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FINS5537
Individual Assignment – Term 1 2022
Due to be submitted no later than 11.59 pm * Wednesday the 20th of April 2022 in a soft copy format via the Turnitin link placed on the Moodle course website.
*Please allow a minimum of 20 to 30 minutes to upload your assignment. Do not wait untill the due date to upload your assignment as the system can
become slow closer to the due date.
NO ASSIGNMENT WILL BE ACCEPTED VIA EMAIL OR ANY OTHER FORM/S
This assignment will comprise a total of 40% of the marks allocated for this unit. The assignment consists of the preparation of an advice document in a form of a professional & compliant Statement of Advice (SOA) in relation to the case study. The SOA must adhere ASIC RG175 requirements in particular the “Clear, Concise and effective” requirement.
Late submissions will be accepted; however, they will incur 25% penalty for every 24 hours after the due date. HOWEVER, Please Note: YOU CANNOT overwrite your submission after the due date (No resubmission past the due date).
Submission details The submission must include the following in ONE PDF document / file: 1. The assignment (SOA) in a PDF format, incorporating all the relevant elements to ensure the prepared SOA is compliant with the relevant financial services laws, technically accurate and professionally presented
2. PowerPoint presentation slides (10- 15 slides) to be copied and pasted into the SOA words document with your speaker notes summarising your Statement of Advice before you PDF the file to be submitted on Turnitin. The aim of the presentation is a way to present your advice to the clients in the case study
3. In maximum of 500 word attached to the assignment, prepare a summary of how you will be adhering the FASEA Code of Ethics’ 5 values and 12 standards when dealing assisting your clients in the case. Give specific examples.
Use the submission link provided on Moodle. Only submissions via the link will be accepted
VERY IMPORTANT _ Rules You Must adhere to The aim of this task is to demonstrate competence in constructing a professioan aand compliant SOA. The work therefore must be your own. Turnitin similarity
reporting is strictly applied. Copying from other students work or starting from a template completed by a student who completed this course or a similar course at
other educational institutions previously is considered plagiarism and will be penalised and likely lead to failing the assignment.
Your similarity result should be in low single digit (less than 10%). Systematic
plagiarism will be penalised regardless of the similarity score. Plain and simple this work must be your own work in its entirety.
Similarity between 10 and 20% will be closely investigated Similarity exceeding 20% will not be graded
You CANNOT use software or other licensees /companies’ templates. This assignment must be entirely your work cover to cover.
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Important Notes:
• The assignment must be typed (Font 11)
• Attempt ALL questions and issues raised in the case study assignment
• Ensure your SOA contains all the relevant sections, to ensure your
SOA is compliant with the relevant financial services laws, technically
accurate and professionally presented in line with the industry best
practice.
• Your PowerPoint presentation needs to be professionally
presented and represent an accurate summary of the SOA/
executive summary.
• Where appropriate, the use of tables, graphs, flowcharts, etc. is
encouraged to help illustrate your point clearly.
• Show workings and calculations where applicable.
• Clearly state your source references. Be clear in answering the
questions and or client’s enquiry.
• Assumptions must be clearly stated, assumptions need to be
reasonable and logical and cannot conflict with the facts in the
question/s
• Provide the excel spreadsheet projection/working in the appendix of the
SOA document.
Assumptions
o Inflation 2.1%
o AWOTE 2.3% (use for wages inflation)
o The investment growth rate is to be provided by you, however, you must
apply due diligence on the rate provided and provide your source or
research reference/s. This would be based largely off the investment and
the asset allocation of your investment portfolio
o Use 2021-22 tax rates where applicable
Refer to the mark allocation and what is expected from you section below for further details and tips
Important Note: You need to answer the question in a Statement of Advice (SOA) format in accordance with ASIC guidelines (refer to RG 90 for examples only). The SOA must have a 2 page “Executive Summary” section where you summarise the client’s current situation, needs, concerns, goals, objectives and your recommended strategy.
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Case Study – The Sweeny Family
Robert Sweeny (aged 65) is married to Julie (aged 60). They are living in a suburb in of the inner Sydney. They have two children, James (aged 26). Charlotte (aged 22) and 2 grandchildren aged 2 and 4
Robert is a partner in an engineering firm. Robert works very long hours and travels frequently. He can’t wait for the opportunity to slow down so he can have more time to see his wife and spend time with his grandchildren.
Robert is considering continuing staying involved in retirement by potentially taking on a company board position and possibly undertaking consultation projects in his area of expertise.
Julie is a senior executive in an IT company. She is currently working full- time; however, she is planning to reduce her working hours later this year as she would like to assist in looking after the grandchildren. She is considering the possibility of using her superannuation to supplement her income. She was told by a work colleague about using her superannuation to draw income in a form of a Transition to Retirement Pension (TTRP). She would like to get more information on TTRP and whether this is an option she can or should consider.
Robert and Julie have been discussing for a while the need for them to see a financial adviser to help them put in place a plan for retirement. They would also like to know the impact of the latest superannuation changes on their retirement plan. They would also like a plan to manage some upcoming expenses including their planed holiday, buying a new car and house renovations.
Robert and Julie have a very strong belief to remain close to their children and grandchildren and assist them in every way possible. They are also realistic with regards to the fact they need to look after themselves and recognise the fact they need to be able to meet their expenses in retirement.
Both Robert and Julie have reasonable experience when it comes to investment and management of their financial affairs. Although in recent times Robert and Julie have been too busy to pay attention to their financial affairs, they feel this will be different in retirement where they would have ample time to manage their financial affairs and take control of their finances and investments as they both feel this is important for them.
Robert and Julie have decided to come and see you. Julie made an appointment for both Robert and herself for an initial consultation with you.
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Robert and Julie have left you with the information below after the first interview.
Robert Julie
Income salary & wages * (excludes employer SG contribution)
$320,000
$280,000
Home (principal residence) Unencumbered
$2,800,000 (Joint tenancy)
Residential investment property purchased in August 2015 for $650,000 Current rent is $590 per week. Total expenses excluding interest. $8,000p.a)
$850,000
Rental property loan @3.9% variable (current (P&I) repayments made $3,500 per month)
$220,000
Home contents $280,000
Motor Vehicle $85,000
Bank Account (at call) $120,000 (Joint)
Term deposit @ 2.1%
Maturing soon $150,000
Share portfolio (acquired in Nov 2016) **
$200,000 Invested equally in the
following shares: CBA and Rio Tinto
Employer superannuation (retail funds)
Current account balance: $1,750,000
(Insurance inside the superannuation fund of $650k life and TPD) Superannuation Fund Investment: High Growth Fund (100% growth assets)
Current account balance: $900,000
(Insurance inside the superannuation fund $500K life and TPD) Superannuation fund Investment: Moderate (50 % Growth, 50% Defensive assets)
Managed funds (acquired in February 2017 for $100,000) ***
$155,000 invested in Australian shares
Income requirement/ Living expenses. (Excludes Mortgage/loan repayments)
$90,000 p.a.
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Notes to the supplied information:
*The employer makes only the mandated employer contribution (SGC) to their nominated superannuation fund.
** The share portfolio was acquired by Robert after he received a cash inheritance.
*** The managed funds invested in Australian shares.
# Robert and Julie’s current living expenses will continue until retirement.
You need to advise Robert and Julie on the issues below, considering the following specific issues and concerns:
You need to clearly address the following issues: where you are providing advice on each of the points below you need to ensure you highlight the benefits and the risk of the advice relevant to the clients personal circumstances. You also need to clearly demonstrate how your advice to the client meets the best interest duty with the financial services legislations and regulations.
• Analyse and address Robert and Julie’s goals, objectives, needs, and concerns and whether they can achieve their objectives including their retirement objectives and how. (You are strongly advised to provide them with options and alternatives where necessary and appropriate).
o Retirement: Robert would like to retire once he reaches age 70. Julie is
planning to retire when she reaches age 65. However, they are happy to postpone retirement for a few more years if this would help them achieve a more comfortable retirement as Robert is happy to scale down his workload and stay working on a consultancy basis for a few more years as a semi- retirement plan.
o Robert and Julie think they need an after-tax income of $80,000 in today’s dollars during their retirement as by then they think their debt will be paid out (assume this income can be produced tax free at retirement). You need to provide the calculation supporting your projections of their retirement needs.
o They like to know if the latest superannuation changes that came into effect
on the 1st of July 2017 impact their retirement and saving plan. Address the changes relevant to Robert and Julie’s current personal circumstances and their future.
o Julie is considering whether this. The Transition to Retirement Pension
(TTRP) is an option she can or should consider. You need to provide clear advice with clear justification.
o They would like to pay off their debt as soon as possible.
o They would like to save and invest to help them achieve their objectives.
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o They are happy to consider the concept of borrowing to invest if they feel it can help them achieve their retirement aim.
o They would like to do some renovations on the house after they both have
retired. The expected cost is approximately $355,000 in today’s dollars.
o They would also like to take a trip to Europe in the next 2 years for which the
expected cost is approximately $35,000 in today’s dollars.
o Once retired, they would like to purchase a new car. They would like to set
aside a budget between $180,000 to $250,000 in today’s dollars.
o They have asked you about the ability of starting their own SMSF as some of Robert’s work colleagues have done just that. At present Robert and Julie’s superannuation contributions go to an employer nominated retail fund. They would like to know benefits and risks of establishing an SMSF relevant to their own personal circumstances. They are particularly interested in the possibility of acquiring an office space through the SMSF for Robert to run his consultancy business in retirement. (You need to provide a clear recommendation with appropriate justification as to whether an SMSF is or is not appropriate to their needs).
o Julie has heard from a colleague at work that the SMSF can borrow to
purchase a property under a Limited Recourse Borrowing type arrangement. Robert and Julie would like to know more about this and the possibility to use such a facility through an SMSF to buy an apartment and rent it out to Julie’s sister who is getting married this summer. This is in addition to exploring the possibility of the fund purchasing a commercial office space for Robert to run his practice in retirement.
o Robert and Julie heard a while back from one of their friends about a strategy
that was referred to as "using salary sacrifice to superannuation to maximise retirement income". They are questioning whether such a strategy would be suitable to either and or both (provide a calculation illustration with your explanation).
o Robert would like to get some advice on the share portfolio he has recently
purchased after he received some tips from an old friend of his who invests regularly in the market. Advise Robert if his share portfolio is well diversified and explain why or why not, also elaborate on what can be done to make the share portfolio more diversified. Provide Robert with a clear illustration/ justification. Julie would also like to provide advice on what she should do with her managed funds investment.
o The term deposit is maturing soon, and they would like some advice on
what they should be doing and possible options available for them
o Robert and Julie would like to get some advice on their possible eligibility to obtain the age pension once they are retired. Provide them with a clear explanation of the reason why or why not. Explain any other social security issues, if any.
o Robert and Julie would also like to be able to assist in providing a private
school education for their grandchildren. They would like to provide and budget for around 50% of the total annual cost or $15,000 p.a. per grandchild for the 12
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school years (at a minimum they would like to be able to assist in funding for the 6 years of high school if funding for the entire 12 school years is not affordable). They are exploring the option of setting up a sinking fund for this purpose.
o Robert and Julie would like to get some advice on the different types of
pensions they can start their superannuation savings with once they are retired.
o Robert and Julie would like to ensure they have adequate general and
personal insurance. For the personal insurance you are required to provide a clear needs analysis and make appropriate recommendations on the amount and type of covers required. You also need to provide insurance product recommendations and supply quotes of premiums.
o They would like you to consider their estate planning needs. You need to
provide a clear recommendation on all their estate planning needs. (Avoid large generic contents in this section). Information provided needs to be relevant and specific to the clients’ circumstances.
o Projections should be made up to Robert & Julie’s life expectancy + 8 years.
• Risk Profiling – Robert and Julie’s attitude to risk:
o Robert likes owning shares as from his financial background he understands that Australian shares and shares in general may have a higher volatility than some other asset classes. However, he also understands shares tend to perform well over the long term. Robert is comfortable with taking risk if he can understand it and see that there are possible rewards.
o Julie on the other hand was brought up in a very conservative family
where her family had most of their money invested either in government bonds or term deposits with one of the major banks. Julie’s family have always talked in front of her that they dislike share investments as they feel they can't sleep for worry about market events. However, they have also said to Julie several times that she could never go wrong with property investment and have always encouraged her and Robert to buy a house when they first got married. Julie therefore is more conservative than Robert when it comes to risky investments; however, because of studying finance subjects at university she can see that sometimes there could be some merit in taking calculated risks to achieve better returns.
o Robert and Julie have both indicated they would not mind taking some
calculated investment risks to help them achieve their objectives.
As part of your advice to the clients you need to address the following:
• Asset allocations and diversification.
• Investment portfolio recommendations, providing reasoning and justifications.
• Cash flow and asset projections (include projections of cash flows for Robert and Julie, presenting both pre-tax and post-tax results).
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• Cash flow and net worth tables.
• Provide assumptions used and justifications (cost, risk, suitability, etc.) where required.
• Use diagrams and charts to assist with your illustrations.
• Clear calculation of projections.
Your task now is to prepare a complete Statement of Advice (SOA) for Robert and Julie. The information provided in the client scenario is to be used in preparing your calculations and advice. As the assignment is to be a SOA for clients, it should be in a suitable format and use appropriate language. Clarity and conciseness are important but full explanations are required.
• Your SOA should clearly show the structure you recommend for their portfolio, how they can achieve their goals and where the capital and income will be sourced. Your SOA should address a long-term plan to provide income and should include projections.
End of the Assignment Question
Assignment mark allocation & what is expected from you
Mark Allocation
Marks breakdown between both tasks SOA and presentation slides (out of 100)
Overall Presentation SOA and presentation slides 20 Marks
Disclosure and compliance 15 marks
Analysing current situation, identifying the client goals, objectives needs and concerns
(including risk profile) 20 marks.
Projections and illustrations 15 marks
Strategy and recommendation 30 marks
What is expected from you
Deliver appropriate advice that address all the clients’ goals, objectives, needs, concerns,
and special circumstances. The advice needs to meet best interest duty and demonstrate
the client will be in a better position in following the advice and recommendation you have
presented. You need to clearly identify the risks of the advice and how they can be
mitigated.
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Your SOA needs to be professionally presented, aiming for best practice and not for
minimum standards. The statement of advice based entirely on your own work. The SOA
need to be compliant with all the financial services regulation for the format, the advice
itself and all appropriate and required disclosures. Providing a compliant statement of
Advice (i.e. disclosure, meeting the best interest duty, regulatory etc.)
Current situation: Building and structuring the client current situation (including pre
advice cash flow and net worth)
Clearly analysing the fact in the case study
Appropriately addressing all the client goals, objectives, needs, concerns, and special
circumstances
Providing a client with strategy that addresses all the client goals, objectives and
concerns and aims to meet the client goals.
Providing client with options and solutions – providing alternative strategies
Highlighting how the strategy is in the best interest of the client – i.e., meeting the best
interest duty.
Highlighting the risk of the strategy (if any)
Addressing how the risks can be
mitigated.
Providing post advice cash flow and net worth & the requested projections going
forward
Providing specific product recommendations to execute the strategy
Obtaining Authority from the client to proceed with the
recommendation.
Retirement Advice: you need to perform appropriate calculation to identify the amount
required to fund retirement income and other expenditures (if any) the clients intending
to undertake. You need to clearly demonstrate through both cash flow and net worth
projections how the clients is able (or unable if they don’t have sufficient resources) to
fund their retirement
Insurance Advice: you need to perform needs analysis based on the clients’ facts and
special circumstances listed in the case study. You need to identify needs and gaps and
provide clear recommendations of what insurance covers should be sought, increased,
or upgraded, cover type, sum insured, etc. For Insurance quotes, you can make
appropriate and reasonable assumptions (i.e. client is in good health and is a non-
smoker, providing there no information to the contrary in the case study).
Estate Planning Advice: needs to be clear and non-generic recommendations. The
advice in this section must relate specifically to the client. You need to address more
issues than generic issues related to wills and Power of Attorney.
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Risk profile section – you are required to address the key issues and justify accordingly.
You therefore needed to make clear reference to how you determine the client risk profile
(Client risk tolerance, Time horizon, Goals and objective, Liquidity needs and investment
experience, etc.)
SMSF & Superannuation Advice: you need to avoid including generic information and
general pros and cons. Your advice related to SMSF (to set or not to set up, to keep and
not to keep, etc.) need to be specific to the client’s circumstances and facts listed in the
case study.
Other superannuation advice needs to be provided with clear justification maintaining or
switching. All super switching advice need to refer to ASIC information sheet INFO182.
Switching Advice: All switching advice (superannuation, investment and insurance)
need to be clearly justified.
Projections Clear cash flow and net worth projection to be provided- you need reference
to your projection in the body of the SOA in relation to the specific goals (i.e. retirement
funding, etc.) Cash flow projections and net worth projections to justify strategy and
demonstrate if financial goals and objectives are met.
Presentation – needs to be professionally presented and your document must flow and
need to be reader friendly.
Disclosure & Compliance – Appropriate disclosure of fees and benefits and meeting the
regulatory requirement of advice documentation.
Technically accurate advice – It’s critically important to provide accurate advice for the
client to rely on
Again, always relate to the clients' specific circumstances throughout the SOA and ensure
you are specific when explaining concepts, rules, regulations, legislative changes in
terms of highlighting their impact on the clients specific and relevant.
Key sections you must include in the SOA:
• Covering letter
• Cover page
• Table of Content
• Executive summary (2-3 pages max)
• scope of advice
• Assumptions
• Current situation- information about the client
• Goals and objectives
• Risk profile
• Your advice and recommendations
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• Investment advice
• Retirement advice
• Insurance advice
• Estate planning advice
• Superannuation and SMSF advice
• Other advice related to specific goals and objectives (education funding,
specific questions, etc.)
• Meeting best interest duty
• Risks of the advice and how they are mitigated.
• Disclosure sections – meeting all legal and best practice disclosure
requirements:
• The cost of the advice and how you are paid.
• All fees, commission and other benefits including soft dollar commissions.
• Specific disclaimers.
• How to proceed. Authority to proceed and actions to proceed.
• Appendices
SCHEDULE & MILESTONE TO ACHIEVE
Week one: Analyse all the facts in the case study including goals, objectives, needs,
concerns, and special circumstances + cash flow and net worth pre advice – formulate
the current situation part of the SOA.
Week Two: Start Building the skeleton of the SOA, do your research including calculation
of all financial targets and commence projections.
Week Three: Finalise projections and final draft of strategy recommendations
Week Four: Product research and finalise strategy recommendations.
Week five: Bring it all together constructing the first complete draft of the SOA before
the Saturday workshop
Final stage: Finalise SOA and PowerPoint presentation for submission.
The SOA will be discussed after the lecture in class every week and feedback will be
provided on the work you have completed to date and questions will be answered to help
you finalise your work. COME PREPARED!!
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Individual Assignment Rubrics and marking guidance
The rubric below is read in conjunction with the assignment expectation
Very Good to Excellent ( D – HD) Satisfactory (Pass to Credit) Unsatisfactory
• Clear and appropriate SOA/assignment layout and
structure
• Clearly addressing and providing in depth analysis of all the clients
goals, objectives, risks and
concerns
• Clear and thorough analysis in determining the client risk profile
addressing different goals and
time horizon (i.e. utilizing goal-
based risk profiling)
• Clearly identify strategies to help the clients achieve their
objectives, with addressing clear
alternatives/ scenario analysis
• Clear and concise and effective articulation in
addressing the required
contents requested in the
assignment question
• Good and efficient use of Visual aids (table, graphs, headings, etc.)
for illustration
• The SOA is Professionally presented flow nicely and reader
friendly
• Meeting the compliance requirement of an SOA.
• Clearly demonstrating the advice meets Best interest duty
• Highlighting the risk of the advice and how they can mitigated
• Meeting best practice standard
• Providing clear cash flow projections
• Regularly relating the advice to the client personal circumstances and
facts in the case study
• Little or no generic information in the body of the advice
• Professionally prepared and presented PowerPoint slides with
detailed speakers notes
• Clear evidence of independent research and analysis incorporated
throughout assignment as required
• Appropriate use of referencing where necessary
• Thoroughly Addressing all the points of what expected of you below
• Very Low Similarity (Turnitin
report)
• Adequate SOA/ assignment layout and
structure.
• Clearly addressing and analysing the clients goals,
objectives, risks and concerns
• Clear and adequate analysis in determining the client risk
profile addressing different
goals and time horizon (i.e.
utilizing goal- based risk
profiling)
• Clearly identify strategies to help the clients achieve their
objectives, with addressing
clear alternatives and scenario
analysis
• Clear and somewhat concise and effective articulation in
addressing the required
contents requested in the
assignment question
• Adequate use of Good and efficient use of Visual aids (table,
graphs, headings, etc.) for
illustration
• The SOA is reasonably Professionally presented and
reader friendly
• Meeting the compliance
requirement of an
SOA.
• demonstrating the advice meets Best interest duty
• Clearly highlighting the risks of the advice and how they can
mitigated
• Providing clear cash flow projections
• Adequately relating this advice to the client personal
circumstances and facts in the
case study
• Some generic information in the body of the advice
• Clearly prepared and presented PowerPoint slides
with detailed speakers notes
• Some evidence of independent research and analysis as required
• Appropriate use of referencing as required
• Covering the key points of what expected of you below
• Low Similarity (Turnitin report)
• Poor assignment layout and/or structure
• No Adequately addressing or
analysing the clients
goals, objectives, risks
and concerns
• No clear analysis in determining the client risk
profile addressing
different goals and time
horizon (i.e. utilizing goal-
based risk profiling)
• Vague or unclear strategies
• Failing certain compliance
requirement.
• Not adequately demonstrating the advice
meets Best interest duty
• Not highlighting the risks of the advice and how they can
mitigated
• No or unclear cash flow projections
• High use of generic information
• Poor presentation overall
• No demonstrated independent research or
analysis
• Little or no use of references
• Not adequately Covering the points of what expected of you below
• High Similarity (Turnitin report)
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End of Assignment
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