FNSCUS505 Financial Planning Assignment

Added on - 01 Apr 2020

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DFP Module 1 Assignment 1509Diploma of Financial PlanningModule1AssignmentSubmission Instructions:Key steps thatmustbe followed:1.Please complete the Declaration of Authenticity at the bottom of this page.2.Once you have completed all parts of the assessment and saved it (eg. to your desktopcomputer), login to the Monarch Learning Management System (LMS) to submit yourassessment.3.In the LMS, click on the fileSubmit DFP Module 1 Assignment” in the Module 1section of your course and upload your assessment file/s by following the prompts.4.Please be sure to click “Continue” after clicking “submit”.This ensures your assessorreceives notification – very important!Declaration of Understanding and Authenticity*I have read and understood the assessment instructions provided to me in the Learning Management System.I certify that the attached material is my original work. No other person’s work hasbeen used without dueacknowledgement. I understandthat the work submitted may be reproduced and/or communicated for the purposeof detecting plagiarism.Student Name*:Date:*I understand that by typing my name or inserting a digital signature into this box that I agree and am bound by theabove student declaration.Rupinder Kaur
Important assessment informationAims of this assessmentThis assessment covers the foundations of the financial planning process. It requires completionof a client risk profile, with a target asset allocation being assigned based on the data extracted.General advice is contrasted to personal advice, with skill related assessments ensuring formalprocedures are followed in the advice process. These include the provision of a Financial ServiceGuide (FSG), a client questionnaire being completed, as well as a risk profile, and firstappointment file note being completed. Australian Privacy Principle obligations are explored in aclient specific scenario. Managing potential client complaints is addressed, as is the FinancialOmbudsman Service (FOS), including how complaints are managed within the FOS. The need tounderstand a client situation is fully explored. This includes identifying financial and non-financialgoals including allocating appropriate time frames to them. Completion of a comprehensivebudget is addressed. Based on this completed budget, advice strategies that promote a cashsurplus, including strategies to manage cash deficits (if applicable) are explored. Scaled advice andthe best interests duty is a focus. The documentary areas of financial advice are covered includingthe differences between a comprehensive Statement of Advice (SOA), a Scaled Advice document,and execution-only instructions. The Australian economy is addressed, including how it influencesinvestment markets within different cycles. Monetary policy and fiscal policy, among other keyeconomic policy areas is addressed.Marking and feedbackThis assignment contains 7 assessment activities each containing specific instructions.This particular assessment forms part of youroverallassessment for the following units ofcompetency:FNSCUS505FNSCUS506FNSFPL501FNSIAD501FNSFPL505Grading for this assessment will be deemed “competent” or “not-yet-competent” in line withspecified educational standards under the Australian Qualifications Framework.Units: FNSCUS505, FNSCUS506, FNSFPL501, FNSIAD501, FNSFPL505
What does “competent” mean?These answers contain relevant and accurate information in response to the question/s withlimited serious errors in fact or application. If incorrect information is contained in an answer, itmust be fundamentally outweighed by the accurate information provided. This will be assessedagainst a marking guide provided to assessors for their determination.What does “not-yet-competent” mean?This occurs when an assessment does not meet the marking guide standards provided toassessors. These answers either do not address the question specifically, or are wrong from alegislative perspective, or are incorrectly applied. Answers that omit to provide a response to anysignificant issue (where multiple issues must be addressed in a question) may also be deemednot-yet-competent. Answers that have faulty reasoning, a poor standard of expression or includeplagiarism may also be deemed not-yet-competent. Please note, additional information regardingMonarch’s plagiarism policy is contained in the Student Information Guide which can be foundhere:http://www.monarch.edu.au/student-info/What happens if you are deemed not-yet-competent?In the event you do not achieve competency by your assessor on this assessment, you will begivenonemore opportunity to re-submit the assessment after consultation with your Trainer/Assessor. You will know your assessment is deemed ‘not-yet-competent’ if your grade book in theMonarch LMS says “NYC”afteryou have received an email from your assessor advising yourassessment has been graded.Important:It is your responsibility to ensure your assessment resubmission addressesallareasdeemed unsatisfactory by your assessor. Please note, if you are still unsuccessful in meetingcompetency after resubmitting your assessment, you will be required to repeat those units.In the event that you have concerns about the assessment decision then you can refer to ourComplaints & Appeals process also contained within the Student Information Guide.Expectations from your assessor when answering differenttypesof assessment questionsKnowledge based questions:A knowledge based question requires you to clearly identify and cover the key subject matterareas raised in the question in full as part of the response.Skill based questions:Where you are asked to write as though you are speaking to a client, your answers must showyour ability to:understand your client’s concerns/perspective/viewsUnits: FNSCUS505, FNSCUS506, FNSFPL501, FNSIAD501, FNSFPL505
show empathydisplay a professional responseexplain ideas clearly and simply so your client can understand the issuesGood luckFinally, good luck with your learning and assessments and remember your trainers are here toassist youUnits: FNSCUS505, FNSCUS506, FNSFPL501, FNSIAD501, FNSFPL505
Activityinstructions to candidatesThis is an open book assessment activity.You are required to read this assessment and answerall3 questions that follow.Please type your answers in the spaces provided.Please ensure you have read “Important assessment information” at the front of this assessmentEstimated time for completion of this assessment activity: 1 hourUnits: FNSCUS505, FNSCUS506, FNSFPL501, FNSIAD501, FNSFPL505Assessment Activity 1Simulation ExerciseRisk Profile
The following exercise will highlight how it is possible to have the same fact pattern but potentially different clientrisk profiles, and hence investment recommendations. For this assessment activity to be most useful, you need tofind a family member, colleague or friend to agree to answer the risk profile questionnaire below in this ‘mock’client scenario.Your subject must imagine the following situation has recently occurred. They have inherited $150,000 from along lost relative. They wish to invest the money, and are happy to leave it invested for a minimum of 7 yearsbefore they reassess their financial situation.Please note, the risk profile questionnaire used in this assessment has been extracted from RBS Morgans Ltd, asan example of some of the questions used in the financial planning industry. The full questionnaire can beaccessed athttps://www.morgans.com.au/private-clients/My-client-account/~/media/8A2A5352D6DE413EA61AB2C6349C05C7.ashx(just scroll down when the file is downloaded, the first page appears blank)Required:1.Complete the risk profile questionnaire (below) included in this assessment activity. Note: there is noneed for both a ‘client’ and ‘partner’ unless desired.One ‘client’ is sufficient. Because it’s a worddocument, you can highlight the relevant answer (for example yellow) to indicate your mock client’sresponse.2.Add up the total pointsand match the total points to the indicative investor risk profile at the end of thequestionnaire (below). What indicative investor profile describes your client?Type your answer in this box.The indicative investor risk profile that is ideal for the client has been an assertive investor as the client isready to undertake investments that would be fundamental for long term growth and the investor isready sacrifice his short term profit. The client has sufficient knowledge about investment and is ready totake short term risks.3.Based on the completed risk profileand total points determined from questions 1 and 2, use the tablebelow as a guide to determine what percentage of income (cash and fixed interest) and growth (sharesand property) you would recommend.Note, do not provide a range, rather you are required to choose aspecific percentage for your recommendation. There is no ‘right’ answer in this exercise, however therecan be awrong answer if your recommended allocation of income assets or growth assets lies outside ofthe range indicated in the table below.ConservativeModeratelyConservativeBalancedAssertiveAggressiveGrowth assets in portfolio0% – 25%10% – 30%25% – 50%45% – 65%75% – 100%Income assets in portfolio75% – 100%70% – 90%50% – 75%35% – 55%0% – 25%Units: FNSCUS505, FNSCUS506, FNSFPL501, FNSIAD501, FNSFPL505
Your RecommendationThe investor is assertiveGrowth assets in portfolio45%-65%Income assets in portfolio35-55%Risk Profile QuestionnaireIdentifying your investment risk profile1. Which of the following best describes your current stage of life?Single with few financial burdens. Ready to accumulate wealth for futureshort termand long term goals.(5 points)a)b) A couple without children. Preparing for the future by establishing ab)home. Expecting to have or already have a high purchase rate ofc)household and consumer items.(4 points)c) Young family with a home. You have a mortgage and childcare costs andmaintain only small cash balances.(3 points)d)d) Mature family. You are in your peak earning years and your mortgage ise)under control. You both work and you may or may not have children thatare growing up or have left home. You’re ready to start thinking aboutg)your retirement years.(5 points)e)Preparing for retirement. You own your home and have few financialburdens; you want to ensure you can afford a comfortable retirement.(2 points)(5f) Retired. You rely on existing funds and investments to maintain your(6lifestyle in retirement. You may already be receiving a Government(7pension and/or Superannuation pension.(1 point)2. How familiar are you with investment matters?a)Not familiar at all with investments and feel uncomfortable with thecomplexity.(0 points)b)Not very familiar when it comes to investments.(1 point)c)Somewhat familiar. I don’t fully understand investments, including theshare market.(2 points)d)Fairly familiar. I understand the various factors which influenceinvestmentperformance.(3 points)e)Very familiar. Iuse research and other investment information to makeinvestment decisions. I understand the various factors which influenceinvestment performance.(7 points)Units: FNSCUS505, FNSCUS506, FNSFPL501, FNSIAD501, FNSFPL505
3. How long have you been investing, not counting your own home or bank type deposits?a) 3 years or more.(5 points)Up to 3 years.(2 points)c) This is my/our first investment.(1 point)4.How long would you invest the majority of your money before you think you would needaccess to it? (Assuming you already have plans in place to meet short term cash flow and/oremergencies).a) In 2 years or less.(1 point)b)Within 3 – 5 years.(3 points)c) Within 6 – 10 years.(7 points)Not for 10+ years.(10 points)5. Once you start using your invested money how long would you need it to last?a) Over a period of 2 years or less.(0 points)b)Over a period of 3 – 5 years.(1 point)c) Over a period of 6 – 10 years.(3 points)More than10 years/Retirement.(5 points)6.In October 1987, the Australian share market fell more than 40% during the month. If theshare component of your portfolio fell by 40% over a short period, such as a month, would you:Sell all of the investments. You do not intend to take risks.(1 point)Sell a portion of your portfolio to cut your losses and reinvest intomore secure investment sectors.(3points)Hold the investment and sell nothing, expecting performance toimprove.(5 points)Invest more funds to lower your average investment price.(7 points)(If you have experienced a fall like this, choose the answer that corresponds to your actual behaviour.)7. If your investments fell by more than 6% over a short period, would you:Sell all of the remaining investment.(1 point)Sell a portion of the remaining investment.(3 points)Units: FNSCUS505, FNSCUS506, FNSFPL501, FNSIAD501, FNSFPL505
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