Financial Advisory Practice

Financial Advisory Practice

Contents
INTRODUCTION.....................................................................................................................................3
COMPLIANCE:........................................................................................................................................3
RECOMMENDATIONS........................................................................................................................18
REFERENCES........................................................................................................................................20

INTRODUCTION
Advisory service is the offering, typically for a fee, of competent, personalized investment
advice. Advisory management may be conducted by individuals, separate groups, or a team of
practitioners within a private fund, corporate finance company, or expert advisory company
(Dolata, Agotai, Schubiger and Schwabe, 2019). The report is based on scenario that is related to
offering suggestion to client regarded to their retirement plan. For better understanding or better
service to client, compliant Statement of Advice (SOA) is also offered. This can be known as a
form of document that lays out the recommendations that their certified financial advisor or
consultant provides to a customer. It may provide the grounds on which the guidance is offered,
the particulars of the delivering agency and any fees or benefits earned by the advisor or
licensee.
COMPLIANCE:
Advice to client: Though, above client has plan to use such property as rent but apart from this
they can use it different kinds of plans such as national senior term deposit and bank fixed
deposit. In both scheme above client will be able to generate higher amount of financial return.
Before going to this concept, this will be useful to know about both schemes:
National senior term deposit- In such scheme, investors can secure their future for long time
period. This is so because under this a fixed amount is deposited during the age of retirement and
after the retirement clients can gain higher amount of return on each month (Santacruz, 2018).
Term Deposits of National Seniors are a safe deposit account underneath the Monetary Claims
System of the Australia. Under such an arrangement, for each issuing bank at any registered
deposit-taking institution (ADI) established in Australia and authorized by the Bank of Australia
(RBA, such investments are covered up to a maximum of $250,000. (APRA). In the case of the
Monetary Claims System, APRA will seek to pay the bulk of clients within seven days from the
date for their covered deposits underneath the Scheme. Any transfer of part or more of the funds
until exhaustion will be subjected to a notification of 31 days. Conversely, they can contact them
2 business minutes before the release of the period if they wish to change the saving account.

Bank fixed deposit- Term deposits, generally referred to as fixed deposits, are a savings method
where a lump-sum balance is invested for a specified period, varying from 1 month to 5 years, at
a negotiated inflation rate (Gurne and Grossi, 2019). Major banks, Non-Banking Finance Firms
(NBFC), community banks, bank branches and investment funds may benefit from savings
accounts. Though, in the case of above clients they are planning to use their property for long
time period and this will be beneficial for them to gain higher amount of return in upcoming time
period.
Scope of advice- The scope of advice to support Sam and Kim SMITH for future so that they can
gain higher amount of return from their investment property. As the amount of investment
property is of $700,000 which has mortgage loan is of $200,000. The property has been acquired
in year 2010 and they want to use this property for future whether as rental purpose or by any
other option. The scope of advice to help couple in upcoming time period as they are going to
retire in 5 years so that they can gain higher amount of return from their property or investment.
Goal and objectives-
Clear goals: In accordance of above case study, both clients need an advice so that they can
survive in upcoming time period after retirement. Below some clear goals are mentioned in such
manner which are as follows:
 One of the key goal of advice is to offer a guideline to both couples so that they can
generate higher return from their investment (Tharp, 2019).
 Making their investment property more secure and effective which can sustain for long
time period.
 They can generate higher amount of return from both options including bank fixed
deposit, and National senior term deposit.
Measurable goals: The measurable goal is the amount which will be received as a rental income
on their investment property if they will give such property for rent.
Time specific goals: The time specific goal is period of year on which their property will be
given on rent by above mentioned client. In this time period they might be able to recover total
cost of investment which is of $700,000 including amount of interest.

Risk Profile assessment: A risk profile is an estimation of the readiness and capacity to take
hazards of a person (Vulpoiu, 2018). The risks to which an entity is vulnerable may also be
alluded to. For determining an appropriate investment strategy for an investment, a risk profile is
essential. A risk profile is used by organizations as a means to minimize future hazards and
challenges. The appropriate level of risk a person is willing and ready to tolerate is defined by a
risk profile. The risk profile of an organization seeks to assess how an internal judgment process
can be influenced by a desire to take on threat (or an indifference to risk). In the context of above
case of Sam and Kim SMITH, this is essential for them to analyze overall risk which may be
faced by them in upcoming time period from the investment which they made of $700,000 and
there might be risk of not getting right lender for their property for rental purpose. As well as to
this, another risk is related to more time consumption in order to recover total investment value
of project which is of $700000. Basically if project consumes too much amount of time than this
may lead to higher risk for both people. Below some risks can occurred in such manner in the
context of above mentioned both plans:
Risks in fixed deposits-
Liquidity risk-It is possible to quickly liquidate bank current accounts (FDs). A tax may be
levied, nevertheless. Until expiration of the 5-year term, tax saver FDs should not be deleted.
Default risk- Bank defaults are uncommon but conceivable. Even so, the DICGC guarantees the
balance of the deposit, including interest of up to Dollar 5 lakh per individual per account, and
any amount above that is liable to risk premium (Maume, 2019).
No deposits additional. When you activate your term deposit, you will need to create a single
payment deposit, because there's no way to apply to your savings while you go (Cruciani,
Gardenal, and Rigoni, 2018). For daily savers, this may be a challenge, but one way to fight it is
by having additional deposit accounts with phased longer maturities.
Less mobility. Low risk is a term deposit - however the downside is that this is not a very
versatile choice for investments. In terms of versatile features and choices, most plans with
similar costs, such as fixed interest bank deposits, offer a lot more.

Insurance needs analysis- The life insurance preparation method to requirements is used to
calculate the duration of healthcare insurance and specific needs. The solution to needs takes into
account the amount of money necessary to pay funeral costs, as well as loans and commitments
including such mortgages or college expenses (Nettle, Crawford and Brightling, 2018). The life
insurance preparation approach to requirements is used to estimate the quantity of health
coverage and specific needs. The solution to needs takes into account the amount of funds
required to pay funeral costs, as well as loans and commitments such as mortgages or education
costs. In the context of below mentioned client Sam and Kim this can be inferred that there is
need of insurance on their property as they are going to use this for their retirement plan and
there can be risk of losing such property. In this case, they need to make insurance plan so that
they can make secure this from all risks which may occur in upcoming time period.
Existing Risk Insurance Cover – Client One Sam
TYPE OF
COVER
Lif
e
TP
D
Income
Protectio
n
Traum
a
Name of
Company
AAC
Insurance
AAC Insurance
Sum Insured 100,000 100,000 Nil Nil
Commenceme
nt Date
Annual Premium 600 900
Renewal Premium
Surrender Value
Maturity Date
Maturity Value
Policy Owner Sam Sam