Financial Planning Report: Brendon McDougall's Financial Future

This report is a detailed financial plan for Brendon McDougall, a 52-year-old single (widowed) Australian resident. It outlines his current financial situation, including assets, liabilities, income, and existing insurance coverage. The report assesses his risk profile, which is conservative, and identifies his financial objectives: securing retirement, providing for his children's future home deposits, funding his daughter's wedding, planning a retirement holiday, and ensuring adequate insurance and estate planning. The recommendations include investment strategies for the daughter's wedding (shares), children's house deposits (Fixed Maturity Plans), and the retirement holiday (Bank Fixed deposits). It also suggests establishing a SMSF for superannuation and recommends specific insurance providers for life, TPD, income protection, trauma, and private health insurance. The report emphasizes the importance of estate planning and recommends formulating a will to ensure the appropriate transfer of assets. Appendices provide future value calculations for both outside and within superannuation investments.

Part B detailed template instructions
Client's name: Brendon McDougall
Date of contact: 1 April 2019
Re: Initial Appointment
FSG and adviser profile
Brendon was handed Financial Services Guide (FSG) version 5 012019 and my Adviser
Profile at the interview on 1 April 2019. The FSG was explained to him.
Scope of advice
The SOA will provide advice on:
 the achievement of wealth creation and lifestyle goals;
 personal insurances i.e. life, total & permanent disability (TPD), income protection
(IP), trauma and private health insurance;
 superannuation and retirement planning (including before and/or after-tax
contributions);
 estate planning; and
 any social security and taxation planning considerations (where relevant).
The SOA excludes any budgeting and cash flow analysis. Client to be advised on the risks
of not receiving advice in these areas.
Current situation
Your personal profile Brendon McDougall
Date of birth 5 Oct 1966
Current age 52
Marital status Single (Widowed)
Residency Status Australian Resident
Residential address 15 Surf Street, Mermaid Beach
Telephone [phone]
Email address [e-mail]
Employment status Employed
Dependents / Children Current age & date of birth
27 years; 1992
24 years; 1995
Your health
Current health Healthy
Pre-existing medical conditions? No
Member private health fund 176000
Smoker? No
Family history considerations? Lung Cancer (father side)

Lifestyle Assets Value
Property $ 700.000
Car $ 20,000
Motor Boat $ 35,000
Home content $ 30,000
Subtotal $ 785,000
Financial Assets – Non-Super Value
cash $ 37,000
Subtotal $ 37,000
Financial Assets – Super Value
Best Super $ 212,000
Master Super 36,000
Subtotal $ 48,000
Assets Total $ 860,000
Liabilities Limit Amount
outstanding Interest rate Repayment
Credit Card $ 10,000 $ 2,000 20% $ 2,400
Liabilities Total $2,400
Net Worth (Assets – Liabilities) $ 857,600
Income $
Salary $ 104,000
Income Total $ 104,000
Expenses – N/A for this assignment
Estimated Cash Surplus / (Deficit) per month $x
INSURANCE
Owner Insurance
Type
Insurance
Provider
Benefit
Amount
Waiting
Period
Benefit
Period Premiums
Super fund Life
protection
Master
Super
fund
$ 126,000
Up to 70
years of
age
Super Fund Total and
Permeant
Disability
Master
Super
fund
$ 50,000 Up to 60
years of
age

(TPD)
Estate planning
Do you have a Will? Yes
Provision for testamentary trust
Do you have a Power of Attorney? Yes
Type / Attorney’s name Zora
Binding Death Nomination? No
Potential issues / special consideration
The potential issues and special considerations which can be recognised from Brendon’s
case is effectively portrayed below:
 Brendon would be requiring appropriate savings in order to ensure that at the
time of retirement he would be able to maintain an appropriate standard of
living. Therefore, there is a requirement for assessing the two-superannuation
funds which is maintained by him
 In addition to this, he needs to plan for a sum which needs to be kept aside in
case of his death or illness so that the family is able to pay their bills.
 Brendon also wants to contribute to his daughter wedding for which he would
need $ 10,000 in order to meet the expenses of the wedding.
 In addition to all these, Brendon desires to enjoy a vacation with friends in Las
Vegas which would after his retirement. Plus, he also wants to maintain a
comfortable standard of living post his retirement.
Objectives
 Set up an appropriate superannuation funds so that the established goals and
objectives which is being pursued by Brendon. In addition to this, the superannuation
fund would also provide appropriate coverage for Brendon in terms of insurance
coverage requirements.
 Set up an investment fund so that a sum of $ 30,000 can be provided to each of his
Children, Jason and Ashleigh so that they can purchase their own house in future.
 Ensure that the children are financially looked after in case of death of Brendon or
illness.
 Provide $ 10,000 to the wedding requirements of Ashleigh which would take place in
the next few months. This is considered to be a high priority need which needs to be
fulfilled.
 Have a retirement holiday trip with friends to Las Vegas with all the comforts of a
holiday included in the same. The anticipation of Brendon is that he would be
requiring an amount of $ 25,000 for meeting all the needs which would be required at
the time of the vacation.
 Brendon also needs a proper insurance and estate planning so that his assets and
funds can effectively transfer to the nominee which is set in the will. Therefore,
Brendon would be requiring review of the current insurance and estate plan.
Risk profile
 As per the analysis of the risk profile of Brendon, it is clear that Brendon follows a
conservative approach which requires him to make investments in defensive assets.

This is an approach which is undertaken by the investor so as to achieve a peace of
mind rather that more returns from the investments which is made. Therefore,
Brendon will be maintaining more of cash balances and fixed interest within his
profile in order to appropriately manage the risks of the business. Brendon would
also make investments with moderate risks so that he can achieve capital growth
from the investments which is made by him.
Wealth creation & lifestyle recommendations – outside superannuation
1. Goal [daughter’s wedding]
Recommended strategy:
 One of the requirements of Brendon is to provide for his daughter’s wedding. The
requirements for funds for Brendon would be on short term basis as the wedding is
due in a few months. Therefore, Brendon can invest the sum in shares which would
be sold off when the funds would be required. The shares which would be selected
for making investment would be a high valuation share so that Brendon can get
appropriate funds from the sale of the shares. Brendon anticipates that he would be
requiring a sum of $ 10,000 for covering the wedding expenses.
Advantages of strategy [reasons why]
 The investment in shares gives a chance to Brendon to make profits from the sale of
share. In addition to this, shares are also considered to be liquid in nature and
therefore can be converted easily to cash which ensures that cash will be readily
available as and when required.
Disadvantages of strategy
 This option would be subjected to significant market risks as there can be a situation
where the value of the shares falls which would then lead to a loss for Brendon.
Alternatives considered
 One of the alternative options which is available to Brendon is that he can set up an
investment fund which would be set up for a short term basis and would also follow a
tax effective approach in managing the fund. The fund would be established for short
term purposes.
2. Goal [house deposit for children]
Recommended strategy:
 Brendon can make investments in a Fixed Maturity Plans which is known to yield
more interest than a Fixed deposit. This strategy provides Brendon an option to
choose between growth option of dividend option thereby allows flexibility in decision
making process. As per the case Brendon wants to provide $ 30,000 each for his
children in a period of 3 to 4 years. Therefore, it can be recommended that Brendon
should proceed with a Fixed maturity plan strategy and also choose growth option as
the period of holding the investment would be for 3-4 years. The growth option would
be more beneficial for Brendon and would also allow him to get appropriate funds at
the time of maturity of the same.

Advantages of strategy [reasons why]
 The maim advantage of investing in Fixed Maturity Fund is to ensure that the funds
are generating an interest from investment which is more than Fixed deposit interests
and there is also tax advantage which is associated with the same. In addition to this,
there is also a double indexation benefit which is associated with Fixed Maturity
Fund.
Disadvantages of strategy
 The disadvantage which can be related to the Fixed Maturity Fund option is that
there is a difficulty to take out the funds from the investment. In case of forced exit, a
penalty needs to be incurred.
Alternatives considered
 An alternative option which is available to the client is of making investment in Bank
Fixed deposits which has tax advantage associated with the same as well.
3. Goal [holiday]
Recommended strategy:
 Brendon can invest in Bank Fixed deposits which would allow him keep the funds
which is kept for the purpose of holiday intact and locked and would also help in
generating appropriate interest rate. It is expected that by the time the fund is
matured, appropriate amount can be received from the fixed deposit.
Advantages of strategy [reasons why]
 The investment would keep the sum intact which is kept for holiday purposes and
therefore allow the client to meet his desires at the time of maturity of the fund.
Disadvantages of strategy
 The disadvantage of using such an option is that the funds would be locked in for a
fixed period.
Alternatives considered
 Investments in superannuation fund would help Brendon to get the required fund for
meeting the holiday requirement of the business.
Wealth creation recommendations – superannuation / retirement planning
Goal [sort out superannuation / retirement planning]
Recommended strategy:
 Selection of a Superannuation Strategies which includes the option of setting up a
SMSF

Advantages of strategy [reasons why]
 Greater control over the funds of the business.
 Flexibility in the operations of the business.
 Costs
 More choice of investments such as commercials, real estate, collectibles.
Disadvantages of strategy
 Increased cost for lower balances
 Increased accountability
Alternatives considered
 An alternative approach which is available to the client is to make investments in long
term government bonds which can provide appropriate returns so that the same can
help secure the retirement of the client

Wealth protection (insurance) - recommendations
1. Life insurance
 Allianz Australia Life Insurance Limited.
2. Total and permanent disability (TPD) insurance
 Permanent Insurance Company Suncorp Group
3. Income protection (IP) insurance
 ANZ Income Protection
4. Trauma insurance
 AIA Group of Insurance
5. Private health insurance
 Australia Health Insurance
Estate planning
In terms of Estate Planning, we recommend Brendon:
 Brendon needs to formulate an appropriate will so that in case of death of the
Brendon, the estate assets can be transferred appropriately to the children.
Other
 Na

Appendix 1 – Future value (FV) calculations [outside super]

Appendix 2 – Future value (FV) calculations [superannuation / retirement planning]