating the financial services and practices. The aim of the organisation is to
deliver the potential services in form of licensing and authorising the business ventures and
stakeholders to allocate potential services for aching the competitive advantage in the respective
market. Every business venture when look after to start the business operations it seek legal
authorisation from the authorities of government to start the respective practice (Stone, 2017).
The authorisation is done in form of the registration and such like practices. The authorisation is
the primary requirements and need of the business venture that needed to start the business
functions or operations. Licensing practices have been started by the government in Australia
many years back to legalise the whole system. This practice could also favour the government to
conserve the tax income of the government. Bettina and Gordon also require taking the
authorisation from the AFSL in case of starting up the business venture. This would support the
stakeholder to initiate the business operation legally. This is essential for starting up the business
venture to legalise the whole system. This would support the investors and the firm to completely
take the legal ownership over the brand and also will allow the business entity to get an approval

from the authorities to start up the whole business idea. Authority in from the registration will be
granted. This would also be required in paying the taxes and all other duties to the government in
against to channelize the business operations.
(b)
(1) Training and competencies
Training and competencies are the credentials to start up a new business venture under
the finance service and professional practices. This is an authorised training program or courses
that make the individual more professional or competent to achieve the best level of knowledge
and ability to meet up the necessary requirements being a finance consultant. The qualification is
always required for the professionals to hold before they proceed further for working as a
professional or to start up a business venture where the professional level of knowledge is
granted to consult the individuals and customers about various financial products. This is a
professional level of training program that convert a finance students into a financial consultant
or a professional (Moynihan and et.al., 2020). Training and competencies is an essential
requirement that professional or the finance consultant needed to fulfil in any given situation.
This is more like an authorisation against starting up a business venture to allocate the financial
services and practices. Training and competencies are the authorised qualification that makes the
professional more capable to deliver the best level of consultancy practices to meet up the client
and customers requirements. The training and qualification is done under the affiliation of the
AFSL. Any institute that is affiliated with the AFSL can conduct the courses. Professional can
jin the courses to get a professional level of training and competencies to achieve the best level
of professional level of skills and ability as a professional.
(2) Expertise and experience required
To obtain a professional level of training and competency courses affiliated by the AFSL
this is important for the professional to hold a experience of minimum 2 years as a financial
professional. This is a key or necessary requirements that professional seek before approaching
for the training course. The professional level of degree in MBA or any other must be hold to get
admission under the courses (Batterbury and Toscano, 2018). As the aim of the course or the
training and competencies program is to allocate the professional level of knowledge and
guidance as finance professional. The professionals can only take advantage if they hold the
basic qualification as finance professional. The basic qualification like MBA would allow the

professional to gain the best level of exposure under the training program. This is an essential
requirement that needed to fulfil as a professional.
(C)
Winsome is planning to expand ts business scale by attracting the retail customer. This
would be an important step for the business venture. Expansion of market is very necessary for
the business professional in order to achieve success in the market (Chahda and et.al., 2021).
This step would support the Winsome to enhance the individual capability at an individual level.
This step would not require the Winsome to take any special approval in against to deliver the
existing business practice. As long the company is engaged in same or similar professional
activity company do not seek any especial approval in against to under the practices. This would
allow the business entity and organisation to undertake the best level of growth opportunities in
the market. Attracting new customer is a key way or approach to expand the business in the
market (Rendalls and et.al., 2019). This practice would allow and support the organisation to
expand the existing customer basis. Company should also go for the high business expansion or
the growth oriented approaches like attracting new customer base so as the Winsome is trying to
pursue by attracting the retail client. This would certainly allow the business entity to expand the
existing scale of growth or profit making opportunities in favour to the organisation. This would
be a progressive step towards approaching the high growth opportunities and possibilities in
favour of the business organisation or venture. This step would certainly maximise the overall
possible growth and development opportunities in the respective market. All this is a part of the
business development and growth practices part of the business venture.
(D)
Disclosure is also a part of the business idea or practices. These are various legal
obligations which business entities require to fulfil in against to deliver the business operations.
These are the some mandatory requirements that needed to fulfill in case of the company or the
business venture delegate or started delegating its services at a professional level. There is
certain disclosure that company require to make in case of entering into the professional
consultancy to the retail client. Winsome required disclosing about the annual income or the
gross income gained out of the financial consultancy to the retail client. This would be required
information which in any situation needed to disclose by the entity. The information about the
expenditure and the total profit made in delivering the services is also necessary to disclose

(DEVARAKONDA and MUNIPALLE, 2019). The billing or the GST return is also essential to
disclose in case of delivering the professional services. All these are the mandatory requirements
that in any situation required disclosing by the business entity and professional. As in the
professional circumstances every service or the practice is delivering in the professional
capacity. This becomes essential for the organisations and ventures to disclose all necessary or
the required information in the best way possible so that best level of legal requirements are
meet. In case of the Winsome do not let all these requirements fulfilled than some legal
obligations would be faced. The mandatory requirements are needed to ensure in any given
situation irrespective of the circumstances and the situation.
(e)
In case of the Winsome failed to meet up the requirements related to the disclosure of
necessary information than the ASIC can take required action against the entity. The steps like
cancelling the license could have also been done. At a primary level the charges are imposed
against not fulfilling the required criteria or the requirements. In case of the Winsome do not
depict the charges obliged against not meeting up the requirements that the authority can take a
step like cancelling the license and such related conditions. ASIC has all its rights against the
entities engaged in the business practices (Nicholls and et.al., 2017). This can be done in such
manner that the business entity get to disclose all the required information. In case of any breach
in the required essential criteria meet than the ASIC can imposed strict actions so that no such
examples are set in the professional circumstances. This step is very strict and also involve
cancelling the license for certain period that would also involve not reviewing the license again
for the respective tenure.

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