Financial Planning Report: Financial Planning for Retirement ACCT 2264

This financial planning report presents a Statement of Advice (SOA) developed for a married couple, Sean and Lydia Salter, who are seeking pre-retirement planning guidance. The report begins with an executive summary, outlining the clients' personal and financial situations, including their goals to retire by 2025, pay off their mortgage, and maintain their current standard of living. It details their combined gross income, assets, and liabilities, as well as their objectives such as minimizing taxes, providing for their children, and ensuring a comfortable retirement income. The report assesses the clients' balanced risk profile and scope of advice, which focuses on establishing a realistic retirement plan and advising on financial products to minimize tax expenses. It includes detailed personal information, a risk profile assessment, and a discussion of potential risks associated with the advice. The report then evaluates the viability of the recommendations, including strategies for superannuation, estate planning, and investment properties, along with an ongoing service review and authority to proceed. Finally, it provides a detailed financial position analysis, including cash flow projections, and offers specific recommendations to achieve the clients' financial goals, such as paying off the mortgage, purchasing a car, taking a holiday, and providing for their children. The report aims to provide a comprehensive and compliant financial plan for a secure retirement.

Running head: FINANCIAL PLANNING
Statement of Advice
Confidential
Prepared for
(Mr Sean and Lydia Slatar)
Client Address Line 1)
(Client Address Line 2)
Prepared By
(Insert Adviser Name)
(Adviser Address here)
Authorised Representative of
Mentor Financial Planning Pty Ltd ABN 61 094 529 987
Australian Financial Services Licensee
Australian Financial Services License number xxxxx
Level 18, 28 Bligh Street,
Sydney NSW 2000

1
FINANCIAL PLANNING
Table of Contents
Executive Summary.........................................................................................................................2
Personal Situation of the Client...................................................................................................2
Financial Situation.......................................................................................................................2
Goals and Objectives...................................................................................................................3
Risk Profile..................................................................................................................................3
Scope of Advice...............................................................................................................................3
Personal Information of the Client..............................................................................................4
Goals and Objectives of the Clients.................................................................................................5
Risk Profile Assessment..................................................................................................................6
Risks Associated with the Advice...................................................................................................6
Viability of the Recommendations..................................................................................................7
Financial Position of the client........................................................................................................8
Recommendations..........................................................................................................................10
Superannuation Fund.....................................................................................................................16
Estate Planning..............................................................................................................................18
Investment Property.......................................................................................................................18
Ongoing Service Review...............................................................................................................19
Authority to Proceed......................................................................................................................20

2
FINANCIAL PLANNING
Executive Summary
Personal Situation of the Client
As per the information which is provided, the clients are Sean and Lydia Salter who are a
married couple. The information which is provided in the fact sheet shows that Sean works as an
electrician while Lydia works as a Florist. Both the clients want to retire by 2025 and by the time
needs to have proper and quite retirement life with no burden of any mortgage. The annual salary
of Sean is $ 140,000 while Lydia earns around $ 30,000. The couple wants to ensure that their
standard of living to be appropriate and also wishes that they can purchase a car and go on a
holiday trip after retirement. As per the information, they hold a property which is used for
residential purposes but after retirement, they want to use the property for generating rental
income.
Financial Situation
As the client fact sheet highlights, Sean is able to generate a gross income of $ 140,000
from his work while Lydia is able to generate $ 30,000 from her florist job. In total, the gross
income of the family is $ 170,000. The couple also owns a property which has a market value of
$ 550,000 and the same is under mortgage. The mortgage interest amounts to $ 175,000 which
also needs to covered by the time of their retirement. I also noticed that Lydia would be getting a
inheritance to her aunts property which is worth $ 200,000. In addition to this, the client has a
superannuation of $ 270,000 while client’s partner has a superannuation of $ 100,000.
Goals and Objectives
The goals and objectives which the clients would be looking forward to fulfill are listed
below in details:

3
FINANCIAL PLANNING
 To pay off their mortgages at retirement and have sufficient funds to purchase a new car
($40,000) and take a holiday ($25,000).
 To restructure their affairs with a view to having $52,000pa in retirement.
 To give the two children $40,000 each to start their savings plans.
 To minimize tax, if possible, both now and in retirement
 To maintain their current standard of living while conducting the operations of the
business.
Risk Profile
The client fact sheet which is available shows that the client is a balanced investor as the
investment objective of the client is to maintain appropriate funding after their retirement so that
they can maintain an appropriate standard of living for themselves. The income that would be
attained requires to satisfy the need of income and the fair rate of return.
Scope of Advice
As per the information which is available to me from the client fact sheet is that the
clients need financial advice regarding establishing a realistic future plan for setting up
retirement plan for themselves. My role would be to advise the clients about the entire financial
product available in the market that can be beneficial for the client. The different products which
are available in the market would help the client in minimizing the tax expenses which is
associated with the business. I would be suggesting some of the strategies which can be followed
by the client for the purpose of ensuring that the clients are satisfied with the services which is
followed by the business.

4
FINANCIAL PLANNING
Personal Information of the Client
Personal Details
Sean Lydia
Title Mr Mrs
Given Name Sean Lydia
Preferred Name Sean Lydia
Family Name Salter Salter
Email
Phone No. 0425 112 221 (05)8888 9999
Address
29 Esther Court
BRICKHILL VIC 3999
29 Esther Court
BRICKHILL VIC 3999
Date of Birth 21/01/1960 (Age 59) 17/11/1960 (Age 58)
Marital Status Married Married
Health Status
Smoking Status
Job title Electrician Florist
Employment Status Self Employed Employed

5
FINANCIAL PLANNING
Number of
Dependants
0
Goals and Objectives of the Clients
In order to ensure that the investment strategies are properly followed and implemented,
it is imperative that the goals and objectives of the business are properly managed and the same
should also be the basis on which the recommendation would be framed. In case of any change
in the scenario of the client or market condition, the recommendation would also change. From
which I have understood from the fact sheet of the client is that the goals and objectives of the
client can be divided into three categories:
 Short Term: The short-term goals of the clients is to enhance their current standards of
living and also minimize their taxes. This would be providing supporting finance to the
clients for meeting their standard of living.
 Medium Term Goals: The clients intend to give each of their children a sum of $ 40,000
for their better future. The clients want to pay off their mortgage loans by the time they
are fully into retirement.
 Long term: The long-term objectives of the clients is to ensure that they have an
appropriate fund on per annum basis of about $ 52,000 so that they can meet their
standards of living after retirement. In addition to this, the client also wants to purchase a
new car for a value of $ 25,000 and also go on a holiday trip which would costs $ 40,000.
Risk Profile Assessment

6
FINANCIAL PLANNING
The fact sheet which is provided to me shows that the client wants to take a less risky
approach in managing their financials while at the same time ensuring that the goals and
objectives of the client are fulfilled. During our meetings we also discussed: your reasons for
seeking advice; what sort of returns you are expecting; how you would like to manage your
investments; what your short, medium and long-term goals are; and how you feel about potential
capital growth and investment security. On the basis of our meetings I can assess that your risk
type is balanced. I would assess that you want a 60% growth while 40% would be on secured
income. This percentage makes you a balanced risk taker. The risk management policies which
needs to be followed in the business would be appropriately managing the operations. The
investment objective of the client is to maintain a stable return over the medium term, whereby
security of capital is of major importance. The clients want a stable life after retirement and
therefore needs to plan properly for meeting their current standard of living even after retirement.
Risks Associated with the Advice
The advice which I would be giving would be based on the current market situation and
the fact sheet which is provided by the client. On the basis of the information which is reflected
in the client fact sheet and considering the goals and objectives of the client, I would be
preparing my statement of advice for the clients. The risks which are associated with the advice
are listed below in point form:
 The advices or recommendation which I would be giving would be based on current
situation of the market. The market is always subjected to change and therefore if a major
change occurs than the advice would not be applicable.

7
FINANCIAL PLANNING
 In case there is a change in the goals and objectives of the client that the advice which is
provided by me would also change and I would have to review the statement of advice
again.
 It is quite possible that an investment product supposes a superannuation product which I
have suggest to be the best and tax effective can still be not the best option. This is
because the market is changing and new companies are brining in better options.
Therefore, there will always be an option available in the market which would be better
than what I have suggested.
The above-mentioned risks are some of the risks which are likely to arise which I am
disclosing fully. I would also to highlight that I have provided the recommendations to the best
of knowledge and believe that the same would be in the best interest of the clients.
Viability of the Recommendations
The recommendation which I have suggested is based on the fact sheet which was
provided to us by the client and after a detailed analysis of the market situation and also
identification of the best product which is available in the market. I would like to assure you that
the recommendation which I have provided is in the best interest of both of you and it would
effectively help you to meet long term objectives and goals. The recommendations if
implemented would help to minimize your tax expenses thereby enhance the savings which is
generated by you and your partner along with ensuring that the mortgage is paid off along with
the interest amount which is associated with the same. In addition to this, you would also be able
to keep aside a sum of money which can then be used by both of you for providing a gift to your
children of $ 40,000. In addition to this, after retirement you would be able to maintain your

8
FINANCIAL PLANNING
current standards of living as well purchase the car which you are intending to buy and also go
on the holiday trip which is one of your objectives.
The recommendation would serve in the best interest of the client as the same is provided
to the client considering all risks which are applicable to the client and I have selected the best
possible course of action which can be taken in such a situation. The main objective on my part
is to ensure that the goals and objectives of the client are fulfilled. There are also some other
goals and objectives which needs to be fulfilled and the same would also be considered in my
statement of advice.
Financial Position of the client
Cash flow Sean Lydia Combined Not
es
Salary income $140,000.0
0 $30,000.00 $170,000.0
0
Non-taxable income $
-
$
-
$
-
Rental income $
4,750.00
$
9,750.00
$
14,500.00
Personal Income $0.00 $0.00 $0.00
Other income (e.g. taxable benefits,
investment income)
$
-
$
-
$
-
Total income received before tax $144,750.0
0 $39,750.00 $184,500.0
0
Expenses
Mortgage principle home $15,252.00 $15,252.00 $30,504.00
Mortgage investment property $0.00 $0.00 $0.00
Household Expenses $21,000.00 $21,000.00 $42,000.00
Motor Vehicle Expenses $0.00 $0.00 $0.00
Medical/Education $0 $0 $0.00
Clothing/Entertainment $0.00 $0.00 $0.00
Super/Life Contributions $10,000.00 $0.00 $10,000.00
Business Expense $0 $0 $0.00
Personal Loans/Credit Cards $0 $0 $0.00

9
FINANCIAL PLANNING
Other Expenses $0.00 $0.00 $0.00
Total expenses $46,252.00 $36,252.00 $82,504.00
Total income received before tax less total
expenses $98,498.00 $3,498.00 $101,996.0
0
Total tax payable from tax table above $41,850.00 $2,750.00 $44,600.00
Total net cash flow $56,648.00 $748.00 $57,396.00
The above table effectively shows the income and expenses of the clients and how the
same affect the ultimate savings of the client. The above table shows financial projection of Sean
and Lydia in separate manner as well as combined manner. This is the income statement for the
client in current scenario and the shows that the expenses for Sean and Lydia is extremely high.
In addition to this, the tax expenses which is represented for Sean and Lydia is also shown to be
significantly high. The client is not able to maintain a savings of $ 82,000 for meeting their
expenses and therefore, it is imperative that a proper plan is formulated for minimising the taxes
of the clients. In addition to this, the cash flow statement provides an idea regarding the major
expenses which is incurred by the client and also the ultimate savings which is made by the
client in current scenario.
Balance Sheet
Balance Sheet
Assets Liabilities
Principal Residence $650,000.00 $150,000.00
Cash and Bank Deposits 14000 $ -
Motor vehicles $
62,000.00 $ -
Investment Property $550,000.00 $175,000.00
Home Contents 25000 $ -
Business Interests $0.00 $0.00
Managed Funds $
85,000.00 $ -

10
FINANCIAL PLANNING
Shares and Debentures $0.00 $0.00
Surrender value of traditional life insurance $0.00 $0.00
Collectables $0.00 $0.00
Superannuation- Sean $270,000.00 $0.00
Superannuation- Lydia $100,000 $0
Caravan/Boat $0.00 $0.00
Holiday Home $250,000.00 $0.00
Other Assets $0 $0
Personal Loans/ Overdrafts $0 $20,000
Other Liabilities $0.00 $0.00
Total $2,006,000.00 $345,000.00
Net Worth $1,661,000.00
The above table effectively shows the assets and liabilities which are owned by the
clients and also shows the computation of the net worth of the client. The above table also shows
the client have investment property for which appropriate funds needs to be maintained. The
good thing about the financial situation of the client is that the liabilities are all minimum as
presented in the balance sheet of the business. The above table also shows that Sean and Lydia
both have their own superannuation fund which is represented by $ 270,000 and $ 100,000
respectively. On the basis of such information as well, I would be preparing my statement of
advice so that the goals and objectives of the client are considered.
Recommendations
In order to meet the financial expectation and goals of the clients, the recommendations
are formulated after detail review of the market and also analysis of the best product which is
available in the market. I have formulated the recommendations considering the goals of the
clients and the same explained below in details:
Minimization of Taxes

11
FINANCIAL PLANNING
I noticed that the Sean in particular pays a significant amount of taxes which affects his
savings. Therefore, in case of Sean, I would like to suggest the option of Salary sacrifice which
would help in reducing the taxes by considerable margin. Under a salary sacrifice arrangement, a
form of agreement is present between the employer and their employee, the employee agrees to
forgo part of their future entitlement (such as salary or wages) in return for benefits of a similar
value. The tax would be charged on the reduced portion of the salary and not on the amount
which is sacrificed by the employee. The tax amounts which is incurred by the client affects the
savings of the couple. If salary sacrifice option is selected and implemented then, it will not only
reduce the taxes of Sean but also make additional contribution to the superannuation funds. In
the case of Lydia, the option to sacrifice the salary is not available as a minimum income above $
37,000 is required for opting for the salary sacrifice option. It is to be noted that the salary which
is sacrificed by the client would also be subjected to taxes but at a lower rate of 15%. Therefore,
it would be my recommendation that the Sean should salary sacrifice $ 10,000 so that he is able
reduce the overall taxes which is required to be paid. The financial projections associated with
the same are presented below:
Cash flow Sean
Without Salary Sacrifice With Salary Sacrifice
Salary income $140,000.00 $140,000.00
Less: Salary Sacrifice $10,000.00
Income After Salary Sacrifice $0.00 $130,000.00
Non-taxable income $ - $ -
Rental income $ 4,750.00 $ 4,750.00
Personal Income $0.00 $0.00
Other income (e.g. taxable benefits, investment income) $ - $ -
Total income received before tax $144,750.00 $134,750.00
Expenses
Mortgage principle home $15,252.00 $15,252.00
Mortgage investment property $0.00 $0.00

12
FINANCIAL PLANNING
Household Expenses $21,000.00 $21,000.00
Motor Vehicle Expenses $0.00 $0.00
Medical/Education $0 $0
Clothing/Entertainment $0.00 $0.00
Super/Life Contributions $10,000.00 $10,000.00
Business Expense $0 $0
Personal Loans/Credit Cards $0 $0
Other Expenses $0.00 $0.00
Total expenses $46,252.00 $46,252.00
Total income received before tax less total expenses $98,498.00 $88,498.00
Total tax payable $41,850.00 $40,049.00
Total net cash flow $56,648.00 $48,449.00
Superannuation Contributions
Particular Without Salary Sacrifice With Salary Sacrifice
Superannuation contribution $ 10,000.00 $ 10,000.00
Salary Sacrifice $ - $ 10,000.00
Total $ 10,000.00 $ 20,000.00
Contribution Tax $ 1,500.00 $ 3,000.00
Net Super Contribution $ 8,500.00 $ 17,000.00
The above table reveals that the even though the net cash flow generated from the
operations would get lower due to the salary sacrifice option, the total contribution which is
made to the superannuation fund would get high which is an advantage for the client. In addition
to this, the tax expenses of the client also get lower.

13
FINANCIAL PLANNING
Figure 1: (Australia Income Tax Calculator)
The Australia income tax calculator is applied as shown in the figure above in order to
arrive at the tax payment which the clients need to incur after opting for the salary sacrifice
option which would be most appropriate option for the client.
Meeting Your Daily Expenses
After retirement, Sean and Lydia, both of you want to have a proper standard of living for
which you need $ 52000 for meeting your expenses. In order to achieve this, I would like to
advice to invest in a pension-based account fund which would be contributed by your respective
super funds. In order to avail this option, preservation age criteria need to be fulfilled which is
set at the age of 60 years. In such a manner you can set aside money from the super fund for such
a pension fund payment. The account-based pension plan for Sean is portrayed below:
Existing Superannuation Platform Investor Amount
National Super Sean 270000


14
FINANCIAL PLANNING
Recommended Pension Platform Investor Amount
Zurich Australia Pension fund Sean 50000
On the basis of the amount which is set, Sean can draw out his capital which would be
determined by a percentage or he also has the option of lumpsum withdrawal. The percentage of
rates which are applicable are listed below:
Setting Aside a Sum for their Children
As per the fact sheet of the client, one of the objective of the client is to gift their children
an amount of $ 40,000 each when they retire. In such a case, I would suggest that the best course
of action which is available to the client is to invest in an investment fund which can provide an
appropriate interest. The sum can be deposited in this investment fund and at the time of year
retirements, you will be able to provide your children with the required amount. The amount
which is set aside needs to be invested to generate appropriate returns. I would like to suggest an

15
FINANCIAL PLANNING
appropriate option of a balanced approach whereby the 70% of the total funds needs to be
invested in shares and securities while 30% of the fund would be invested in fixed interest-
bearing options. The overall return which can be generated following such an option is 4.8% and
the client would face a moderate volatility. This would be the best option which is available to
you as you would able to keep aside the money and at the time of maturity you would be able to
manage the operations of the business.
Mortgage Payment and Purchase of Car
One of the objective of the client was to ensure that the mortgage amount which is
remaining is paid off and also the client wanted to have a sum of $ 65,000 extra so that the client
can purchase a new car and also go on a holiday trip. I would recommend that both of you use
the super fund lumpsum amount which you will be getting at the time of retirement. The
superfund at the time of retirement would provide you with enough cash so that the all the
mortgage payment is taken care of and also additional amount is available for meeting the
additional $ 65,000 which is required. On the basis of the current situation of Sean, the super
balance which is available with him is shown to be $ 270,000 which would be increasing further
due to the salary sacrifice option which is recommended. A graphical projection of the
enhancement of the superannuation fund for Sean is reflected below:

16
FINANCIAL PLANNING
The above figure shows the superannuation funds of Sean and how the same would
enhance to an appropriate level till the date of his retirement. In addition to this, the
superannuation fund of Lydia would also be maturing at the time of their retirement which would
then provide appropriate savings to the family to meet any kind of expenses in future as well.
Superannuation Fund
As per the fact sheet which is provided by the client, the superannuation fund requires
contribution from the employer as well as the employee. The superannuation fund attracts lower
amount of taxes and therefore it is one of the most effective means for generating savings for a
business. The superannuation fund would be very useful for managing future endeavours and
also for generating savings for the future. The salary sacrifice option would be the most
appropriate option for Sean as this would reduce his total tax payable and increase. The
superannuation fund would also be providing for the mortgage payment for the clients and also
contribute to the savings of the clients. In the case of Lydia, the superannuation fund amount is

17
FINANCIAL PLANNING
of $ 100,000 and there is no separate contributions made by Lydia. A graphical presentation of
the financial position of Lydia is shown below:
The above graph shows the superannuation amount which would be available to Lydia at
the end of the 7 years period. This fund would help the clients to maintain their savings and
standard of living at the time of their retirement. The superannuation fund of the client provides
an appropriate option for managing the costs of the client and effectively meeting the goals and
objectives of the client. It is suggested to Sean that he makes a contribution of $ 10,000 as non-
concessional payments which would be considered to be a salary sacrifice option for the client.
Recommended
Superannuation
Platform
Investor Contribution Amount
National Super Sean 10000 10000

18
FINANCIAL PLANNING
Estate Planning
The estate planning process would be considering all the properties of the clients would
be equally distributed to their children. I would recommend you to maintain a will so that there is
no problem with the inheritance and your wishes are carried out accordingly. In addition to this,
Lydia would be receiving some inheritance of $ 200,000 from her aunt which should also be
considered to be a part of the property of the client and thereby considered in the will.
Inheritance Income
As indicated in the fact sheet, Lydia is entitled to inherit a sum pf $ 200,000 from her
family which can be used for securing a pension fund which would be very useful in the
retirement phase of your lives. I would also recommend you to invest in the pension fund option
which is provided by Zurich funds and the same is projected below:
Recommended Pension Platform Investor Amount
Zurich Australia Pension fund Lydia 200000
This way Lydia and Sean, you both can go on that holiday plan which you have set out
without putting much pressure on your savings. I would recommend that you make the
arrangements for setting up such funds as the same would be useful to you both.
Investment Property

19
FINANCIAL PLANNING
In case of investment property, there is a mortgage which is there on the property and the
same would be cleared from the superannuation fund. I would recommend that the client put the
investment property under rent so that appropriate rental income can be generated and the client
would be able to maintain their standard of living. In addition to this, the rent which would be
generated can meet their day to expenses and help them to meet their income target of $ 52,000.
Ongoing Service Review
The costs which is associated with the financial services which is provided by us should
also be known to you considering full disclosure requirements for our services. We will be
discussing the fees and other financial charges which you need to bear for the services whicgh
we are providing you.
Summary of Costs
Fee Type Fee Amount
Upfront
Advice $3,500.00
Insurance $1,000.00
Investment costs $1,500.00
Ongoing
Advice $3,300.00
Insurance $1,000.00
Investment costs $3,500.00

20
FINANCIAL PLANNING
Fee type
Amount Licensee
Share
Adviser Share
% $
Fee For Service - Ongoing
BT SuperWrap Compact $0.00
Ongoing Advice
Service
0.75% $3,300.00 $1,000.00 $2,300.00
Authority to Proceed
Upon receiving the advice dated 10th August 2019 and reading the strategy and recommendations
contained within, we confirm and acknowledge that:
We have received and retained a copy of the Financial Services Guide and Adviser Profile.
The details of our personal circumstances, financial position and lifestyle and financial
objectives are accurately summarised within the SoA.
If the information relating to our relevant circumstances contained in the SoA is, or becomes,
incomplete or inaccurate, then the advice contained in the SoA may not be appropriate for us
and that before acting on the advice, we need to consider the appropriateness of the advice,
taking into account our objectives, financial situation and needs.

21
FINANCIAL PLANNING
The basis of the advice is clear and understood.
Where we did not understand the recommendations made, we have sought and received
clarification.
Where the SOA included investment advice, we understand and agree with the risk profile
assessment, and the recommended asset allocation of the portfolio.
The projected returns illustrated in the SoA and attachments are not guaranteed and are to be
used as a guide only.
We have been provided with and understand the information about remuneration and other
benefits paid or payable as a result of obtaining the advice set out in the SoA or
implementing the recommendations made in the SoA.
We have received and retained the research pages provided and the applicable Product
Disclosure Statements or other disclosure requirements.
We understand that the contents of the advice are for our sole use.
We authorise the Licensee to collect our advice fees and pay these as outlined in the
disclosure section of this SOA.
The advice was prepared by Brent Barber, acting on behalf of <Adviser ASIC AFS Licensee
Name>, an Australian Financial Service Licence (No. <ASIC AFS Licensee Number>). We
acknowledge that is only licensed to provide financial services in Australia and the services
provided are governed exclusively by the laws of Australia.
The strategy and recommendations made in the SoA rely on the continuation of current
legislation and the recommendations may become inappropriate if laws change.

22
FINANCIAL PLANNING
Our personal information will be dealt with in accordance with <Adviser ASIC AFS
Licensee Name> Privacy Policy. If we have requested, we have been provided with a copy.
We consent to our information being dealt with in that way, and for <Adviser ASIC AFS
Licensee Name> to pass our information to third parties engaged by <Adviser ASIC AFS
Licensee Name> to prepare financial reports for us.
Accordingly, we wish to proceed with the implementation of the strategy and recommendations
and authorise <Practice Name> to implement them as per the SoA, if applicable, subject to the
variations indicated below.
Variations (if applicable):
We acknowledge that, if the variations have not already been agreed with our adviser, our
adviser cannot confirm that implementation of the recommendations (as we have varied them)
are appropriate in light of our objectives, financial situation or needs without further analysis and
advice, and neither our adviser, nor <Adviser ASIC AFS Licensee Name> are responsible for the
consequences of implementing the varied recommendations, if we do not seek further advice.

23
FINANCIAL PLANNING
Sean Salter / /
Client 1 Signature Date
Lydia Salter / /
Client 2 Signature Date
Brent Barber / /
Adviser Signature Date