Personal Wealth Management

This document provides an extensive analysis of personal wealth management for Dean and Hamish. It includes information about their life objectives, personal details, balance sheet, income statement, current financial position, financial ratios, asset allocation, projected cash flow, and recommendations about their financial position. It also includes an executive summary and insurance product recommendations for both Dean and Hamish.

Running head: PERSONAL WEALTH MANAGEMENT
Personal Wealth Management
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Part A...............................................................................................................................................3
Life Objectives.............................................................................................................................3
Information about Dean and Hamish...........................................................................................3
Personal Details.......................................................................................................................3
Balance Sheet...........................................................................................................................4
Income Statement....................................................................................................................4
Current Financial Position...........................................................................................................5
Financial Ratios.......................................................................................................................5
Asset Allocation.......................................................................................................................5
Projected Cash Flow................................................................................................................7
Recommendation about your financial position..........................................................................7
Part B...............................................................................................................................................9
Executive Summary.....................................................................................................................9
Part C.............................................................................................................................................11
Insurance Product Recommendation.........................................................................................13
Insurance Needs for Dean..........................................................................................................13
Life Insurance........................................................................................................................13
Total and Permanent Disability Insurance.............................................................................14
Income Protection Insurance.................................................................................................14

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Insurance Need for Hamish.......................................................................................................15
Life Insurance........................................................................................................................15
Total Permanent Disability Insurance...................................................................................16
Income Protection Insurance.................................................................................................17
Superannuation Contribution Strategy for Dean and Hamish...................................................18
Reasons for Recommendation...................................................................................................18
How is my Advice Appropriate?...............................................................................................18
Consequences of advice.............................................................................................................19
Commissions..............................................................................................................................19
Authority to Proceed..................................................................................................................19
Cooling Off Period....................................................................................................................20
Bibliography..................................................................................................................................21

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Part A
Life Objectives
Short term An extensive analysis of your personal insurance needs.
Medium term
They have $100,000 in 5 years’ time for the purpose of
education grant to their young son.
You want $50,000 expenses saved for around the world trip in
15 years’ time in order to enjoy your 21st anniversary.
Long term Both retire comfortably on $650 a week debt free when
Hamish turns 65.
Information about Dean and Hamish
Personal Details
Dean Hamish
48 years 50 years
He is employed as a nurse and earns
$68,000 per year plus 9.5%
superannuation guarantee contributions
He is employed as a pharmacist earning
$88,000 per year plus 9.5%
superannuation guarantee contributions.
Health: Excellent Health: Excellent
Smoker: No Smoker: No
Risk profile: Conservative Risk profile: Balanced

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You both have child named Hayden who is 2 years old and at the current time period, you
are not looking to have another baby.
Balance Sheet
Liabilities Assets
Home mortgage $600,000 House $850,000
Credit cards $50,000 Vehicles $65,000
Car loans $50,000 Savings account $20,000
Transactional
bank account $10,000
Superannuation: HESTA
Industry Superannuation $70,000
Fund (Dean)
Superannuation: HESTA
Industry Superannuation $80,000
Fund (Hamish)
Shares $152,000
Other assets $50,000
Total: $700,000 Total: $1,295,000
Income Statement
Details Amount
Living expenses $41,600
Insurance $4,500
Credit card $8,038
House mortgage (principal and interest, 5.2% interest rate) $91,838
Car loans $4,200
Total annual expenses $150,176
Estimated annual surplus/deficit cash ($30,765)

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Current Financial Position
Financial Ratios
Net worth ratio
The net worth ratio calculated is 45.95%. Both of you own
45.95% of your assets while on the other hand your creditors
own 54.05%. This is not a favorable position to be in owning
lower than the amount that you to owe.
Liquidity ratio
Your liquidity ratio computed is 9.61%. This is seen to be a
bad scenario as you may not have sufficient cash to pay your
short-term debts.
Savings ratio As both of you pay an increased amount of mortgage the
savings ratio is negative and the value comes to -25.76%.
Monthly debt
service ratio
The monthly debt service ratio is 87.16% and this suggests
that 87.16% of the net income is going towards servicing
debt.
Asset Allocation
Dean
Asset class Asset allocation (%)
Cash 4.3
Fixed interest 11.1
Total defensive assets 15.4
Australian equities 54.9
International equities 5.3
Property 22.5
Alternative strategies (growth) 1.9

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Total growth assets 84.6
Total 100
23%
2%
55%
5%
11%
4%
Asset allocation of Dean's assets
Property
Alternative assets
Australian equities
International equities
Fixed interest
Cash
It is seen that Dean your current asset allocation is found to be a risk profile that is
aggressive and therefore I can recommend that you sell off the growth assets in order to enhance
cash weight due to your conservative risk profile. An ideal allocation of your assets will be to
maintain defensive assets and the assets that are less growing.
Hamish
Asset class Asset allocation(%)
Cash 4.3
Fixed interest 11.5
Total defensive assets 15.8
Australian equities 54.1
International equities 5.9
Property 22.1
Alternative strategies (growth) 2.1
Total growth assets 84.2
Total 100

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22%
2%
54%
6%
11%
4%
Asset allocation of Hamish's assets
Property
Alternative assets
Australian equities
International equities
Fixed interest
Cash
I can suggest you to sell off your Australian shares and withheld more of cash. The
current asset allocation is an Aggressive one and therefore this should be done in order to
maintain a Balanced Risk Profile. This can be done by maintaining defensive assets and half
growing assets that would be ideal for the purpose of asset allocation.
Projected Cash Flow
Dean and Hamish
2020 2021 2022 2023 2024
Income 119411 119411 119411 119411 119411
Expense 151424 152709 209815 151197 152602
Net cash
flow
$(32013) $(33298) $(90404) $(31786) $(33190)
Recommendation about your financial position
Hamish and Dean, the current issue for the objectives that is medium term has been
paying for your car and home loan. It is possible that you both may incur increased income with
the help of the growth assets you have over the defensive asset and still one cannot save money

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as the savings ratio is negative. I can therefore suggest you to undertake refinancing of your
house loan and sell off your car mainly due to your increased monthly debt service ratio.
It is seen that mainly due to the increased market value of your house, both of you can
borrow $680,000 from ANZ bank for 30 years. The interest that is aid is undertaken at a variable
rate of 5.36% p.a, which includes the payment of the interest as well as the principal. The
estimated monthly repayment as per the bank is $3,802.
After you receive a new loan from the bank, ANZ bank will pay off for the old loan and
you will receive a new mortgage within an additional $80,000 credit line for refinance.
You both can even sale your car as the present value of the car is more than the mortgage value
of the car.
The new five year projected cash flow after the incorporation of the recommendation is;
Dean and Hamish
2020 2021 2022 2023 2024
Income 119411 119411 119411 119411 119411
Expense 101010 102295 103619 104983 106387
Net cash
flow
$18401 $17116 $15792 $14428 $13024
It is seen that for the next five years both of you can save around $78,761 from the net
cash flow. With the help of the available cash, you will have sufficient money to attain you
medium term goal, which is attaining $100,000 in the next 5 years in order to meet the education
grant for your son.

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Part B
Executive Summary
The current statement of advice that has been prepared for both of you gives out a clear
idea about the sort of products and money that you will require in order to attain your future
goals and objectives. The advice is solely based on the information that has been providing from
your end. The objectives have been segregated on the basis of the time within which the
objectives need to be attained. It is therefore seen that the short term goal has been to gain
various kinds of insurances with the help of which both of you can have a happy and satisfied
life. The medium term objective has been to maintain a cash balance with the help of which you
two will be able to pay off your home mortgage and car loan. The other medium objectives has
been to create a lump sum amount with the help of which the educational grant of their child can
be attained and even create a certain amount of money with the help of which they can fulfill
their dream of going on a worldwide trip.
On the basis of this, I have put forth a recommendation and this has been selling of your
car and undertakes refinance with the help of which the loan mortgage can be paid off and an
additional amount can be attained with the help of which the other expenses can be met. On the
basis of this I have even prepared a proper better recommendation regarding the insurance
products that is needed for you in order to safeguard your future and thereafter in case of any sort
of unprecedented events, financial remuneration can be given to you.
There have been several sorts of insurances that have been provided to you and one of the
key insurance that is required is life insurance for both of you so that in case of death of any one
of you financial benefits can be attained with the help of which your child can have a safe future.

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Income protection insurance coverage is even beneficial and therefore has been recommended as
with the help of this insurance the income can be protected as well. Trauma insurance as well as
the Permanent and Temporary Disablement Insurance Coverage is even required with the help of
which both of you can have a safe and secured life. The recommended amount that will be
required for the purpose of retirement will be based on the total income and the objectives that
have been highlighted.

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Part C
It is seen that both of you are working and your total income sums to $156,000 p.a. The
personal items are valued at $50,000 your car is work $65,000.You both have various sorts of
investments along with the certain amount of money in superannuation. The amount of liability
that you two have are extensively high and it is seen that due to these factors you need to have a
lump sum amount so that even after paying off the debts enough money is there so that the
retired life can be secured. It is therefore recommended that both of you should have a life time
sum amount of $1,060,800 based on the fact that your life expectancy is 99 years and you are
looking to attain $650 per week after retirement debt free. With the help of this amount I can
recommend that even after paying off all the debts and meeting your expenses, you can have a
life as per your dream.
The projection of the superannuation is another key factor that will be considered and it is
seen that you both receive superannuation on the basis of 9.50% on the salary. Both of you are
looking to retire when Hamish attains the age of 65 years. The projection of superannuation for
Dean till the time you retire is $109,820 and on the other hand the projected superannuation
amount for Hamish is $125,400 and the total sum is found to be $235,220. There is a deficit of
$825,580 for you I would provide recommendations on the basis of which this amount ca be
adjusted.
I can recommend in accordance to the deficit that has been attained is that both of you
have to increase your income either through increasing your salary from the company were you
are working or need to initiate any sort of other source of income with the help of which you can
increase your income as well.

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I would even recommend you to increase your investments in superannuation with the
help of which the savings can be increased and you can have more savings as well. It is even
recommended to undertake further investments in share portfolio with the help of which the
amount can be increased and the retirement plans can be attained. On the basis of the asset
allocation, it is recommended that you assess the investment portfolio from time to time and
change your products in case one of the products is not performing effectively. These activities
can be helpful in the development of a better life after retirement with the help of which you two
can have a safe and secured life.
On the basis of the risk profile that has been assessed and the asset allocation for each
one of you, it is seen that undertaking investments in a specified portfolio will be helpful in the
increase in returns that can be used for the purpose of future use. You two can even payoff the
car mortgage by selling the car with the help of which some of the liabilities can be reduced and
thereby the extent of income will increase. In this manner we can conclude that maintaining
effective amount of money for the future will be required with the help of which all of your
future goals and expectations can be met and you two as well as your son can have a secured life
ahead.
I would specifically mention you the fact that all the recommendations and the monetary
values that have been computed has been on the basis of certain assumptions and one of them
has been estimating that the life expectancy for both of you will be 99 years and the tax rates will
remain the same as per the current year. It has even been considered that the rate of inflation will
be fixed as well and no other changes in the normal lifestyle of both of you will take place. In
this manner, the recommendations that have been provided will be helpful for both of you to
maintain a sustainable lifestyle.

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Insurance Product Recommendation
The product recommendations that is done for both of you has been on the basis of the
various sorts of insurances that are required and accordingly the features and the amount that is
required to be invested in the insurance product for each one of you has been laid down.
Insurance Needs for Dean
Life Insurance
Financial Need Amount of Cover Explanation
Mortgage $600,000 In case of death the amount of
mortgage can be covered
Funeral Costs $10,000 The cost that has to be beard
in order to complete the
crematorium ceremonies.
Income Supplement $420,000 Cover up the expenses in case
of Dean’s death with the help
of which the Hamish and their
son can have secured life.
Total $1,030,000 The superannuation value will
be excluded from this amount
as the value will be received
after death.

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Total and Permanent Disability Insurance
Financial Need Amount of Cover Explanation
Mortgage Costs $600,000 In case of total and permanent
disability, the amount of
mortgage can be covered
Medical Costs $50,000 The cost that has to be beard
in order to pay for the medical
expenses due to total and
permanent disability
Income Supplement $420,000 Cover up the expenses in case
of Dean’s disability with the
help of which the Hamish and
their son can have secured life.
Total $1,070,000 The superannuation value will
be excluded from this amount
as the value will be received in
case of total and permanent
disability.
Income Protection Insurance
Financial Need Amount of Cover Explanation
Mortgage $600,000 In case of any unprecedented
events the amount of

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mortgage can be covered
Income Coverage $30,000 Will cover the loss that will
take place due to loss in
income.
Income Supplement $420,000 Cover up the expenses in case
of income loss with the help of
which the Hamish and their
son can have secured life.
Total $1,050,000 The entire amount can be
secured and thereby their
future life can be secured.
Insurance Need for Hamish
Life Insurance
Financial Need Amount of Cover Explanation
Mortgage Costs $600,000 In case of death the amount of
mortgage can be covered
Funeral Costs $10,000 The cost that has to be beard
in order to complete the
crematorium ceremonies.
Income Supplement $420,000 Cover up the expenses in case
of Hamish’s death with the
help of which the Dean and

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their son can have secured life.
Total $1,030,000 The superannuation value will
be excluded from this amount
as the value will be received
after death.
Total Permanent Disability Insurance
Financial Need Amount of Cover Explanation
Mortgage Costs $600,000 In case of total and permanent
disability, the amount of
mortgage can be covered
Medical Costs $50,000 The cost that has to be beard
in order to pay for the medical
expenses due to total and
permanent disability
Income Supplement $420,000 Cover up the expenses in case
of Hamish’s disability with the
help of which the Dean and
their son can have secured life.
Total $1,070,000 The superannuation value will
be excluded from this amount
as the value will be received in
case of total and permanent

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disability.
Income Protection Insurance
Financial Need Amount of Cover Explanation
Mortgage Costs $600,000 In case of total and permanent
disability, the amount of
mortgage can be covered
Medical Costs $50,000 The cost that has to be beard
in order to pay for the medical
expenses due to total and
permanent disability
Income Supplement $420,000 Cover up the expenses in case
of Dean’s disability with the
help of which the Hamish and
their son can have secured life.
Total $1,070,000 The superannuation value will
be excluded from this amount
as the value will be received in
case of total and permanent
disability.

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Superannuation Contribution Strategy for Dean and Hamish
By looking into contribution strategy that can be used for both of you it can be said that
both of you can undertake a non-concessional contribution of $1000 for each one within your
superannuation within this financial year. This will be an after tax contribution and therefore the
amount that will be less than $51,021 of the income earned and the same amount will be given
by the Government to both of you.
Reasons for Recommendation
Hamish and Dean I recommend you two to maintain more investments in the life and
total and permanent disability insurance products with the help of which you can maintain
increased amount of returns in case of any unprecedented events both of you can maintain better
lifestyle. The values that have been recommended has been considered based on the salary you
earn, the current superannuation, the existing assets, the investments and the savings that both of
you have and in this manner, you two will have sufficient amount of money in the future as well.
Both of you have a new life and therefore it is your responsibility to ensure your income is
covered and thereafter all the expenses can be met and your career can prosper as well.
How is my Advice Appropriate?
The suggestions that have been given have been helpful in the development of a plan that
will have a secured life for you. The long term, medium term as well as the short term goals can
be attained with the help of which even after completing the expenses you two will have
additional money with the help of which any of your desires can be fulfilled. The investments
that will be made will be helpful in increased returns and as the investment will be made in a
portfolio the chances of facing loss will be least.

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Consequences of advice
The advice that has been given will be helpful in the development of a better future for
both of you. As there was no previous insurance products purchased from your end hence,
replacement of any product is not possible. All the information related to cost has been
mentioned and it is seen that proper maintenance of the strategies that have been advised will
lead to better long term performance for your money and attaining the desired lifestyle.
Commissions
The commission that will be given to me will be on the basis of the advice and the service
that I have provided. The commission will be divided among the company as well as for me. A
total amount of $ 220 will be charged out of which the company has a commission of $20 and
the rest will be my commission.
Authority to Proceed
Before signing the authority, I would like you to check that I have:
 Given you my Financial Services Guide (FSG)
 Provided you a Product Disclosure Statement (PDS) for every financial product that I
have recommended
 Explained to you about your personal scenarios, insurance requirements and financial
objectives in a way you understand, and answered your questions
 Explained any commissions I would receive.
If I haven’t done all of these things, do not sign the authority to proceed. Before you sign this
authority, please also make sure that you have:

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 Gone through all the documents I provided you
 Examined that your personal information in this document is true
 Asked me questions about anything that you want clarification.
By signing below, you agree to representatives of application on your behalf for the products
recommended in this Statement of Advice.
Cooling Off Period
In case you have applied for an insurance product that has already been suggested in the
Statement of Advice, in that case you may change your mind and you are eligible to cancel the
recommended product within 14 days of cooling period.

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