Financial Planning Homework: Client Financial Analysis and Planning

This document presents a comprehensive solution to a financial planning assignment, addressing various aspects of client financial analysis. It begins by identifying missing information and key issues to be discussed with the client, such as debt reduction and risk management. The assignment then prioritizes client goals, including saving for a home deposit and boosting superannuation contributions. It includes calculations for annual after-tax income, cash flow analysis, and net worth statements. Furthermore, the solution addresses life insurance calculations, suitable financial outcomes, and the treatment of the client's superannuation. The document provides detailed explanations and calculations to aid in understanding the financial planning process and developing effective strategies for clients.

Financial
Planning

Table of Contents
QUESTIONS...................................................................................................................................1
1. Missing information.................................................................................................................1
2. Issues required to be discussed with client..............................................................................1
3. Set of priorities.........................................................................................................................1
4. Goals to be identified...............................................................................................................1
5. Risks for Andrew.....................................................................................................................1
6. Calculation of client's annual after tax income........................................................................2
7. Preparation of cash flow analysis and net worth statement.....................................................2
8. Life insurance calculation........................................................................................................3
9. Suitable outcomes....................................................................................................................3
10 The way in which superannuation of client will be dealt.......................................................4

QUESTIONS
1. Missing information
A. One of the main information which is missing is related to own house or mode of
residention of Mark. It is the element which required to be analysed in detail because this
information can help to calculate the actual taxable income.
B. The collection of this information will be communicated while calculating the taxable
income.
C. All the additional information which will be collected from client will be documented
in the books where details of client are mentioned.
2. Issues required to be discussed with client
The client is willing to reduce the debt as soon as possible and it is the main issue which
should be discussed. The amount of debts is very high and it is not possible to repay all of them
quickly. The risk which is required to be focused by the client is keeping cash reserve of $10000.
There are various expenses and after deducting all of them it is not possible to maintain net
income of $60000 and keep a reserve of $10000.
3. Set of priorities
Some of the goals which are required to be prioritise are as follows:
 Saving for a deposit in a first home. It is a long term goal.
 Boosting the superannuation contribution. It is a medium term goal.
 Adequate life and total permanent disability insurance. It is a short term goal.
4. Goals to be identified
One of the goal which could be accomplished by client is maintaining holiday allowance
of $3000 P.a. Another goal which could be addressed in future is replacement of car. Currently it
is very important to review the budget and focus on other major goals.
5. Risks for Andrew
There are various types of risks which may affect the goals of Andrew. The major risk
from all of them is legislative risks. There are various types of rules and regulations of
government which are required to be focused by Andrew an if one of them is ignored then it may
result in failure of goals.
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6. Calculation of client's annual after tax income
Particulars Amount Amount
Incomes:
Salary 95000
Add: Increment @ 4% 3800
Bank interest 200
Dividend 950
Total income 99950
Less: Expenses With inflation of 2.5% (55000+13
75)
Income after expenses 43575
Add: Disallowed expenses with inflation @2.5% (1300+33) 1333
Total income 44908
Calculation of tax:
Particular tax Amount of tax
From 1 dollar to 18200 dollar No tax 0 on first 18200
From 18201 dollar to 37000
dollar
9.65% 1814 on next 18800
From 37001 to 87000 22.78% 1801 on rest 7908
Total tax 3615
Income after tax:
Total income 44908
Less tax 3615
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Total income after tax 41293
7. Preparation of cash flow analysis and net worth statement
A. Cash flow analysis and net worth statement:
Particulars Amount
Cash flow from operating activities
Salary 95000
Less: expenses 55000
Income from operating activities 40000
Cash flow from investing activities
Repayment amount for debts (500+660) (1160)
Bank interest 200
Dividends 950
Cash flow from investing activities (10)
Cash flow from financing activities Nil
Surplus 39990
B. Cash flow analysis and net worth statement:
Particulars Amount
Cash flow from operating activities
Salary 95000
Less: expenses (55000)
Add: Disallowed expenses 15000
Less: actual amount for creditcard (700)
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Cash flow from operating activities 54300
Cash flow from investing activities
Repayment amount for debts (500+660) (1160)
Bank interest 200
Dividends 950
Cash flow from investing activities (10)
Cash flow from financing activities Nil
Surplus 54290
8. Life insurance calculation
9. Suitable outcomes
There are various strategies which are matching to the goals of the organisation are
reviewing the budgets because it can help to deal with the exceeding incomes.
10 The way in which superannuation of client will be dealt
Value of superannuation is very high and the amount of it is not being used in the
calculation of income after tax. The amount of it will be taxed @ 15% and its amount will be
taxed if the total income of the individual is more than 300000. In the case of Mark the income if
not more than 30000 Dollar so there is no tratment of Superannuation.
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