DFP8v3 Advanced Financial Planning: Building Forster's Wealth Strategy

This assignment presents a comprehensive financial planning case study centered around David and Alyssa Forster, a couple seeking advice on building a long-term wealth strategy, particularly in light of Alyssa's recent redundancy and an inheritance. The case details their personal information, assets (including personally held investments, superannuation, shares in a private company, inheritance, and redundancy payment), liabilities, and financial goals. The assignment requires the development of a Statement of Advice (SOA) including cash flow tables and projections, and answering specific questions related to financial planning strategies, investment recommendations, risk management, and estate planning considerations tailored to the Forsters' unique circumstances. The ultimate goal is to provide the Forsters with a robust financial plan that addresses their wealth creation, retirement, and estate planning needs while providing them with peace of mind.

Assignment
Advanced Financial Planning (DFP8_AS_v3)
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)
Part 3 Demonstrated Demonstrated
Part 4 Demonstrated Demonstrated
Feedback (assessor to complete)
[insert assessor feedback]

Before you begin
Read everything in this document before you start your assignment forAdvanced Financial Planning
(DFP8v3).
About this document
This document includes the following four (4)parts:
• Part 1: Instructions for completing and submitting this assignment and statement of competency
• Part 2: The case study
• Part 3: The SOA:
– Statement of advice (SOA) template
– SOA Appendix 1: Cash flow tables (financial position before and after implementation of strategy)
– SOA Appendix 2: Projections and assumptions
• Part 4: Assignment questions (Parts A–G).
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 KapLearnAdvanced Financial
Planning (DFP8v3) subject room.
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Part 1: Instructions for completing and submitting this
assignment
Completing the assignment
The assignment
For this assignment you are required to complete the following tasks:
In your assessment workbook:
• Review Part 1: Review the key advice in which you are required to be proficient to complete this
assignment.
 Part 2: Case study.
• Complete Part 3 (the SOA template), using the data in the case study
– complete SOA Appendix 1 cash flow tables
– complete SOA Appendix 2 projections and assumptions.
• Complete Part 4 (assignment questions) Parts A, B, C, D, E, F and G.
Most of the information and resources to help you answer the questions in this assignment can be found in
your topic notes. Some data will have to be sourcedexternally.
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 source additional information from other organisations in the financial services
industry to find the appropriate product/s to meet your client/s requirements, and perhaps to calculate
your advicefees.
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 these assignments.
• Name your file as follows: Studentnumber_SubjectCode_Submissionnumber
(e.g. 12345678_DFP8v3_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.
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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 Education.
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 can 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 Advanced Financial Planning (DFP8v3)
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 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.
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 following process when marking your assignment:
• Assess your responses to each question, and its sub-parts if applicable, and then determine whether you
have demonstrated competence in each question.
• Determine if, as a whole, your responses to the questions have demonstrated overall competence.
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‘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 need only 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 (in conjunction with the SOA presentation) is your opportunity to demonstrate your
competency inthese units:
FNSFPL508 Conduct complex financial planning research
FNSFPL602 Determine client requirements and expectations for clients with complex needs
FNSFPL603 Provide comprehensive monitoring and ongoing service
FNSFPL604 Develop complex and innovative financial planning strategies
FNSFPL605 Present and negotiate complex and innovative financial plans
FNSFPL606 Implement complex and innovative financial plans
FNSCUS505 Determine client requirements and expectations
FNSIAD501 Provide appropriate services, advice and products to clients
We are here to help
If you have any questions about this assignment you can post your query in the ‘Ask your Tutor’ forum in
your subject room. You can expect an answer from one of our technical advisers or student support
staffwithin 24 hours of your posting.
Statement of competency(student to complete)
All students completing this assignment are required to be proficient in the following advice areas:
• tax and estate planning
• superannuation
• insurance and risk protection
• financial planning
• securities.
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Part 2: The casestudy
Background
You work for KeyPlan Pty Ltd, a financial planning company which is an Australian Financial Services Licence
holder and a registered life insurance broker.
Your company has planners who can provide advice in:
• superannuation
• investments and savings plans (including margin lending, securities, derivatives and
managed investments)
• constructing an investment portfolio
• strategic financial planning and asset allocation
• debentures
• retirement planning
• budget and cash flow planning
• debt management
• social security and other government benefits
• salary packaging
• insurance (i.e. life, disability, income protection and trauma)
• deposit and payment products
• estate planning.
Your advice is limited to the areas in which you have completed appropriate accreditation.
KeyPlan does not:
• help to establishself-managed superannuation funds
• provide real estate evaluations and advice
• prepare income tax returns
• undertakesuperannuation fund accounting
• administer superannuation funds
• prepare legal documents such as wills or trusts.
You can assume that you are registered with the Tax Practitioners Board (TPB) as a tax (financial) adviser.
You have organised a meeting with new clients, David and AlyssaForster, who are seeking advice about
their financial situation. Alyssa has just been made redundant from her current employer. This, together
with an inheritance Alyssa is about to receive, has made them concentrate their efforts to build an effective
long-term wealth strategy for their retirement.
David and Alyssawish to become more active investors, but admit they are busy and would rather enjoy
family time than manage investments when they are not working. They are looking for an effective wealth
creation strategy and an estate plan and want peace of mind knowing that their finances are structured to
meet their and the family’s needs.
The following pages detail the information you have obtained from them at your initial meeting.
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David and Alyssa’s current situation
Table 1 Personal details
Name DavidForster AlyssaForster
Salutation Mr Mrs
Age 53 46
Status Married Married
Home address 11 Cove Rd, Brisbane QLD 11 Cove Rd, Brisbane QLD
Health Good Good
Smoker No No
Occupation Consulting engineer/Managing director Clinical psychologist
Employer Forster Consultants Pty Ltd Brisbane Family Medical Practice
Projected retirement age 65 When David decides to retire
Dependents/family relationships Name Age/date of birth
Son Rowan 16
Daughter Kaya 14
Rowan and Kayaattend a co-educational public school. They are both academically in the top 10% of their
years and show a strong inclination to go on to tertiary study. They both play weekend sport all year and
Kaya is involved in dance and drama. They are expected to remain dependent on their parents to some
degree until they complete further studiesat around age 22.
Table 2 Professional relationships
Solicitor Freya Patel
Time span of relationship 8 years
Quality of relationship Adequate, used for wills, some company matters and conveyancing
Accountant Kim Young
Time span of relationship 12 years
Quality of relationship Very good, has played an important role as an adviser to the
consultancy business
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Assets and investments
Alyssaand David have several assets held in different structures and derived from different sources. They
are:
• personally held assets and investments
• superannuation
• shares in Forster Consultants Pty Ltd
• an inheritance
• a redundancy payment.
Each of these is described in a separate section below.
Personally held assets and investments
Details of Alyssa and David’s current investments and assets.
Assets Value Liability Ownership status Other information Purchase price
Principal residence:
Indooroopilly, Brisbane,
QLD
$900,000 $210,000 Joint ownership House purchased 5 years ago with
original mortgage of $270,000.
Interest rate of 4.4% P&I. The clients
are paying $1,000 p.m. in addition to
the minimum required payments on
their mortgage
$697,000
Cash management trust $28,000 $0 Joint ownership Interest of 2.0% p.a., can be
reinvested
N/A
Everyday bank account $9,000 $0 Joint ownership No interest, used for holidays and
daily expenses, balance varies
N/A
Forster ConsultantsPty
Ltd
$119,544 $0 Two shares each Value is 50% of the value of the
company. Value is calculated as 2 x
profit before tax
Cost base of
shares is $2 each
Home contents $68,000 $0 Joint ownership Estimated value for insurance
purposes
N/A
Superannuation
Details of Alyssa and David’s superannuation.
Financial assets Value Ownership Other information
Superannuation $315,678 David Invested in the high-growth option (5% cash; 5% international fixed interest;
20% property; 40% Australian equities; 30% international equities). Eligible start
date is 1 July 1992. Average annual return over 10 years is 5.9%. There are no exit
fees or entry fees and the annual fee is $124, with investment fees of 0.25% p.a.
Superannuation $133,634 Alyssa Invested equally between two single-sector options, cash fund and Australian share
fund (asset allocation is 50% cash, 50% Australian equities). Eligible start date is
1 July 1999. Average return over 10 years is 4.1%.There are no exit fees, no entry
fee and no member fees.Investment fees are 1.1% p.a.
Both David and Alyssa’s superannuation benefits are fully preserved.
Davidhas a tax-free component of $63,000 and the remainder is a taxed element of the taxable component.
Alyssa’s benefit is all in the taxed element of the taxable component.
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Inheritance
Alyssa’s much-loved aunt, Betty, died four months ago. Betty never married and was Alyssa’s late mother’s
only sibling. Alyssa and Bettywere very close, with Alyssa acting as Betty’s carer for many years. Alyssais an
only child and isthe sole beneficiary of her aunt’s estate.
Alyssa inherited her aunt’s former home in Spring Hill, Brisbane, and she is currently negotiating the final
sale of the property. It is a two-bedroom, ground floor apartment and holds no sentimental value for her.
She would rather invest the funds in more flexible assets to provide for the future needs of her family.
There is no outstanding loan attached to the property and it was never rented out. She will receive the
values shown in the table of inherited assets below, after meeting all expenses related to the sale.
Alyssa is unsure how best to invest these funds.
In addition, the trustees of Betty’s account-based pension fund have paid the remaining benefit amount to
the executors of her estate. Alyssa expects to receive the death benefit payment shortly.The amount and
components of the death benefitare:
• Taxed element of the taxable component: $238,000
• Tax-free component: $40,000
• Total: $278,000
Alyssa would like to know the tax payable on this benefit and how the net proceeds should be invested.
Inherited assets at date of Betty’s death (excluding superannuation benefit).
Inherited assets
Asset Shares
held
Purchase
date
Purchase
price
Share price at
date of death
Value at
date of death
Other information (assumed
dividends and franking level)
BHP Billiton Ltd 1,212 9/03/1984 $10.75 $20.56 $24,919 Current annual dividends:
$0.72 per share
100% franked
Commonwealth Bank 320 19/05/1997 $3.31 $72.21 $23,107 Current annual dividends:
$4.20 per share
100% franked
Commonwealth Bank 19 4/09/2000 $27.70 $1,372
Commonwealth Bank 22 27/08/2001 $30.05 $1,589
Insurance Australia Group 1,100 19/06/2000 $1.78 $5.34 $5,874 Current annual dividends:
$0.26 per share
100% franked
Insurance Australia Group 110 8/08/2000 $2.75 $587
National Australia Bank 740 30/07/1985 $4.08 $27.08 $20,039 Current annual dividends:
$1.98 per share
100% franked
National Australia Bank 50 4/02/2000 $21.73 $1,354
Rio Tinto Ltd 242 1/01/1988 $6.67 $46.53 $11,260 Current annual dividends:
$2.23 per share
100% franked
Wesfarmers 1,000 1/02/1985 $2.15 $42.83 $42,830 Current annual dividends:
$1.98 per share
100% franked
Online cash account n/a n/a n/a n/a $9,500 Earning1.5% p.a.
Apartment in Spring Hill,
QLD (selling now)
n/a 23/5/1986 $62,000 n/a $419,000 Betty’s principal residence in
Spring Hill, Brisbane. Debt-
free, no income, net value
after sale
Total inheritance
excluding superannuation
benefit
$561,431
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Forster ConsultantsPty Ltd
David and Alyssa own 50% of the eight issued shares in Forster Consultants Pty Ltd with their business
partners,Bill and his wife,Laura.David and Bill are joint managingdirectorsandAlyssaand Lauraare the other
directors.The company’s constitution states that all directors are employees of the company and are
entitled to be paid employee benefits from the company, such as the provision of cars, superannuation
contributions, director’s fees, etc. at the discretion of the managing directors.
David and Alyssa have a buy-sell agreement with Bill and Laura that in the event of death or total and
permanent disability of David or Bill, their fourshares willbe transferred to the other party.David and Bill
have a good working relationship and are of similar age.
At this stage,David and Alyssa have not put in place a funding arrangement nor do they know how to do
this.Under the buy-sell agreement, the consideration is half the value of the company. The value of the
company is calculated as two times the average of the last two year’s profit before tax.
Forster Consultants Pty Ltd— Profit and loss statement
2016/17 2015/16
Revenue
Consulting revenue $752,375 $708,356
Other revenue (bank interest etc.) $3,578 $4,140
Total revenue $755,953 $712,496
Expenses
Marketing and advertising $9,130 $8,421
Rent $37,023 $31,234
Insurance and legal expenses $18,257 $18,070
Administration and compliance $84,679 $82,296
Costs directly associated with Consulting (MD
salaries, contracted consultants’ fees, etc.)
$481,703 $458,548
Total expenses $630,792 $598,569
Profit before tax $125,161 $113,927
Tax $34,419 $32,469
Net profit after tax $90,742 $81,458
Forster Consultants Pty Ltd— Statement of financial position
2016/17 2015/16
Assets
Cash $90,660 $82,008
Trade and other receivables $57,403 $57,251
Plant and equipment $18,183 $18,427
Total assets $166,246 $157,686
Liabilities
Trade and other payables $46,675 $41,867
Total liabilities $46,675 $41,867
Net assets $119,571 $115,819
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Redundancy details:Alyssa
Alyssa has been working for the same company for nine years, since her daughter,Kaya,started school. Her
role has been made redundant following a restructure of the large allied health services businessshe works
for. She has an offer to work for her past boss, who started his own psychology practiceabout four years
ago. He can match her current salary and she can start as soon as she stops work with her current
employer.
Since her aunt died,Alyssa has wanted to work in a more supportive environment than offered by her
current employer.
Payment details
Type of payment Basis for calculation Pre-tax amount ($)
Lump sum annual leave Accrued entitlement – 18 weeks 25,420
Lump sum long service leave Prorata entitlement – 7.8 weeks 11,150
Payment in lieu of notice 5 weeks 8,308
Redundancy 16 weeks 24,225
Golden handshake Lump sum 21,000
Annual income details
The diagram below shows the expected sources of income for Alyssa and David in the current financial
year. As no dividends were paid from the company, they are not shown.
Note:You may assume that your plan takes effect at the start of a new financial year.
The actual income received for this year is detailed in the table below.
Income type David Alyssa Notes
Salary $150,000 $85,000 Does not include SG
Interest $280 $280 From jointly held CMT
Total gross income $150,280 $85,280 This is not their taxable income
Notes:The table above includes only regular income. Any income generated by a superannuation death
benefit, redundancy or dividends is not included. Any income derived from the inheritance has not been
included in the table.
While the private use of a company vehicle would normally have fringe benefit tax implications, please
disregard this for the purposes of this assignment.
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Salary Income
from CMT
(50%)
Redundancy
payment
David Alyssa
Salary
Income from
CMT (50%)

Annual expenditure
David and Alyssa have a detailed family budget,whichthey presented to you at their meeting.
It is provided below, together with notes about the expenses where relevant. They are confident that their
expenses are unlikely to changesignificantly in the next few years.
Expense David
($ p.a.)
Alyssa
($ p.a.)
Combined
($ p.a.) Notes
Accountant’s fees $650 $550 $1,200 For individual personal annual tax returns
Charitable donations $1,200 $800 $2,000 Total donation amount toHeart
Foundation andRSPCA, in equal
proportions— both deductible gift
recipients (DGRs)
Children's expenses and activities $2,800 $2,600 $5,400
Council rates $650 $650 $1,300 Principal residence
Discretionary: restaurants, gifts,
clothing, shoes, etc.
$18,500 $18,500 $37,000
Electricity $1,520 $1,520 $3,040
Gas $ 525 $525 $1,050
Groceries $8,500 $8,500 $17,000
Health insurance $1,750 $1,750 $3,500 Family hospital and extras policy with $500
excess
Holidays $8,000 $ 8,000 $16,000
House insurance $1,010 $1,010 $2,020 Home and contents policy
House maintenance and repairs $8,200 $8,200 $16,400 Includes cleaners, etc.
Income protection $1,250 $935 $2,185 90-day wait, benefit to age 65,
75% income plus superannuation (SG)
Medical bills/prescriptions $950 $950 $1,900
Mobile phones and internet – $1,080 $1,080 Work-related use for David
Mortgage $16,120 $16,120 $32,240
Annual repayment amount inclusive of
additional monthly payments of $1,000
p.m. (joint expense)
Pay TV $830 $830 $1,660
School fees $750 $750 $1,500 Rowan and Kaya’s school fees are $650
each
Water $560 $560 $1,120
Total expenses $73,765 $73,830 $147,595
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