Kaplan DFP1 Financial Planning Fundamentals Assignment Solution

This document presents a comprehensive solution to a Financial Planning Fundamentals (DFP1) assignment, focusing on the case study of Joe and Natalie Olden. The assignment requires an analysis of their financial situation, based on the provided fact find, including their assets, liabilities, income, and expenses. The solution likely involves determining their investment objectives, risk profile, and providing financial advice related to their goal of purchasing a house, considering their income, debts, and available savings. The solution will likely include calculations, recommendations, and a discussion of relevant financial planning principles and regulations. The assignment covers units of competency such as financial planning analysis, ethical guidelines, client needs, and financial product knowledge.

Assignment
Financial Planning Fundamentals
(DFP1_v2A1)
Student identification(student to complete)
Please complete the fields shaded grey.
Student number
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)
Question 1 Not yet demonstrated Not yet demonstrated
Question 2 Not yet demonstrated Not yet demonstrated
Question 3 Not yet demonstrated Not yet demonstrated
Question 4 Not yet demonstrated Not yet demonstrated
Question 5 Not yet demonstrated Not yet demonstrated
Question 6 Not yet demonstrated Not yet demonstrated
Question 7 Not yet demonstrated Not yet demonstrated
DFP1_AS_v2A1

Feedback (assessor to complete)
[insert assessor feedback]
Page 2 of 34

Before you begin
Read everything in this document before you start your assignment for Financial Planning Fundamentals
(DFP1v2).
About this document
This document includes the following parts:
• Part 1: Instructions for completing and submitting this assignment
• Part 2: Case study
• Part 3: Assignment questions.
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 Financial Planning
Fundamentals (DFP1v2) subject room.
Part 1: Instructions for completing and submitting this
assignment
Word count
The word count shown with each question is indicative only. You will not be penalised for exceeding the
suggested word count. Please do not include additional information which is outside the scope of the
question.
Additional research
You will be required to complete additional research to answer the assignment questions.
Page 3 of 34

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 this assignment.
• Name your file as follows: Studentnumber_SubjectCode_Submissionnumber
(e.g. 12345678_DFP1_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 assignment
You must submit your completed assignment in a compatible Microsoft Word document.
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 assignment must be completed before submitting it to Kaplan Professional. Incomplete assignments
will be returned to you unmarked.
The maximum file size is 5MB. Once you submit your assignment for marking you will be unable to make
any further changes to it.
You are able to submit your assignment earlier than the deadline if you are confident you have completed
all parts and have prepared a quality submission.
The assignment marking process
You have 12 weeks from the date of your enrolment in this subject to submit your completed assignment.
Should your assignment be deemed ‘not yet competent’ you will be give an additional four (4) weeks to
resubmit your assignment.
Your assessor will mark your assignment and return it to you in the Financial Planning Fundamentals
(DFP1v2) subject room in KapLearn under the ‘Assessment’ tab.
Make a reasonable attempt
You must demonstrate that you have made a reasonable attempt to answer all of the questions in
your 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 assignment.
Page 4 of 34

How your 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 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.
‘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 assignment is your opportunity to demonstrate your competency against these units:
FNSFPL502 Conduct financial planning analysis and research
FNSFPL501 Comply with financial planning practice ethical and operational guidelines and regulations
FNSFPL506 Determine client financial requirements and expectations
FNSINC401 Apply principles of professional practice to work in the financial services industry
BSBITU402 Develop and use complex spreadsheets
FNSASIC301 Establish client relationship and analyse needs
FNSASIC302 Develop, present and negotiate client solutions
FNSIAD301 Provide general advice on financial products and services
We are here to help
If you have any questions about this 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.
Page 5 of 34

Part 2: The Case Study
Joe and NatalieOlden
You met JoeOlden when he came into your office last week. He had been mowing the grass in the park over
the road, saw your business sign and came for a chat to see if you could help him and his wife.
He and Natalie live in a small rural community outside town and have been married for three years. Joe is
age 26 and is a horticulturalist with the local council. Natalie is age 24 and a librarian.However,she is not
working at present as she looks after their twins. Until the twins arrived, their focus had been on working
hard and saving for a deposit to buy a house. They rent a nice home on the edge of town and enjoy the
scenic views over the hills.
Their landlord has approached them saying she wants to sell the house and will give them first refusal to
purchase it. Joe’s parents have offered to help them with a loan.
They want some help in making a decision and understanding how it will all work.
You give Joe your Financial Services Guide (FSG) and a fact-find form and you agree to meet next week.
First meeting
After introductions and pleasantries, you ask Joe if he has read the FSG and briefly go through the contents
for Natalie. They are comfortable to have an initial consultation to see where it takes them.
They have completed the fact find and as you discuss the contents, you make additional notes on their file.
The fact find looks as follows:
Joe and NatalieOldenFact Find
Table 1 Personal details
Name JoeOlden NatalieOlden
Salutation MrOlden MrsOlden
Age 26 24
Marital status Married Married— we just celebrated our third anniversary
Home address Hillview Cottage Burgenfield
Health Good Good
Smoker No No
Occupation Horticulturalist Librarian
Employer Burgenfield Rural Council Burgenfield Library
Projected retirement age Probably 67 Not thought about it
Dependents/family relationships Name Age/date of birth
Son Jason 2 (Both in good health and developing normally)
Daughter Jillian 2
Page 6 of 34

Table 2 Professional relationships
Solicitor None
Time span of relationship n.a.
Quality of relationship
Accountant None
Time span of relationship n.a.
Quality of relationship
Table 3 Assets and investments
Assets and investments (personally owned)
Assets Value Ownership
status
Other information Purchase price
Everyday bank
account
$500 Joint We try to keep at least this amount in the
account. We’d like to have more cash on
hand for the unexpected because with the
twins something is always happening
Joe’s ute $4,000 Joe It’s 12 years old and still running well. It’s a
great little workhorse
$15,000
Natalie’s sedan $12,000 Natalie It’s only three years old and I love it.
The four doors and hatchback make it great
to take the kids out and for shopping
$18,000
Home contents $7,000 Joint Includes gardening equipment that Joe
uses for part-time gardening jobs
Bonus saving account $22,500 Joint We were saving quite well and enjoying a
carefree lifestyle until the twins came
along, but for the last year we have often
had to resist the temptation to dip into it.
We get extra interest if we don’t make
withdrawals
Table 4 Liabilities
Debts Value Payment Ownership
status
Other information Interest
rate
Credit card $2,500 Minimum Joint We would prefer to pay it off each month
but we spent a lot rearranging the house
for the twins when they arrived
22.5%
Car loan $5,400 $61pw Natalie There are two years until it’s paid out 13.5%
HECS debt $12,000 None Natalie From Natalie’s librarian course CPI
Table 5 Superannuation
Fund Value Ownership Other information
SunSuper $16,300 Joe From my job with the council. I’ve been with them since I left school
and did my apprenticeship
Council Super $11,800 Natalie From my job in the library since I finished university
Page 7 of 34

Table 6 Income p.a.
Income type per annum Joe Natalie Notes
Salary $48,000 Super on top of this. I hope to get the supervisor’s job
in a couple of years when the current guy retires
Salary $5,000 I was on $47,000 before I took time off to have the kids.
I’m not sure how long I’ll be away but I don’t want to
lose the opportunity to work locally. This is my town
and I love it
I still do some work from home for the library. I hope
I’ll earn $5,000 a year but we’ll see
Centrelink About $17,500 About $675 a fortnight
Interest $394 $394 From the home deposit saving fund
Total combined
gross income
$71,288
Table 7 Estimated annualexpenditures
Expense per year Joint Notes
Accountant’s fees A friend does our tax online
Charitable donations None
Children's pocket money n.a.
Council and water rates Included in rent
Discretionary: restaurants, gifts, holidays,
etc.
$1,000 We used to go out a lot and take short weekend
breaks but we are more likely to go for a walk than
to the pub nowadays
Debt repayment $3,765 Car loan and minimum payment on the credit card
Electricity $1,000
Gas $600
Weekly shopping $30,000 What with things for the kids we easily spend $550
each week
Health insurance We don’t have any
Holidays We now visit an aunt on the coast if we go
anywhere
House insurance Landlord’s responsibility
House maintenance and repairs Landlord’s responsibility
Income protection Never thought of it
Medical bills/prescriptions $1,500 We are pretty healthy
Mobile phones and internet $1,500
Motor vehicle and fuel $10,000
Mortgage n.a.
Pay TV Don’t get time for much TV
Private school fees n.a.
Rent $15,600 $300 pw
Total expenses $64,965
Page 8 of 34

Not
applicable
Table 8 Investment objectives and attitude to risk
Joe and Natalie did not fill out this part of the fact find. They said it did not apply to them or they did not
understand the questions or possible answers.
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?
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.
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.
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.
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.
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.
Retired. No longer working you 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.
What return do you reasonably expect to achieve from your investments?
A return without losing any capital
3–7% p.a.
8–12% p.a.
13–15% p.a.
Over 15% p.a.
Page 9 of 34

Not
applicable
If you did not need your capital for more than ten (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 were any loss in value.
Less than 1 year.
Up to 3 years.
Up to 5 years.
Up to 7 years.
Up to 10 years.
How familiar are you with investment markets?
Very little understanding or interest.
Not very familiar.
Have had enough experience to understand the importance of diversification.
Understand that markets may fluctuate and that different market sectors offer different
income, growth and taxation characteristics.
Experienced with all investment sectors and understand the various factors that may
influence performance.
If you can only receive greater tax efficiency from more volatile investments,
which balance would you be most comfortable with?
Preferably guaranteed returns, before tax savings.
Stable, reliable returns, minimal tax savings.
Some variability in returns, some tax savings.
Moderate variability in returns, reasonable tax savings.
Unstable, but potentially higher returns, maximising tax savings.
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.
You would cut your losses and transfer your money into more secure investment sectors.
You would be concerned, howeverwould wait to see if the investments improve.
This was a calculated risk and you would leave the investments in place, expecting
performance to improve.
You would invest more funds to lower your average investment price, expecting future
growth.
Page 10 of 34

Not applicable
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.
You are not nearing retirement, have surplus funds to invest and you are aiming to
accumulate long-term wealth from a balanced fund.
You have a lump sum (e.g. an inheritance or a lump sum payment from your employer)
and you are uncertain about what secure investment alternatives are available.
You are nearing retirement and you are investing to ensure that you have sufficient funds
available to enjoy retirement.
You have some specific objectives within the next five years for which you want to save
enough money.
You want a regular income and/or totally protect the value of your savings.
Investor profile total points
Investor risk profile summary
70 –140 Conservative
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.
140–210 Moderate
You are a cautious investor seeking better than basic returns, howeverrisk 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.
210–280 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.
280–315 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.
315–350 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.
Page 11 of 34

Table 9 Estate planning
They have not bothered about wills because if one of them died everything would go to the other.
They haven’t got around to doing anything now they have the kids.
Insurance and risk management
Policy Life
insured
Owner Cover Premium
per annum
Notes
Death and TPD Joe SunSuper $125,000 Death
$175,000 TPD
$3.92pw Standard cover
Death and TPD Natalie Council Super $87,000 Death $2.00 pw TPD cancelled as she is not
working
Income protection
Home and contents
Private health insurance
Joe’s ute insurance
Natalie’s sedan
insurance
Natalie Fully comprehensive $420 p.a. Premium included in
motor vehicle costs
You ask them about the offer from their landlord.
Question Answer
Tell me about this offer from your
landlord?
We’ve always got on well with her. We pay our rent on time and she always
responded promptly if we had any problems. She likes to come and collect the rent
if she can so she can see our kids. So, we’re friends, really.
She says she’s selling up and moving to the coast and can’t manage a rental
property from far away. She knows we were saving to buy a house and it would
make life easy for her if we bought it and she didn’t have to pay real estate agent
fees. Of course, it would make life easy for us too as we wouldn’t have to move.
How much is she asking? Well she wants $280,000. Sounds a bargain compared to the prices they pay in the
cities nowadays but it’s only a two-bedroom weatherboard cottage and it suits us
just fine. We looked at the asking prices for other homes in the window of the real
estate office and it seemed a fair price.
Have you asked about a mortgage? Yes, we spoke to the bank and they told us if we could make a 20% deposit they
would fund the rest. So that means we would borrow $224,000 and we need
$56,000 deposit — a bit more than that to cover legal costs.
And you’ve had an offer from Joe’s
parents?
Yes, we told them we have saved $22,500 but they could see we were short about
$40,000 and they said they’d lend us the money to help us out. It’s too big an
opportunity to pass by.
But it’s a loan, not a gift? That’s right. They are in their mid-50s and plan to retire in 10 years and will want
the money back by then. Joe has two brothers and neither of them is married yet
so he’s the apple of their eye, having presented them with two grandkids at once.
They haven’t said anything about paying interest but it’s sort of understood that
once we get on top of the mortgage payments and I’m back at work we can pay
them back in instalments.
Page 12 of 34