Superannuation and Retirement Planning-Written

Written Project
DFP3_AS_v6A1

Superannuation and Retirement Planning
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(DFP3_AS_v6A1)
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Student identification (student to complete)
Please complete the fields shaded grey.
Student number
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Written project result (assessor to complete)
Result — first submission (details for each activity are shown in the table below)
Parts that must be resubmitted:
Result — resubmission (if applicable)
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Result summary (assessor to complete)
First submission Resubmission (if required)
Section 1 Not yet demonstrated Not yet demonstrated
Section 2 Not yet demonstrated Not yet demonstrated
Section 3 Not yet demonstrated Not yet demonstrated
Section 4 Not yet demonstrated Not yet demonstrated
Section 5 Not yet demonstrated Not yet demonstrated
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Feedback (assessor to complete)
[insert assessor feedback]
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Before you begin
Read everything in this document before you start your written project for Superannuation and Retirement Advice (DFP3v6).
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About this document
This document is the written project, to be submitted with your Oral A project with audio recording. These assessments must be submitted before
submitting your Oral B project.
This document includes the following:
• Instructions for completing and submitting this project.
• Project sections (including fact finder templates, cash flow templates and managed funds calculations).
– Section 1: Establish the relationship with the client and identify their objectives, needs and financial situation.
– Section 2: Analyse client objectives, needs, financial situation and risk profile to develop appropriate strategies and
solutions.
– Section 3: Address clients’ questions and concerns about superannuation matters.
– Section 4: Present appropriate strategies and solutions to the client and negotiate a financial plan, policy or transaction.
Provide ongoing service where requested by the client.
– Section 5: Agree on the plan, policy or transaction.
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How to use the study plan
We recommend that you use the study plan for this subject to help you manage your time to complete the project within your enrolment period.
Your study plan is in the KapLearn Superannuation and Retirement Advice (DFP3v6) subject room. You must submit and complete your oral A
project, audio recording, written project and exam, prior to you commencing and submitting your oral B project and audio recording. We strongly
suggest completing your oral A project and audio recording, written project and exam in Week 10 and once completed, to then commence and
submit oral B project and audio recording no later than Week 12.
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How to use the sample case study and SOA
The sample case study provides a model to help you prepare your SOA for this project. The case study explains the process that is undertaken to
develop the SOA with reference to an example and it is a very useful resource. Download the sample SOA and refer to it as you work through the
learning materials for this subject.
Before you start work on this project, go back to the sample SOA and:
• compare how the SOA matches with the goals and objectives identified in the case study
• consider what information has been included in the SOA
• consider why this information has been included.
This exercise will help you prepare an SOA for this project that addresses your client’s goals. Please bear in mind that not all SOAs are exactly alike in
their construction, but all have common heading topics within them. Accordingly, there may be minor differences between the sample SOA and the
SOA template in this project. However, all the required compliance elements will be included in both formats.
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Instructions for completing and submitting this written project
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Saving your work
Download this document to your desktop, type your answers in the spaces provided and save your work regularly.
• Use the template provided, as other formats will not be accepted for these projects.
• Name your file as follows: Studentnumber_SubjectCode_Project_versionnumber_Submissionnumber
(e.g. 12345678_DFP3_AS_v6_Submission1).
• Include your student ID on the first page of the project.
Before you submit your work, please do a spell check and proofread your work to ensure that everything is clear and unambiguous.
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Submitting the written project
Only Microsoft Office compatible written projects submitted in the template file will be accepted for marking by Kaplan Professional Education. You
need to save and submit this entire document.
Do not remove any sections of the document.
Do not save your completed project as a PDF.
The written project must be completed before submitting it to Kaplan Professional Education. Incomplete written projects will be returned to you
unmarked.
The maximum file size is 20MB for the Written and Oral A Project. Once you submit your written project for marking you will be unable to make any
further changes to it.
You are able to submit your written project earlier than the deadline if you are confident you have completed all parts and have prepared a quality
submission.
Please refer to the Project submission/resubmission instructions (pdf) in the Assessment section of KapLearn for details on how to submit your
written project.
Refer to your study guide so you can plan ahead to complete your audio recording before the written and oral A project is due.
Note: The written project (in Word), oral A project (in Word) and audio recording must all be submitted together.
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The written project marking process
Please note: You have 12 weeks from the date of your enrolment in this subject to submit your completed oral A project and audio recording,
written project, exam and oral B project and audio recording.
You must submit and complete your oral A project, audio recording, written project and exam, prior to you commencing and submitting your oral
B project and audio recording. We strongly suggest completing your oral A project and audio recording, written project and exam in Week 10 and
once completed, to then commence and submit oral B project and audio recording no later than Week 12.
If you reach the end of your initial enrolment period and have been deemed ‘Not Yet demonstrated’ in one or more assessment items, then an
additional four (4) weeks will be granted, provided you attempted all assessment tasks during the initial enrolment period. Please note, you must
complete all the assessments in Oral A project, audio recording, written project and exam prior to commencing and submitting your Oral B project
and audio recording.
Your assessor will mark your projects and return them to you in the subject room in KapLearn under the ‘Written and Oral Assessment’ page.
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Make a reasonable attempt
You must demonstrate that you have made a reasonable attempt to answer all of the questions in your written project. Failure to do so will mean
that your project will not be accepted for marking; therefore, you will not receive the benefit of feedback on your submission.
If you do not meet these requirements, you will be notified. You will then have until your submission deadline to submit your completed written and
oral A project.
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How your written project is graded
Project tasks are used to determine your ‘competence’ in demonstrating the required knowledge and/or skills for each subject. As a result, you will
be graded as either ’demonstrated’ or ‘not yet demonstrated’.
Your assessor will follow the below process when marking your written project:
• Assess your responses to each question, and sub-parts if applicable, and then determine whether you have demonstrated competence in each
question.
• Determine if, on a holistic basis, your responses to the questions have demonstrated overall competence.
You must be deemed to be ‘demonstrated’ in all assessment items in order to be awarded the units of competency in this subject, including:
• all of the exam questions
• the written and oral A and oral B project.
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‘Not yet demonstrated’ and resubmissions
Should sections of your project be marked as ‘not yet demonstrated’ you will be given an additional opportunity to amend your responses so that
you can demonstrate your competency to the required level.
You must address the assessor’s feedback in your amended responses. You only need amend those sections where the assessor has determined you
are ‘not yet demonstrated’.
Make changes to your original submission. Use a different text colour for your resubmission. Your assessor will be in a better position to gauge the
quality and nature of your changes. Ensure you leave your first assessor’s comments in your project, so your second assessor can see the instructions
that were originally provided for you. Do not change any comments made by a Kaplan assessor.
Units of competency
This written project is your opportunity to demonstrate your competency against these units:
FNSFPL503 Develop and prepare financial plan
FNSFPL504 Implement financial plan
FNSFPL505 Review financial plans and provide ongoing service
FNSASICU503 Provide advice in superannuation
FNSASICZ503 Provide advice in financial planning
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We are here to help
If you have any questions about this written project, you can post your query at the ‘Ask your Tutor’ forum in your subject room. You can expect an
answer within 24 hours of your posting from one of our technical advisers or student support staff.
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Case study — Nathan and Mary Davidson
You are a financial planner for AFS licensee EANWB Financial Planning. Nathan and Mary Davidson have been undertaking their own research into
planning their retirement, and recently attended one of your firm’s retirement seminars. After this seminar they spoke with you about their concerns
that they may not accumulate enough money in superannuation to fund their retirement.
You met with them and during your initial meeting you provided them with some basic information, including a fact finder for them to fill out. You
then organised a second meeting, at which you collected more information on their current financial situation and spent time clarifying their needs
and objectives.
A summary of their financial situation, based on your interviews with the clients, is provided below. The completed fact finder, including the risk
profile questionnaire, can be found on page 11 of this project.
Current situation
Nathan, age 54, and Mary, age 52, are married and have two children, Jonathan and Sarah, who are nearing the end of their schooling.
They own their own home, valued at $600,000, and have recently received an inheritance from the estate of Mary’s mother.
Although they have cleared their mortgage, they still have access to a redraw facility of $100,000. However, they do not want to access this unless
there is as an emergency.
Nathan is a full-time sales representative for an agricultural supplies company. He earns $140,000 annually plus superannuation guarantee (SG)
contributions from his employer paid into the employer’s default fund.
Mary is primarily a self-employed marketing consultant and has business income net of expenses of $65,000 annually. She also works as a contracted
employee in a mining engineering company. Her hours vary, but typically she earns about $5,600 annually, plus SG which is paid into the employer’s
default fund.
Jonathan and Sarah attend a private school and Nathan and Mary pay a total of $7,000 annually in fees, uniforms, books, school trips etc.
The only other assets they have are their two cars.
Superannuation
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Nathan has $270,000 in his superannuation fund and Mary has $99,000. They are both invested in the default balanced option. Further details of
their superannuation are in the fact find (Appendix 1).
Neither Nathan nor Mary has made any personal contributions to their superannuation fund.
Nathan’s employer will allow salary sacrificing to superannuation without impacting on any other employee benefits and will maintain his SG
contribution based on his pre-salary sacrifice income.
Mary’s employer will not allow her to salary sacrifice to superannuation, but does make SG contributions to her superannuation fund.
Nathan and Mary are happy with their current superannuation funds and the underlying investments they are invested in. They do not wish to
receive advice in regard to changing their funds or investment portfolios.
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Insurance
Nathan and Mary’s their life insurance and total and permanent disability (TPD) insurance are owned by their superannuation funds.
Nathan and Mary both have self-owned trauma policies and income protection policies. Mary also has business overheads insurance.
Their cars are comprehensively insured and they have home building and contents insurance cover including legal liability cover.
Nathan and Mary have family private health insurance cover.
Further details on their insurance policies are in the fact find.
They have specifically stated that they do not require any advice on their insurance policies.
Investments
Nathan and Mary have not had any investments other than their superannuation. Surplus income had been used to pay off their mortgage.
However, they do have $350,000 in their savings account that was left over from the inheritance from Mary’s mother’s estate after paying off their
mortgage. This savings account, which is their bank’s ordinary transaction account, does not pay any interest.
Other information
Nathan and Mary have a credit card with a limit of $30,000 that they use for all their general expenses and entertainment. However, they never
spend up to their limit and their average expenses are $7,500 per month, which they repay within the interest-free period.
Nathan and Mary take regular annual holidays with their children, and spend approximately $10,000 per trip.
Other expenses include deductible charity donations of $1,220 and accountant’s expenses of $500 annually.
Needs and objectives
Nathan and Mary are concerned they will not have enough money to provide an adequate income in retirement. They do not want to rely on the age
pension and would like to be fully self-sufficient if possible.
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After your initial meeting with them, they reviewed their situation and decided they would like you to prepare advice using a retirement income of
$80,000 a year (in today’s dollars). They based this figure on their current spending after deleting items that will not apply after retirement (such as
school fees) and considering their desired lifestyle in retirement. They have used their bank’s ‘Retirement Projector’ and determined that if they live
to age 95 and earn 4% (net of inflation) on their investments, they will need almost $1.3 million in retirement savings when Nathan is age 65.
Nathan and Mary would like to channel their surplus income into their retirement planning now that they do not owe anything on their mortgage.
They have ‘parked’ the inheritance money in their savings account and plan to retain $50,000 in a secure investment to support the children in their
last years at school and into university. They want to invest the balance in a tax-effective way, and are considering adding it to Mary’s
superannuation to help her ‘catch up’ because she earns less than Nathan and took time out of the workforce to raise the children when they
were young.
Like most people, they would also like to reduce their overall tax liability.
Closing the interview
Before concluding your meeting, you review the information Nathan and Mary provided to check that it is complete and accurate and ask if they
have any questions.
Nathan and Mary understand from their own research that there are many ways to add money to their superannuation, but are confused about
which will be the most appropriate for them.
You advise Nathan and Mary what happens next and explain that, with their agreement, you will prepare a written report based on the information
they have shared with you, which will include recommended strategies to help them to achieve their financial goal of having adequate funds for
retirement.
Nathan and Mary agree to proceed to the next stage of the financial planning process and you make an appointment to present the plan in a
fortnight.
As their financial planner, your task is to prepare a statement of advice (SOA) that will include strategies to meet Nathan and Mary’s goals.
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Fact finder
Important notice to clients
Your planner must act in your best interest when making any superannuation and retirement recommendations. Therefore, before making a
recommendation, the planner must ask you about your investment objectives, financial situation and your particular needs.
The information requested in this form will be used strictly for that purpose.
Warning
The planner could make inappropriate recommendations or give inappropriate advice if you fail to fully and accurately complete this form.
Personal and employment details
Personal
details
Client 1 Client 2
Title Mr Mrs
Surname Davidson Davidson
Given & preferred names Nathan Mary
Home address 1 Galbraith Grove, Stanhope Gardens, NSW 1 Galbraith Grove, Stanhope Gardens, NSW
Business address n.a. n.a.
Contact phone [phone] (02) 6655 4477
Age 54 52
Sex  Male Female Male  Female
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Smoker Yes  No Yes  No
Expected retirement age In 11 years, approximately age 65 W
h
e
n
N
a
t
h
a
n
r
e
t
i
r
e
s
Dependants (children or
other)
Name Age Sex School Occupation
Jonathan 17 M Yes
Sarah 18 F Yes
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Employment
details
Nathan Davidson Mary Davidson
Occupation Sales representative Marketing consultant
Employment status Self-employed  Employee  Self-employed  Employee
Not employed Pensioner Not employed Pensioner
 Permanent Part-time Permanent Part-time
Casual Contractor Casual  Contractor
Other Government Other Government
Business status Sole proprietor Partnership  Sole proprietor Partnership
Private company Trust Private company Trust
Notes
Any other
person to be
contacted (e.g.
accountant,
banker,
solicitor etc.)?
Mary is
primarily a
self-employed
sole trader but
is also an
employed
contractor.
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Cash flow statement
Cash flow Nathan Mary Combined Comment
Salary less any salary sacrificed amount $140,000 $70,600 $210,600 Includes for Mary income net of
business expenses and income
from employment as above
Non-taxable income nil nil
Rental income n.a. n.a.
Unfranked dividends received nil nil
Franked dividends received nil nil
Interest nil nil No interest paid on cash
Other income (e.g. taxable benefits, trust income,
investment income)
nil nil
Total income received before tax $140,000 $70,600 $210,600
Investment expenses nil
Expenses
Mortgage nil nil
School fees $3,500 $3,500 $7,000
Utilities n.a. n.a. Paid as part of the expenses
through credit card
Personal insurance $5,496 $3,564 $9,060 Nathan’s annualised premiums:
$3,612 trauma, $1,884 income
protection
Mary’s annualised premiums:
$2,172 trauma, $420 income
protection, $972 business
overheads
Car insurance $1,600 $1,600 $3,200
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Home building and contents insurance $750 $750 $1,500
Health insurance $1,422 $1,422 $2,844
Living expenses $45,000 $45,000 $90,000 $7,500 per month through
credit card
Holidays $5,000 $5,000 $10,000
House maintenance n.a. n.a. Paid as part of the expenses
through credit card
Motor vehicle n.a. n.a. Paid as part of the expenses
through credit card
Other
$610 $610 $1,220 Donations
$150 $350 $500 Accountant’s fees
Total expenses $63,528 $61,796 $125,324
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Assets and liabilities
Asset Owner Value Liabilities Net value Notes
Personal assets
Family home Nathan/Mary $600,000 $0 $600,000 Redraw of $100,000 available
for emergency use
Home contents Nathan/Mary $150,000 $0 $150,000 Insured value
Car Nathan/Mary $11,000 $0 $11,000 2008 Ford Focus
Car Nathan/Mary $16,000 $0 $16,000 2008 Ford Falcon XR6
Total $777,000 $0 $777,000
Superannuation
Employer superannuation Nathan $270,000 n.a. $270,000 Balanced option
Employer superannuation Mary $99,000 n.a. $99,000 Balanced option
Total $369,000 $369,000
Other assets
Savings account Nathan/Mary $350,000 Nil $350,000 Transaction account
Total $350,000 Nil $350,000
Net worth $1,496,000 $0 $1,496,000
Liabilities
Loan Current debt Percentage tax
deductible
Interest only Repayment
Home loan n.a. n.a.
Investment property n.a. n.a.
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Investment loan n.a. n.a.
Personal loan n.a. n.a.
Other n.a. n.a.
Total $0 $0
Needs and objectives
Details Comments
Accumulate sufficient funds in superannuation to retire in
11 years on $80,000 a year
They estimate that they will need $1.3m in superannuation
when Nathan is around age 65
Use excess income for retirement saving
Retain $50,000 in a secure investment to support children in
their last years at school and into university
Invest balance of Mary’s inheritance for retirement
Reduce overall tax liability
Other
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Estate planning
Do you have a will?  Yes No
When was it last updated: O
c
t
o
b
e
r
2
0
0
9
Do you have powers of attorney?  Yes No
Current superannuation, insurances and investments
Superannuati
on
Member Nathan M
a
r
y
Fund name ASSF Super Fund C
I
S
F
S
u
p
e
r
F
u
n
d
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Date of joining fund 1 July 1992 (service date) 1
J
u
l
y
1
9
9
2
(
s
e
r
v
i
c
e
d
a
t
e
)
Type of fund  Accumulation Defined benefit  Accumulation Defined benefit
Pension Pensioner Pension Pensioner
Contribution
(e.g. 5% of salary)
SG By employer By yourself SG By employer By yourself
Current value of your
superannuation fund
$270,000 $
9
9
,
0
0
0
Amount of death and disability
cover
$720,000 $
7
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2
0
,
0
0
0
Is there provision for you to
top-up or salary sacrifice?
 Yes No Yes  No
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Superannuation taxation details
Nathan Mary
Current value $270,000 $99,000
Tax-free component $0 $0
Taxable component:
Taxed element $270,000 $99,000
Untaxed element $0 $0
Preservation:
Preserved $270,000 $99,000
Unrestricted non-preserved $0 $0
Restricted non-preserved $0 $0
Previous years contributions:
Non-concessional contributions:
Year 1 $0 $0
Year 2 $0 $0
Year 3 $0 $0
Year 4 $0 $0
Concessional contributions:
Year 1 SG only SG only
Year 2 SG only SG only
Year 3 SG only SG only
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Year 4 SG only SG only
Other contributions:
Small business CGT exempt contributions $0 $0
Personal injury payments $0 $0
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Nominated beneficiaries
Name Binding Non-binding
(Yes/No)
T
r
u
s
t
e
e
d
i
s
c
r
e
t
i
o
n
(
Y
e
s
/
N
o
)
Yes/No Amount
Nathan — Beneficiary is Mary Yes 100% No No
Mary — Beneficiary is Nathan Yes 100% No No
Are there any current flags or splits on your superannuation Yes/No N Details
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benefit in the event of a marriage breakdown?
Are you a beneficiary of any current flags or splits of a
superannuation benefit in the event of a marriage breakdown?
Yes/No N Details
Life insurance
details
Life insured Owner Policy type Company Policy
number
Death
benefit
Comments Annual
premium
DOES NOT WISH
TO BE
REVIEWED
Disability
insurance
details
Life insured Owner Policy type Company Policy
number
Death
benefit
Comments Annual
premium
DOES NOT WISH
TO BE
REVIEWED
Trauma
insurance
details
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Life insured Owner Policy type Company Policy
number
Death
benefit
Comments Annual
premium
DOES NOT WISH
TO BE
REVIEWED
Income
protection
insurance
details
Life insured Owner Policy type Company Policy
number
Benefit
amount
Waiting
period
Benefit
payment
period
Annual
premium
DOES NOT
WISH TO BE
REVIEWED
General
insurance
details
Item covered Owner Policy type Company Combined
policy number
Cover
amount
Other benefit Total annual
premium
DOES NOT WISH
TO BE
REVIEWED
Investment details
Investment type Company Purchase date Units held/
fixed rate
Current
value
Owner
Savings account East Antipodean National Wealth
Bank
n.a. $350,000 Nathan and
Mary
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Investment attitude details
Are you concerned about the amount of tax that you are paying? Yes/No
Why? Would like to pay less if possible; think tax rates are too high
How important is liquidity (i.e. funds available) to you? Very/Moderately/Not
Why? They are investing for the long term and have enough cash to meet short-term needs
If you had funds available for investing, how would you choose to
invest them? Why?
Not certain looking forward — probably in shares and/or
property depending how much is available. That’s one of the
reasons we are seeking advice
Are there certain investments that you wish to avoid? Yes/No
Which ones? Don’t want anything exotic or too risky
RISK PROFILE
Determining your investor risk profile P
o
i
n
t
s
This investor risk profile questionnaire has
been designed to help you understand the
type of investor you are, so that with the
help of your adviser, you can choose the
investments that best match your financial
objectives
Which of the following best describes your current stage of life? Nathan Mary
Single with few financial commitments. You are keen to accumulate wealth for the future. Some funds must
be kept available for enjoyment such as cars, clothes, travel and entertainment 50 50
A couple without children. You may be preparing for the future by establishing and furnishing a home.
There are a lot of things you need to buy. You are probably better off financially now than you may be in
the future
40 40
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Young family. This is the peak home purchasing stage. You have a mortgage and a very small amount of
savings. Probably dissatisfied with your financial position and the amount of money saved 35 35
Mature family. You are in your peak earning years and have the mortgage under control. Many partners also
work and any children are growing up and have either left home or require less supervision. You are starting to
think about retirement, although it may be many years away
30 30
Preparing for retirement. You probably own your own home and have few financial commitments;
however, you want to ensure that you can afford a comfortable retirement. Interested in travel,
recreation and self-education
20 20
Retired. No longer working and must rely on existing funds and investments to maintain your lifestyle.
You may be receiving the pension and are keen to enjoy life and maintain your health 10 10
What return do you reasonably expect to
achieve from your investments?
A return without losing any capital 10 10
3–7% p.a. 20 20
8–12% p.a. 30 30
13–15% p.a. 40 40
Over 15% p.a. 50 50
If you did not need your capital for more
than 10 years, for how long would you be
prepared to see your investment
performing below your expectations
before you cashed it in?
You would cash it in if there was any loss in value 10 10
Less than 1 year 20 20
Up to 3 years 30 30
Up to 5 years 40 40
Up to 7 years 45 45
Up to 10 years 50 50
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How familiar are you with investment
markets?
Very little understanding or interest 10 10
Not very familiar 20 20
Have had enough experience to understand the importance of diversification 30 30
Understand that markets may fluctuate and that different market sectors offer different income,
growth and taxation characteristics 40 40
Experienced with all investment sectors and understand the various factors that may influence
performance 50 50
If you can only get greater tax efficiency
from more volatile investments, which
balance would you be most comfortable
with?
Preferably guaranteed returns, before tax savings 10 10
Stable, reliable returns, minimal tax savings 20 20
Some variability in returns, some tax savings 30 30
Moderate variability in returns, reasonable tax savings 40 40
Unstable, but potentially higher returns, maximising tax savings 50 50
Six months after placing your investment
you discover that your portfolio has
decreased in value by 20%.
What would be your reaction?
Horror. Security of capital is critical and you did not intend to take risks 10 10
You would cut your losses and transfer your money into more secure investment sectors 20 20
You would be concerned, but would wait to see if the investments improve 30 30
This was a calculated risk and you would leave the investments in place, expecting performance to
improve 40 40
You would invest more funds to lower your average investment price, expecting future growth 50 50
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Which of the following best describes your
purpose for investing?
You want to invest for longer than five years, probably to age 55–60. You are mainly investing for growth
to accumulate long-term wealth 50 50
You are not nearing retirement, have surplus funds to invest and you are aiming to accumulate long-term
wealth from a balanced fund 40 40
You have a lump sum e.g. an inheritance or an eligible termination payment from your employer, and you
are uncertain about what secure investment alternatives are available 30 30
You are nearing retirement and you are investing to ensure that you have sufficient funds available to
enjoy retirement 20 20
You have some specific objectives within the next five years for which you want to save enough money 20 20
You want a regular income and/or totally protect the value of your savings 10 10
Investor profile total points 190 150
INVESTOR RISK PROFILE SUMMARY
0–50 Defensive
You are a conservative investor. Risk must be very low and you are prepared to accept lower returns to protect capital.
The negative effects of tax and inflation will not concern you, provided that your initial investment is protected
51–130 Moderate
You are a cautious investor seeking better than basic returns, but risk must be low. Typically an older investor seeking to protect
the wealth that you have accumulated, you may be prepared to consider less aggressive growth investments
131–210 Balanced
You are a prudent investor who wants a balanced portfolio to work towards medium to long-term financial goals. You require an
investment strategy that will cope with the effects of tax and inflation. Calculated risks will be acceptable to you to achieve good
returns
211–300 Growth
You are an assertive investor, probably earning sufficient income to invest most funds for capital growth. Prepared to accept
higher volatility and moderate risks, your main concern is to accumulate assets over the medium to long term. You require a
balanced portfolio, but more aggressive investment strategies may be included
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301–350 High growth
You are an aggressive investor prepared to compromise portfolio balance to pursue potentially greater long-term returns.
Your investment choices are diverse, but carry with them a higher level of risk. Security of capital is secondary to the potential for
wealth accumulation
Acknowledgment
The information provided in this financial fact finder is complete and accurate to the best of my knowledge.
I understand that a policy purchased without the completion of a fact finder, or following a partial or inaccurate completion,
may not be appropriate to my needs. I also understand that a policy purchased that differs from that recommended by the
planner may not be appropriate to my needs. I acknowledge that my planner has provided me with the completed financial fact
finder, signed by me.
Client(s) signature(s)
Planner’s name
Planner’s signature
Date
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The Project (student to complete)
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Section 1 Establish the relationship with the client and identify their objectives, needs and financial
situation
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Section 1 Part A — Establish relationship
Apart from the initial contact with the Davidsons at your retirement seminar, you have met with them twice in order to gather the information you
need to assess their situation and provide them with advice.
Briefly explain at least five (5) strategies you are likely to use with a client in order to ensure that they are comfortable with you and the interview
process. (200 words)
Answer here: Davidsons have met for particularly for making their retirement superannuation.
Nathan and Mary both are working as employees, but one is professional and other one is working
as contractor in the mining sector and also having a sole trader business. After hearing and
analyzing the case of Davidsons they have to be satisfied that their issue can be resolved. For
retaining and satisfying them that their work will be done accurately strategies are to be used.
Firstly they should be given brief profile of the firm and their work in the field and the years of
experience and key achievement of the firm. Second they would be provided with the
understanding of the whole case. They will be than given knowledge about each factor giving
detailed discussion of the same. What are the issues related to the family they will be given
understanding in language for building their confidence. Third they will be given understanding of
the possible options and solution that are available for the problem. Fourth giving them the best
options that could bring them maximum benefits. And at last Assuring them that they will be
given the best services and the problem will be sought out in best way by giving them briefings
about the steps that would be undertaken.
Assessor feedback: Resubmission required?
No
Page 46 of 136

Section 1 Part B — Adviser obligations
Referring directly to yourself and your licensee, explain what an FSG is and why it is necessary. Provide details of the law you must comply with and
the information the FSG must contain, including your complaints procedure. (250 words)
Answer here: FSG is the financial service guide that helps in making the informed decisions about
the services that are offered. FSG is an essential document which will explain how the financial
services will be provided to the clients. It will give sufficient information to make decisions
whether the financial services should be obtained or not. It give details about the financial
services, what it is authorized to provide. Details about the MDA services, about the warning and
risks associated and privacy provisions. It is essential to give the client complete details about the
services so that they are not misinformed about its authority and scope of services. They provide
clear provisions. The superannuation funds are mainly regulated under Superannuation Industry
Act, 1993 and financial services Reform act 2002. and employer contributions are regulated under
Superannuation Guarantee Act, 1992. Information required to be contained in the FSG are about
the authorized access to various provision and laws that could be approached by company. It
includes license and the scope. Financial or investment services provided by company it is
essential for the firm. The extent of advice that could be given on investment and its validity.
Should containing the risk sectors that in case of negative implications of the step arises. Complete
details about the firm and the working condition should be given. It should include the complaints
and help sections regarding the service provided by firm. They should provide assured services
regarding the compliant given by company.
Assessor feedback: Resubmission required?
No
Page 47 of 136

Section 1 Part C — Tax and cash flow
Using the information you have gathered from your clients (i.e. the information provided in the case study and fact finder), complete the table below
and determine their cash flow position and annual savings capacity.
You can assume that the clients have no tax deductions or liabilities other than those stated in the case study or fact finder.
Section 1 Table 2
Tax calculation Nathan Mary Combined Comments
Income from employment
Salary or income from employment 140,000 70600 210600
Salary sacrifice 12600 6354 18954
Salary after salary sacrifice 127400 64246 191646
Rental income NA NA NA
Unfranked dividends NA NA NA
Franked dividends NA NA NA
Franking (imputation) credits NA NA NA
Interest NA NA NA
Other income (e.g. taxable benefits, trust income,
investment income)
NA NA NA
Capital gains < 1 yr NA NA NA
Capital gains > 1 yr NA NA NA
Tax-free component of capital gains NA NA NA
Assessable income 127400 64246 191646
Deductible expenses 0 0 0
Donations 1720 0 0
Income protection insurance NA NA NA
Business overheads insurance NA NA NA
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Other NA NA NA
Taxable income 127400 64246 191646
Tax on taxable income 38220 19273 57493
Non-refundable tax offsets (e.g. LITO/SAPTO) NA NA NA
Medicare levy NA NA NA
Medicare levy surcharge NA NA NA
Franking rebate NA NA NA
Refundable rebates and offsets NA NA NA
Total tax 38220 19273 57493
Page 49 of 136

Cash flow Nathan Mary Combined Comment
Salary less any salary sacrificed amount 127400 64246 191646
Total expenses 90000 0 90000
Total income received before tax less total
expenses
127400 64246 191646
Total tax payable from tax table above 38220 19273 57493
Total net cash flow 89180 44973 134153
Assessor feedback:
[insert feedback]
Date assessed: Click here to enter a date
Does the student need to resubmit? No
Questions that need to be resubmitted
First submission Not yet demonstrated
Resubmission Not applicable
To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Page 50 of 136

Section 2 Analyse client objectives, needs, financial situation and risk profile to develop
appropriate strategies and solutions
Page 51 of 136

Section 2 Part A — Gaps in information
Identify any gaps in your data collection based on the fact finder in Appendix 1 and the summary of information provided. From the interviews, are
there any other issues that would need to be followed up with Nathan and Mary? (100 words)
Answer here: The gap in the information provided should be again reconfirmed with the client.
The information did not give details about the time period for which superannuation is to be
carried out. They have also not provided the details about the amount they are bale to sacrifice for
the fund. Complete details about the salary break should also be given by the Davidson family.
Nathan and Mary are required to claim the deduction under the donations to charitable trust.
They are required to have segregation of their salaried income so that deductions can be claimed
over the expenses.
Assessor feedback: Resubmission required?
No
Page 52 of 136

Section 2 Part B — Risk profile
Identify the Davidsons’ likely risk profile based on the information they have provided. Identify any concerns that you may have with their responses
compared with the information in the case study.
• Suggest questions you could use to clarify the responses.
• Justify why you do or do not think that the score and the resulting risk profile category is an accurate reflection of their tolerance to risk, and
decide on a profile for each. (250 words)
Answer here: Before beginning with the task to decide for the sacrifice and the arrangement
related to the tax provisions it is important to clarify the doubts related to the issues. All the issues
related to the case should be enlisted first by the firm and than client should be asked to resolve
the issues. It is essential for the firm to clarify the doubts or on which complete information is not
provided by the client. There are several factors on which client approval should be taken by the
firm before proceeding on further.
Whether the retirement benefit are to be availed by both individuals separately ?
Combined benefits could be availed for the superannuation fund by deducting equal sacrifices
from salaries ?
Can funds for the children education can be increased or decreased according to the requirements
?
Are the expenses claimed related to the business do not contain any personal expense of Mary ?
What amount of tax they are currently paying and how much variation is acceptable by them for
meeting the requirement of funds ?
Do children earn any income that is not assessable under income of parents ?
The score and the risk profile is an accurate reflection of the tolerance risk as they are ready to
increase the sacrifice for the retirement funds. Both are working so that they can have enough
benefits in their old age. Their tax returns show that they are ready to pay the tax and modify their
returns accordingly. Where the tax beyond the specified limit will not be tolerated by the clients.
Page 53 of 136

Assessor feedback: Resubmission required?
No
Page 54 of 136

Section 2 Part C — Strategies
Summarise appropriate retirement strategies for Nathan and Mary.
• Consider superannuation and non-superannuation assets and strategies.
• Provide a detailed explanation of why you consider these assets and strategies to be appropriate.
• Include the lump sum amount that Nathan and Mary will need at retirement to achieve their income goal, and strategies to help them reach that
goal.
• Provide a summary of other recommendations that you will include in your SOA for Nathan and Mary. (500 words)
Answer here: Superannuation funds refers the arrangements put in place by Australian
government. An efficient superannuation fund systems should be capable of meeting the needs
and requirement of people. Superannuation underpinning the entire retirement income system of
the assessee. A pension system is built on three pillars super contributions, age and voluntary
saving by assessee. The contribution requires contribution from employers equal to 9.5% on
income of the employee. It is helping superannuation industry and the members to maximize their
wealth and take benefits out of the funds on retirement. The scheme has become the largest
scheme in pensions. For increasing the superannuation they should make strategies that will help
company in maximizing the retirement benefits. No client want to be cash less after retirement
and coming of new generations. It is essential for companies to decide for the strategies that will
maximize their returns. The strategy include maximizing wealth by splitting the income. Splitting
strategy can be used for splitting the income between the assesse and spouse. This will allow to
keep some fund into their account. Splitting up to 85% of superannuation is allowed to the spouse
therefore splitting could be done. Investing in companies that have long term potential and will
yield more. They can use the funds on shares for superannuation.
Identifying the related risk and drawing the mix right. It is essential for the people to make an
appropriate mix that will increase their returns and reduce their risks. Retirees can choose for the
annuities that pay fixed monthly returns on the basis of their contributions. This provides
guaranteed scheme to the retirees in their old age. Another strategy for the superannuation could
be by acquiring the assets as reverse mortgage and equity release strategies which will provide
them with fixed returns after certain period. Investing in these assets provide them with fixed
amount of returns when they are retired. It is essential that these strategies help them in
maximizing their retirement benefits. This strategies will be adopted for maximizing the benefits.
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Company cannot provide for the details for the benefits of company. These strategies are most
appropriate as they do not attract any tax implications for the assessee. And these strategies like
return on shares and some other schemes are given deductions in the tax return that will help
them to reduce their tax liability as well.
For meeting their retirement goals of income Nathan and Mary will require 1.3 million aggregating
all the income and revenues that will generate income for their retirement.
Analyzing the current scenario of Nathan and Mary other recommendation for increasing and
maximing the returns on their retirement. Davidsons can also invest in other retirement benefit
scheme that will give returns after the retirement and which are tax deductible. They should invest
their funds in equity schemes that can provide benefit for the company. They should not provide
for other deductions. The shift of contribution could be made to the the return of spouse so that
the liability could be reduced by splitting the contributions. This strategies should be taken
carefully so that it could benefit the client and they are available with enough income funds on
retirement for their future spending.
Assessor feedback: Resubmission required?
No
Assessor feedback:
Page 56 of 136

[insert feedback]
Date assessed: Click here to enter a date
Does the student need to resubmit? No
Questions that need to be resubmitted
First submission Not yet demonstrated
Resubmission Not applicable
To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Page 57 of 136

Section 3 Address clients’ questions and concerns about superannuation matters
Page 58 of 136

Section 3 Part A — Product research
Nathan and Mary have stated they are happy with their current superannuation funds. If, however, it is requested, provide a summary of the type of
research you would conduct to ensure the suitability of these funds for the clients’ future retirement needs. (250 words)
Answer here: The research will be made on the basis of future plans of Nathan and Mary in terms
of their funding needs that they will be needed for fulfilling their aims and life goals. As with the
changing needs and expectation of the customers, I will be researching on the employment life of
Nathan and Mary, their living standard and their interest so accordingly I could frame the provide
for the best funds that would meet the future need of both as per their specification. The tax rate
is also a major factor that is crucial in developing a superannuation fund so I will be ensuring that
low rate of tax is levied and higher return will ascertained to Nathan and Mary in the future. I need
to find the provisions that are been applied towards the superannuation fund and in accordance
to the age of Nathan and Mary, the fund is to be created so that they could availed best
concessions with larger return in the long run. Through this, I will be getting rebate on the income
tax bills, less value of the tax has to be paid on the investments, getting government grants and at
retirement age of Nathan and Mary, their income will be resulted as tax-free. This fund will helps
them in diversifying their investments and having savings for the predetermined period that can
be used for any purpose whether it could be investment or meeting personal needs or expenses.
Assessor feedback: Resubmission required?
No
Page 59 of 136

Section 3 Part B — Client queries on superannuation contributions
Nathan and Mary have a number of questions about superannuation contributions after the seminar they attended and as a result of their research.
Respond to their questions, basing your answer on their personal situation. You may be required to re-educate the clients where they are confused
or misunderstand the superannuation rules.
Question 1
Nathan is confused about taxation of superannuation contributions. He has friends who write a cheque, send it to their superannuation fund and
claim a tax deduction. He asks:
Am I correct in assuming that we can both claim personal tax deductions for any superannuation contributions we make? Could you
explain the tax deduction rules
that apply to our situations, how much can we contribute and when we can start?
Answer Nathan’s questions. (250 words)
Answer here: Provisions in context of taxation on the contributions of superannuation as per the
Australian taxation reflects that in case when an employer contributes any amount to the
superannuation fund on behalf of its employee, amount of tax in this case is deductible for an
employee only in case when they lies within the limits of age based contribution. For the
employees that aged between below 35, the amount of tax deduction limits to $13935. For an
employee who aged in between 35-49, limit of deduction accounted as $38702 and those who are
aged above 50, deduction limit amounting to $95980 is been applied. Thereafter, the government
charges taxes on the superannuation contributions at 15% rate of interest per year. In addition to
this, surcharge is also been applied to the contributions where income of an employee is more
than $94691. However, income level above this amount, then surcharge value increases until the
income is reached. At this point of time, full surcharge of 15% is applied to the contributions made
towards the fund. In respect to this case, as Nathan aged 52 that is over 50 so he will be getting a
tax deduction limit of the amount $95980. In accordance with the Australian taxation system, the
benefits on superannuation might be taken as the lumpsum or as a pension.
Page 60 of 136

Assessor feedback: Resubmission required?
No
Page 61 of 136

Question 2
Mary asks:
We read an article recently that said Nathan can split the superannuation contributions he makes to my superannuation account. Is that
correct, and if so, how does it work?
Answer Mary’s question. (150 words)
Answer here: Referring to the Australian taxation, it has been analyzed that members can split
specific contributions with spouse in order to helps her in boosting super savings of their spouse.
For splitting, member will have to give an application as a request to split of an employer
contributions and the personal contributions that are been made in previous financial years.
Members can also opt for carry forward a contribution that is unused to the later years that
effectively increase the concessional contributions cap. This will be applied in the following
situation-
The concessional contribution of member for a particular year exceeds general concessional
contributions cap.
The sum super balance of the member prior to the beginning of financial year is lower than
$500000
If member has not used its contribution for last five years
As Nathan falls under all the situation so he can split his superannuation contribution with Mary
so that her savings increases.
Assessor feedback: Resubmission required?
No
Question 3
Nathan is concerned about tax payable if they invest any of their cash savings into superannuation. He says:
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I’ve heard that some people have had to pay tax on superannuation contributions at the highest tax rates. How can we be sure we won’t
fall into that trap?
Answer Nathan’s question. (150 words)
Answer here: The taxable income of the superannuation fund reflects a flat rate as 15% , but the
concessional contributions of such members whose income is exceeding the amount of $300000
are been subjected to 30% of the tax rate. So in this case it is not a concern for Nathan because its
earnings are less than $300000 that is $140000 so the tax rate levied will be 15% after which he is
eligible for getting tax deduction of a particular amount because he crossed the age of 50. This
shows that taxable income of majority funds of Nathan is less than his gross or the accessible
income. Therefore, Nathan can go for investing his savings into the superannuation fund as
doesn't have to bear higher tax rate on amount of money invested. He has to pay only 15% of the
income generated from investing the savings to the government as per the provisions.
Assessor feedback: Resubmission required?
No
Page 63 of 136

Section 3 Part C — Client queries on superannuation benefit payments
Question 1
Mary asks:
When and how can we access our superannuation? Can we get it if we are still working?
Explain the rule that applies in their circumstances. Explain when and under what circumstances they will be able to access their superannuation.
(200 words)
Answer here : Superannuation can be accessed when Mary attains the age of 60 or more as this is
considered to attain pension age. Mary can get there superannuation even when they are working
of certain conditions are being met. These conditions include if Mary cease gainful employment,
have no intentions to become gainfully employed in future. If any if the conditions are being
satisfied the Mary can withdraw there superannuation fund before the attainment of her pension
age. If Mary is aged less than 60 and wanted to take out the funds from superannuation then any
withdrawal done would be taxable depending upon the amount withdrawn. Any amount that is
withdrawn above this low rate threshold will be taxed at 17% or your marginal tax rate whichever
is lower. It is essential for the business to ensure that they can provide the access for the funds
before the retirement only if they are not left with the job. Funds could be released before the
retirement only for managing debts of company. If Mary release the funds before retirement they
have to pay tax on release of superannuation funds. The tax is to be made regardless of the
payment that is received by Mary.
Assessor feedback: Resubmission required?
No
Question 2
Nathan asks:
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I understand that we are too young to access our superannuation any time soon. In general terms, please explain how we would be taxed
right now if we were old enough and retiring and we took our money out as a lump sum. I don’t want to commit to something that will
work against us.
Discuss the situation if the lump sum was taken at retirement after age 60 and just before age 60. Include a brief explanation of components of the
lump sum, how they are taxed and any other matters relating to them? (200 words)
Answer here: There will be different tax implications if the superannuation is taken out before and
after the age of 60, if Nathan is aged less than 60 and wanted to take out the funds from
superannuation then any withdrawal done would be taxable. Different tax rates are charged
depending upon the money withdrawn, the current threshold is that the money withdrawn up to
$205000 would be tax free but this is a lifetime limit. Any amount that is withdrawn above this
low rate threshold will be taxed at 17% or your marginal tax rate whichever is lower. If Nathan is
withdrawing a lump sum amount at there preservation age (the age at which Nathan can
withdraw his super, there are some condition of releasing fund) then it will be taxed at 22% or
your marginal tax rate whichever is lower. There are limited circumstances in which Nathan can
withdraw before his preservation age. If Nathan is above 60 then he can generally withdraw from
his superannuation fund at tax free rates, as he has achieved his pension age and you are being
eligible for withdrawing. So Nathan should keep in mind these tax implications before withdrawing
as he needs saving for his older age too.
Assessor feedback: Resubmission required?
No
Page 65 of 136

Question 3
Mary asks:
I don’t like the idea of paying lump sum tax and then losing some benefits. Tell us more about these income stream options. How do they
work? What are the rules that apply and how much tax do we pay if we were to commence an income stream now or could we access our
superannuation now?
Discuss this in broad terms and explain the situation immediately before and after reaching age 60. Assume Mary and Nathan will continue to work
until age 60 and then retire. (300 words)
Answer here: The superannuation fund could pay the benefits to the member as the super income
stream in case the member has been met with one of conditions in relation to release. Super
income stream is counted as the series of the periodic payments to the member. There are
different types of the income streams available to the member as follows-
Account based- Under this an income stream is been paid from the super account that is held in
name of the member.
Non-account based- In this, income stream does not contain an identifiable account balance in
name of member. Under this the member will be receiving a regular income, that is usually
guaranteed for the life or for the fixed time period.
There following standards that has to be followed by Mary and Nathan in respect of their income
streams-
Minimum amount is to be paid every year and the payments occurs at least on annual basis
There is no any maximum amount of annual payment except for the transition to the retirement
income streams.
Income stream could be commuted as the lump-sum only in specific conditions.
The capital supporting an income streams cannot be added by way of the contribution or the
rollover once an income stream is been started.
An income stream that is account based does not have a value of residual capital on the
termination, however, non-account based income stream might have the residual capital value.
Income stream that cannot be paid to the non-dependent beneficiary just after death of member.
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In case if such standards are not been met in income year, income stream will be ceases for the
purpose of income tax and considering fund that has not been paid at any of the time during a
period.
Mary has to pay different tax rate on different income stream but the flat rate is 15%
Assessor feedback: Resubmission required?
No
Assessor feedback:
[insert feedback]
Date assessed: Click here to enter a date
Does the student need to resubmit? No
Questions that need to be resubmitted
First submission Not yet demonstrated
Resubmission Not applicable
To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
Page 67 of 136

Section 4 Present appropriate strategies and solutions to the client and negotiate a
financial plan, policy or transaction. Provide ongoing service where requested by
the client
You must now prepare an SOA based on the recommendations made, which will be used to record this advice (including amendments, if any) for
Nathan and Mary. Remember that the SOA must be of a standard that is compliant and would be suitable to present to a client.
Important instructions
• What to submit: You have been provided with cash flow templates to use for the project SOA. Please include them with your submission.
• Template SOAs and SOA preparation software: Do not use the sample SOA published by ASIC as a basis for your submission. The use of financial
planning software and dealer templates to prepare your SOA is also not permitted. Submissions that exhibit excessive reliance on SOA templates
may be considered to be plagiarism or collaboration, and may not be considered to be a reasonable attempt at the project.
• Assumptions: You must list the assumptions used in your SOA in your project submission. These will generally include:
– any assumptions you have made regarding missing background information on the clients
– any assumptions you have used to calculate future income from your recommended investments
– any assumptions used for fees and premiums relating to the products you have recommended.
• Strategy advice: You must provide specific strategy recommendations in the following areas based on the information given:
– wealth creation strategies to meet retirement needs
– personal investments
– strategies using superannuation
– asset allocation.
Use the information on each of these areas given in the subject notes to provide reasons for each of the strategies recommended.
• Product advice: Specific product recommendations are not required; however, you do need to make and justify any recommendations of the type
of product(s) selected for the client’s consideration.
You have been told the clients are happy with their current superannuation funds and do not require any specific advice on their current personal
insurance arrangements. However, it is expected that you will provide in the ‘Things to consider section’ of the SOA, appropriate comments about
any issues you have identified with these areas and their future estate planning needs.
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• Cash flow projections: You must include detailed cash flow tables using Appendices 1 and 2 as a template, showing Mary and Nathan’s situation
before and after your recommendations. These should be included as Appendices 1 and 2 to your SOA.
• Recommendations: You should include superannuation projections up to the retirement age of your clients before and after your
recommendations as Appendix C to your SOA. In addition, please show that your strategy will enable your clients to meet their retirement income
goal for 21 years (based on Nathan living to age 84 and Mary to age 85).
Page 69 of 136

The SOA template
An SOA has been commenced for Nathan and Mary Davidson, using the data collected in the interviews, their fact finder and their risk profile. You
must complete the remaining sections in the SOA as directed. The SOA starts on the following page. Please review the sample case study and the text
as a guide to completing your SOA.
Page 70 of 136

Statement of advice
Prepared for
Nathan and Mary Davidson
Prepared by
<Your name>
Authorised Representative Number: 66666
AR address
AR contact details
Authorised Representative of
EANWB Financial Planning
ABN: 1010101010
Australian Financial Services Licensee
Licence No. 101010
Head office: 88 Money Lane, Accumulation.
You are entitled to receive a statement of advice (SOA) whenever we provide you with any personal financial advice. Personal financial advice is advice that takes into account any one or more of your objectives, financial
situation and needs.
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This SOA is a record of the personal financial advice provided to you and includes information on the basis on which this advice is given, information about fees and commissions and any interests or associations which might
influence the advice.
If this advice includes a recommendation to you to acquire a particular financial product, other than securities, or an offer to issue or arrange the issue of a financial product to you, we will also provide you with a product
disclosure statement containing information about the particular product to help you make an informed decision about that product.
Be aware that the advice contained in the following SOA is valid for a period of 30 days only. If the plan is not implemented within this time, it will need to be reviewed for accuracy.
Page 72 of 136

Executive summary
In this section, you need to provide your client with a concise summary of:
• their situation
• their objectives
• your recommended strategy to achieve the objectives
• the outcomes your client can expect from adopting the strategy.
The client should be able to read this executive summary and understand the advice you are giving
and the reason/s underpinning the advice, and be able to determine whether or not their goals
have been achieved. There should be sufficient detail to allow the client to make a decision, taking
into account any risk/s involved and your fees. It should be written without using jargon and in
clear, unambiguous language, and be appropriate to their level of financial understanding.
Your situation
Summarise your clients’ current situation. Provide a brief statement about their family, employment, health, asset and debt position. (150 words)
Nathan as per information available age is 54, and Mary, age is 52, and both are married and have
two children whose names are Jonathan and Sarah. Jonathan and Sarah school will come to end.
Currently you own a home whose value is $600,000, and you recently received a ancestor
property from the estate of Mary’s mother.
Salary of Mary is 5600 and same of Nathan is 140000. Nathan work in agriculture firm and Mary
acts as consultant and run business as well as also do job. They have home valued 600000.
Nathan’s your boss permit salary sacrificing to superannuation while all other employee benefits
will remain same and will maintain his SG contribution based on your pre-salary sacrifice income.
Mary’s boss does not permit salary sacrifice to superannuation. However, he will make SG
contributions to her superannuation fund. As part of asset apart from home you have car. Thus,
we have major requirements and accordingly portfolio will be prepared for you.
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Assessor feedback: Resubmission required?
No
Your objectives
List your clients’ objectives (i.e. their financial and non-financial goals, objectives and needs). Nathan and Mary expressed a desire to address their
immediate needs and medium and long-term objectives. Summarise these in point form for Nathan and Mary to confirm. (100 words)
 Nathan and Mary want to channel their surplus income into their retirement planning and
it is their main objective and goal. Nathan and Mary do not have sufficient income to meet
needs after retirement. Hence, they intend to make investment.
 Medium term objective: To earn return consistently at stable rate.
 Long term objective: To generate sufficient amount so that needs after retirement can be
fulfilled.
 To reduce tax liability
Assessor feedback: Resubmission required?
No
Page 74 of 136

Summary of our strategy and recommendations
For the short term — up to one year
Summarise your recommendations for your clients’ short-term goals. Present the strategies in point form to provide a quick picture of your
intentions.
 For one-year investment will be made in superannuation fund so that sufficient return can
be gain in invested amount.
 Keeping aside specific amount so that can be invested on time equity run in loss.
Assessor feedback: Resubmission required?
No
For the medium term — two to five years
Summarise your recommendations for your clients’ medium-term goals. Include strategies that cannot be considered immediately or require
monitoring.
Answer here: In order to meet medium term requirements investment can be made in shares so
that more and more return can be gained on invested amount.
Assessor feedback: Resubmission required?
No
For the long term — more than five years
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This is where you need to summarise your recommendations for your clients’ long-term goals.
 If investment in equity seems to be profitable then further more amount can be invested.
Further investment amount can be increased by 30%.
 If it is identified that stock market failed to generate results then in that case investment
can be made on mutual funds.
Assessor feedback: Resubmission required?
No
Page 76 of 136

Summary of expected outcomes if you implement our advice
For example:
Should you proceed with the recommendations contained within this report, we estimate that:
• You will reduce your debt by $XYZ and/or save $ABC.
• You will build wealth in non-superannuation assets to $Y through regular contribution of $X.
• Your objective of yyy will be achieved by…
• Align the outcomes with the objectives.
 If advise is implemented good amount of return can be gained. Investment in
superannuation will not be made altogether.
 In varied years in instalment investment will be made in superannuation fund. Some of
amount will be invested in non-superannuation asset which is equity.
 Objective is to earn return in such a way so that old age needs can be easily fulfilled.
Assessor feedback: Resubmission required?
No
Risks in our advice
Identify both financial and non-financial risks that can impact the desired outcome.
Answer here: Financial risk is that economic factors affect a lot to the stock market. If GDP or any
economic indicator give poor performance then in that case stock market tumble. Ultimately, if
such kind of scenario happened then in that case return on equity will decline. It is one of non-
financial risk which affect desired outcome. If firm earn less profit in the business then in that case
stock price decline and loss observed on investment. This is another financial risk that can impact
desired outcome on invested amount.
Page 77 of 136

Refer to the sample SOA for examples of relevant descriptions that should be included here and
under each subheading below. Include risks that are specific to your strategies.
Assessor feedback: Resubmission required?
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Summary of our fees and commissions
Answer here: 2% brokerage will be charged on each transaction. It is nominal percentage and can
not hit return on stocks to great extent.
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Your next steps
Time to time portfolio will be evaluated in order to access performance.
Make sure you have full understanding of our advice.
If you have any doubt then contact us.
Assessor feedback: Resubmission required?
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Body
While this section contains similar headings as the
Page 78 of 136

executive summary, the information provided is
more detailed and supports the recommendations
made. As with the executive summary, it should
be written without using jargon and in clear,
unambiguous language, and be appropriate to
your client’s level of financial understanding.
Page 79 of 136

Important information about you
This section contains information about you that we used in preparing our advice, such as:
• your reasons for seeking advice
• what you would like to achieve
• your personal and financial information.
Page 80 of 136

Present position
Your reasons for seeking advice
Outline why the clients sought advice.
Answer here: After leaving job permanently one intends to have sufficient fund so that old age
needs can be fulfilled. Hence, there must be a source of income from where fixed amount can be
gained every month within a year.
Assessor feedback: Resubmission required?
No
What you would like to achieve
Summarise here what you understand to be your clients’ main objectives.
Following our discussions, here is what I understand to be your main objectives and needs:
Answer here: Client main objective is to develop alternative source of income so that old age
needs can be financed as maximum as possible. Second main objective is to earn maximum
possible return. Alone if one will be dependent on superannuation then that is not possible
because return on superannuation is quite low. On other hand, if investment is made in equity
good return can be gained.
Assessor feedback: Resubmission required?
Page 81 of 136

No
Page 82 of 136

Your personal and financial information
Listed below is a summary of your relevant personal and financial details that you have provided.
Personal information
Personal details
Fill the gaps
Client 1 Client 2
First name(s) Nathan Mary
Surname Davidson Davidson
Age
Marital status Married Married
Health status
Smoker status Non-smoker Non-smoker
Employment status Permanent Part-time
Employer name
Occupation Sales representative Marketing consultant
Annual salary $140,000 $70,600
Summarise the discussion points that could/need to be raised here.
Answer here: Main point which need due attention is that equity is highly risky but higher return
generating investment. Thus, approach need to be identified that must be followed to control risk
on investment.
Page 83 of 136

Assessor feedback: Resubmission required?
No
Children and dependant details
Answer here: Both are dependent and study in school.
Your existing insurance
Fill any gaps.
Personal insurance 9060
Car insurance 3200
Home contents Insurance 1500
Health insurance 2844
Page 84 of 136

Your existing estate planning
Summarise the clients’ existing estate planning provisions here.
Answer here: An existing estate planning structure of Nathan and Mary reflects the points in
relation to health care, power of attorney, life insurance, understanding the estate taxes,
developing alternatives of investment, reviewing different income streams etc.
Assessor feedback: Resubmission required?
No
Financial information
Current income and expenses details
Income and expenses
Complete the table:
Nathan Mary Total
Assessable income 152600 70600 223200
Net tax payable 38220 19273 57493
Yearly expenses 90000 0 90000
Estimated surplus 24380 51327 75707
Discussion points:
Page 85 of 136

From the table you have prepared and your cash flow analysis, identify questions you will need to ask about their income, lifestyle, expenses and
intentions, before you start preparing your strategies. What are the gaps? (100 words)
Answer here: The above analysis indicates that the total accessible income calculated as 223200
and the amount of tax payable attained as 57493 with an yearly expense of 90000. The resulted
surplus equated after deducting the taxes and expenses from income as 75707. This means that
adequate profits are generated by them after meeting their expenses.
Assessor feedback: Resubmission required?
No
Page 86 of 136

Assets and liabilities
Value Liability Net value
Home $600000 $0 $600000
Home contents $150000 $0 $150000
Motor vehicles $27000 $0 $27000
Personal assets
Employer superannuation — Nathan $270000 n.a. $270000
Employer superannuation — Mary $99000 n.a. $99000
Savings account $350000 NIl $350000
Investment assets $350000 $350000
Net worth $1496000 $1496000
Discussion points:
Prepare discussion points you will use to obtain a better understanding about how your clients see their situation and future. What are their
attitudes to debt, personal assets, investments and superannuation assets that can assist you with your advice? What are the gaps? (100 words)
Answer here: The above evaluation shows that the future situation of client is better as its net
worth amounting to $1496000 and has made an adequate amount of investment towards its
personal assets, investments, superannuation etc. These assets reflects that Nathan and Mary will
earn a sufficient amount of profits in the future through its superannuation funds, savings and the
investment made by it in other assets. The gap is present in between the actual and the expected
returns that will be attained from the fund in the future periods so they must opts for taking
corrective action in order to reach their expected gains with that of the actual gains.
Page 87 of 136

Assessor feedback: Resubmission required?
No
Incomplete and/or inaccurate information warning
Note that if, for any reason, the information on which our advice is based is incomplete or inaccurate, then it may not be appropriate. Before acting
on the advice, you should consider its appropriateness in light of your particular circumstances, needs and objectives.
Page 88 of 136

Your risk profile
In this section, you need to provide:
• an overview of the different risk profiles
• the risk/return characteristics of various asset classes
• the client’s risk profile including the appropriate mix of assets (the asset allocation) for the client’s risk profile, the appropriate investment return
time horizon for that profile and any specific concerns. Discuss their attitudes to investing and any other experience or interests that can support
your assessment.
Personal attitude and diversification
Client is risk taker by nature and due to this reason 50:50 ratio will be prepared for
superannuation and equity.
Investment time horizon
As proposed above investment will be made in equity and superannuation fund. In case of equity
risk is high and return is high. On other hand, in case of superannuation fund risk is low and
return is moderate. Investment will be made for five years.
Your risk profile and recommended asset allocation
History reflect that investment in equity is always risky. Investor if take higher risk on investment
then in that case return will also be high or vice versa. On other hand, if investment is made in
interest-based securities then in that case risk but return is also low. We believed that investment
must be made in the balanced manner so that risk can be reduced and profit can be maximized.
Asset class
Recommended
exposure Strategic allocation
Cash 15%-20% 20%
Fixed interest 10%-25% 25%
Property 10%-20% 10%
Australian shares 15% to 25% 25%
Page 89 of 136

International shares 20% to 30% 20%
Page 90 of 136

Assessor feedback: Resubmission required?
No
Page 91 of 136

Strategy recommendations
This section tells you:
• what our advice is and why it is appropriate for you
• reasons for our recommendations
• what you need to consider and any risks associated with our advice.
Read this section carefully and ask me if you have any questions.
Recommended action — first year
You will use your findings from the analysis you did in the project above as the basis for the
information you will need to provide in this section.
For each recommendation below discuss the reasons, risks, advantages and disadvantages.
All recommendations should be listed here. They are to include investment and debt management
recommendations. You are not required to provide specific advice to your client about their estate
planning needs. However, if after analysis of their situation you believe that advice is required, you
need to explain what advice they should seek and why.
Concept. If you use technical terms or concepts in your discussion explain what the terms mean.
For example, do not assume they know what ‘gearing’ or ‘franking’ means
Note: You do not have to complete all of the recommendation boxes below. You can add more
boxes if required.
Recommendation 1
Answer here: Reasons: Investment in superannuation fund is determined because investment in it
is safe. It is very important to at least allocate specific proportion of assets. Investment in
superannuation is recommended because it will help you to control risk to some extent. Main aim
is to invest 25% portion of overall investment amount in fixed interest securities. It is expected
Page 92 of 136

that to some extent investment in superannuation and other interest-based securities will lead to
reduction in risk of overall portfolio. Risk is low and due to this reason emphasis is given on making
investment in superannuation fund. Advantage of making investment in superannuation is that
fixed return will be gain and risk will be low. On other hand, disadvantage is that return
percentage is low then equity.
Assessor feedback: Resubmission required?
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Recommendation 2
It is recommended that client must make investment in equity and its proportion must be 25% in
overall portfolio. Investment is made on equity to boost return on portfolio. Main aim is to make
balanced portfolio and due to this reason just 25% investment is made on Australian equity. One
of major risk factor associated with equity is that it is highly volatile in nature because it take in to
account number of factors like market conditions and domestic as well as global economy,
because of all these factors stock generate higher and lower return. Main advantage of equity is
that higher return can be gained but need to take high risk. Disadvantage is that in case market
decline equity we invest may generate very low return.
Investment will also be made in international shares and percentage of same would be 20% in
overall portfolio. Many times, world economic conditions are better but domestic conditions are
not good. Hence, investment is made in international equity separately so that if domestic firm
shares failed to generate return then in that case profit can be gained on international equity. Risk,
advantages and disadvantages are same as discussed above for domestic equity.
Page 93 of 136

Assessor feedback: Resubmission required?
No
Page 94 of 136

Recommendation 3
It is recommended that client must keep aside specific amount of money or cash with it or in bank.
This is because in life any unfortunate event may happened or investment expenses or loss on
investment may be observed. Hence, to ensure that client will handle such kind of jerks easily
separate cash must be kept aside. $500 per month can be saved and kept in bank account so that
client can handle condition which need cash immediately.
Assessor feedback: Resubmission required?
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Recommendation 4
Investment will also be made on property because in case demand in market rise property
generate very higher return for the investors. If investment is made on it on right time then in that
case better return can be gained, even more then equity. Risk is that if economy observe deflation
then value of property will decline and loss may be faced on investment. Advantage is that market
is not much volatile like equity in terms of trend. Hence, better decisions can be taken by the
investor in case of property investment. Disadvantage is that if economic slowdown happened
then in that case low or not profit can be observed on investment.
Assessor feedback: Resubmission required?
No
Page 95 of 136

Things you should consider
In this section briefly discuss strategies that you did not recommend that could be considered at another time and how they could benefit the clients.
Answer here: In case equity generate negative results then in that case investment can be made
on mutual funds. This is because in mutual fund managers manage entire fund and take steps to
protect return on investment. Hence, it can be said that if equity failed to generate results mutual
fund can be best available option.
Refer to the sample SOA for examples of relevant descriptions that should be included here and
under each subheading below.
Assessor feedback: Resubmission required?
No
Retirement planning
Briefly state what has been achieved with your strategies and highlight what still needs to be addressed or reviewed.
Answer here: Strict implementation of strategy lead to better risk management and earning of
moderate return. Companies shares in the portfolio can be reviewed and those which are
generating less return can be replaced by new one in the portfolio.
Assessor feedback: Resubmission required?
No
Estate planning
Page 96 of 136

You have recorded the clients’ estate planning details for completeness of information gathered in the fact finder. You have explained that you
cannot provide legal advice. However, if you see deficiencies in their current structure, discuss them briefly and suggest a course of action. (100
words)
Answer here: Estate planning of Nathan and Mary comprises deficiencies regarding non-
compliance of legal, financial and the tax professional as they didn't met with a lawyer of estate
planning. This is said to be the major mistake because they are having complicated assets which
cannot be settled down effectively without the lawyer. If they would hire an experienced attorney
then they could be provided you with proper strategies relating to tax planning on the basis of the
particular needs and the demands of the estate.
Assessor feedback: Resubmission required?
No
Taxation issues
Superannuation are subject to tax. Tax rate of 15% will be charged on the income from
superannuation. Capital gain tax will be charged on gain made on equity. However, if any year loss
is faced and in other year gain is observed on investment then in that case both can be offset.
Assessor feedback: Resubmission required?
No
Page 97 of 136

Recommended asset allocation
Proposed asset allocation
Your investment assets are invested across various asset classes. The table below summarises:
• weight: the proposed asset allocation resulting from our recommendations
• risk profile weight: the recommended asset allocation for your investment risk profile
• variance (weight): the variance between the recommended and proposed asset allocation.
Asset allocation after implementation of recommendations
Asset allocation Weight Risk profile weight Variance (weight)
Defensive assets
Australian cash 20% 15% -13%
Australian fixed interest 15% 15% -14%
International fixed interest 10% 0% -7%
Total for defensive assets 45% 40% -33%
Growth assets
Australian equities 25% 25% -16%
Australian property 10 20% 47%
International equities 20% 15% -4%
International property 0% 0% 0%
Total for growth assets 55% 60% 33%
Page 98 of 136

Grand total 100% 100% 0%
Comments on proposed asset allocation versus your risk profile
You need to explain the reason for any large (greater than 10%) variances here. Refer to the sample SOA for a discussion on variances. Discuss how
the situation will change over time.
Portfolio is prepared by considering your risk tolerance level. Portfolio is made in balanced manner
and under this 25% investment is proposed to be made on fixed interest security, 10% investment
is made on property, 25% investment is made on Australian shares and 20% investment is made
on international shares. Thus, overweight is given on equity in order to generate higher
percentage of return for you. As you are moderate risk taker and due to this reason 45% overall
allocation is made on equity. 25% investment is made on fixed interest security so that if return
decline in equity then on that case that loss will be offset by return gain on property and fixed
interest securities.
Assessor feedback: Resubmission required?
No
Page 99 of 136

Investment product recommendations
Product recommendations
Note that I can only recommend products on our recommended list, which has been approved by
EANWB Financial Planning.
Use the space below to list the products that you are recommending Nathan and Mary invest in and those that they already have that you
recommend they keep.
Nathan and Mary Davidson, following our investment strategy, we recommend that you invest in
the following products:
You must make investment in superannuation fund of Australia.
Make investment in Commonwealth bank fixed deposit 5-year scheme.
Must open demat account with CMC market and start making investment in varied companies
shares.
Assessor feedback: Resubmission required?
No
Relevant research material and product disclosure statements (PDSs) are attached for your attention. It is important that you read these documents
carefully and contact us if you have any questions or if there are areas of the document that you do not fully understand. All of these products are on
our approved recommended list.
Note: You do not need to include these PDSs as part of your project. The above statement is a standard inclusion in an SOA.
Cooling-off period
Details on the cooling-off period for each product are provided in the PDS.
Page 100 of 136

Disclosure of remuneration, commissions and other benefits
How are we paid?
Commissions and fees — upfront, ongoing and financial planning advice fees
If you are charging SOA preparation fees, implementation fees, ongoing advice fees, or any other
non-product related fees, you must provide the details here. You may need to source information
outside of the subject notes to complete this requirement. However, you can use the examples of
how fees are shared between advisers and licensees from the sample SOA if needed.
If you are not charging these fees you may either delete the table below or fill it in with $0 as the
fee charged to make it clear.
Fee type Initial fee Initial fee paid to licensee Initial fee paid to adviser
SOA fee 0 0 0
Implementation fee 0 0 0
Ongoing advice fee* 0 0 0
Total 0 0 0
*If the ongoing service fee is charged as a percentage of the product(s), you may use the table below instead. If you are charging a flat fee
or an hourly fee you should use this table.
Investment recommendations
Summarise all of the products that you have recommended to the client here. Refer to the sample
SOA for examples of what to include. You will need to source information outside of the subject
notes to complete this table, based on the products you have used (or created).
Page 101 of 136

Assessor feedback: Resubmission required?
No
Page 102 of 136

If you wish to implement the products I have recommended, there may be initial and ongoing fees applicable as detailed below.
Product Initial fee Initial fee paid to
licensee
Initial fee paid to
adviser
Ongoing fees
paid to licensee
Ongoing fees
paid to adviser
Answer here 100 150 50 70 80
Answer here 100 150 50 70 80
Total 200 300 100 140 160
Note: Please see the sample SOA for directions on completing the answers in the paragraphs below.
Product providers will also charge a fee for the management of the funds invested in their products. The annual management fee charged by Answer
here is Answer here%. The amount you will be charged will depend on the funds you have invested.
For example, $Answer here invested with them will incur a $ Answer here annual management cost.
Commissions
Our policy on taking commissions from product and service providers is summarised below:
Answer here: The policy of consultant firm in relation to taking commission from the service
providers reflects that they will charge a commission of 2% from the overall sales and the revenue
generated from the service providers.
Assessor feedback: Resubmission required?
No
Other fees and benefits
Page 103 of 136

EANWB Financial Planning and I may also receive additional benefits. Where the benefits received are greater than $300 in value, they will be
recorded in a register that meets the requirements of the Financial Planning Association (FPA) Code of Professional Practice on alternative forms of
remuneration. A copy of the register for EANWB Financial Planning is publicly available and can be provided on your request.
Ongoing services
You need to make sure that your client fully understands what you are offering in terms of ongoing service.
Draft an outline of the level of ongoing service you intend to recommend to Nathan and Mary. In your outline, discuss the type of information that
you would regularly provide to Nathan and Mary in relation to their financial planning needs. (250 words)
Answer here: Discussing and analyzing the overall case Nathan and Mary it would now be
provided services related to the returns. It is essential that outline of the services that will be
provided to the client. Discussing the service will make the client rely upon the services that will be
provided this will help in building confidence in the client. Services that will be provide by the
company should be structured so that issues can be reconfirmed by the client. Client will be given
draft of the calculations related to the relevant taxable head how that could be changed and what
will be their implications on the income and tax return. Client should be given the guidance
regarding the key options and possible options that can be taken for company. They will be
provided with other guidance regarding their income and what steps could be taken for reducing
their tax liability. The service will guide them regarding the investment schemes for the retirement
that will help in maximizing their returns. Also the updates about the new investment schemes will
be provided by firm so that they any alternative investment coming before or after the tax return
date. (refer to the sample SOA for the sorts of services you could include here)
Assessor feedback: Resubmission required?
No
Page 104 of 136

Ongoing service fee
What would you do to ensure that Nathan and Mary know the specific costs relating to an ongoing service? (100 words)
Answer here: The firm will be provide a document to Nathan and Mary in which all the details
regarding the cost of a ongoing service is mentioned. This document will help them in evaluating
the accurate amount of estimations relating to cost so that accordingly they will be planning for
availing the services from the firm and the type of the service that they need to take in respect of
their retirement and estate planning. It also enables Nathan and Mary in computing the amount of
returns after deducting the cost will be gained by them and is in turn satisfying their needs or not.
Assessor feedback: Resubmission required?
No
Page 105 of 136

Implementation schedule
In order to ensure that your recommendations will be implemented efficiently, you need to ensure that all tasks that need to be completed by both
you and the clients are itemised in the schedule. The schedule should highlight the priority of each task, as well as the order of completion. The time
frame should be as specific as possible.
Nathan and Mary Davidson, in order to proceed with our recommendations, you will need to complete the steps below:
Action By whom By when
Volatility Stock broker 25th november 2019
Earning growth Agent 20th november 2019
Note: The recommendations contained in this SOA are current for 30 days only. Please contact me for further discussion if you are unable to act on
our recommendation within this time frame.
Assessor feedback: Resubmission required?
No
Page 106 of 136

Authority to proceed
By signing this authority to proceed, I/we Nathan and Mary Davidson acknowledge the following:
• I/We acknowledge that the information I/we provided in the financial needs analysis has been used to arrive at the recommendations contained
in this SOA.
• I/We have read, understood and retained a copy of the SOA prepared by <Your name> dated <Date>. This document contains information which
accurately summarises my/our current situation, investments and financial objectives.
• I/We have been provided with an EANWB Financial Planning FSG.
• I/We have read and understood the PDSs for the recommended products.
• I/We acknowledge that the product(s) listed in the table below are to be implemented in my/our name/s:
Product(s) Amount
Mid cap funds $100000
• I/We wish to make the following change/s to the recommendations within the SOA:
Product(s) Amount
Multi cap funds $200000
Signed_______________________________ Date ____/____/_____
Client Name
Page 107 of 136

Signed_______________________________ Date ____/____/_____
Client Name
Signed_______________________________ Date ____/____/_____
Financial Planner
Please note that a cooling-off period may apply to your initial investment or insurance policy.
Refer to the PDS.
Page 108 of 136

Consent to ongoing contact
I/We consent to being contacted by our adviser on an ongoing basis, in line with the agreed ongoing service review structure detailed within this
recommendation. My/our preferred hours of contact are between ____ and ____.
Signed_______________________________ Date ____/____/_____
Client Name
Signed_______________________________ Date ____/____/_____
Client Name
Page 109 of 136

SOA — Appendix 1 — Current situation
Note: The items listed in this template are indicative only and must be adapted to your clients’ personal circumstances. There may be other relevant
income or expense items that are not included in this template. You should add, delete or substitute items where appropriate.
Cash flow statement
Income and expenses
Client 1 Client 2 Notes
Income from employment
Salary 140,000 70600
Salary sacrifice 12600 6354 (state % if applicable)
Salary after salary sacrifice 127400 64246
Rental income NA NA
Unfranked dividends NA NA
Franked dividends NA NA (state % return if applicable)
Franking (imputation) credits NA NA (state franking % if applicable)
Interest NA NA (state % return if applicable)
Other income, e.g. taxable benefits NA NA
Capital gains < 1yr NA NA
Capital gains > 1yr NA NA
Tax-free component of capital gains NA NA
Assessable income 127400 64246
Deductible expenses
0 0 Include income protection premiums if held outside
superannuation
Page 110 of 136

Rental expenses, repairs etc. 1720 0
Taxable income NA NA
Tax on taxable income NA NA (state year applied)
Non-refundable tax offsets (e.g. LITO/SAPTO) NA NA
Medicare levy 127400 64246
Medicare levy surcharge 38220 19273
Franking rebate NA NA
Refundable rebates and offsets NA NA
Net tax payable NA NA
NA NA
NA NA
38220 19273
Page 111 of 136

Family cash flow
Client 1 Client 2 Combined
Salary less any salary sacrifice amount 140000 70600
Non-taxable income (e.g. income from superannuation income
streams for a person over age 60, Family Tax Benefit)
12600 6354
Interest income NA NA
Dividends received (excluding franking credits) NA NA
Rental income NA NA
Other income NA NA
Total income received before tax 127400 64246
Investment expenses
Interest payments NA NA
Rental expenses 1720
Other NA NA
Living expenses
General living expenses NA NA
Home mortgage NA NA
Car payment NA NA
Credit cards NA NA
Holiday NA NA
Children’s education NA NA
Other loans, e.g. personal NA NA
Insurance premiums NA NA
Page 112 of 136

Other NA NA
Total expenses 1720 NA
Total income received before tax less expenses 125680 64246
Net tax payable from the ‘Income and expenses’ table above 38220 19273
Net cash flow 87460 44973
Page 113 of 136

Assets and liabilities
Asset Owner Value Liabilities Net value Notes
Personal assets
Family home Nathan/Mary $600,000 $0 $600,000 Redraw of
$100,000 available
for emergency use
Home contents Nathan/Mary $150,000 $0 $150,000 Insured value
Car 1 Nathan/Mary $11,000 $0 $11,000 2008 Ford Focus
Car 2 Nathan/Mary $16,000 $0 $16,000 2008 Ford Falcon
XR6
Other
Total $777,000 $0 $777,000
Investment assets
Investment property
Savings account
Term deposit
Shares
Other
Total
Superannuation
assets
Client 1 superannuation Nathan $270,000 n.a. $270,000 Balanced option
Client 2 superannuation Mary $99,000 n.a. $99,000 Balanced option
Total $369,000 $369,000
Net worth $1,496,000 $0 $1,496,000
Page 114 of 136

Liabilities
Loan Current debt Percentage deductible Interest only Rep
aym
ent
Loan
Home loan 0 0 0
Investment property 0 0 0
Other 0 0 0
Total 0 0 0
Page 115 of 136

SOA — Appendix 2 — Post strategy implementation
Note: The items listed in this template are indicative only and must be adapted to your clients’ personal circumstances. There may be other relevant
income or expense items that are not included in this template. You should add, delete or substitute items where appropriate.
Client 1 Client 2 Notes
Income from
employment
Salary 140,000 70600
Salary sacrifice 12600 6354 (state % if applicable)
Salary after salary
sacrifice 127,400 64,246
Rental income 2150.26621 2150.26621
Unfranked
dividends
Franked dividends (state % return if
applicable)
Franking
(imputation)
credits
0 0 (state franking % if
applicable)
Interest 940.741466 37.6296586 (state % return if
applicable)
Other income,
e.g. taxable
benefits
0 0
Capital gains < 1yr 0 0
Capital gains > 1yr 0 0
Tax-free
component of
capital gains
0 0
Assessable
income 130,491 66,434
Page 116 of 136

Deductible
expenses 1720 0
Include income protection
premiums if held outside
superannuation
Rental expenses,
repairs etc. 671.95819 671.95819
Taxable income 128,099 65,762
Tax on taxable
income 128,099 65,762 (state year applied)
Non-refundable
tax offsets (e.g.
LITO/SAPTO)
0 0
Medicare levy 0 0
Medicare levy
surcharge 0 0
Franking rebate 0 0
Refundable
rebates and
offsets
0 0
Net tax payable 128,099 65,762
Family cash flow
Client 1 Client 2 Combined
Salary less any salary
sacrifice amount 127,400 64,246 191,646
0
Non-taxable income (e.g. income from superannuation income streams for a
person over age 60, Family Tax Benefit) 32657.168 11974.2949 44,631
Page 117 of 136

Interest income 940.741466 37.6296586 978
Dividends received
(excluding franking
credits)
0 0 0
Rental income 2150.26621 2150.26621 4,301
Other income 0 0 0
Total income received
before tax 154,000 74,784 228,784
Investment expenses 0
Interest payments 0 0 0
Rental expenses 500 500 1,000
Other 0 0 0
Living expenses 0
General living
expenses 6719.5819 6719.5819 13,439
Home mortgage 0 0 0
Car payment 0 0 0
Credit cards 0 0 0
Holiday 0 0 0
Children’s education 671.95819 671.95819 1,344
Page 118 of 136

Other loans, e.g.
personal 806.349828 806.349828 1,613
Insurance premiums 671.95819 671.95819 1,344
Other 0 0 0
Total expenses 2,150 2,150 4,301
Total income received
before tax less
expenses
160,998 76,258 237,256
Net tax payable from
the ‘Income and
expenses’ table above
48,299 22,877 71,177
Net cash flow 112,699 53,381 166,079
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Assets and liabilities
Asset Owner Value Liabilities Net value Notes
Personal assets
Family home Nathan/Mary $600,000 $0 $600,000 Redraw of
$100,000 available
for emergency use
Home contents Nathan/Mary $150,000 $0 $150,000 Insured value
Car 1 Nathan/Mary $11,000 $0 $11,000 2008 Ford Focus
Car 2 Nathan/Mary $16,000 $0 $16,000 2008 Ford Falcon
XR6
Other
Total $777,000 $0 $777,000
Investment assets
Investment property Nathan/Mary 8000 0 8000
Savings account Nathan/Mary 5000 0 5000
Term deposit Nathan/Mary 15000 0 15000
Shares Nathan/Mary 36000 0 36000
Other Nathan/Mary 16000 0 16000
Total 80000 80000
Superannuation
assets
Client 1 superannuation Nathan $270,000 n.a. $270,000 Balanced option
Client 2 superannuation Mary $99,000 n.a. $99,000 Balanced option
Total $369,000 $369,000
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Net worth
Liabilities
Loan Current debt Percentage deductible Interest only Rep
aym
ent
Loan 0 0 0
Home loan 0 0 0
Investment property 0 0 0 0
Other 0 0 0
Total 0 0 0
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SOA — Appendix 3
You can use two methods to calculate and show the clients’ projected superannuation balances based on the strategies recommended.
Firstly, you may use an Excel spreadsheet to project the balance of the clients’ superannuation funds up until the age of retirement (i.e. age 65 for
Nathan) before and after your recommendations. You should then show the analysis that demonstrates that the clients can generate $80,000
annually from their superannuation for 21 years.
Use the FV formula in Excel to calculate annual balances for the accumulation and you can also use it to show drawdown of the income in a separate
calculation.
Alternatively, depending on the strategies you have recommended, you may use one of the following online financial calculators to assist you in
completing these tasks:
• First State Super:
<https://supercalcs.com.au/FSS_TransCalc/Home/YourDetails>
• Russell Investments:
<https://www.yoursupersolution.com.au/Calc/TtrDisclaimer.aspx>
• Superfacts Calculator:
<https://secure.superfacts.com/calcs/ttr/default.htm?site=mercer#Top0>
• Hesta:
<https://www.hesta.com.au/resources-calculators/calculators.html>
• ASIC’s MoneySmart Calculator:
<
https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps#super>
Assumptions:
• Rates of return are net of inflation to project in today’s dollars.
• Rates of return are appropriate to the clients’ risk profiles.
• Rates of return are after fees.
• Ignore contributions tax on SG and salary sacrifice, if any.
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• In retirement the clients’ funds are invested in a conservative asset allocation and the rate of return should be no higher than 3% net of fees and
inflation.
Please ensure that you use a rate of return that is net of inflation and is appropriate to the clients’ risk profile.
Include details of all assumptions that you have made. You may ignore the impact of contributions tax on the SG and salary sacrifice, if any.
266781 FV
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Use a table such as Table 1 below to show the expected financial result of the projections. Use the form of table on the following page (Table 1(a)) to
complete the list of assumptions.
Table 1 Superannuation account balance projections
Current situation After recommended strategy
Nathan’s
age
Nathan’s account
balance at
year end
Mary’s account
balance at
year end
Combined account balance Nathan’s account
balance at
year end
Mary’s
account
balance at
year end
Combined account
balance
54 12600 5364 17964 46200 28240 74440
12600 5364 17964 46200 28240 74440
12600 5364 17964 46200 28240 74440
12600 5364 17964 46200 28240 74440
12600 5364 17964 46200 28240 74440
12600 5364 17964 46200 28240 74440
12600 5364 17964 46200 28240 74440
12600 5364 17964 46200 28240 74440
12600 5364 17964 46200 28240 74440
12600 5364 17964 46200 28240 74440
12600 5364 17964 46200 28240 74440
12600 5364 17964 46200 28240 74440
Table 1(a) Assumptions relating to Table 1 above
Value Nathan: Current Mary: Current
Nathan: Strategy
recommendations
Mary: Strategy
recommendations
Contribution amount: SG and
any other payment (pmt)
46200 28240 He is contributing 33% of
his salary
She is contributing 40%
of her salary
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Contribution frequency Annual Annual
Rate = the rate of return of
the fund, net of inflation and
fees
9.50% 9.50%
Hints for using the FV formula in Excel to predict account balances
• Nper = either 1 for annual or 12 for monthly contributions
• PV = value of the superannuation at the end of the previous year and should be entered as a negative value
• rate = annual rate divided by the frequency of contributions
• pmt = the contribution amount and should be a negative value when accumulating funds and positive when funds are being drawn from the
superannuation
• type = (can be left blank) indicates that the payments happen at the end of each period.
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Table 2 Superannuation income analysis post-retirement
Nathan’s age Combined account balance Assumptions Combined fund
65 Rate of return net of inflation 9.50%
66 Frequency of drawdown
67 Income p.a. $80,000
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
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84
85
86
Assessor feedback:
[insert feedback]
Date assessed: Click here to enter a date
Does the student need to resubmit? No
Questions that need to be resubmitted
First submission Not yet demonstrated
Resubmission Not applicable
To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
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Section 5 Agree on the plan, policy or transaction
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Section 5 Part A
The SOA has been completed and a meeting has been organised with Nathan and Mary to present the recommendations and, if they agree, to
implement them.
Describe the steps that should be followed in presenting this advice to Nathan and Mary. In your answer, you should address at least four (4) of the
following requirements regarding presentation of advice:
• The order in which you present the information.
• What backup information and documents might you need?
• Any risks associated with the solution.
• Two (2) questions that the Davidsons are likely to ask you, and the answers you will give.
• The language you will use to present the strategy to Nathan and Mary. (400 words)
Answer here: The order in which the information is to be presented to Nathan and Mary should be
in form of written document as a report that will be including all the details regarding cost, returns
generated and the other plans. SOA template which is stated as the statement of advice is been
prepared as the document that contains all the material information that might be needed by
Nathan and Mary. In form of backup, the copy of the documents has to be maintained as the
records and the documentation at the registered office of the firm. There re various risk that
attached with the solution that includes systematic and unsystematic risk where systematic risk
relates with the risk factor that cannot be avoided such as market risk, interest rate risk, inflation
risk etc. On the other hand, unsystematic risk indicates company risk, credit risk, reputation risk
etc. that could be controlled by the company. It is essential for the firm to ensure that client would
be satisfied only when they are given in a structured format. The format of written document will
include the relevant and important information that is required to have special attention of the
the client. This will include all documents that are legally related to the case of the clients Nathan
and Mary. For the backup of the information data related to the clients are stored in the storage
devices plus servers so that it can be extracted at the point when data is lost or damaged. For
clarifying the discussions notes with personal understanding of the client should be added for the
clients take it understandable. Davidson will ask about the limit to which sacrifice is allowable as
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per the laws. Second questions is based on the tax consequences that will be arising due to the
sacrifice. Firm will be using proper professional language for presenting the information related to
the sectors that will be considered in the return statement of Nathan and Mary. They will be given
instruction regarding the adjustments that will be done in the statements. It is essential that they
are given in proper formatted manner. They are required to write in easy as well as
understandable language that are easily understandable by the clients. The language should be
clear and accurate so that there are not any confusion regarding the the adjustments that will be
made for the superannuation.
Assessor feedback: Resubmission required?
No
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Section 5 Part B
Suggest a minimum of two concerns that the Davidsons might have about the strategy that you have proposed. Explain how you would address each
of these concerns. (100 words)
Answer here: It is the essential part of the strategic planning any step that is not adequate by the
client may lead to the rejection of the consultation.
First they may not agree with the salary sacrifice of the percentage suggested as they are having
other expenses that are to be carried out by them for running their home. They may object and
recommend lower sacrifice arrangement for the retirement.
Second strategy related to the investment in retirement schemes for increasing their retirement
benefit. These concerns will be addressed by making expert consultations over the issues that
might rise. Client will be directly contacted for clarification.
Assessor feedback: Resubmission required?
No
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Section 5 Part C
Assume the recommended superannuation strategy for Nathan is to commence salary sacrificing into his superannuation fund. What information
pertaining to a salary sacrifice arrangement would you recommend be confirmed between Nathan and his employer and how should this be
recorded to ensure that the arrangement is correctly implemented? (75 words)
Answer here: Salary sacrificing adjustment is decided and understood between first Nathan and
firm. Whether Nathan is ready to have the salary sacrifice of such ans amount. It is to be
conformed that after salary sacrifice Nathan his available with enough funds for carrying out its
monthly expanses. Nathan should confirm the employer that sacrifice will be made for the
retirement benefit will be credited to superannuation funds. This will be recorded in statement of
superannuation fund on monthly basis.
Assessor feedback: Resubmission required?
No
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Section 5 Part D
In the checklist below, list six (6) key actions &/or documentation and record who should complete these throughout the financial planning process
with the Davidsons.
Answer here
Checklist — client name
Action/Documentation Who will action
Bank statements Banker
Quarterly pension and the retirement
statements
Agent
List of the credit card numbers Broker
Insurance policy document Insurance company
Financial report Auditors
SOA template Financial planner
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Assessor feedback: Resubmission required?
No
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Section 5 Part E
You will need the help of a colleague to implement the agreed upon recommendations. Prepare a short email for your colleague that introduces the
clients, broadly summarises the advice, and explains to them the actions needed to implement the recommendations. Include a list (dot point) of
documents you will attach to assist your colleague in performing the implementation. Use the information recorded in the Implementation Schedule
to assist you with this task. (150 words)
Answer here:
To
Abc
5 November, 2019
Firm has adopted the tax return filing of Nathan and Mary. They are planning to adopt for the
sacrifices for increasing their retirement benefit. For increasing their benefit different strategies
have been discussed to the client. Clients want that after retirement they have adequate source of
income through retirement benefits or any retirement scheme. Therefore it is essential that the
strategies that are recommended for the client are properly implemented by them. They are
suggested to split their incomes between the spouse and assesse so that the tax on
superannuation is reduced they are also required to perform the task very adequately so that they
do not attract any other liability. For increasing the benefits they are advised to invest in shares
that will pay returns and return are tax free which will reduce their liability.
 Salary Statements
 Superannuation Receipts of employer
 Income tax returns of previous year
With Regards
xyz
Assessor feedback: Resubmission required?
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No
Assessor feedback:
[insert feedback]
Date assessed: Click here to enter a date
Does the student need to resubmit? No
Questions that need to be resubmitted
First submission Not yet demonstrated
Resubmission Not applicable
To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or your resubmission.
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