1202AFE Financial Planning 1 Trimester 1, 2018: Statement of Advice

This document presents a financial planning file note for Pete Molloy, a 28-year-old electrician, created on April 9, 2018. The statement of advice (SOA) covers wealth creation, lifestyle goals, personal insurances (life, TPD, income protection, trauma, and private health), superannuation, and taxation planning. Pete's current situation, including his income, assets, and objectives like purchasing a house, securing his daughter's future, and planning for retirement, are outlined. The analysis includes recommendations for wealth creation outside superannuation (house deposit), lifestyle (holiday planning), and superannuation strategies, along with insurance advice. The file note also assesses Pete's risk profile as a growth investor and provides detailed future value calculations in the appendix. Desklib provides access to this and other solved assignments.

1202AFE Financial Planning 1
Trimester 1, 2018
File Note – Statement of Advice
Client's name: Pete Molloy
Date of contact: 9 April2018
Re: Initial Appointment
FSG and adviser profile
Pete was handed Financial Services Guide (FSG) version 4 010217 and my Adviser Profile
at the interview on 9 April 2018. The FSG was explained to him.
Scope of advice
Full statement of advice (SOA). Specifically, the SOA will provide advice on the achievement
of wealth creation and lifestyle goals, personal insurances (that is life, total & permanent
disability (TPD), income protection (IP), trauma and private health insurance),
superannuation (including salary sacrifice, personal tax deductible contributions and/or after
tax contributions) and taxation planning where relevant.
The SOA excludes any budgeting and cash flow analysis, as well as any advice on debt
repayment, social security and estate planning. Client to be advised on the risks of not
receiving advice in these areas.
Current situation
 Pete is a 28 years old person who is single as he got separated from his wife and
currently lives with his daughter Isabelle who is 8 years old. He works as an
electrician in a large electric company and earns $65,000 yearly along with 9.5%
Super. Pete works for around 40 hours in a week and is a full time employee. Pete
has the intention of purchasing a house for them in order to live healthy and happily
and accordingly even wants to maintain sufficient income with the help of which he
would be able to take care of the future of her child. Pete therefore wants to
undertake investments with the help of which he would be able to provide adequate
education to his child in order to establish her in the society. Pete has two Super
funds in which he has sufficient balance and has a savings bank account in which he
maintains a balance of $32,000 and out of this $10,000 is kept for emergency
purposes. Pete even wants to undertake investments in order to earn income with
the help of which he would be able to maintain the current living style even after
retirement. Pete does not have significant amount of assets and only has a car and
home contents. Pete even wants to purchase insurance for him and his daughter in
order to remunerate financially in case of any kind of accidents and unprecedented
events.
Potential issues / special consideration
 The potential issue that needs to be taken into consideration is that Pete’s only
source of income is the salary he receives from the company and a small amount of
interest from his savings. It is even seen that Pete does not have insurance and
therefore it can cause harm to him in the future due to unprecedented events. Pete’s
child is growing and therefore it becomes essential for him to increase his level of

1202AFE Financial Planning 1
Trimester 1, 2018
income with the help of which the future of his child as well as for Pete can be
secured.
Objectives
 Make sure that his child is protected financially in the event of his death
 Purchase his own house
 Establish adequate future income for his child for her education for the time when
she attains the age of 21 years
 Getting the superannuation fund sorted in order to provide adequate income even
after his retirement.
 Taking a family holiday in UK
 Purchasing adequate insurance and making investments in such a manner so that
the risks would be lower and level of returns would be high.
Risk profile
 The evaluation of the risk profile for Pete suggests the fact that the client is a risk
taker and therefore he is a growth investors. As he is quite young, he ready to face
risks and earn more and therefore 80% of the investments would be in growth
investments and the rest of 20% would be in the defensive assets.
Wealth creation recommendations – outside superannuation
1. Goal[house deposit]
Recommended strategy:
 In order to purchase the house, Pete needs to make adequate money in order to pay
for the house deposits and therefore Pete has to plan his superannuation in a proper
way and invest more in the superannuation. This is a very tax effective tool for the
investor as it is seen that balance from the superannuation can be used for the
purpose of purchasing properties and therefore the initial deposit of the house can
be made with the help of the balance available in the superannuation.
Advantages of strategy
 Tax effective,
 High returns would be available
 Has the potential for long term income
 Would act as a retirement strategy as well.
Disadvantages of strategy
 The return is not as high as the investment in equities
Alternatives considered
 Increase the savings in the term deposit which can be used as an alternative in order
to pay for the house deposit or else the income that is attained from the portfolio
investments can be used for the purpose making the house deposits as the house
would be purchased within a span of 5-6 years time from now.

1202AFE Financial Planning 1
Trimester 1, 2018
Lifestyle recommendations
1. Goal[holiday]
Recommended strategy:
 The strategy that is recommended is undertaking investments in the asset and share
portfolio and the investment should be an aggressive one with the help of which
higher level of returns can be attained at a shorter time period and this can be used
for the purpose of paying off for the holiday that has been decided.
Advantages of strategy
 Apart from paying for the holiday, additional income would be received from the
investment that can be used for the future use.
Disadvantages of strategy
 The extent of risk associated to such investments is significantly high and income
invested can be lost as well.
Alternatives considered
 Either invests in the share portfolio by investing more in the defensive assets and
less in the growing assets or else invest more in superannuation and banking
products.
Wealth creation recommendations – superannuation
1. Goal[sort out superannuation]
Recommended strategy:
 Superannuation Strategies inclusive of the option of setting up a SMSF
Advantages of strategy
 Several choice available for investment
 Effective tax strategies
 Transparency
 Expenses are low
 Flexibility
 Consolidation of the super assets
Disadvantages of strategy
 The cost increases when the balance gets lowered
 Increase in the level of accountability

1202AFE Financial Planning 1
Trimester 1, 2018
Alternatives considered
 Investing in real estate and even in share and asset portfolio in order to maintain the
amount that is desired
 Increasing the level of deposit in the term deposits
Wealth protection (insurance) - recommendations
1. Life insurance
 Australian Income Protection Specialists
2. Total and permanent disability (TPD) insurance
 Permanent Insurance Company
3. Income protection (IP) insurance
 TAL Income Protection
4. Trauma insurance
 Real Life Insurance
5. Private healthinsurance
 Australian Health Insurance
Other
 NA

1202AFE Financial Planning 1
Trimester 1, 2018
Appendix 1 – Future value (FV) calculations