Financial Planning Report: Analysis of Jake Mackenzie's Finances

This financial planning report analyzes the current financial circumstances of Jake Mackenzie, a 57-year-old architect with a strong financial standing, including a high salary, significant savings, and substantial property and superannuation assets. The report identifies potential future issues, such as retirement funding and investment avenues, and outlines Jake's objectives, including early retirement, share portfolio growth, and lifestyle enhancements. It assesses his risk profile and provides detailed recommendations for wealth creation, including diversification of investments beyond shares. The report also covers insurance needs, including life, income protection, and medical insurance, along with the advantages and disadvantages of each. It explores superannuation and retirement planning, suggesting the Transition to Retirement strategy, and discusses estate planning considerations, including wills and inheritance. Finally, the report touches on social security benefits and concludes with a marking rubric for assessment.

FINANCIAL PLANNING

TABLE OF CONTENTS
CURRENT CIRCUMSTANCES....................................................................................................1
Current wealth condition of Jake............................................................................................1
Potential issues.......................................................................................................................1
Objectives...............................................................................................................................1
Risk Profile.............................................................................................................................1
WEALTH CREATION / LIFESTYLE RECOMMENDATIONS..................................................2
INSURANCE...................................................................................................................................2
SUPERANNUATION / RETIREMENT PLANNING...................................................................3
ESTATE PLANNING.....................................................................................................................4
SOCIAL SECURITY.......................................................................................................................4
MARKING RUBRIC.......................................................................................................................4
REFERENCES................................................................................................................................7

CURRENT CIRCUMSTANCES
Current wealth condition of Jake
In the current case study there is a client Jake Mackenzie who was born on 12/02/1960
and in the current year he is 57 years old. He is Australian citizen and working in Grand Designs
Pty Limited company on the profile of Architect and his current economic condition or financial
health is better. Salary of Jake is worth of $140,000 per annum excluding the superannuation and
the excluded amount will be return to him after retirement. Saving of Jake per month is worth of
$2500, value of his house and motor vehicle is worth of $850,000 and $40,000 respectively.
Along with this his home contents of approximately worth of $75,000. The superannuation
amount of the Jake is also high and due to which he has two superannuation accounts in the
Bank. The taxable amount of the client is worth of $492,500 which is lower as compare to his
balance like $532,500. Apart from this, after the retirement he will get huge amount and in short
it can be said that economic condition of Jake is healthier and strong.
Potential issues
The issues and problems of the Jake are for the future that after age of retirement how
much fund he will require for spending further life. Other issue is related to avenue of investment
that which one will be beneficial like insurance, shares or any other. Moreover, he needs to keep
some fund for the superannuation or not etc. Apart from this, main concern of the Jake is for
need of money as well as selection of fruitful investment avenue. Another issue is regarding to
salary that employer of Jake allow his to sacrifice salary.
Objectives
Key objective related to non financial of Jake for short term (8 years) is to take self
retirement at the age of 63 years instead of 65 years. Medium term goal of the client is to
improve the money of share portfolio from $40,000 to $100,000 within upcoming 5 years.
Moreover, he needs to build swimming pool, raise fund for holiday, estate planning as well as
get the appropriate insurance. Second last and last options and objectives having the higher
priority as compare to others.
Risk Profile
The Jake having time frame to raise the amount of shares portfolio within 5 years in
which he has risk of 1 year. It may be possible that balanced amount can be delay for 1 year in
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case the conditions of stock market reduce. Apart from this, Jake not consider any other kind of
investment criteria because he has faith on the stock investment rather than other available
options to invest money. Due to this, the risk profile of Jake is regarding to the time-frame for
meet with the balance of share portfolio as well as delaying the retirement years.
WEALTH CREATION / LIFESTYLE RECOMMENDATIONS
The Jake wants to improve his level of wealth and economic conditions and for which he
makes several kinds of objectives as well as plan along with the time frame. As per the financial
adviser there are several kinds of ways and methods through which the client Jake can make
investment and then create or improve his wealth up to the higher condition. At the current case
study Jake has various types of objectives and among all of them some relies under the financial
and some under the non financial aspect. For the financial aspect Jake always consider shares
portfolio as compare to another available investment categories. On the basis of this it can be
recommended to the Jake that he needs to consider other investment avenues also which help to
reduce the level of risk and enhance return of initial investment.
Advantage to make investment in other criteria is rather than considering only one, is
Jake able reduce risk because it diversifies in other aspects. Along with this, he able to generate
more amount in terms of return as compare to only shares.
Disadvantage of go for diversify portfolio is that Jake needs to consider and manage the
all investment avenues and look at all within specific time frame.
INSURANCE
The term which provide protection to living and non living aspects against to those events
which can be incurred is considered as insurance. There are various kinds of insurance which
will be suitable for the Jake in order to achieve different types of objectives in effective manner.
The Jake has specific objective is that use appropriate insurance which having the higher priority
which are like life, total and permanent disability, income protection, trauma and others. After
considering these all it can be suggested to the Jake that he needs to invest money in life
insurance, income protection as well as medical which provide safety and protection to him in
terms of profitability. The income protection allows to protect those amount which are generated
through different kinds of economic activities done by Jake. Life insurance helps to the Jake for
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recovering some of money in case he dies which is one of the highly prioritised insurance. Along
with this, through medical insurance Jake is beneficial in terms of taking money at the time of
arising diseases. There are some advantages and disadvantages of insurance which are such as
follows:
When the Jake go through insurance in order to make investment then able to protect
himself in terms of monetary which helps to enhance the lifestyle of his up to the higher level.
This kind of investment avenue allows to Jake for tax relief in which he not needs to pay any
kind of taxation amount. In case, the income of Jake scraped or stolen then insurance company
will provide to Jake which is also one kind of benefit for him. Apart from this, when he will ill
and for his treatment huge expenses are there, which will be provided by the insurance firm.
Hence, it can be said that insurance will be highly supportive for Jake in order manage wealth
and lifestyle both.
In contrary to this, disadvantage of insurance is that amount of superannuation is affected
in negative manner because the deductions of insurance amount will be from fund of the
superannuation. Apart from this, if the Jake not come under any disease and not arise any kind of
expenses related to treatment then any benefit will not be there. Along with this, whole
premiums or funds of medical insurance will not be provided return to Jake.
SUPERANNUATION / RETIREMENT PLANNING
Objective of the Jake regarding to the retirement planning as well as superannuation is to
take retirement before 2 years which is at the age of 63 years rather than standards age of
retirement 65 years. In this the Jake should adopt the Transition to Retirement (TTR) strategy in
which the benefits and allowances given by firm are to be sacrificed by the employee. The Jake's
employer allow to him for salary sacrifice worth of on which any kind of taxation not need to
pay as well as NIC is to be paid by company. Hence, it can be recommended that Jake needs to
adopt the strategy of Transition to Retirement and some advantages and drawbacks of it are such
as:
Very basic benefit of the TTR strategy is that it allows to Jake for supplement his level of
salary as well as boost up the lifestyle which is key objective of his. Along with this, through
suggested strategy Jake able to use tax which is saved and due to which his super or lifestyle
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boost up or increase up to higher extent before the retirement or age of 65 years. In addition to
this, it is tax effective by which wealth improves ultimately.
All kinds of super fund not provide and allow to using the TTR strategy which is major
disadvantage for the Jake. Apart from this, there is specific time frame is available and within it
Jake able to take fund using TTR otherwise cannot withdraw money. In case the Jake not reaches
up to the age of preservation then unable to use this strategy in effectual manner which affects to
his lifestyle in negative manner.
ESTATE PLANNING
In the estate planning Jake wants to consider the will or inherent property which he gets
from his previous generation who are passed away. In addition to this, the will is specified and
give direction to the Jake that in which order he will deal with property which he got in the will.
Due to taking property of will Jake has various kinds of responsibilities which are necessary to
fulfil and complete by him. Through the estate planning Jake will be beneficial up to the higher
extent because it helps to improve level of property of his and make his lifestyle effectual. In
order to this, Jake needs to complete responsibilities like funeral of will givers, outstanding debt
which left by ancestors, defending those challenges which are included with the will property
etc. Hence, it can be said that estate planning is beneficial because these are inherent from
ancestors in free of costs which lead to improve the financial position and wealth up to the higher
extent. Along with this, responsibilities and other things which are ancestors left are to be
completed and fulfilled by Jake which is adverse condition of estate planning.
SOCIAL SECURITY
In the social security the government of country comes into picture where the employees
are in various kinds of beneficial situations. In the social security the government provides
assistance to the employees in terms of financial as well as monetary situations by which Jake
will be in the fruitful manner. Due to this kind of beneficial conditions Jake highly able to meet
with the objectives of wealth creation as well as enhancing the lifestyle. From the social security
Jake is in the protective and safely area which helps to reduce level of risk up to some level.
Along with this, chances of reduction in lifestyle and wealth creation will be reduce which is one
of the highly beneficial. In opposite to this, some amount from salary is needs to given to the
government which is negative aspect of social security.
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MARKING RUBRIC
Criteria %
weighting
Excellent (85-
100%)
Very good
(75-84%)
Good (65-
74%)
Satisfactory
(50-64%)
Unsatisfactory
(0-49%)
Client's
circumstances
Circumstances
in terms of
financial are
very good of
Jake
Wealth
creation and
lifestyle:
outside
superannuatio
n
Outside
superannuatio
n wealth and
lifestyle
creation of
Jake is good.
Superannuatio
n and
retirement
planning
Planning of
superannuatio
n and
retirement for
creating
wealth and
lifestyle is
very good of
Jake for the
future.
Insurance Insurance
level of Jake is
at the
unsatisfactory
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level.
Estate
planning
Estate
planning is
good because
here Jake got
property in
will and shares
portfolio
worth of
$40,000.
Social security Little
satisfactory
condition is
there of Jake
in terms of
social security.
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REFERENCES
Journals and Books
Baker, H. K. and Ricciardi, V., 2014. Investor behavior: The psychology of financial planning
and investing. John Wiley & Sons.
Boisclair, D., Lusardi, A. and Michaud, P.C., 2015. Financial literacy and retirement planning in
Canada. Journal of Pension Economics & Finance. pp. 1-20.
Delgadillo, L. M., 2014. Financial clarity: Education, literacy, capability, counseling, planning,
and coaching. Family and Consumer Sciences Research Journal. 43(1). pp. 18-28.
Hastings, J. S., Madrian, B. C. and Skimmyhorn, W. L., 2013. Financial literacy, financial
education, and economic outcomes. Annu. Rev. Econ. 5(1). pp. 347-373.
Jalil, M., Abdul Razak, D. and Azam, F., 2013. Exploring factors influencing financial planning
after retirement: structural equation modeling approach. American Journal of Applied
Sciences. 10(3). pp. 270-279.
Parks, B., Olson, P. D. and Bokor, D. W., 2015. Don't mistake business plans for planning (it
may be dangerous to your financial health). Journal of small business strategy. 2(1). pp.
15-24.
Serna, G. R., 2013. Understanding the effects of state oversight and fiscal policy on university
revenues: Considerations for financial planning. Planning for Higher Education. 41(2). p.
93.
Online
Power, T., 2017. TRIPs: 10 interesting facts about transition-to-retirement pensions. [Online].
Available through: <https://www.superguide.com.au/boost-your-superannuation/trips-
facts-about-transition-to-retirement-pensions> [Accessed on 1st June 2017].
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