Financial Planning Fundamentals: Strategy Paper for Brendon McDougall

This assignment presents a detailed financial plan for Brendon McDougall, a 52-year-old single (widowed) Australian resident. The plan addresses his wealth creation and lifestyle goals, including providing for his children, funding a holiday, and ensuring a comfortable retirement. It covers various aspects such as personal insurances (life, TPD, income protection, trauma, and private health), superannuation and retirement planning, and estate planning. The analysis includes a review of his current assets, liabilities, income, and expenses, along with his risk profile as a conservative investor. The assignment offers strategic recommendations for wealth creation both inside and outside superannuation, including investment funds and share portfolios, as well as superannuation strategies. It also suggests wealth protection measures through various insurance policies and estate planning considerations, such as preparing a will. The document outlines potential issues and special considerations, such as Brendon's desire to retire before age 70, and provides future value calculations to support the recommendations. The assignment aims to create a comprehensive financial strategy tailored to Brendon's specific needs and objectives.

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
Jason 27 years; 1992
Ashleigh 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 $ 104,000
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
 As per the case which is shown, Brendon wants to continue working as long as he
can but would like to retire before the age of 70 years. Brendon wants to work till 65
years but if there is a need to continue with the work then he would prefer 3 days’
work in a week until permanent retirement by the age of 70 years. This is to be done
for the purpose of supporting the lifestyle he wants for his post retirementlife.
Objectives
 Ensure that children are financially after in case of death or illness in future.
 Allocate a sum of $ 30,000 each for Jason and Ashleigh so that they can afford their
own accommodations in future.
 Provide $ 10,000 for wedding expenses for Ashleigh which was promised to her.
 Setting up an appropriate superannuation fund for effectively meeting the objectives
and goals which is established by Brendon. In addition to this, provide appropriate
insurance coverage to him as well
 Have a retirement holiday trip with friends in Las Vegas which would be requiring $
25,000 and the same would be including all the luxuries of a vacation.
 Reviewing the insurance and estate planning needs that is something that Brendon
would be requiring to set right due to the will which is created by him.
Risk profile
 The risk profile analysis which is conducted for Brendon shows that he is a
conservative investor who would like to have peace of mind more than higher returns
which can be available to him if he undertakes more risks. Therefore, Brendon will be
maintaining more of cash balances and fixed interest within his profile for
appropriately managing the risks. Brendon would also undertake investments in
moderately risky investments for the purpose of achieving capital growth.
Wealth creation & lifestyle recommendations – outside superannuation
1. Goal [daughter’s wedding]
Recommended strategy:
The most appropriate strategy which can be followed for maintaining appropriate funds
for daughter weddings is by saving the required amount in term deposit. Brendon can

easily access the cash amount as and when required for such savings in order to meet
the obligations. The requirement as per the estimation of Brendon would be $ 10,000 for
meeting expenses of the wedding.
Advantages of strategy [reasons why]
 The term deposit would be easily accessible as and when it is required by Brendon
and therefore this option would not lock away the funds which is required.
Disadvantages of strategy
 The fund can be spent by Brendon for some other purposes and the option is not a
tax effective option.
Alternatives considered
 Investment Fund: This is a option which is available for saving appropriate funds
which is required and the same is also an tax effective option. The fund is to be
established for a short term period as Brendon would be requiring the fund on current
basis.
2. Goal [house deposit for children]
Recommended strategy:
 Investment Fund: Brendon can invest in a separate fund which would be different
from his investment in superannuation fund so that changes can be tracked in the
same. As per the goal of Brendon, he would be providing the amount of $ 30,000
each to his children in a period of 3-4 years and therefore an investment fund is the
most effective way for setting aside a required amount funds for the children. A
medium term investment fund would be the most appropriate choice for Brendon.

Advantages of strategy [reasons why]
 The maim advantage of investing in investment fund is to appropriately manage the
unsystematic risks which is associated with the investments and in addition to this,
some tax advantage would also accrue from the same.
Disadvantages of strategy
 The main disadvantage is that the fund often faces inefficiency in generating
appropriate returns and also faces mismanagement issues.
Alternatives considered
 Investment in superannuation fund can also contribute effectively to the needs of the
client and also provide tax advantage in relation to the same.
3. Goal [holiday]
Recommended strategy:
 Investment in share portfolio would help in accumulation of additional income that
can be attained with the help of which the family holiday can be undertaken.
Advantages of strategy [reasons why]
 The investments can bring out effective amount of income with the help of which the
family holiday can be undertaken
Disadvantages of strategy
 The level of risk is very high and therefore the invested amount can be lost
Alternatives considered
 Investment in superannuation would effectively meet the needs of Brendon
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]
 Tax benefits
 Flexibility
 Consolidated Assets

 Costs
 Choice of investments
Disadvantages of strategy
 Increased cost for lower balances
 Increased accountability
Alternatives considered
 An alternative option which is available to the management and the interest rate is
fixed at an agreed level for the same period. Similarly to a fixed or variable rate
mortgage, whether one end up getting a better deal with a fixed term deposit.

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 health insurance
 Australian Health Insurance
Estate planning
In terms of Estate Planning, we recommend Brendon:
 Needs to prepare an appropriate will so that in the event of death of Brendon the
estate of Brendon and Zora can be shared equally among his children.
Other
 Na

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

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