Financial Planning Fundamentals

This report focuses on the fundamentals of financial planning, including wealth creation, protection, and estate planning. It provides expert advice and strategies for securing your future and retirement.

Financial Planning
Fundamentals

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
CURRENT SITUATION................................................................................................................1
GOAL 1 (WEALTH CREATION).................................................................................................5
Recommended strategy................................................................................................................5
Advantages of strategy................................................................................................................6
Disadvantages of strategy............................................................................................................6
Alternative considered.................................................................................................................6
GOAL 2 (WEALTH PROTECTION).............................................................................................6
Recommended strategy................................................................................................................6
Advantages of strategy................................................................................................................6
Disadvantages of strategy............................................................................................................6
Alternative considered.................................................................................................................6
GOAL 3 (ESTATE PLANNING, SOCIAL SECURITY AND LIFESTYLE)...............................6
Recommended strategy................................................................................................................6
Advantages of strategy................................................................................................................6
Disadvantages of strategy............................................................................................................6
Alternative considered.................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
APPENDIX......................................................................................................................................8

INTRODUCTION
Financial planning could be defined as the process of planning for future by maintaining
finance. With the help of it, individuals can secure their future as it is focused with whole life
security. In order to meet all the goals after retirement the individuals try to make sure that they
are performing financial planning so that they can live their elderly safely. If the individuals will
not be focused with it then they can face issues in their future. While performing financial
planning different stages are followed. First of all, current financial situation is analysed, then
goals are developed, evaluation of alternatives, revaluation of revising the plan etc. Main aim of
this report is to understand the aspects that are required to be focused in financial planning.
Present report is based upon financial planning to Justin Case who is looking for future and
retirement planning so that future could be secured. This assignment is focused with various
elements that are wealth creation, protection, social security, estate planning and lifestyle.
CURRENT SITUATION
Your personal profile Justin Case
Date of birth 23 May 1961
Current age 59
Marital status Single (Divorced)
Residency Status Australian
Residential address 26 Mary Street, Toowoomba QLD 4350
Telephone [phone]
Email address [e-mail]
Employment status Agricultural Representative for John Deer
Dependents / Children Current age & date of birth
Thomas 29
Gemini 27
Your health
Current health Still fit and healthy and ok working at that point in time
Pre-existing medical
conditions? No
Member private health fund Yes
1

Smoker? No
Family history
considerations?
Mother did pass away quite early (aged 55) from a stroke,
though otherwise, the family is generally pretty healthy
Lifestyle Assets Value
Property 550000
campervan 10000
Home contents 50000
Subtotal 610000
Financial Assets – Non-Super Value
Bank account 35000
Subtotal 35000
Financial Assets – Super Value
Agricultural representative (9.5% of 87200) 8284
Subtotal 8284
Assets Total 653284
Liabilities Limit Amount
outstanding Interest rate Repayment
Interest 7500 1425 19% Nil
Liabilities Total 7500 1425 19% Nil
Net Worth (Assets – Liabilities) $651859
Income $
Retirement income 50000
2

Salary 87200
Income Total 137200
Expenses – N/A for this assignment
Estimated Cash Surplus / (Deficit) per month $x
Owner Insurance
Type
Insurance
Provider
Benefit
Amount
Waiting
Period
Benefit
Period
Justin /
super fund
Home and
contents RACQ 130000 NA NA
Justin /
super fund
Car
insurance RACQ NA NA NA
3

Estate planning
Do you have a Will? Yes
Provision for testamentary trust NA
Do you have a Power of Attorney? Yes
Type / Attorney’s name Enduring power of attorney
Binding Death Nomination? Yes
Potential issues / special consideration
There are various types of uses or special considerations that are required to be focused
by Justin. The main issues which may take place for Justin are described below and all of them
should be taken into consideration by Justin for effective financial planning:
 There is no information provided by Justin regarding the provision for testamentary trust
which may result in calculation of actual superannuation for him.
 Benefit amount of car insurance is also not provided by Justin which may affect the
calculation of input and output superannuation.
 The waiting period for all the insurances is not mentioned in the interview which was
conducted with Justin and lack of information of it may affect the wealth creation and
protection processes.
 Benefit period of the insurance cover which was taken by Justin is also not provided
which will affect the accurate wealth creation and protection calculations.
Objectives
There are various objectives of Justin for financial planning and future development and
all of them are mentioned bellow:
 Wealth creation which is focused with inside and outside of superannuation so that an
adequate income to endure all the goals regarding retirement and supplementing the age
pension.
 Wealth protection is another objective of Justin which is focused with insurance so that
life cover for whole life could be saved by him.
 Estate planning, social security and lifestyle is third objective of Justin and main goals
of it is to plan for future life safety and security by maintaining social life so that a high
standard life could be lived.
4

Risk profile
Risk profile could be defined as the evaluation of all the risks which could be faced by
individuals and ability to take risks. It can also be defined as the threats that are exposed by an
organisation. It is very important for determining the proper investment and asset allocation for
the portfolio. While planning to analyse the level of risk, its possibility and impact along with
steps to resolve them it is very important to generate risk profile. The risk profile for Justin is as
follows:
Risk Possibility Impact Resolution
Inappropriate
planning for
superannuation
Almost certain High Proper planning for
the process of
superannuation.
Lack of knowledge
for insurance planning
Likely Moderate Getting detailed
information of all the
insurances that are
taken by Justin
Ineffective wealth
protection and
creation planning
Possible High Performing
appropriate tasks for
wealth creation and
protection.
Lack of effectiveness
in social security,
estate planning and
lifestyle.
Rare Low Assuring effective
planning for estate
planning, lifestyle and
social security.
GOAL 1 (WEALTH CREATION)
Recommended strategy
5

Advantages of strategy
Disadvantages of strategy
Alternative considered
GOAL 2 (WEALTH PROTECTION)
Recommended strategy
Advantages of strategy
Disadvantages of strategy
Alternative considered
GOAL 3 (ESTATE PLANNING, SOCIAL SECURITY AND LIFESTYLE)
Recommended strategy
Advantages of strategy
Disadvantages of strategy
Alternative considered
CONCLUSION
6

REFERENCES
7

APPENDIX
8