Superannuation and Retirement Planning - DFP3_AS_v4

This written assignment is for Superannuation and Retirement Planning - DFP3_AS_v4. It includes instructions for completing and submitting the assignment, a case study of Nathan and Mary Davidson, and sections to establish the client's objectives, analyze their financial situation, address their concerns, present appropriate strategies, and agree on a plan. The assignment covers units of competency such as FNSASICZ503, FNSFPL503, FNSFPL504, FNSFPL505, and FNSASICU503.

Written Assignment
Superannuation and Retirement Planning
(DFP3_AS_v4)
Student identification (student to complete)
Please complete the fields shaded grey.
Student number
Written assignment 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)
Result summary(assessor to complete)
First submission Resubmission (if required)
Section 1 Not yet demonstrated Not yet demonstrated
Section2 Not yet demonstrated Not yet demonstrated
Section3 Not yet demonstrated Not yet demonstrated
Section4 Not yet demonstrated Not yet demonstrated
Section 5 Not yet demonstrated Not yet demonstrated
Feedback (assessor to complete)
[insert assessor feedback]
DFP3_AS_v4

Before you begin
Read everything in this document before you start your written assignment for Superannuation and
Retirement Advice (DFP3v4).
About this document
This document is the written assignment — half of the overall Written and Oral Assignment.
This document includes the following:
• Instructions for completing and submitting this assignment.
• Assignment sections (including factfinder 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.
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 assignment within your enrolment period. Your study plan is in the KapLearn Superannuation and
Retirement Advice (DFP3v4) subject room.
How to use the sample case study and SOA in KapLearn
The sample case study provides a model to help you prepare your SOA for this assignment. 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 assignment, 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 assignment 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 assignment. However, all the required compliance elements will be included in both
formats.
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Instructions for completing and submitting this written
assignment
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 assignments.
• Name your file as follows: Studentnumber_SubjectCode_Assignment_versionnumber_Submissionnumber
(e.g. 12345678_DFP3_AS_v4_Submission1).
• Include your student ID on the first page of the assignment.
Before you submit your work, please do a spell check and proofread your work to ensure that everything is
clear and unambiguous.
Submitting the written assignment
Only Microsoft Office compatible written assignments 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 assignment as a PDF.
The written assignment must be completed before submitting it to Kaplan Professional Education.
Incomplete written assignments will be returned to you unmarked.
The maximum file size is 20MB for the Written and Oral Assignment. Once you submit your written
assignment for marking you will be unable to make any further changes to it.
You are able to submit your written assignment earlier than the deadline if you are confident you have
completed all parts and have prepared a quality submission.
Please refer to the Assignment submission/resubmission instructions (pdf) in the Assessment section of
KapLearn for details on how to submit your written assignment.
Your Written Assignment and Oral Assignment must be submitted together on or before your due date.
Please check KapLearn for the due date.
The written assignment marking process
You have 12 weeks from the date of your enrolment in this subject to submit your completed assignment.
If you reach the end of your initial enrolment period and have been deemed Not Yet Competent in one or
more assessment items, then an additional 4 weeks will be granted, provided you attempted all assessment
tasks during the initial enrolment period.
Your assessor will mark your written and oral assignment and return it to you in the (DFP3v4)subject room
in KapLearn under the ‘Assessment’ tab.
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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 assignment. Failure to do so will mean that your assignment 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 assignment.
How your written assignment is graded
Assignment 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 competent or not yet competent.
Your assessor will follow the below process when marking your written assignment:
• 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 competent in all assessment items in order to be awarded your qualification,
including demonstrating competency in:
• all of the exam questions
• the written and oral assignment.
‘Not yet competent’ and resubmissions
Should sections of your assignment be marked as ‘not yet competent’ 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 competent’.
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 assignment, 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 assignment is your opportunity to demonstrate your competency against these units:
FNSASICZ503 Provide advice in financial planning
FNSFPL503 Develop and prepare financial plan
FNSFPL504 Implement financial plan
FNSFPL505 Review financial plans and provide ongoing service
FNSASICU503 Provide advice in superannuation
Note that the Written and Oral Assignment is one of two assessments required to meet the requirements
of the units of competency.
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We are here to help
If you have any questions about this written assignment, 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 10 of this
assignment.
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 theyhave 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 $5600 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
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.
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.
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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 toachieve 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
Smoker Yes  No Yes  No
Expected retirement age In 11 years, approximately age 65 When Nathan retires
Dependants (children or other)
Name Age Sex School Occupation
Jonathan 17 M Yes
Sarah 18 F Yes
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Employment details
NathanDavidson MaryDavidson
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 flowstatement
Cash flow Nathan Mary Combined Comment
Salary less any salary sacrificed amount $140,000 $70,600 $210,600Includes 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
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 $600,000Redraw of $100,000 available
for emergency use
Home contents Nathan/Mary $150,000 $0 $150,000Insured value
Car Nathan/Mary $11,000 $0 $11,0002008 Ford Focus
Car Nathan/Mary $16,000 $0 $16,0002008 Ford Falcon XR6
Total $777,000 $0 $777,000
Superannuation
Employer superannuation Nathan $270,000 n.a. $270,000Balanced option
Employer superannuation Mary $99,000 n.a. $99,000Balanced option
Total $369,000 $369,000
Other assets
Savings account Nathan/Mary $350,000 Nil $350,000Transaction 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.
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: October 2009
Do you have powers of attorney?  Yes No
Current superannuation, insurances and investments
Superannuation
Member Nathan Mary
Fund name ASSF Super Fund CISF Super Fund
Date of joining fund 1 July 1992 (service date) 1 July 1992 (service date)
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 $99,000
Amount of death and
disability cover
$720,000 $720,000
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
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)
Trustee discretion
(Yes/No)
Yes/No Amount
Nathan— Beneficiary is Mary Yes 100% No No
Mary— Beneficiary isNathan Yes 100% No No
Are there any current flags or splits on your superannuation
benefitin the event of a marriage breakdown?
Yes/No N Details
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
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
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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
Investment atti tude details
Are you concerned about the amount of tax that you are paying? Yes/No
Why?
How important is liquidity (i.e. funds available) to you? Very/Moderately/Not
Why?
If you had funds available for investing, how would you choose to invest them? Why?
Are there certain investments that you wish to avoid? Yes/No
Which ones?
RISK PROFILE
Determining your investor risk profile Points
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
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
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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 wasany 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
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
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.
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Client(s) signature(s)
Planner’s name
Planner’s signature
Date
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The Assignment(student to complete)
Section 1 Establish the relationship with the client and identify
their objectives, needs and financial situation
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)
Strategies I would like to use are as follows –
 Listening to the objectives of the client: The planner must be calm and patient while conducting the
interview with the client, the planner must give a clear idea to the client that he is listening to him.
 Allowing sufficient time: for obtaining all the information from the client, it needs time. The planner
must allow him sufficient time to assess all the questions in details and to confirm that all the
information have been recorded as stated by the client
 Gathering information: Exactness in collecting information is very crucial for protecting the interest
of client as well as the planner. The gathered information will be utilized to evaluate the client’s
position and preference. The planner is required to collect all the information relating to the clients
present situation, his requirements and should evaluate all the information with due importance.
 Informing the client regarding the role of planner: Most of the times, the clients are misguided and
their expectation does not match with the offered assistance from the planner’s agency. Therefore,
the planner should clarify about his role initially at the time of interview.
 Noting the client’s presentation: when the planner meets the client for the first time or having a
conversation with them over telephone for the first time, the planner will have a first impression
about the client based on the following aspects:
o Mental status of the client
o client’s personal situation
o supporting networks
Assessor feedback: Resubmission required?
No
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)
Financial service guide or FSG is crucial document that is designed for assisting the client in deciding
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whether any financial service offered by the planner that is stated in the FSG. FSG shall be prepared for the
below mentioned reasons –
 service delivering entities must give FSG to the client as soon as practicable after it becomes
apparent to the providing entity that a financial service will, or likely to provide to the client and, in
any event, they must give an FSG to the client before a financial service is provided
 The FSG is designed to assure that the clients get adequate information to enable them deciding
about whether to avail financial services from the providers
 To provide the clients with personal as well as general advises and advises regarding financial
services.
Information that must be contained in FSG are as follows –
 Date of the FSG
 The title as ‘Financial service guide’ on the cover page of the document
 Contact details and name of the entity providing FSG and the AFS licence number, if the the entity
is an AFS licence
 The authorised representative number, if the providing entity is is authorised representative
 Details about the commission, remuneration and other benefits
 Details about the financial services offered by the providing entity
 Information regarding the compensation arrangement offered by the providing entity
 Where the providing entity is the participant in settlement facility, clearing or licensed market, then
the statement complied with that.
Assessor feedback: Resubmission required?
No
Page 21 of 77

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 $70,600 $210,600
Salary sacrifice Nil Nil
Salary after salary sacrifice $140,000 $70,600 $ 210,600
Rental income $ 0 $ 0
Unfranked dividends $ 0 $ 0
Franked dividends $ 0 $ 0
Franking (imputation) credits $ 0 $ 0
Interest $ 0 $ 0
Other income (e.g. taxable benefits, trust income,
investment income)
Capital gains < 1 yr $ 0 $ 0
Capital gains > 1 yr $ 0 $ 0
Tax-free component of capital gains $ 0 $ 0
Assessable income $140,000 $70,600 $210,600
Deductible expenses
Donations $ 610 $61 0 $ 1220
Income protection insurance NA NA
Business overheads insurance NA NA
Other $ 150 $ 350 $ 500 Accountant’s fees
Taxable income $139,240 $69,640 $ 208,880
Tax on taxable income $39,151 $14,180 $53,331
Non-refundable tax offsets (e.g. LITO/SAPTO) $ 0 $ 0
Medicare levy $ 2,785 $ 1,393 $4,178
Medicare levy surcharge $ 0 $ 0
Franking rebate $ 0 $ 0
Refundable rebates and offsets $ 0 $ 0
Total tax $41,936 $15,573 $57,509 Tax plus Medicare levy minus LITO
Page 22 of 77

Cash flow Nathan Mary Combined Comment
Salary less any salary sacrificed amount $140,000 $70,600 $210,000
Total expenses $63,528 $61,796 $125,324 Include income protection
premiums if held outside
superannuation
Total income received before tax less total
expenses
$76,472 $8,804
$85,276
Total tax payable from tax table above $41,936 $15,573 $57,509
Total net cash flow $34,536 -$6,769 $27,767 Annual savings capacity
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 23 of 77

Section2 Analyse client objectives, needs, financial
situation and risk profile to develop appropriate
strategies and solutions
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)
It can be identified from the above graph that Nathan at the age of 65 will get $ 406,010 that is lower as
compared to $ 1.3 million. Therefore, it shall be discussed with the client, Nathan and Mary that their
contribution is significantly low as compared to the requirement of $ 1.3 million.
Issues identified are as follows –
o Clients do not have any surplus investment except the superannuation
o Clients do not have sufficient amount to provide sufficient income after retirement
Assessor feedback: Resubmission required?
No
Page 24 of 77

Section 2Part 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)
While making any decisions regarding investment it is crucial to understand the risk profile that will help
the planner to guide with regard to investment. For determining the risk profile, we have considered
Nathan and Mary’s personal risk attitude, time horizon for investment and investment diversification
 Personal attitude towards risk – generally, investments with high return is associated with high
level of risk and investments with low return is associated with low risk. Risk attitude depends on
individual investors as some investors are risk averse and some are risk lovers.
 Investment time horizon - The time interval elapsed during which the investment program is to be
executed and completed is the client’s investment time horizon. It is crucial to determine the
investment type that will be included in the client’s profile. It is generally found that the investor
with balanced portfolio prefers moderate growth whereas the aggressive investors prefer high risk
associated with high return. Nathan is prudent investors who prefers balanced portfolio to work
towards medium- to long-term financial goals. Therefore, he requires an investment strategy that
will cope with the effects of tax and inflation. Calculated risks will be acceptable to you to achieve
good returns.
 Diversification of your assets – an important strategy to diversify the risks is allocating the assets in
various funds like fixed interest, shares, property, cash or fixed interest or all of which have
different levels risk and return levels. Diversification approach will minimizes the risk associated
with investment as wider spread of investments will lower the chance that all the investments will
perform poorly.
Suggested questions:
 Whether they are willing to take more risk for high return?
 Whether they are willing to diversify their assets for reducing the risks?
 Whether the client is interested to invest in long term projects for high return aspects
Assessor feedback: Resubmission required?
No
Page 25 of 77

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)
Superannuation strategy:
As Nathan is planning to retire at the age of 60 he will have to pay additional tax if he withdraws any
amount exceeding $195,000 in 2017-18 financial years from taxable component of his super before-tax
contributions. Through splitting the contributions with his wife Mary he can construct their super and both
of them will have tax free withdraw up to $195,000. However, withdrawals exceeding $195,000 will be
taxed at 15%. The 2% Medicare Levy may also apply.
Non-superannuation strategy:
Taxable component of the benefit will be subjected to the tax on the basis of whether the client is taking
the benefit after or before age of 60 or they are getting the benefit upon death or the benefits are left to
non-dependent as the tax laws
Estate planning: Mary has got some asset from his mother and they do not have any power of attorney.
Personal insurance: They do not wish to review their insurance Their primary objective is to increase their
savings for retirement and to achieve an income of $80,000 per annum after tax once they reach
retirement. Their current situation indicates that if they continue as their present situation, they will be not
be able to meet their goal.
Recommendation: From the given details, it is clear that their projected superannuation account balances
at retirement are based on their current situation. This superannuation account balance would be able to
generate around $1.3 million when Nathan turns 65. It is recommended that they address this immediately
by undertaking this recommendation.
Nathan and Mary, it is recommended that they both should keep their existing superannuation funds
because the research indicates that they offer competitive fees and quality managers, however it is
recommended that they change their investment options to be more in line with their risk profile
Recommendation: If they were to remain in their current asset allocation, even with the additional
investment into superannuation they would not be able to attain their desired income in retirement. It is
therefore prudent for them to take on a little more risk than they have currently taken in order to have a
better chance of reaching their goal.
As they will still have a high surplus income, it is suggested that they should start any savings plan into high
income earning cash account for safeguarding for future holidays or unexpected events. They have
mentioned that they prefer to keep a cash buffer and it is recommended that the clients with investment
property and debt will keep a safeguard in case of unprotected expenditures that may arise, or increasing
interest rates on loans. They have estimated on their own assumption that they will need $1.3 million for
their living up to the age of 95 years and earning of 4% per annum net of inflation.
Client requested that they do not wish to review their insurances as part of the recommendations set.
However, it is recommended to prepare a strategy to review the insurances once they have implemented
the recommendations in the SOA. Without the review the risk of being over or under insured and
potentially unable to meet their desired long-term goals and objectives if something unexpected happens.
Page 26 of 77

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 27 of 77

Section 3 —Address clients’ questions and concerns about
superannuation matters
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)
 Wills prepared by the attorney
I recommend it to Nathan and Mary that they shall consult their solicitor or any specialist in planning the
estate to create wills as soon as practicable. The will shall assure that the client’s preference will be fulfilled
upon his death. Therefore, I suggest that they shall further update it on continuous basis if any substantial
changes take place.
 Taxation issues
It is imperative that the investment outside the superannuation is subject to normal rate of tax that is
applicable on earnings. As Nathan and Mary both have substantial surplus cash flow it is likely that they will
start accumulating the surplus fund which in turn will enhance their taxable income. Further, these
accumulation swill be monitored on continuous basis and therefore it is recommended that they shall
invest in tax free alternatives.
They must be aware that the property investment sale will be subject to capital gains tax. However, the
amounts will be depended on the timing and pricing of the sale. As the client did not propose selling of the
investment, this is not a concern at the moment.
If at all the client wants any other option for superannuation, they must consider the fund that will give
them tax benefit.
 Superannuation
For further securing the wishes of the client case of either of Mary and Nathan were to die, it is suggested
that the client shall update binding death benefit nominations under the superannuation. Investigation
with regard to the superannuation funds indicates that Nathan and Mary both have binding death benefit
nominations that already lapsed few years ago.
A binding nomination becomes invalid 3 years after the signing date. If the nomination becomes invalid and
no nominations is made subsequently, the trustee shall exercise the discretion, considering the lapsed
binding nominations, before paying the death benefits to the beneficiaries or the estate.
Assessor feedback: Resubmission required?
No
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.
Page 28 of 77

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)
Tax deduction:
Yes, the client’s contributor will be deductible under tax for any personal contribution in his next return of
income tax, if he is self-employed or unemployed and receives any earnings from investment. The
contributor can claim a deduction on tax for personal contribution in the below mentioned situations –
 Contributor does not earn more than 10% of total reportable fringe benefits, assessable earnings
and reportable contribution as an employee
 The contributor is a part of Australian Super and his contribution invested in super account
 If he has not opened any account for retirement earning using full or part of the contribution for
which he plans to claim deduction on tax
 He is planning to divide the total or part of his contribution with his spouse and at the same time
he wants to claim deduction for the spouse. The contributor must serve notice of his willingness to
claim the deduction first.
Limitations on deduction claim:
Deduction cannot be claimed for:
 Contributions which are transferred from super to start an account for retirement income
 Contributions which are divided with the spouse
 Transfer of super from one fund to another fund, including overseas fund of super
Therefore, entire contribution can be claimed as tax deduction if all the eligibility criteria are met.
The age of contribution is as follows:
 If the contributor is lower than the age of 18, he cannot claim any deduction if he earned as an
employee or operator of business during the year he is intended to claim deduction.
 If the contributor is higher than 75 years of age, he cannot claim deduction for contributions made
after 28 days of completing the age of 75
Assessor feedback: Resubmission required?
No
Page 29 of 77

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)
Yes, the superannuation contribution can be split.
splitting the super contributions with Mary:
If the contributor is considering of retiring before the age of 60 then splitting his contribution with his
spouse, may be used for tax benefit strategy.
Yes, the contributor can split Nathan’s contribution with Mary despite of his own age, however, the age of
spouse must be:
 Less than the age of their preservation, despite of whether they are employed or unemployed
 They are between the age of 65 and preservation age and not yet retired.
If the spouse is aged 65 or more, the contribution cannot be split.
Maximum amount that can be split:
The maximum amount that can be split is up to 85% of before tax contribution with his spouse, which
includes:
 Contribution of salary sacrifice and contribution of employer’s Superannuation guarantee
 Personal contribution that has been claimed as tax deduction purpose that are generally
contributed by self employed people.
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:
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)
Tax payable on the contribution towards super is depended upon the age of the investor and type and
amount of contribution. Only after receiving the contribution, deduction for tax is made. There are
restrictions on the maximum amount of contribution and the investor has to pay tax if he exceeds the limit.
Type Tax on contribution as per the rate of 2017-2018
After tax or
before tax
contribution
 Concessional – for any age - Up to $25,000 per year @ 15%
 Non-concessional - Any contribution over the limit of $ 100,000 will be
taxed @ 47%, unless the investor specifically mentioned to release the
amount over limit.
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If the income exceeds $300,000, all or parts of before tax contribution will be taxes @ 30%
Tax on investment income: Income from investment is taxed @ 15%. These taxes are deducted from
Applied crediting rate of the super, before the incomes are credited to the account.
Tax on withdrawals: If the age of the investor is below 60, tax on withdrawals is deducted before receiving
the payment. Withdrawals are not taxed if age of the investor is above 60.
Assessor feedback: Resubmission required?
No
Page 31 of 77

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)
The contributor can access his super:
 While in the continuation of job, under the retirement transition rules, or
 When he reaches the age of preservation or retires from job, or
 When he turns 65, despite of he is retired or not
There are limited situations where he can access the savings of super early. These instances are generally
involves the emergency medical situations or critical financial adversity. Preservation age of the contributor
is different from the age of pension. The age of preservation is the age at which he can access the super, if
he is retired or he has started a conversion to income stream of retirement.
The super can be received as:
 Super lump sum
 Super stream of income
 Combination of both
Super lump sum: if the fund permits, the contributor will be able to withdraw a part or the whole super
through the single payment. This single payment is known as lump sum. The super may be withdrawn
through the number of lump sums. However, if the contributor instructs that the fund shall make
continuous payments from the super, then it can be a stream of income.
Super stream of income: these incomes are received as a series of continuous payments from the super
fund. The payments must be paid for certain time period and qualify for the least payments for income
from super.
Assessor feedback: Resubmission required?
No
Question 2
Nathan asks:
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.
Page 32 of 77

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)
Superannuation lump sum is normally an ad-hoc cash payment from the super fund. Money can be
withdrawn in more than one lump sum, however, regular withdrawals from the superannuation are known
as retirement income stream.
After the age of 60:
An individual retiring on or after the age 60 years of age can withdraw the super benefits in lump sum and
no income tax or benefit payments tax will be payable on those benefits in Australia for Australian citizens
residing in Australia. Major exception to the declaration that ‘no tax will be payable’ is: If the client is a
long-term member of one of the public sector funds, then few or approximately all of the benefits from
super may be considered ‘untaxed benefits’ or super from an ‘untaxed source’.
Before the age of 60:
Superannuation pension income, which is received before the age of 60 is taken into account towards a
person’s evaluated income for the purpose of tax. The tax-free part of the super pension is tax-free and not
added to the assessable income whereas the taxable part of the pension payment is added with the
assessable income and can avail a 15% offset in pension. The offset from pension can reduce the payable
tax component on the income from super pension.
Assessor feedback: Resubmission required?
No
Page 33 of 77

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 orcould weaccess 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)
Before the age of 60:
Benefits from super can be segregated in two parts – taxable and tax-free. When the investor gets retired
before the age of 60, the tax-free part of the benefit is is exempt from tax and the taxable part is usually
taxable. The amount of tax that has to be paid on the benefit of super is depended on:
 Size of the benefit: After reaching the prevention age, if the amount is withdrawn from super, then
the tax-free part of the benefit will be for first $195,000 of the tax-part. However, the condition to
avail this benefit is the amount is to be withdrawn in lump sum.
Whether the amount withdrawn is included in income stream or super pension: The lump sum received
from superannuation is treated differently. If the investor retires before the age of 60, he may receive tax-
free payment as part of revenue stream and he will also be eligible for 15% pension offset on the taxable
part of the benefit.
After the age of 60:
If the investor’s age is 60 years or more and he is retired, he can withdraw the super benefits as
superannuation pension (or as lump sum) and will not have to pay any tax in Australia on his payments of
benefits. The key exclusion to this ordinary rule is where the depositor is a long-term member of a any type
of public sector superannuation fund, and then tax will be payable on taxable part of the pension or lump
sum. The incomes on any investments financing a superannuation pension are also free from tax or exempt
from tax whether the investor retires before or after the age of 60. Therefore, the beginning of tax-free
super benefits and retirement planning has surely become easier, but it is suggested that anyone thinking
for retirement should check their individual situation with an accountant.
Assessor feedback: Resubmission required?
No
Page 34 of 77

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 35 of 77

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 assignment 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
assignment.
• Assumptions: You must list the assumptions used in your SOA in your assignment 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
– personalinvestments
– 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.
• 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 36 of 77

The SOA template
An SOA has been commenced for Nathan and MaryDavidson, using the data collected in the interviews,
their fact finder and theirrisk 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.
Statement of advice
Prepared for
Nathan and MaryDavidson
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.
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 37 of 77

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)
Present situation –
Nathan who is aged about 54 and his wife Mary who is aged about 52 are married with two children named
as Sarah and Jonathan. They have their own home that is valued at $600,000. Further, they have recently
received the heritage of Mary’s mother. They have the redraw facility from mortgage amounted to
$100,000. However, they are not willing to avail this unless there is a crucial situation.
Nathan is a full time employee in an agricultural deliverable firm as sales representative and his income is
$140,000 per annum, in addition to superannuation guarantee. On the other hand, Mary is self employed
and working as a marketing consultant and in addition she had business income of $65,000 per annum net
of expenses. She also earns $5600 per annum from a part time job. Their children, Sarah and Jonathan go
to school and the expenses in school are $7,000 per annum for uniforms, fees, school trips and books. The
only other assets they have are their two cars.
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)
Objectives of Mary and Nathan –
 Retirement planning is their main priority at present and they want to construct their
superannuation in an effective way
 To add their surplus fund into their retirement plan so that they not owe any amount towards
mortgage
 They required $80,000 per year after tax payment to fulfil their income target after retirement
 They already deposited their receipt from inheritance into the savings account and planning to
Page 38 of 77

preserve $50,000 in a secure investment to assist the children in their fi$ 0l years at school and
university
 To reduce their overall tax liability, but not at the cost of risk
Assessor feedback: Resubmission required?
No
Page 39 of 77

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.
Recommendations:
 Nathan and Mary Shall start a plan for saving which involved high rate of interest and must
contribute at least $500 per month
 Consult any solicitor for preparing a will
 Consider constructing an ‘enduring’ power of attorney, and an ‘enduring’ custodian
 Shall make the binding nomination within the superannuation funds in favour of client’s legal
personal representative
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.
The client Nathan and Mary does not have any medium-term goals
Assessor feedback: Resubmission required?
No
For the long term — more than five years
This is where you need to summarise your recommendations for your clients’ long-term goals.
Recommendations with regard to pre-retirement –
 Mary wants to implement a strategy of ‘balanced’ asset distribution within the fund as per their risk
profile through changing the option of current investment.
 Nathan wants to implement a strategy of ‘balanced’ asset distribution within the fund as per their
risk profile through changing the option of current investment.
Assessor feedback: Resubmission required?
No
Page 40 of 77

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.
On the basis of the recommendation the client will be able for –
 Maintaining positive cash flow with the available surplus funds.
 Increasing the available amount in Nathan’s superannuation at retirement from around $80,000 to
$1.3 million.
 Achieving retirement income goal of $80,000 annually after paying tax when Nathan reaches the
age of 65.
 Managing the distribution of their assets on death.
Assessor feedback: Resubmission required?
No
Risks in our advice
Identify both financial and non-financial risks that can impact the desired outcome.
 All investments that includes suggested superannuation that carries some risks. Value of the your
investments both outside and inside the superannuation may not enhance as compared to market
potential and there is a chance decreasing the value and the income created from their portfolio
may also vary.
 As the client preferred not to analyse their insurance at present, the insurance amount may not be
adequate for their requirements. In some instances, there can be tax implications for receiving
payments from insurance. There may be waiting periods or delays applicable to some types of
insurance. You should undertake a full review of your insurances as soon as possible.
 Holding investment for long term may result in the asset allocation being outside the desired risk
profile. As they have not requested suggestion on the investment property there is a risk that it
may not fulfil their long-term objectives and needs.
Assessor feedback: Resubmission required?
No
Summary of our fees and commissions
 Management costs are there those are associated with the superannuation that they shall be
aware of, however, none of the fees are paid to the planner as their adviser, or the planner’s
licensee
 Clients would be charged flat fees for the preparing their SOA and no commissions are payable on
Page 41 of 77

investments.
Assessor feedback: Resubmission required?
No
Your next steps
Before proceeding with the planner’s suggestion, they should consider the following:
 Read the advise statement and disclosure statements of products carefully
 They must be sure that they understood all the advise and suggestion of the planner
 The client must be able to contact the planner in case of any query
To follow the planner’s suggestion, they should complete the ‘Authority to proceed’ at the end of this
statement of advise document and return it to the planner. The planner will then work with the client to
implement the recommendations.
Assessor feedback: Resubmission required?
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Body
While this section contains similar headings as the 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 andin clear, unambiguous language, and be appropriate to your client’s level of
financial understanding.
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.
Present position
Your reasons for seeking advice
Outline why the clients sought advice.
They don’t have any home loan, their children Sarah and Jonathan are in their final year of schools. Their
main objective is to create sufficient income for retirement period and utilise their surplus fund received
from Mary’s inheritance into the savings account and planning to preserve $50,000 in a secure investment
Page 42 of 77

to assist the children in their final years at school and university.
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:
 Retirement planning is their main priority at present and they want to construct their
superannuation in an effective way
 They required $80,000 per year after tax payment to fulfil their income target after retirement
 To add their surplus fund into their retirement plan so that they not owe any amount towards
mortgage
 They already deposited their receipt from inheritance into the savings account and planning to
preserve $50,000 in a secure investment to assist the children in their fi$ 0l years at school and
university
To reduce their overall tax liability, but not at the cost of risk
Assessor feedback: Resubmission required?
No
Page 43 of 77

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.
Both Nathan and Mary like their jobs and have been with the same employers for some time. They never
considered about changing their jobs or receiving any increase in pay in the near future.
Assessor feedback: Resubmission required?
No
Children and dependant details
Nathan and Mary have two children, Sarah and Jonathan, aged 18 years and 17 years and they are nearing
to the completion of their schooling.
Your existing insurance
Fill any gaps.
Personal insurance
Car insurance
Home contents Insurance
Page 44 of 77

Health insurance
Your existing estate planning
Summarise the clients’ existing estate planning provisions here.
At present they do not have any wills or powers of attorney. They have binding death nominations in their
superannuation funds, however they have not reviewed these recently
Assessor feedback: Resubmission required?
No
Financial information
Current income and expenses details
Income and expenses
Complete the table:
Nathan Mary Total
Assessable income $140,000 $70,600 $210,600
Net tax payable $33,600 $16,944 $50,544
Yearly expenses $63,528 $61,796 $125,324
Estimated surplus $42,872 ($8,140) $34,132
Discussion points:
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)
As they do not have any home loan, they have a moderate amount of additional income with the potential
of increasing their savings and long-term wealth. Planner will recommend about the best use of the cash
flow to assure that they will still have a surplus while assuring that they address their retirement income
goals. Mary has expenses more than her income after paying the tax, which turn into negative surplus.
Mary should consider about minimizing her expenses to turn the negative surplus into positive, so that the
overall surplus can also be improved. A bigger potion of their income is expensed for paying the tax. They
should consider about tax-saving investment to minimize the burden of tax.
Assessor feedback: Resubmission required?
No
Page 45 of 77

Assets and liabilities
Value Liability Net value
Home $600,000 $0 $600,000
Home contents $150,000 $0 $150,000
Motor vehicles $27,000 $0 $27,000
Personal assets
Employer superannuation—Nathan $270,000 $ 0 $270,000
Employer superannuation—Mary $99,000 $ 0 $99,000
Savings account $350,000 $ 0 $350,000
Investment assets $ 0 $ 0
Net worth $14,96,000 $0 $14,96,000
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)
They own their own home and some financial commitments; However, they want to assure that they can
afford a comfortable retirement, recreation, Interested in travel and self-education. They did not avail any
tax saving investment. They should think about investing more amounts to superannuation. Both Nathan
and Mary like their jobs and have been with the same employers for some time. They never considered
about changing their jobs or receiving any increase in pay in the near future. They should consider about
generating a positive cash flow with surplus funds available.
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 shouldconsider its appropriateness in light
of your particular circumstances, needs and objectives.
Page 46 of 77

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.
While making any decisions regarding investment it is crucial to understand the risk profile that will help
the planner to guide with regard to investment. For determining the risk profile, we have considered
Nathan and Mary’s personal risk attitude, time horizon for investment and investment diversification
 Personal attitude towards risk – generally, investments with high return is associated with high
level of risk and investments with low return is associated with low risk. Risk attitude depends on
individual investors as some investors are risk averse and some are risk lovers.
 Investment time horizon - The time interval elapsed during which the investment program is to be
executed and completed is the client’s investment time horizon. It is crucial to determine the
investment type that will be included in the client’s profile. It is generally found that the investor
with balanced portfolio prefers moderate growth whereas the aggressive investors prefer high risk
associated with high return. Nathan is prudent investors who prefers balanced portfolio to work
towards medium- to long-term financial goals. Therefore, he requires an investment strategy that
will cope with the effects of tax and inflation. Calculated risks will be acceptable to you to achieve
good returns.
 Diversification of your assets – an important strategy to diversify the risks is allocating the assets in
various funds like fixed interest, shares, property, cash or fixed interest or all of which have
different levels risk and return levels. Diversification approach will minimizes the risk associated
with investment as wider spread of investments will lower the chance that all the investments will
perform poorly.
Risk profile and recommended asset allocation
Structure of various investment assets used for creating a portfolio with regard to achieve the objectives is
considered as asset allocation. Generally, investment with high return is associated with high level of risk
and investment with low return is associated with low risk. Risk attitude depends on individual investors as
some investors are risk averse and some are risk lovers.
There are 5 broad categories of risks that are matched to 5 asset allocations that we use to meet clients’
requirements. They are ranged from low-risk to high-risk as the diagram shown below –
Assessor feedback: Resubmission required?
No
Page 47 of 77

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 assignment 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 completeall of the recommendation boxes below. You can add more boxes
if required.
Recommendation 1
Nathan and Mary, it is recommended that they both should keep their existing superannuation funds
because the research indicates that they offer competitive fees and quality managers, however it is
recommended that they change their investment options to be more in line with their risk profile.
If they were to remain in their current asset allocation, even with the additional investment into
superannuation they would not be able to attain their desired income in retirement. It is therefore prudent
for them to take on a little more risk than they have currently taken in order to have a better chance of
reaching their goal.
Assessor feedback: Resubmission required?
No
Recommendation 2
Their primary objective is to increase their savings for the purpose of retirement and achieving the after tax
income of $80,000 per annum once they reach retirement. Their current situation indicates that if they
continue as their present situation, they will not be able to meet their goal. From the given details, it is
clear that their expected superannuation account balances at retirement are based on their current
situation. Balance in the superannuation account would be able to generate around $1.3 million when
Nathan will turn 65. It is recommended that they address this immediately by undertaking this
recommendation.
Page 48 of 77

Assessor feedback: Resubmission required?
No
Page 49 of 77

Recommendation 3
As the client will still have high additional income, it is recommended that they should start savings plan
into high income generating cash account for constructing safeguard for future holidays or the unprotected
events. They have mentioned that they prefer to keep a cash buffer and it is recommended that clients with
debt and investment property keep a barrier in case of unprotected expenses that may arise, or increasing
interest rates on loans.
It is recommended that they start with $500 a month each. This will assure that they will have over $10,000
at the closing of each year that can be used to fund the holidays, in addition to budgeted $10,000 in their
cash flow.
Assessor feedback: Resubmission required?
No
Recommendation 4
They requested that they do not wish to review their insurances as part of the set of suggestions. However,
it is recommended that they review their insurances once they have executed the recommendations in this
SOA. Without this review the risk of being over or under insured and potentially unable to meet their
desired long-term goals and objectives if something were to happen to either of them increases.
Assessor feedback: Resubmission required?
No
Page 50 of 77

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.
Alternative strategy is considered for their surplus cash flow, for committing the investing into managed
fund whereas the managed fund will create greater diversification. It will further create better match with
the risk profile. However, it is not more accessible as compared to cash and not easy to make any
withdrawals in case of emergency. As they have stated that they would like to have a cash barrier, it is
suggested that, this year they should start by accumulating funds in a cash account. Further, it is proposed
that once they have started the savings plan, their cash buffer is been monitored and if they are
accumulating additional funds, they can look at suggestions that are more in line with their risk profile and
offer greater diversification and potential tax benefits.
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.
As Mary and Nathan are willing to use their surplus fund in their retirement plan, so that, they do not owe
any amount towards mortgage, the recommendation will help them to provide them with provide sufficient
income after retirement. It will also assist them to invest the surplus fund from inheritance money in a tax-
efficient way and reduce their overall liability of tax.
Assessor feedback: Resubmission required?
No
Estate planning
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)
 Wills prepared by the attorney
I recommend it to Nathan and Mary that they shall consult their solicitor or any specialist in planning the
estate to create wills as soon as practicable. The will shall assure that the client’s preference will be fulfilled
upon his death. Therefore, I suggest that they shall further update it on continuous basis if any substantial
changes take place.
 Superannuation
For further securing the wishes of the client case of either of Mary and Nathan were to die, it is suggested
that the client shall update binding death benefit nominations under the superannuation. Investigation
with regard to the superannuation funds indicates that Nathan and Mary both have binding death benefit
nominations that already lapsed few years ago.
A binding nomination becomes invalid 3 years after the signing date. If the nomination becomes invalid and
no nomination is made subsequently, the trustee shall exercise the discretion, considering the lapsed
binding nominations, before paying the death benefits to the beneficiaries or the estate.
Page 51 of 77

Assessor feedback: Resubmission required?
No
Taxation issues
My strategies and recommendations have had the following impact on your tax position:
 It is imperative that the investment outside the superannuation is subject to normal rate of tax that
is applicable on earnings. As Nathan and Mary both have substantial surplus cash flow it is likely
that they will start accumulating the surplus fund which in turn will enhance their taxable income.
Further, these accumulation swill be monitored on continuous basis and therefore it is
recommended that they shall invest in tax free alternatives.
 They must be aware that the property investment sale will be subject to capital gains tax. However,
the amounts will be depended on the timing and pricing of the sale. As the client did not propose
selling of the investment, this is not a concern at the moment.
Assessor feedback: Resubmission required?
No
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 2% 15% -13%
Australian fixed interest 1% 15% -14%
Inter$ 0tio$ 0l fixed interest 3% 10% -7%
Total for defensive assets 7% 40% -33%
Australian equities 9% 25% -16%
Page 52 of 77

Australian property 67% 20% 47%
International equities 11% 15% -4%
International property 6% 0% 6%
Total for growth assets 93% 60% 33%
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.
The anticipated asset allocation is more in line with their risk profile than your current asset allocation.
However the investment property value is such that they will remain significantly overweight in Australian
property. This means that their overall portfolio is actually in line with a high growth asset allocation with a
large dependency on the property market. As their superannuation account balances increases, the asset
allocation will be moved more towards the balanced portfolio.
Assessor feedback: Resubmission required?
No
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 Maryinvest 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:
 Investment in OzSuper fund
 Invest in BESTA super fund
 Should start a savings plan with RAB Bank online direct high saver account
Assessor feedback: Resubmission required?
No
Page 53 of 77

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 ifyou 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 assignment. 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 54 of 77

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 $2,500 $2,500 $0
Implementation fee $0 $0 $0
Ongoing advice fee* $1,760 $1,760 $0
Total $4,260 $4,260 $0
*Ifthe 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).
Assessor feedback: Resubmission required?
No
Page 55 of 77

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
OzSuper $ 0 $1,500 $1,500 $0.00 $0.00
BESTA $ 0 $2,000 $2,000 $0.00 $0.00
Total $ 0 $3,500 $3,500 $0.00 $0.00
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 Fund manager is 15%. The amount you will be charged will depend
on the funds you have invested.
For example, $ 50,000 invested with them will incur a $ 7,500 annual management cost.
Commissions
Our policy on taking commissions from product and service providers is summarised below:
Most of the clients employ advisors only on nominal basis. More often than not, they resemble self-
employed contractors in the way their advisory services are melded into the client’s objectives. Fund
manager helps the client to maximize their return with the risk tolerance level and the available property.
They also help to diversify the risk to minimize the risk.
To receive this support from the investment firm, advisors are held to some important obligations. The
most important of these provides the firm with its revenues: advisors must transfer a certain portion of
their earnings to the firm. The advisors' generate their income by means of commissions, that is, the fees
clients pay each time they make an investment transaction. Therefore, it's in the best interest of both the
individual advisor and the firm to create increased revenue through maximum trading commissions.
Assessor feedback: Resubmission required?
No
Other fees and benefits
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.
Page 56 of 77

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)
The regular review of Nathan’s situation requires various reasons including:
 Changes in client’s personal situation: If there is any change in the client’s present circumstances, it
should be reviewed immediately
 Financial markets performance: Performance of the portfolio as per the market condition should be
reviewed on regular basis
 Changes in legislation: If there is any change regarding the Government’s rules and regulation, it
should be complied with properly.
 Evaluating on continuous basis the relevance of the investments to changing circumstances of the
client
 Assessing the availability of new products those may be more suitable for meeting the client’s
needs and objectives.
Ongoing service includes:
 6 monthly portfolio update to the client
 Annual review of the entire situation and record the advice if any small adjustments are made
 Implementing the review meeting whenever any new recommendations are made about the
portfolio
 Invitations to seminars for the clients
 An annual Christmas function for the client
Assessor feedback: Resubmission required?
No
Ongoing service fee
What would you do to ensure that Nathan and Mary know the specific costs relating to an ongoing service?
(100 words)
Specific costs relating to an ongoing service:
If the client has agreed to pay for the ongoing services, he must have knowledge about the inclusions of
service charges. The charges include:
 Newsletter
 Invitation for seminars
 Regular reports for the client’s investment portfolio
 Regular review with the financial advisor
Some of the adviser suggests various kinds of ongoing services as per the charges paid by the client and the
level of contact the fund manager can have with the client. If the client is paying the service charges for the
services that he is not using, he can always ask for to switch off the fees.
Assessor feedback: Resubmission required?
No
Page 57 of 77

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 bothyou and the clientsare 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 MaryDavidson, in order to proceed with our recommendations, you will need to complete the
steps below:
Action By whom By when
Complete the application for
investment with BESTA
Nathan 20th September
Complete the application for
investment with OzSuper
Mary 20th September
Open RAB Bank online
direct high saver
account
Pat Planner, with Nathan and
Mary
18th September
Complete binding death benefit
nomi$ 0tion form
Mary 18th September
Complete binding death benefit
nomi$ 0tion form
Nathan 18th September
Arrange appointment with Estate
planning specialist
Pat planner 18th September
Attend estate planning meeting Nathan and Mary 1st October
Diarise ongoing review schedule Pat Planner 18th September
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 58 of 77

Authority to proceed
By signing this authority to proceed, I/we Nathan and MaryDavidsonacknowledge 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
OzSuper Balanced $50,000
BESTA Core Pool $25,000
RAB Bank online direct high saver account Ongoing savings of $500 per
month each. No initial balance
required.
• I/We wish to make the following change/s to the recommendations within the SOA:
Product(s) Amount
OzSuper $60,000
BESTA $35,000
RAB Bank Ongoing savings of $300 per
month each. No initial balance
required
Signed__________________________________ Date _____/_____/______
Client Name
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 59 of 77

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 60 of 77

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
$140,000 $70,600 Includes for Mary income net of business expenses
and income from employment as above
Salary Nil Nil
Salary sacrifice $ 0 $ 0
Salary after salary sacrifice $140,000 $70,600
Rental income $ 0 $ 0
Unfranked dividends $ 0 $ 0
Franked dividends $ 5400 $ 1980 2% on super
Franking (imputation) credits $ 0 $ 0 (state franking % if applicable)
Interest $ 17,500 $ 0 5% on deposits
Other income, e.g. taxable benefits
Capital gains <1yr $ 0 $ 0
Capital gains >1yr $ 0 $ 0
Tax-free component of capital gains $ 0 $ 0
Assessable income $162,900 $72,580
Deductible expenses
$63,528 $61,796 Include income protection premiums if held outside
superannuation
Rental expenses, repairs etc. $ 0 $ 0
Taxable income $99,372 $10,784
Tax on taxable income $24,400 Nil 2016/17
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 $24,400 Nil
Page 61 of 77

Family cash flow
Client 1 Client 2 Combined
Salary less any salary sacrifice amount $140,000 $70,600 $210,000
Non-taxable income (e.g. income from superannuation income
streams for a person over age 60, Family Tax Benefit)
Nil Nil
Interest income $ 17,500 Nil $ 17,500
Dividends received (excluding franking credits) $ 5,400 $ 1,980 $ 7,380
Rental income Nil Nil
Other income Nil Nil
Total income received before tax $162,900 $72,580 $235,480
Investment expenses
Interest payments Nil Nil
Rental expenses Nil Nil
Other Nil Nil
Living expenses
General living expenses $45,000 $45,000 $90,000
Home mortgage Nil Nil
Car insurance $1,600 $1,600 $3,200
Home building and contents insurance $750 $750 $1500
Holiday $5,000 $5,000 $10,000
Children’s education $3,500 $3,500 $7,000
Health Insurance $1,422 $1,422 $2,844
Insurance premiums $5,496 $3,564 $9,060
Other - Donations and accountant’s fees $760 $960 $1720
Total expenses $63,528 $61,796 $125,324
Total income received before tax less expenses $99,372 $10,784 $110,156
Net tax payable from the ‘Income and expenses’ table above $24,400 Nil $24,400
Net cash flow $74,972 $10,784 $ 85,756
Page 62 of 77

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 $ 0 $ 0 $ 0
Total $777,000 $0 $777,000
Investment assets
Investment property
Savings account Nathan/Mary $350,000 Nil $350,000 Transaction
account
Term deposit $ 0 $ 0 $ 0
Shares $ 0 $ 0 $ 0
Other $ 0 $ 0 $ 0
Total $350,000 Nil $350,000
Superannuation assets
Client 1 superannuation Nathan $270,000 $ 0 $270,000 Growth option
Client 2 superannuation Mary $99,000 $ 0 $99,000 Balanced option
Total $369,000 $369,000
Net worth $1,496,000 $0 $1,496,000
Liabilities
Loan Current debt Percentage deductible Interest only Repayment
Loan $ 0 $ 0
Home loan $ 0 $ 0
Investment property $ 0 $ 0
Other $ 0 $ 0
Total $0 $0
Page 63 of 77

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.
Cash flow statement
Income and expenses
Client 1 Client 2 Notes
Income from employment
$140,000 $70,600 Includes for Mary income net of business expenses
and income from employment as above
Salary Nil Nil
Salary sacrifice $ 0 $ 0
Salary after salary sacrifice $140,000 $70,600
Rental income $ 0 $ 0
Unfranked dividends $ 0 $ 0
Franked dividends $ 8100 $ 2970 3% on super
Franking (imputation) credits $ 0 $ 0
Interest $ 21,000 $ 0 6% on deposits
Other income, e.g. taxable benefits
Capital gains <1yr $ 0 $ 0
Capital gains >1yr $ 0 $ 0
Tax-free component of capital gains $ 0 $ 0
Assessable income $169,100 $73,570
Deductible expenses
$73,528 $65,796 Include income protection premiums if held outside
superannuation
Rental expenses, repairs etc. $ 0 $ 0
Taxable income $95,572 $7,594
Tax on taxable income $22,994 Nil 2016/17
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 $22,994 Nil
Page 64 of 77

Family cash flow
Client 1 Client 2 Combined
Salary less any salary sacrifice amount $140,000 $70,600 $210,000
Non-taxable income (e.g. income from superannuation income
streams for a person over age 60, Family Tax Benefit)
Nil Nil
Interest income $ 21,000 $21,000
Dividends received (excluding franking credits) $ 8100 $ 2970 $11,070
Rental income Nil Nil
Other income Nil Nil
Total income received before tax $169,100 $73,570 $242,670
Investment expenses
Interest payments Nil Nil
Rental expenses Nil Nil
Other Nil Nil
Living expenses
General living expenses $55,000 $49,000 $90,000
Home mortgage Nil Nil
Car payment Nil Nil
Credit cards Nil Nil
Holiday $5,000 $5,000 $10,000
Children’s education $3,500 $3,500 $7,000
Other loans e.g. perso$ 0l Nil Nil
Insurance premiums Nil Nil
Other
$760 $960 Donations and
accountant’s fees
Total expenses $73,528 $65,796 $139,324
Total income received before tax less expenses $95,572 $7,594 $103,166
Net tax payable from the ‘Income and expenses’ table above $22,994 Nil $22,994
Net cash flow $72,578 $7,594 $80,172
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
Page 65 of 77

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 $ 0 $ 0 $ 0
Total $777,000 $0 $777,000
Investment assets
Investment property Nathan/Mary $210,000 Nil $210,000 Investment in
Australian
property
Savings account Nathan/Mary $350,000 Nil $350,000 Transaction
account
Term deposit $ 0 $ 0 $ 0
Shares $ 0 $ 0 $ 0
Other $ 0 $ 0 $ 0
Total $350,000 Nil $350,000
Superannuation assets
Client 1 superannuation $ 0than $270,000 $ 0 $270,000 Growth option
Client 2 superannuation Mary $99,000 $ 0 $99,000 Balanced option
Total $369,000 $369,000
Net worth $1,496,000 $0 $1,496,000
Liabilities
Loan Current debt Percentage deductible Interest only Repayment
Loan $ 0 $ 0
Home loan $ 0 $ 0
Investment property $ 0 $ 0
Other $ 0 $ 0
Total $0 $0
Page 66 of 77

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.
• 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.
Page 67 of 77

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 $270,000 $99,000 $369,000 $270,000 $99,000 $369,000
55 $291,017 $110,686 $401,703 $315,900 $124,493 $440,393
56 $312,700 $123,968 $436,668 $369,603 $156,550 $526,153
57 $335,072 $138,844 $473,916 $432,436 $196,862 $629,298
58 $358,154 $155,505 $513,659 $505,950 $247,554 $753,504
59 $384,872 $174,166 $559,038 $591,962 $311,300 $903,262
60 $413,583 $195,066 $608,649 $692,596 $391,460 $10,84,056
61 $444,436 $218,474 $662,910 $810,337 $492,260 $13,02,597
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)
$270,000 $99,000 $270,000 $99,000
Contribution frequency 1 1 1 1
Rate = the rate of return of
the fund, net of inflation and
fees
7% 11% 16% 25.75%
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 arebeing drawn from the superannuation
• type = (can be left blank) indicates that the payments happen at the end of each period.
Page 68 of 77

Table 2 Superannuation income analysis post-retirement
Nathan’s age Combined account balance Assumptions Combined fund
65 $80,000 Rate of return net of inflation 20%
66 $96,000 Frequency of drawdown 1
67 $115,200 Income p.a. $80,000
68 $138,240
69 $165,888
70
$199,066
71
$238,880
72
$286,656
73
$343,987
74
$412,784
75
$495,340
76
594,408
77
$713,290
78
$855,948
79
$10,27,138
80
$12,32,566
81
$14,79,080
82
$17,74,896
83
$21,29,875
84
$25,55,850
85
$30,67,020
86 $ 36,77,315
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
Page 69 of 77

To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or
your resubmission.
Page 70 of 77

Section 5 Agree on the plan, policy or transaction
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)
Order of presenting the information:
1. Executive summary
2. Your situation
3. Your objectives
4. Summary of strategy and recommendations
5. Summary of expected outcomes
6. Risk in the advise
7. Summary of fees and commission
8. Result with recommendations
Risks associated with the solution:
As the client did not wish to review their insurances, chances are there that they will not have adequate
amount required to fulfil their need and objectives. Further, if in any case they require any kind of cover,
they will not be eligible to make payment. Further, in case of some insurance policies it takes some time to
get the payment for insurance cover. Therefore, they shall review their insurance as soon as possible.
Further, the client will not be able to access their funds until they reach the age of 65 or the client retires.
All investments including the superannuation funds carry some risk. Value of the investments both inside as
well as outside superannuation may not be increased in as compared to market expectations and likelihood
is there that the portfolio will fluctuate.
Holding investment property for the long term may result in their asset allocation being outside the desired
allocation for their risk profile. As the clients have not requested advice on this property there is a risk that
it may not meet the long-term objectives.
Two predictable questions the Davidson might ask:
1. Expected investment returns expected to be CPI plus 3-5% over the long term. Moderate level of
income volatility and capital is tolerated in expectation of higher returns in the medium to long
term that is minimum four years. Investor’s accepts higher expected negative return that may take
6 years. The clients may ask for the return approach.
2. As the client has moderate return and risk preference they may ask for an investment strategy that
can be adjusted with the impact of inflation and tax.
The language that will be used to present the strategy to Nathan and Mary:
The strategy will be presented in simple English language. If they do not understand English, then in any
local language which both the client and fund manager understand.
Page 71 of 77

Assessor feedback: Resubmission required?
No
Page 72 of 77

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)
1. They want to Plan for retirement and would like to build up their superannuation. Their anticipated
investment property could help meet some income needs in retirement. Further, they expect that
they will need $80,000 per annum after tax to meet their retirement income goals. Davidson may
be concerned about the risk profile of anticipated investment.
2. You wish to travel to Japan in 9 months’ time and estimate you will need $10,000. To start a savings
plan into a high-interest-earning online savings account and contribute $500 a month each may not
give their required return and Davidson might be concerned about this.
Assessor feedback: Resubmission required?
No
Page 73 of 77

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 sacrifices 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)
Documents required are as follows –
 Nathan must agree in writing that deduction will be made from his wages for their benefits
 It is allowed by law, court order, fair work commission or an award of an employee
 Employee shall be agreed and deduction from wages will be in compliance with the Nathan’s
company agreement
To ensure that the system is correctly implemented the following shall be checked –
 Agreement shall be entered into the system before the employee performs the work
 Agreement among Nathan and his employee
Assessor feedback: Resubmission required?
No
Page 74 of 77

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.
Required documents for carrying out the contract and providing service to the clients Nathan and Mary the
following documents will be required –
Checklist — client name
Action/Documentation Who will action
Develop and prepare financial plan Planner
Record and implement client instructions Planner
Determine client requirements and expectations Planner
Implement financial plan Planner
Details of client’s need and objective Client
Details of clients like name, age, priorities Client
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
Page 75 of 77

To pass this subject, you will need to be assessed as DEMONSTRATED for either your first submission or
your resubmission.
Page 76 of 77

Bibliography
Cummings, J.R., 2015. Effect of fund size on the performance of Australian superannuation
funds. Australian Prudential Regulation Authority Working Paper.
Watson, J., Delaney, J., Dempsey, M. and Wickrama$ 0yake, J., 2016. Australian superannuation (pension)
fund product ratings and performance: A guide for fund ma$ 0gers. Australian Jour$ 0l of Ma$
0gement, 41(2), pp.189-211.
Page 77 of 77