Financial Planning and Personal Wealth Management Analysis Report

This report provides a comprehensive analysis of personal wealth management, focusing on a couple's (Dean and Hamish) financial situation. It includes a detailed examination of their life objectives (short, medium, and long term), personal details, balance sheet, income statement, and current financial position, which is assessed using various financial ratios (net worth, liquidity, savings, and debt service). The report further analyzes their asset allocation, projects their cash flow, and offers recommendations to improve their financial position, including refinancing their home loan and selling their car. It then provides an executive summary and dives into insurance product recommendations, specifically life, total and permanent disability, and income protection insurance for both individuals. The report also covers superannuation contribution strategies and provides justifications for the advice, discussing potential consequences, commissions, authority to proceed, and cooling-off periods. The assignment concludes with a bibliography.

Running head: PERSONAL WEALTH MANAGEMENT
Personal Wealth Management
Name of the Student:
Name of the University:
Author’s Note:

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PERSONAL WEALTH MANAGEMENT
Table of Contents
Part A...............................................................................................................................................3
Life Objectives.............................................................................................................................3
Information about Dean and Hamish...........................................................................................3
Personal Details.......................................................................................................................3
Balance Sheet...........................................................................................................................4
Income Statement....................................................................................................................4
Current Financial Position...........................................................................................................5
Financial Ratios.......................................................................................................................5
Asset Allocation.......................................................................................................................5
Projected Cash Flow................................................................................................................7
Recommendation about your financial position..........................................................................7
Part B...............................................................................................................................................9
Executive Summary.....................................................................................................................9
Part C.............................................................................................................................................11
Insurance Product Recommendation.........................................................................................13
Insurance Needs for Dean..........................................................................................................13
Life Insurance........................................................................................................................13
Total and Permanent Disability Insurance.............................................................................14
Income Protection Insurance.................................................................................................14

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PERSONAL WEALTH MANAGEMENT
Insurance Need for Hamish.......................................................................................................15
Life Insurance........................................................................................................................15
Total Permanent Disability Insurance...................................................................................16
Income Protection Insurance.................................................................................................17
Superannuation Contribution Strategy for Dean and Hamish...................................................18
Reasons for Recommendation...................................................................................................18
How is my Advice Appropriate?...............................................................................................18
Consequences of advice.............................................................................................................19
Commissions..............................................................................................................................19
Authority to Proceed..................................................................................................................19
Cooling Off Period....................................................................................................................20
Bibliography..................................................................................................................................21

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Part A
Life Objectives
Short term An extensive analysis of your personal insurance needs.
Medium term
They have $100,000 in 5 years’ time for the purpose of
education grant to their young son.
You want $50,000 expenses saved for around the world trip in
15 years’ time in order to enjoy your 21st anniversary.
Long term Both retire comfortably on $650 a week debt free when
Hamish turns 65.
Information about Dean and Hamish
Personal Details
Dean Hamish
48 years 50 years
He is employed as a nurse and earns
$68,000 per year plus 9.5%
superannuation guarantee contributions
He is employed as a pharmacist earning
$88,000 per year plus 9.5%
superannuation guarantee contributions.
Health: Excellent Health: Excellent
Smoker: No Smoker: No
Risk profile: Conservative Risk profile: Balanced

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PERSONAL WEALTH MANAGEMENT
You both have child named Hayden who is 2 years old and at the current time period, you
are not looking to have another baby.
Balance Sheet
Liabilities Assets
Home mortgage $600,000 House $850,000
Credit cards $50,000 Vehicles $65,000
Car loans $50,000 Savings account $20,000
Transactional
bank account $10,000
Superannuation: HESTA
Industry Superannuation $70,000
Fund (Dean)
Superannuation: HESTA
Industry Superannuation $80,000
Fund (Hamish)
Shares $152,000
Other assets $50,000
Total: $700,000 Total: $1,295,000
Income Statement
Details Amount
Living expenses $41,600
Insurance $4,500
Credit card $8,038
House mortgage (principal and interest, 5.2% interest rate) $91,838
Car loans $4,200
Total annual expenses $150,176
Estimated annual surplus/deficit cash ($30,765)

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Current Financial Position
Financial Ratios
Net worth ratio
The net worth ratio calculated is 45.95%. Both of you own
45.95% of your assets while on the other hand your creditors
own 54.05%. This is not a favorable position to be in owning
lower than the amount that you to owe.
Liquidity ratio
Your liquidity ratio computed is 9.61%. This is seen to be a
bad scenario as you may not have sufficient cash to pay your
short-term debts.
Savings ratio As both of you pay an increased amount of mortgage the
savings ratio is negative and the value comes to -25.76%.
Monthly debt
service ratio
The monthly debt service ratio is 87.16% and this suggests
that 87.16% of the net income is going towards servicing
debt.
Asset Allocation
Dean
Asset class Asset allocation (%)
Cash 4.3
Fixed interest 11.1
Total defensive assets 15.4
Australian equities 54.9
International equities 5.3
Property 22.5
Alternative strategies (growth) 1.9

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Total growth assets 84.6
Total 100
23%
2%
55%
5%
11%
4%
Asset allocation of Dean's assets
Property
Alternative assets
Australian equities
International equities
Fixed interest
Cash
It is seen that Dean your current asset allocation is found to be a risk profile that is
aggressive and therefore I can recommend that you sell off the growth assets in order to enhance
cash weight due to your conservative risk profile. An ideal allocation of your assets will be to
maintain defensive assets and the assets that are less growing.
Hamish
Asset class Asset allocation(%)
Cash 4.3
Fixed interest 11.5
Total defensive assets 15.8
Australian equities 54.1
International equities 5.9
Property 22.1
Alternative strategies (growth) 2.1
Total growth assets 84.2
Total 100

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22%
2%
54%
6%
11%
4%
Asset allocation of Hamish's assets
Property
Alternative assets
Australian equities
International equities
Fixed interest
Cash
I can suggest you to sell off your Australian shares and withheld more of cash. The
current asset allocation is an Aggressive one and therefore this should be done in order to
maintain a Balanced Risk Profile. This can be done by maintaining defensive assets and half
growing assets that would be ideal for the purpose of asset allocation.
Projected Cash Flow
Dean and Hamish
2020 2021 2022 2023 2024
Income 119411 119411 119411 119411 119411
Expense 151424 152709 209815 151197 152602
Net cash
flow
$(32013) $(33298) $(90404) $(31786) $(33190)
Recommendation about your financial position
Hamish and Dean, the current issue for the objectives that is medium term has been
paying for your car and home loan. It is possible that you both may incur increased income with
the help of the growth assets you have over the defensive asset and still one cannot save money

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PERSONAL WEALTH MANAGEMENT
as the savings ratio is negative. I can therefore suggest you to undertake refinancing of your
house loan and sell off your car mainly due to your increased monthly debt service ratio.
It is seen that mainly due to the increased market value of your house, both of you can
borrow $680,000 from ANZ bank for 30 years. The interest that is aid is undertaken at a variable
rate of 5.36% p.a, which includes the payment of the interest as well as the principal. The
estimated monthly repayment as per the bank is $3,802.
After you receive a new loan from the bank, ANZ bank will pay off for the old loan and
you will receive a new mortgage within an additional $80,000 credit line for refinance.
You both can even sale your car as the present value of the car is more than the mortgage value
of the car.
The new five year projected cash flow after the incorporation of the recommendation is;
Dean and Hamish
2020 2021 2022 2023 2024
Income 119411 119411 119411 119411 119411
Expense 101010 102295 103619 104983 106387
Net cash
flow
$18401 $17116 $15792 $14428 $13024
It is seen that for the next five years both of you can save around $78,761 from the net
cash flow. With the help of the available cash, you will have sufficient money to attain you
medium term goal, which is attaining $100,000 in the next 5 years in order to meet the education
grant for your son.

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Part B
Executive Summary
The current statement of advice that has been prepared for both of you gives out a clear
idea about the sort of products and money that you will require in order to attain your future
goals and objectives. The advice is solely based on the information that has been providing from
your end. The objectives have been segregated on the basis of the time within which the
objectives need to be attained. It is therefore seen that the short term goal has been to gain
various kinds of insurances with the help of which both of you can have a happy and satisfied
life. The medium term objective has been to maintain a cash balance with the help of which you
two will be able to pay off your home mortgage and car loan. The other medium objectives has
been to create a lump sum amount with the help of which the educational grant of their child can
be attained and even create a certain amount of money with the help of which they can fulfill
their dream of going on a worldwide trip.
On the basis of this, I have put forth a recommendation and this has been selling of your
car and undertakes refinance with the help of which the loan mortgage can be paid off and an
additional amount can be attained with the help of which the other expenses can be met. On the
basis of this I have even prepared a proper better recommendation regarding the insurance
products that is needed for you in order to safeguard your future and thereafter in case of any sort
of unprecedented events, financial remuneration can be given to you.
There have been several sorts of insurances that have been provided to you and one of the
key insurance that is required is life insurance for both of you so that in case of death of any one
of you financial benefits can be attained with the help of which your child can have a safe future.

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Income protection insurance coverage is even beneficial and therefore has been recommended as
with the help of this insurance the income can be protected as well. Trauma insurance as well as
the Permanent and Temporary Disablement Insurance Coverage is even required with the help of
which both of you can have a safe and secured life. The recommended amount that will be
required for the purpose of retirement will be based on the total income and the objectives that
have been highlighted.

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Part C
It is seen that both of you are working and your total income sums to $156,000 p.a. The
personal items are valued at $50,000 your car is work $65,000.You both have various sorts of
investments along with the certain amount of money in superannuation. The amount of liability
that you two have are extensively high and it is seen that due to these factors you need to have a
lump sum amount so that even after paying off the debts enough money is there so that the
retired life can be secured. It is therefore recommended that both of you should have a life time
sum amount of $1,060,800 based on the fact that your life expectancy is 99 years and you are
looking to attain $650 per week after retirement debt free. With the help of this amount I can
recommend that even after paying off all the debts and meeting your expenses, you can have a
life as per your dream.
The projection of the superannuation is another key factor that will be considered and it is
seen that you both receive superannuation on the basis of 9.50% on the salary. Both of you are
looking to retire when Hamish attains the age of 65 years. The projection of superannuation for
Dean till the time you retire is $109,820 and on the other hand the projected superannuation
amount for Hamish is $125,400 and the total sum is found to be $235,220. There is a deficit of
$825,580 for you I would provide recommendations on the basis of which this amount ca be
adjusted.
I can recommend in accordance to the deficit that has been attained is that both of you
have to increase your income either through increasing your salary from the company were you
are working or need to initiate any sort of other source of income with the help of which you can
increase your income as well.