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					             Capstone project — risk protection and superannuation

                                            FP4-1SN4-1 project


                                           Project cover sheet
This document includes:
    student identification
    project declaration
    project instructions
    submission instructions
    project result, result summary and feedback
    project checklist
    project questions (including fact finder templates, cash flow templates and managed funds
     calculations).



Student identification (student to complete)
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Telephone number




Project declaration (student to complete)
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DECLARATION: The project that I have attached and submitted is my own work, completed in
person by me. I understand that I am not to give my completed project (or provide a copy of my
project) to any person or organisation other than Kaplan Education Pty Ltd. I also understand the
definition of the terms ‘collusion’ and ‘plagiarism’ and that penalties apply for ‘collusion’ and/or
‘plagiarism’ as stated in Kaplan Education’s Assessment Policy and Student Misconduct Policy.
The policy is available at:
<www.kaplanprofessional.edu.au>  What you need to know  Policies

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to the declaration stated above.
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resubmit your project.
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Please check KapLearn for the due date.



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for details on how to submit your project.
Note: Assessors should double-click on the fields below to select the student’s result.



Project result (assessor to complete)

Result — first submission


Not yet competent

Questions that must be re-submitted:


Sections 2, 3 and 4

Result — re-submission (if applicable)


Not yet competent




Result summary (assessor to complete)
                                           First submission                Re-submission (if required)


Section 1                                   Demonstrated                     Not yet demonstrated


Section 2                                Not yet demonstrated                Not yet demonstrated


Section 3                                Not yet demonstrated                Not yet demonstrated


Section 4                                Not yet demonstrated                Not yet demonstrated


Section 5                                   Demonstrated                     Not yet demonstrated




Feedback (assessor to complete)
Please refer to your assignment document for comments. You are required to amend your paper in accordance
    with each comment provided for the sections that require resubmission.
            Capstone project — risk protection and superannuation

                                                FP4-1SN4-1 project
This project contains five sections based on the information provided on your clients, George and
Rebecca Brown, and their family. Complete all sections.
The following checklist is provided as a guide to ensure you have completed the project
requirements.


Project checklist (student to complete)
Step   Action                                                                                                  Completed?

1.     Read the Study Guide
       Go to the What you need to know section and read the advice in the Study Guide on preparing
       your project.

2.     Familiarise yourself with the project
       Think about the project questions while reading your learning materials and completing the activities
       and review questions.

3.     Answer Sections 1–2: Part F
       Ensure that you complete the fact finder and risk profile templates for Question 2.

4.     Answer Section 2: Part G — Statement of Advice
       • Follow the steps given in the Statement of Advice Preparation Checklist — you must submit the
         completed checklist
       • Use the family cash flow templates provided
       • Use an excel spreadsheet to prepare SOA Appendix 3.

5.     Answer Sections 3–5


6.     Upload your completed project
       You must submit the following completed items in this template:
       • the project cover sheet and completed student declaration
       • answers to all five project sections
       • the completed Statement of Advice Preparation Checklist
       • the completed Statement of Advice and appendices.
Case study background — George and Rebecca Brown
You work for the financial planning company, Markson and Co, which is a licensed securities
dealer and a registered life insurance broker.
Your company specialises in investment and insurance advice but does not provide stockbroking,
real estate evaluations and advice, income tax preparation, superannuation fund accounting,
superannuation fund administration or the preparation of legal documents such as Wills or trusts.
George Brown is a senior engineer with an international mining company. He has been working for
the same company for the last seven years and has been pleased that the company was primarily
unaffected by the global financial crisis (GFC). He believes there is potential for further
improvement in his salary as well as growth prospects within the company.
Rebecca Brown is working part-time as a paralegal with the same company she worked for prior to
having their children, Ruby and Sienna. She has a good relationship with the owners of the firm
and does not see any change in her current employment situation for the time being.
Both George and Rebecca are in good health and are non-smokers. They have private health
cover for the family.
George and Rebecca have approached you for financial advice.
They advise you that they are confused in regard to their financial situation. This has come about
due to conflicting information they have read, which states that although they will be living longer,
nearly half of all 40 year olds will die over the next forty years. Further, their children have asked
questions about the insurance plan advertisements they have seen on television which has raised
concerns as to whether they have adequate insurance cover. Further, they want to make sure their
children will be adequately provided for if something were to happen to them.
They also believe they should have surplus income as a back-up. They would like to save any
surplus in the most tax effective vehicle for the long term. Both George and Rebecca are
concerned that if they have access to these funds they may spend them.
George and Rebecca would like to reduce their mortgage and believe that this could help them to
get ahead before they have to pay large school fees. Their current loan has a redraw facility.
However; they enjoy their annual holidays and have an active social life, and want to make sure
they have income available to continue these activities.
George also advised you that his uncle recently passed away and he has inherited $75,000 cash
along with shares valued at $27,000. They have never considered owning shares before but
George is keen to understand the share market and perhaps buy some shares. George is
prepared to take some risks in order to accumulate wealth quickly. However, Rebecca is more
concerned about risk and does not wish to ‘gamble’ any of their funds.
Detailed below are George and Rebecca’s current details.
Personal information
Surname:                             Brown                            Brown

Christian Name:                      George                           Rebecca

Salutation                           Mr                               Ms

Age/Date of birth                    28 March 1970                    17 August 1971

Status                               Married                          Married

Home address                         4 Pringle Ave, Kensington        4 Pringle Ave, Kensington

Health                               Good                             Good

Smoker                               No                               No

Occupation                           Senior Engineer                  Paralegal

Employer                             Knight & Co.                     Ranier and Jackson

Start date                           2004                             2008

Sick leave currently available       14 days plus 10 days per annum   6 days plus 10 days per annum

Retirement age                       60                               59

Dependants/Family relationships      Sienna (aged 11 years)           Ruby ( aged 8 years)



Professional relationships
Solicitor                            Carlie Mattieson

Time span of relationship            10 years

Quality of relationship              Poor

Service provided                     Conveyancing for home purchase


Accountant                           John Watson

Time span of relationship            7 years

Quality of relationship              Excellent

Service provided                     Annual tax return



Annual income details
Name:                                George                           Rebecca

Salary                                                   $110,000                          $55,000

Cash management account — interest                            $375                           $375

Savings account — interest                                     $88                            $88

Inheritance — interest                                     $3,750

Dividends (96.7% franked)                                  $1,750
Notes:
George and Rebecca’s salaries exclude superannuation guarantee (SG) contributions, which are
currently paid at 9% per annum.


Annual expenditure
Mortgage                                                                                                       $28,700

General living expenses                                                                                        $45,000

Accountant’s fees                                                                                                 $500

Donations                                                                                                       $1,000

Holidays (annually)                                                                                            $10,000




Assets and investments
Principal residence            $850,000      Purchased 6 years ago for $550,000. Outstanding mortgage $300,000 — joint
                                             names, variable rate 6.5%

Contents                        $50,000      Joint names

Car                             $18,000      Fully paid off — joint names

Cash management                 $15,000      Cash management account earning 5% p.a. — joint names
account

Savings account                  $5,000      Everyday savings account earning 3.5% p.a. — joint names

Cash management                 $75,000      Cash management account earning 5% p.a. — George’s name only
account — inheritance

ABC Superannuation —           $190,000      Invested in a retail fund, balanced option — earns 6% p.a. net of fees and taxes.
George                                       No beneficiaries or binding nominations specified. The fund accepts salary
                                             sacrifice.

SOH Industry                    $85,000      Invested in an accumulation industry fund, balanced option — earns 5% p.a. net
Superannuation —                             of fees and taxes. The fund only has a defensive, balanced or high growth
Rebecca                                      options available. There is no untaxed element in the fund. No beneficiaries or
                                             binding nominations specified. The fund accepts salary sacrifice.

Share portfolio                 $27,000      Currently earning 6.48% p.a. — 96.7% franked dividends — in George’s name
                                             only



Current share portfolio
Number of shares          Company                                                                     ASX Code

             500          AMP Limited                                                                    AMP

            1,300         Insurance Australia Group Limited (formally NRMA)                              IAG

             400          Commonwealth Bank Limited                                                      CBA

             400          Telstra Corporation Limited                                                    TLS
Investment objectives
They have rated their investment objectives, using a scale ranging from 1 (not concerned) to
5 (very concerned).

George Brown

Income to keep pace with inflation   2     Legal, logical and appropriate tax relief   5

Easy access to your capital          1     Regular income from your investments        1

Easy to administer                   3     Capital growth                              5

Volatility                           2



Rebecca Brown

Income to keep pace with inflation   2     Legal, logical and appropriate tax relief   5

Easy access to your capital          1     Regular income from your investments        1

Easy to administer                   4     Capital growth                              5

Volatility                           4



Estate planning
George and Rebecca have Wills which they quickly wrote using the packages bought from the post
office when Ruby was born. They do not have powers of attorney.


Insurance and risk management
George has three times his salary in term life and total permanent disability (TPD) insurance within
his superannuation. He cannot take out any higher cover within this superannuation fund.
Rebecca has $50,000 of life and TPD in her superannuation fund. George and Rebecca do not
have income protection or trauma cover.
They have family private hospital cover.
Planning issues
•   George and Rebecca are seeking a long-term tax effective investment plan which will provide
    for them in their retirement.
•   George has recently inherited $75,000 from his uncle and would like advice on how to invest
    these funds to contribute to securing their future.
•   George has told you that he understands the risks associated with investing and is willing to
    invest in riskier securities in order to increase their returns.
•   Rebecca is more risk averse. She would like to ensure they do not lose any of their
    inheritance.
•   George and Rebecca’s children currently attend a public school but they would like to send
    both children to a private school to complete their secondary education.
•   George and Rebecca would like to do some renovations to their home, i.e. replacing the old
    bathroom which they believe will cost approximately $17,500. They are happy to use some of
    their inheritance to do this and anticipate the work to be done this year.
•   Both George and Rebecca are not sure if the current asset allocation used in their
    superannuation is appropriate and are seeking your advice on determining an asset allocation
    that they are comfortable with, and will improve the potential to meet their lifestyle and
    financial objectives. They would also like to know if they are on track to reach their retirement
    income goal of $60,000 per annum when George reaches age 60.
•   Rebecca has been unhappy with the service she receives from her industry fund and the
    limited number of choices she has for her account. In addition George has been earning better
    returns every year, even after fees are deducted.
•   They wish to have their full insurance needs reviewed.
•   George and Rebecca would like to reduce their mortgage and believe that this could help them
    to get ahead before they have to pay large school fees.
•   They expressed concern about the fees that you charge and seek clarification on those fees.
As their financial planner, your task is to prepare a Statement of Advice (SOA) that will include
strategies to meet George and Rebecca’s goals.
The project (student to complete)

Section 1 Establish a relationship with the client and identify their objectives,
          needs and financial situation

Part A
List particular strategies you will use to ensure that the Browns are comfortable with the interview
process. (200 words)
A comfortable interview environment will certainly help facilitate the dialogue and establish rapport
between the client and the planner. It could be assisted by following actions:
Creating a comfortable interview environment: make sure there is no interruption during the
interview (Switch off mobile phone, put computer into standby mode, etc); the meeting room should
be quiet without any distraction during the interview; offer something to eat, such as tea, coffee,
water, candy, and biscuit.
Greeting the client in a courteous manner makes them feel respected and valued.
Give a meeting agenda and make sure they all understand what will happen during the interview.
Find something in common to start with the conversation (such as pets, kids) and keep the
conversation flow smoothly to enable us know each other.
Ask different types of questions to encourage George and Rebecca talk about themselves
Showing interest, keep good eye contact and never interrupt when they are talking.
Listen to their concerns, expectations and demands, and take notes.
Use simple language, terminology and/or jargon can be mentioned only if they use it first.
Take breaks if necessary. Sometimes people may find difficult to keep their attention focused after
long hour conversation.
Use non verbal expressions and appropriate body language. Modify my language and
communication style to suit their demographic background if necessary.
Always be open, transparent and helpful: make sure they understand the fees that may involved.




Part B
Give details of any legal requirements you need to comply with at the initial stage of your
relationship with the clients. (250 words)
Financial planning is a highly regulated industry in Australia. A financial planner must meet the
minimum training requirements as defined in the Australian Securities and Investments
Commission (ASIC) Regulatory Guide 146 Licensing: training of financial product advisers (RG
146) and be licensed by the ASIC. .
It is also very important for a financial planner to keep up-to-date with training, as required by
ASIC’s RG 146. Anyone who is a new entrant to the financial services industry will generally need
to meet an experience requirement before obtaining a licence. They will need to operate under an
existing AFS licence holder as either an authorised representative or a representative.
A financial planner is recognised through common law as having a duty of care for their clients and
is legally obliged to exercise as much as the circumstance require, and to ensure the clients is in
no way mislead. The Financial Planning Association’s Code of Ethics and Rules of Professional
Conduct define the benchmark for ‘reasonable care’ of its manner.
A Financial Service Guide (FSG) must generally be given to the clients before providing any
financial service (as defined by RG175)
Compliance with privacy legislation is also very important. All the personal information collected by
financial planner and/or the licensee is governed by the Privacy Act 1988 which contains a national
scheme for the collection, use, correction, disclosure and transfer of personal information by
organisations in the private sector.
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CFT) is another
legislation that financial planners have to comply with. e.g. A planner is obliged to establish and
verify the identity of the client regardless of the nature of the client.

Part C
If, at a later stage, George and Rebecca wish to make a complaint about your advice, what are
their options? How much information are you required to give them, initially, about complaints
procedures? (150 words)
If they have a complaint, they could take the following steps:
Tell me about their concerns, and I will try to resolve the complaint. If they are not satisfied with the
result, they can contact the manager of Markson and Co.
However, if the dispute is still not resolved in a manner acceptable to them, they have the right to
complain to the Financial Ombudsman Service (FOS). FOS is an external dispute resolution
scheme that provides free advice and assistance to consumers and investors to help them in
resolving complaints relating to members of the financial services industry.
Financial Ombudsman Service
GPO Box 3
Melbourne VIC 3001
Phone: 1300 780 808
Fax: 03 9613 6399
Email: info@fos.org.au
Website: www.fos.org.au

They may also contact the Australian Securities & Investments Commission (ASIC) on their free
information line 1300 300 630 to make a complaint and obtain information about their rights.
The above information is also normally available on the Financial Service Guide (FSG).




Part D
Neither of your clients have trauma insurance, and they are unsure about the adequacy of their
current level of life and TPD insurance. Prepare a list of questions that you could use during the
initial interview to help you determine appropriate levels of cover. You should cover asset
preservation, income preservation and future expenditure needs, and the answers to these
questions should enable you to complete the risk needs section of the fact finder. (250 words)
Do you currently have insurance for you home and content? Cars? Income? Life?
What are your assets and income (cash saving, invested assets, retirement account, life insurance,
etc.)? What would be available to your family now, if you weren’t here to provide for them?
Are you wealthy enough to be able to survive without your income? Could you maintain your
current life style on social security benefits (e.g. through Centrelink)?
Could you maintain you superannuation contribution if you didn’t have an income?
Do you have debts? Such as mortgage, credit cards, personal loans. If your household needs two
incomes to maintain the debt/mortgage, then both of you may need to have adequate insurance
cover.
Do you have dependants? If yes, can you think of any ongoing expenses which may occur?
Do you plan on paying for part or all of your children’s education (secondary, tertiary education)?
What are you basic necessities? What do you and your family need to pay for on a regular basis
(e.g. utilities bills)?
How will your family maintain a financial comfort zone? Life events may dramatically change your
financial picture. What kind of special or one-time expenses may come along?
Is there anything else you would like to account for in your life/TPD/Trauma insurance estimate?




Part E
Discuss the benefits and drawbacks of using tools to gather the information required to develop a
financial plan for clients as compared to a more casual, conversational style approach. (200 words)
A financial planner should never only rely on their intuition when determine client’s risk profile and
needs. There are many tools that can be used to gather the necessary information for developing a
financial plan. These tools can be factor-finders, questionnaires, psychometric testings, etc. The
data gathered from these tools will help the financial planner to have a clear picture of the client’s
financial position and expectation.
However, most of these tools are normally in standardised form and may not be able to cover the
full image of the client’s real situation. For instance, the client may think none of the pre-listed
model in the risk profile questionnaire matches their particular circumstance. Alternatively, a
financial planner could adopt a more casual and conversational approach to find out their personal
needs and therefore discover the client risk tolerance.
Psychometric testing could be another method to reveal client’s psychological profile. This tool
offers a relatively cheap and easy way to assess client’s risk acceptance. Nevertheless the results
can be misinterpreted by not taking account of client’s personal circumstance. On the other hand, a
more casual and conversational style might help the financial planner to determine a client’s
psychological acceptance of risk, but it could be time consuming. The effectiveness of using
conversational style approach relies on the communication skills of the financial planner.
Section 2 Analyse client objectives, needs, financial situation and risk profile to
          develop appropriate strategies and solutions

Part A
Record the information you have gathered from your clients in the fact finder below. Include the
information you obtained from your questions in Section 1 Part D.

Part B
Identify any gaps in your data collection form, as well as any other issues that would need to be
followed up with George and Rebecca. (100 words)
The following information is missing:

   Home address does not include state and post code
   There is no contact phone number
   Dates of birth of their children are not given, no school details
   Home and content insurance coverage
   Superannuation details, date of joining fund
   Life insurance policy number for both George and Rebecca
   Insurance premiums
   Private health insurance: coverage, premium
Fact finder
Personal and employment details

Personal details

                                 Client 1                                               Client 2
Title                            Mr                                                     Ms
Surname                          Brown                                                  Brown
Given and preferred names        George                                                 Rebecca
Home address                     4 Pringle Ave, Kensington                              4 Pringle Ave, Kensington
Business address                 N/A                                                    N/A
Contact phone                    07-3639 3838                                           07-3639 3838
Date of birth                    28 March 1970                                          17 August 1971
Age                              42                                                     41
Sex                                      Male                   Female                          Male                 Female
Smoker                                   Yes                    No                              Yes                  No
Expected retirement age          60                                                     59
Dependants (children or other)
Name                                            Date of birth        Sex       School                           Occupation
Sienna                                          30/April/2001        Female    Kensington Primary               Student
Ruby                                            01/May/2004          Female    Kensington Primary               Student


Employment details

                                 Client 1                                            Client 2
Occupation                       Senior Engineer                                     Paralegal
Employment status                      Self employed             Employee                     Self employed               Employee
                                       Not employed              Pensioner                    Not employed                Pensioner
                                       Permanent                 Part time                    Permanent                   Part time
                                       Casual                    Contractor                   Casual                      Contractor
                                       Other                     Government                   Other                       Government
Business status                        Sole proprietor           Partnership                  Sole proprietor             Partnership
                                       Private company           Trust                        Private company             Trust
Notes




Any other person to be contacted? e.g. accountant, bank, solicitor, etc.
Solicitor: Carlie Mattieson / 10 years poor relationship with George & Rebecca / Conveyancing for home purchase
Accountant: John Watson / 7 years excellent relationship with George & Rebecca / Annual tax return
Income, expenditure and net worth

Income and expenses

                                              Client 1   Client 2   Notes

Income from employment

Salary                                        $120,879   $60,440

Salary sacrifice                              $10,879    $5,440     9 % SG

Salary after salary sacrifice                 $110,000   $55,000

Rental income

Unfranked dividends

Franked dividends                             $1750                 $27,000*6.48% = $1,750 (96.7%franked)

Franking (imputation) credits                 $725                  $1,750*(30/70)*96.7% = $725

                                                                    15000 @ 5% p.a. = $750
                                                                    5000 @ 3.5% p.a. = $175
Interest                                      $4,213     $463
                                                                    Total = $925, 50% share = $463 each
                                                                    75000 @ 5% p.a. = $3,750

Other income, e.g. taxable benefits

Capital gains <1yr

Capital gains >1yr

Tax-free component of capital gains

Assessable income                             $116,688   $55,463

Deductible expenses

Rental expenses, repairs etc.

Taxable income                                $116,688   $55,463

                                                                    George 17547 + 37%*(116688 – 80000) =
                                                                    $31,122
Tax on taxable income                         $31,122    $9,572
                                                                    Rebecca 3572 + 32.5%*(55463 – 37000) =
                                                                    $9,572

Non-refundable tax offsets (e.g. LITO/SATO)

                                                                    George 116,688*1.5% = $1,750
Medicare levy                                 $1,750     $832
                                                                    Rebecca 55,463*1.5% = $832

Medicare levy surcharge

Franking rebate                               -$725

Refundable rebates and offsets

Total tax                                     $32,147    $10,404

Income after tax                              $84,541    $45,059

Notes
Family cash flow

                                                              Client 1          Client 2       Combined

Income after tax (as calculated above)                   $84,541         $45,059                   $129,600

Investment expenses




Living expenses

Mortgage                                                 $14,350         $14,350                    $28,700

General living expenses                                  $22,500         $22,500                    $45,000

Accountant’s fees                                        $250            $250                         $500

Donations                                                $500            $500                        $1,000

Annual Holiday                                           $5,000          $5,000                     $10,000

Total expenses                                                                                      $85,200

Net cash flow                                                                                       $44,400


Assets and liabilities

Asset                     Owner          Value         Liabilities       Net value         Notes

Personal assets

Family Home               Joint tenant      $850,000        $300,000        $550,000

Home contents             Joint tenant       $50,000                         $50,000

Car                       Joint tenant       $18,000                         $18,000




Total                                       $918,000        $300,000        $618,000

Investment assets

Superannuation            George            $190,000                        $190,000

Superannuation            Rebecca            $85,000                         $85,000

Cash management           Joint              $15,000                         $15,000
account

Savings account           Joint              $5,000                          $5,000

Cash management           George             $75,000                         $75,000
account - inheritance

Shares                    George             $27,000                         $27,000




Net worth                                   $397,000                        $397,000
Liabilities

Loan                                 Current debt                 Percentage              Interest only          Repayment
                                                                  deductible

Home loan                                     $300,000                                            No               $2,392 p.m.




Total                                         $300,000



Goals and objectives

Details                                                             Comments

Save any surplus in the most tax effective vehicle for the long     Long term
term, long-term tax effective investment plan for retirement

George received $75,000 inheritance and would like advise           Discuss possible options for using the inheritance money
how to invest these fund, Rebecca would like to ensure they
do not lose any of their inheritance

George is willing to invest in riskier securities                   Discuss possible options

Send both children to private school to complete their              Estimate cost and discuss possible options
secondary education

Home renovation cost approximately $17,500                          Short term

Review superannuation asset allocation, Rebecca is also not         Discuss possible options
happy with her current industry fund

Plan for retirement for $60,000 p.a. when George reach 60           Superannuation and/or other investment options

Protect income against sickness or accident                         To be reviewed

Protect family and/or assets in the event of death                  To be reviewed

Protect against serious illness or trauma                           To be reviewed

Reduce/pay off mortgage                                             To be discussed



Other
Annual holiday $10,000
Donation $1,000


Estate planning

Do you have a Will?                                               Yes                                     No

When was it last updated: when Ruby was born

Executor’s name and contact details:

Do you have Powers of Attorney?                                   Yes                                     No

Attorney’s name and contact details:

Do you have a funeral plan?                                       Yes                                     No

Funeral provider and contact details:

Amount paid
Do you have superannuation beneficiaries in                    Yes                                        No
place?

Type                                                           Binding                                    Non-binding

Beneficiary names and contact details:




Current superannuation, rollovers, insurances and investments

Superannuation details

 Personal super        Policy type     Company        Policy         Current value   Death benefit        Disability          Annual
    member                                           number                                                benefit           premium




Employer super                         George                                        Rebecca

Fund name                              ABC Superannuation                            SOH Industry Superannuation

Date of joining fund

Type of fund                               Accumulation              Defined                Accumulation                Defined
                                                                     benefit                                            benefit

                                           Pension                   Pensioner              Pension                     Pensioner

Contribution (e.g. 5% of salary)           By employer               By yourself            By employer                 By yourself

Current value of your super fund       $190,000                                      $85,000

Amount of death and disability
                                       $360,000                                      $50,000
cover

Is there provision for you to top up       Yes                       No                     Yes                         No
or salary sacrifice?

Non-concessional contributions         Amount                                        Year

                                       Amount                                        Year

                                       Amount                                        Year

                                       Amount                                        Year

Spouse contributions received          Amount                                        Year

                                       Amount                                        Year

                                       Amount                                        Year

                                       Amount                                        Year

Concessional contributions             Amount                                        Year

                                       Amount                                        Year

                                       Amount                                        Year

                                       Amount                                        Year
Any other contributions                 Amount                                    Year

                                        Amount                                    Year

                                        Amount                                    Year

                                        Amount                                    Year


Life insurance details

Life insured        R’ship to      Policy type    Company            Policy        Death        Other benefit      Annual
                     client                                         number         benefit                        premium

George            Self            Life/TPD       ABC Super      ABC 2468X       $360,000        Within super    None

Rebecca           Self            Life/TPD       SOH Industry   SOH 1357Y       $50,000         Within super    None
                                                 Super




General insurance details

Item covered         Owner         Policy type    Company            Policy         Cover       Other benefit      Annual
                                                                    number         amount                         premium

Principal         Joint           Indemnity      Safer Home     SHP4545A        $850,000        n. a.           $800
residence                                        Insurance

Content           Joint           Indemnity      Safer Home     SHP4545B        $50,000         n. a.           $400
                                                 Insurance




Investment details

   Investment type               Company            Purchase date       Units held/fixed rate   Current value      Owner

Cash management              The bank             n. a.                                         $15,000         Joint
account

Savings account              The bank             n. a.                                         $5,000          Joint

Cash management              The bank             n. a.                                         $75,000         George
account – inheritance

Share portfolio              Various              n. a                                          $27,000         George
Risk needs

Insurance needs — life and TPD

                                                                                    Client 1                      Client 2

Gross annual income (before tax)                                          $116,600                      $55,400

Less business expenses                                                    n. a.                         n. a.

Number of years income required                                           17                            17

Property repayment                                                        $300,000                      $300,000

Other debts

Sub-total = (income × years) + debts                                      $2,282,200                    $1,241,800

Less existing realisable assets (Insurance/savings/super)                 $672,000                      $257,000

Insured benefit shortfall (before tax)                                    $1,610,200                    $984,800

Gross income is the total of earned income, i.e. before tax earnings derived from personal exertion, including salary, fees,
commission, bonuses, fringe benefits or similar payments that would cease on disablement.

Business expenses are expenses incurred by you in the process of earning income from your profession, business or
partnership.

Insurance needs — income protection/trauma

Income protection                                                                   Client 1                      Client 2

Gross annual income                                                       $116,600                      $55,400

Employer superannuation contributions

Other employer fringe benefits                                            n. a.                         n. a.

Maximum allowable benefit (75% of annual income)                          $87,450                       $41,550

Monthly income                                                            $7,288                        $3,463

Less existing insurance

Monthly benefit required (pre-tax)                                        $7,288                        $3,463

Waiting period to be served                                               60 days                       60 days

Trauma

Medical costs (to cover out-of-pocket health costs)                       $100,000                      $100,000

Additional expenses of a permanent nature, wheelchairs, home              $100,000                      $100,000
alterations, etc.

Additional income: income protection only covers 75%, would you
need extra?

Total funds required                                                      $200,000                      $200,000

Less cash available or assets that can be readily cashed                  $122,000                      $122,000

Shortfall/surplus                                                         $78,000                       $78,000
Acknowledgment

The information provided in this financial fact finder is complete and accurate to the best of my knowledge.

I understand that a policy purchased without the completion of a fact finder, or following partial or inaccurate completion, may
not be appropriate to my needs. I also understand that a policy purchased that differs from that recommended by the planner
may not be appropriate to my needs. I acknowledge that the planner has provided me with the completed financial fact finder,
signed by me.


                                          George, BROWN
Customer(s) signature(s)
                                          Rebecca, BROWN


Planner’s name                            Wei, CHEN



Planner’s signature                                                                              Date




Part C
Now that you have determined the Brown’s needs and objectives, you need to identify their likely
risk profile based on the information they have provided. George and Rebecca completed the risk
profile below prior to your meeting with them.
Identify any concerns that you may have with their responses compared with the information in the
Case study and suggest questions you could use to clarify the responses. Justify why you do or do
not think that the score and the resulting risk profile category is an accurate reflection of their
tolerance to risk. (250 words)

Investment attitude details

Please answer the following questions regarding your attitude to financial issues.

Are you concerned about the amount of tax that you are paying?                                    Yes/No
Why?            Would like to pay less if possible

How important is liquidity (i.e. funds available) to you?                                         Very/Moderately/Not
Why?            Investing for the long term and have enough cash

If you had funds available for investing, how would you choose to invest them? Why?
Not sure

Are there certain sorts of investment that you wish to avoid?                                     Yes/No
Which ones?          Don’t want anything exotic or too risky
RISK PROFILE


Determining your investor risk profile                                                                           Points

This investor risk profile questionnaire has been designed to help you understand the type of investor you are, so that with the
help of your adviser, you can choose the investments that best match your financial objectives.

Which of the following best describes your current stage of life?                                       George         Rebecca

Single with few financial commitments. You are keen to accumulate wealth for the future.
Some funds must be kept available for enjoyment, such as cars, clothes, travel and                         50             50
entertainment.

A couple without children. You may be preparing for the future by establishing and furnishing a
home. There are a lot of things you need to buy. You are probably better off financially now than          40             40
you may be in the future.

Young family. This is the peak home purchasing stage. You have a mortgage and a very small
amount of savings. Probably dissatisfied with your financial position and the amount of money              35             35
saved.

Mature family. You are in your peak earning years and have got the mortgage under control.
Many partners also work and any children are growing up and have either left home or require               30             30
less supervision. You are starting to think about retirement, although it may be many years away.

Preparing for retirement. You probably own your own home and have few financial
commitments; however, you want to ensure that you can afford a comfortable retirement.                     20             20
Interested in travel, recreation and self-education.

Retired. No longer working you must rely on existing funds and investments to maintain your
                                                                                                           10             10
lifestyle. You may be receiving the pension and are keen to enjoy life and maintain your health.

What return do you reasonably expect to achieve from your investments?                                  George         Rebecca

A return without losing any capital.                                                                       10             10

3–7% p.a.                                                                                                  20             20

8–12% p.a.                                                                                                 30             30

13–15% p.a.                                                                                                40             40

Over 15% p.a.                                                                                              50             50

If you did not need your capital for more than 10 years, for how long would you be
prepared to see your investment performing below your expectations before you cashed                 George          Rebecca
it in?

You would cash it in if there were any loss in value                                                       10             10

Less than 1 year                                                                                           20             20

Up to 3 years                                                                                              30             30

Up to 5 years                                                                                              40             40

Up to 7 years                                                                                              45             45

Up to 10 years                                                                                             50             50
How familiar are you with investment markets?                                                     George   Rebecca

Very little understanding or interest                                                               10       10

Not very familiar                                                                                   20       20

Have had enough experience to understand the importance of diversification                          30       30

Understand that markets may fluctuate and that different market sectors offer different income,
                                                                                                    40       40
growth and taxation characteristics

Experienced with all investment sectors and understand the various factors that may influence
                                                                                                    50       50
performance

If you can only get greater tax efficiency from more volatile investments, which balance
                                                                                                  George   Rebecca
would you be most comfortable with?

Preferably guaranteed returns, before tax savings                                                   10       10

Stable, reliable returns, minimal tax savings                                                       20       20

Some variability in returns, some tax savings                                                       30       30

Moderate variability in returns, reasonable tax savings                                             40       40

Unstable, but potentially higher returns, maximising tax savings                                    50       50

Six months after placing your investment you discover that your portfolio has decreased
                                                                                                  George   Rebecca
in value by 20%, what would be your reaction?

Horror. Security of capital is critical and you did not intend to take risks                        10       10

You would cut your losses and transfer your money into more secure investment sectors               20       20

You would be concerned, but would wait to see if the investments improve                            30       30

This was a calculated risk and you would leave the investments in place, expecting performance
                                                                                                    40       40
to improve

You would invest more funds to lower your average investment price, expecting future growth         50       50

Which of the following best describes your purpose for investing?                                 George   Rebecca

You want to invest for longer than five years, probably to the age of 55–60. You are mainly
                                                                                                    50       50
investing for growth to accumulate long-term wealth

You are not nearing retirement, have surplus funds to invest and you are aiming to accumulate
                                                                                                    40       40
long-term wealth from a balanced fund

You have a lump sum, e.g. an inheritance or an eligible termination payment from your employer,
                                                                                                    30       30
and you are uncertain about what secure investment alternatives are available

You are nearing retirement and you are investing to ensure that you have sufficient funds
                                                                                                    20       20
available to enjoy retirement

You have some specific objectives within the next five years for which you want to save enough
                                                                                                    20       20
money

You want a regular income and/or totally protect the value of your savings                          10       10

Investor profile total points                                                                      220       140
Investor risk profile summary


0–50       Defensive

You are a conservative investor. Risk must be very low and you are prepared to accept lower returns to protect capital. The
negative effects of tax and inflation will not concern you, provided that your initial investment is protected

51–130     Moderate

You are a cautious investor seeking better than basic returns, but risk must be low. Typically an older investor seeking to protect
the wealth that you have accumulated, you may be prepared to consider less aggressive growth investments

131–210    Balanced

You are a prudent investor who wants a balanced portfolio to work towards medium to long-term financial goals. You require an
investment strategy that will cope with the effects of tax and inflation. Calculated risks will be acceptable to you to achieve good
returns


211–300    Growth

You are an assertive investor, probably earning sufficient income to invest most funds for capital growth. Prepared to accept
higher volatility and moderate risks, your main concern is to accumulate assets over the medium to long term. You require a
balanced portfolio, but more aggressive investment strategies may be included

301–350    High growth

You are an aggressive investor prepared to compromise portfolio balance to pursue potentially greater long-term returns. Your
investment choices are diverse, but carry with them a higher level of risk. Security of capital is secondary to the potential for
wealth accumulation


Based on the risk profile results, George and Rebecca may seem to be a ‘Growth’ investor and a
‘Balanced’ investor respectively. Both George and Rebecca got stable jobs. George is the
household main earner as he contributes almost 2/3 of the overall family income. Two of the
couple’s investment top priorities are ‘Legal logical and appropriate tax relief’ and ‘Capital growth’,
whereas ‘Easy access to capital’ and ‘Regular income’ are their least concerns. It shows the
couple is willing to take some risks to increase their return. Rebecca is also worry about the
‘Volatility’ and ‘Administration’, she seems to be more conservative than George.
Before George received the inheritance from his uncle, the couple actually did not have much
savings ($15000 cash management account plus $5000 savings). The couple have approximately
$44,000 annual cash surplus, but most of their investment assets are allocated in cash. These
factors may indicate either they are more conservative than what they declared in the risk profile
questionnaire or they have limited investment knowledge and experience, or even both.
Questions that can be asked to confirm their risk tolerance as follows:
         Have you invested in shares or other types of investment before (other than received share
          from inheritance)? How long have you been investing?
         How do you usually feel about your major financial decision after you make them?
         Investment can go up or down, by how much could the total value of all your investment go
          down before you would begin to feel uncomfortable? (e.g. 10%, 20%, etc.)
         Both of you indicated to expect 8-12% of return from your investment, do you understand
          the possible risk involved to have such return?
Assume their responses confirm that George is ‘Growth’ investor and Rebecca is ‘Balanced’
investor. Meanwhile, considering George and Rebecca’s current situation, it would be better to rate
their overall risk profile as ‘Balanced’ for any investment under joint name.
Part D
Given the information you now have on the Browns’ current situation and their tolerance of risk,
what are the critical issues you need to consider to appropriately advise them? What sorts of
investments would they each be comfortable with? (400 words)
Debt: The mortgage interest rate of 6.5% is higher than the return from rest of their investment
assets. It will probably take the couple 17.5 years to fully repay this loan (assuming monthly
repayment of $2,392). It would be beneficial if they could reduce the mortgage.
Risk protection: The couple seem under insurance. George and Rebecca need to increase their
Life and TPD insurance cover. They do not have income protection or trauma insurance either.
Savings: There are excessive funds ($95,000) in the saving account with an annual return of about
5% ($4675/$95000 gives 4.92%).
Investment: Majority of their investments are cash. George also has $27000 shares. They need
some fund to support their children’s secondary education. Tuitions for private school can be costly
in the near future; they should be well prepared before it happens. Assume their children will go to
secondary school for 6 years (from year 7 to year 12) when each of them turns 13. The estimated
additional cost for each child is approximately $12,000 per annum. The funding requirement for
education can be illustrated as follows:
            Year      2014      2015      2016     2017      2018     2019      2020 2021 2022
            Age       13        14        15       16        17       18
  Sienna
            Fund      12k       12k       12k      12k       12k      12k
            Age       10        11        12       13        14       15        16        17    18
  Ruby
            Fund                                   12k       12k      12k       12k       12k   12k


Retirement funding: George’s superannuation risk option does not quite match his risk profiles.
Rebecca’s superannuation seems not performing well enough. Certain analysis and adjustments
can be made to help them reach their retirement goals.
Social security & Taxation: The Brown family is entitled to receive family tax benefit.
Estate planning: The couple wrote their Will when Ruby was born, the Will has not been reviewed
since then. They have no Powers of Attorney or guardianship for their children.
As a ‘Growth’ investor, George has sufficient income to invest for capital growth. He is prepared to
accept higher volatility in the short to medium term to accumulate growth asset over the long term.
George’s investment portfolio can spread across all asset sectors but will include more growth
assets. E.g. 30% in defensive assets (cash, fixed interest) and 70% in growth assets (Australia
equity, international equity, property)
As a ‘Balanced’ investor, Rebecca is more willing to have medium to long-term goals while
accepting the risk of short to medium-term negative return. Rebecca’s portfolio is likely to have an
equal mix of assets. E.g. 40% in defensive assets (cash, fixed interest) and 60% in growth assets
(Australia equity, international equity, property)
Part E
Prepare appropriate insurance and superannuation strategies for George and Rebecca, and
provide a detailed explanation as to why you consider them to be appropriate. Include the lump
sum amount that they will need in retirement and strategies to help them reach that goal. Include
recommendations on the amounts and types of insurance cover you will recommend. Provide a
summary of other recommendations that you will include in your SOA for George and Rebecca.
(500 words)
Insurance:
George contributes about 2/3 of the total income to the family. It would be a disaster to Rebecca
and their kids if George die prematurely or unable to work. Hence need to increase George’s Life
and TPD insurance cover to an appropriate level (current shortfall $1.6 million). Assume I also
found out Rebecca actually performs lot more home duties than George. George may need to pay
extra house keepings to cover Rebecca’s death. Rebecca should also increase her Life and TPD
insurance cover (current shortfall $1 million). Having appropriate life and TPD insurance will help to
pay off debts and maintain their family’s standard of living if either George or Rebecca could no
longer provide for them.
Income protection insurance Suggest both George and Rebecca undertakes income protection
insurance that can cover 75% of their salary.
They should also have reasonable trauma insurance just in case they cannot afford medical costs
if bad things happen. The main purpose of having trauma insurance is to have a lump sum to cover
the medical cost for certain medical conditions. The estimated trauma insurance cover is $100,000
each.
Superannuation:
It is estimated that the couple will have a combined superannuation fund of $1.1 million when
George turns 60.
                      Oct - 2012    Oct - 2013    Oct - 2014     ……      Oct - 2028   Oct - 2029   Mar - 2030

George        Age     42            43            44            ……       58           59           60

A/C Balance           $190,000      $211,224      $233,758      ……       $742,471     $797,771     $821,807

Rebecca       Age     41            42            43            ……       57           58           58

A/C Balance           $85,000       $94,079       $103,624      ……       $301,843     $322,017     $330,725

George        Net return            6% p.a.       Monthly contribution   $770.60
                                                                                           Total   $1,152,532
Rebecca       Net return            5% p.a.       Monthly contribution   $385.30


Assume the couple switch to more conservative option when George turns 60. The combined fund
will provide a net return of 3% per annum. It could provide an annual income of $60,000 ($5000
per month) for them and would be run out before George turn 88. The estimation is shown below

                    Mar 2030     Mar 2031      Mar 2032        ……        Mar 2057     Mar 2058     Apr 2059

George                60            61            62           ……             87           88           89

A/C Balance      $1,152,532      $1,126,756    $1,100,196      ……        $96,896      $39,012      -$20,634
It seems that they have already on the right track towards their retirement goal. However, George’s
current superannuation option does not quite match his risk preference. If George switches to a
‘Growth’ option rather than ‘Balanced’, he may be able to generate more funds in the long run.
Assume the ‘Growth’ option gives a net annual return of 7%; George’s fund will achieve $954,158
when he turns 60.
Since salary sacrifice contributions are taxed at a rate of 15%, it is another option that both George
and Rebecca can undertake to effectively build their wealth. The salary sacrifice will reduce the
taxable income and consequently pay less tax.
***note: more accurate estimation is given in the SOA.

Part F
Provide a summary of the research that you have conducted to support one insurance product
recommendation you will make for Rebecca or George. (250 words)

Life and TPD insurance can help to mitigate the financial impact that arose as a result of the death
or terminal illness of the life insured. It can supply a lump sum to pay off debts and maintain the
family’s standard of living if you can no longer provide them.

If something bad happen to Rebecca (e.g. worst case: death), the family will lose about $45,000
net income and may even increase further expenses (e.g. George need to pay for extra house
keepings). The financial burden on George’s shoulders will be dramatically increased. Considering
the mortgage and future financial needs for their children’s education, their family will certainly
have difficult times if without proper insurance.

I would recommend Rebecca to have life and total and permanent disability insurance within her
superannuation to $1,000,000. This amount should be able to cover the shortfall of $984,800 as
identified in the factor-finder.

Assume Rebecca will continue work for another 17 years (until George reach 60). Her overall life &
TPD insurance need is calculated by adding 17 years of her total income with current debt, which
is $1,241,800. Then subtract this figure by her current realisable assets of $257,000 (See table
below) to determine Rebecca’s insurance shortfall.

         Realisable Assets       Owner      Amount
  Death Benefit                 Rebecca      $50,000
  Superannuation                Rebecca      $85,000
  Cash management account         Joint      $15,000
  Saving Account                  Joint       $5.000
  Cash management account        George      $75,000
  Shares                         George      $27,000
                  Total Realisable Assets   $257,000


Assume I did my research and find out Rebecca’s superannuation fund has the option of $1 million
coverage for life and TPD insurance. Having life & TPD insurance through superannuation can
also be cost effective option as the premium are deducted from super contribution, which means
paying for the cover before tax.
Part G
You must now prepare a Statement of Advice (SOA) based on the recommendations made, which
will be used to record this advice (including amendments, if any) for George and Rebecca.
Remember that the Statement of Advice must be of a standard that is compliant and would be
suitable to present to a client.

Important instructions
   What to submit: you have been provided with a Statement of Advice Preparation Checklist
    and cash flow templates to use for the project SOA. Please include these with your
    submission.
   Template SOAs and SOA preparation software: it is preferable that you do not use the
    sample SOA published by ASIC as a basis for your submission. The use of financial planning
    software and dealer templates to prepare your Statement of Advice is also not permitted.
    Submissions that exhibit excessive reliance on SOA templates may be considered a case of
    plagiarism or collaboration, and may not be considered to be a reasonable attempt at the
    project.
   Assumptions: you must list the assumptions used in your SOA in your project submission.
    These will generally include:
    –    any assumptions you have made regarding missing background information on the clients
    –    any assumptions you have used to calculate future income from your recommended
         investments, and
    –    any assumptions used for fees relating to the products you have recommended.
   Strategy advice: you must provide strategy recommendations in the following areas based on
    the information given:
    –    personal investment or debt reduction
    –    personal insurance
    –    superannuation
    –    estate planning.
    Use the information on each of these areas given in the subject notes to provide reasons for
    each of the strategies recommended.
   Product advice: product recommendations for any personal investment or estate planning
    recommendations are not required. However, you should recommend an appropriate
    superannuation and/or life insurance product to implement the advice you have provided. You
    are required to source, or develop, your own fund details. It is not necessary to include
    Product Disclosure Statements in your project for any products you may recommend in your
    SOA. Including insurance quotes in the SOA is not required. For insurance recommendations
    you may estimate the premiums based on the clients ages, health and occupations but they do
    not have to be prepared from actual quotes.
   Cash flow projections: you must include detailed cash flow tables using Appendix 1 and
    Appendix 2 as a template showing Rebecca and George’s situation before and after your
    recommendations. These should be included as Appendices 1 and 2 to your SOA. Do not
    forget to include any insurance premiums in the analysis.
      Recommendations: You should include superannuation projections up to the retirement age
       of your clients before and after your recommendations as Appendix C to your Statement of
       Advice. In addition please show that your strategy will enable your clients to meet their
       retirement income goal until George is at least 84 (Rebecca is 83, her life expectancy).

Statement of Advice Preparation Checklist (student to complete)
SOA section                 Action                                                                         Completed?

i.     Cover sheet          The following elements should appear on the cover sheet:
                             the words ‘Statement of Advice’
                             the client’s name
                             the authorised representative’s name, AR number and contact details
                              (if different to the licensee)
                             a statement that the authorised representative is an authorised
                              representative of the licensee
                             the licensee’s name, ABN number, AFSL number, address and contact
                              details
                             the date of issue of the SOA
                             a warning about the importance of the document

ii.    Table of contents    Check that the pages in the table of contents agree with the page numbers in
                            the completed SOA.

iii.   Executive summary    Headings should include:
                             summary of our recommendations
                             summary of expected outcomes if you implement our advice
                             risks in our advice
                             summary of our fees and commissions
                             your next steps

iv.    Present position —   Headings should include:
       information about     important information about you
       the client            your reasons for seeking advice
                             what you would like to achieve
                             your personal and financial information
                             personal information
                             your existing insurance
                             your existing estate planning
                             financial information
                             current income and expense details

v.     Risk profile         Heading:
                             your risk profile

vi.    Strategy             Headings should include:
       recommendations       recommended action:
       (analysis of the       – personal investment
       investment
                              – personal insurance
       strategies)
                              – superannuation
                              – estate planning
                             reasons for recommendations:
                              – personal investment
                              – personal insurance
                              – superannuation
                              – estate planning
                             things you should consider (risks)
SOA section                   Action                                                                           Completed?

vii.   Product selection      You are only required to provide a super and or insurance product
                              recommendation — do not provide product recommendations for personal
                              investments or estate planning.
                              Headings should include:
                               product recommendations
                               cooling off period advice

viii. Recommended             Headings should include:
      asset allocation         recommended asset allocation
                               comments on proposed asset allocation versus your risk profile

ix.    Disclosure of fees,    Headings should include:
       commission and/or       how are we paid
       benefits                commission and fees — upfront, ongoing commissions and financial planning
                                advice fees
                               product management and/or operational fees
                               other benefits

x.     Ongoing service        Headings should include:
       and review              ongoing services
                               implementation

xi.    Authority to proceed   Headings should include:
                               authority to proceed
                               consent to ongoing contact

xii.   SOA Appendix 1         Use the family cash flow template below.
                              Heading:
                               financial position before implementation of strategy

xiii. SOA Appendix 2          Use the family cash flow template below.
                              Heading:
                               financial position after implementation of strategy

xiv. SOA Appendix 3           Include detailed projections of the clients super account balances before and
                              after your recommendations up to their retirement age. Also show how the
                              resultant balance can be drawn down until Rebecca reaches age 83 (her
                              current life expectancy).
                              You should include all assumptions for calculations and rates of return should
                              be in today’s dollars (i.e. net of inflation)
Statement of advice
[Complete your SOA in this section of the template]

Assumption List for SOA

   Assume I have got the missing information from George and Rebecca such as their
    superannuation details, insurance detail, etc.;
   Assume I met George and Rebecca in Oct 2012;
   All the superannuation, insurance and investment products in the SOA are fictional,
    including fees, premium, return, cooling off period, etc.;
   Assume all Product Disclosure Statement for investment and insurance products are
    given to George and Rebecca;
   All the commission, fees and benefits information are fictional;
   Assume their home is insured for $850,000 and the contents for $50,000;
19 October 2012


Mr George and Mrs Rebecca Brown
10 Carlisle St., Martins Hill
QLD 4789



Dear George and Rebecca,

Thank you for the opportunity to meet and discuss how we can help your achieve your
financial goals and objectives.

Based on the information contained in your completed fact finder and our conversation at
our meeting on 12 October 2012, I believe that I have a reasonably clear understanding of
your current situation, your goals and objectives, and you attitude to investment risk,
security, and volatility. We are pleased to provide our recommendations in the detailed
Statement of Advice that follows.

This Statement of Advice has been prepared exclusively for you and is based on the
information you have provided. Please take the time to carefully read and understand it, to
ensure that it is consistent with your views and reflects the information we discussed. If
there are any omissions or any details are incorrect, please bring them to our attention. In
addition, if your circumstances have changed, or if this plan is not implemented in the next
30 days, we may need to revise the recommendation to ensure that they are still
appropriate.

Once implemented, the recommendations in this Statement of Advice should be reviewed
on a regular basis to ensure that they continue to meet your ongoing needs. Changes in
legislation, financial markets and your personal situation will occur over time, and as your
financial adviser we can work with you to update your financial plan so that you stay on
track to achieve your goals and objectives.

If you accept our recommendation and are comfortable to proceed with implementation,
please sign the attached Authority to Proceed and return it to us.

We look forward to helping you implement the enclosed recommendations, and in the
meantime we remain available to assist you with any queries you may have in relation to
this Statement of Advice.


Yours sincerely,




Mr. Wei, Chen
Authorised Representative of
Markson and Co
Adviser Authorised Rep No. 72315
                   Statement of Advice
                                                             Prepared for

                      Mr. George & Mrs. Rebecca Brown
                                                             Prepared by

                                                         Wei Chen
                                          999 Cambridge Parade, Wynnum, 4179
                                                     07 9876 5555
                                        Authorised Representative (No. 72315) of

                                               Markson and Co
                                                  ABN: 12 345 054 321
                                    Australian Financial Services Licence no. 54321
                                            5678 Ann Street, Brisbane, 4000
                                                          19 October 2012




You are entitled to receive a Statement of Advice (‘SOA’) whenever we provide you with any personal financial advice. Personal
financial advice is advice that takes into account that any one or more of your objectives, financial situation and needs.

This SOA is a record of the personal financial advice provided to you and includes information on the basis which this advice is given,
information about fees and commissions and any interests or associations which might influence the advice.

If this advice includes a recommendation to you to acquire a particular financial product (other than securities or an offer to issue or
arrange the issue of a financial product to you, we will also provide you with a Product Disclosure Statement containing highly detailed
supportive information about the particular product to help you make well informed decisions about the product.

Be aware that the advice contained in the following SOA is valid for a period of 30 days only. If the plan is not implemented within this
time, it will no longer be current and will need to be reviewed for accuracy
Statement of Advice

Content

   EXECUTIVE SUMMARY ......................................................................................................................................................... 3
      Summary of our recommendations ............................................................................................................................ 3
      Summary of expected outcomes if you implement our advice .................................................................................. 4
      Risks in our advice ...................................................................................................................................................... 4
      Summary of our fees and commissions ...................................................................................................................... 4
      Your next steps ........................................................................................................................................................... 4
   IMPORTANT INFORMATION ABOUT YOU ................................................................................................................................... 5
      Your reasons for seeking advice ................................................................................................................................. 5
      What you would like to achieve ................................................................................................................................. 5
   YOUR PERSONAL AND FINANCIAL INFORMATION ........................................................................................................................ 6
      Personal information.................................................................................................................................................. 6
      Your existing insurance .............................................................................................................................................. 6
      Your existing estate planning ..................................................................................................................................... 6
   FINANCIAL INFORMATION...................................................................................................................................................... 7
      Current income and expense details .......................................................................................................................... 7
   YOUR RISK PROFILE .............................................................................................................................................................. 8
   STRATEGY RECOMMENDATIONS............................................................................................................................................ 10
      Recommended action .............................................................................................................................................. 10
      Reasons for recommendations ................................................................................................................................. 11
      Things you should consider ...................................................................................................................................... 13
   PRODUCT RECOMMENDATIONS ............................................................................................................................................ 14
      Cooling off period ..................................................................................................................................................... 14
   RECOMMENDED ASSET ALLOCATION ...................................................................................................................................... 15
      Comment on proposed asset allocation versus your risk profile .............................................................................. 15
   DISCLOSURE OF FEES, COMMISSIONS AND/OR BENEFITS ............................................................................................................ 18
      How are we paid? .................................................................................................................................................... 18
   ONGOING SERVICE ............................................................................................................................................................. 20
   IMPLEMENTATION ............................................................................................................................................................. 21
   AUTHORITY TO PROCEED ..................................................................................................................................................... 22
      Consent to ongoing contact ..................................................................................................................................... 23
SOA APPENDIX 1 – FINANCIAL POSITION BEFORE IMPLEMENTATION OF STRATEGY .................................................24
SOA APPENDIX 2 – FINANCIAL POSITION AFTER IMPLEMENTATION OF STRATEGY (2012/2013 FINANCIAL YEAR) ....26
SOA APPENDIX 3 – SUPERANNUATION PROJECTIONS ...............................................................................................28
SOA APPENDIX 4 – MANAGED INVESTMENT PROJECTIONS .......................................................................................30
SOA APPENDIX 5 – MORTGAGE PROJECTIONS ...........................................................................................................31
SOA APPENDIX 6 – IMPLEMENTATION SCHEDULE .....................................................................................................32
Executive Summary

Summary of our recommendations

For the short term – up to one year

I recommend that George

   take out life and total and permanent disability insurance outside of his superannuation
    to $1,500,000
   take out income protection insurance within his superannuation to the maximum
    allowable limit of 75% of his current salary
   take out trauma of $100,000 insurance outside of superannuation
   move his superannuation from a balanced to a growth portfolio within his current
    superannuation fund
   make salary sacrifice contribution of $1,200 ( about 10% of his salary) per month to his
    superannuation
   reinvest the dividend proceeds back to the current share portfolio

I recommend that Rebecca:

   increase her life and total and permanent disability insurance within her
    superannuation to $1,000,000
   take out income protection insurance within her superannuation to the maximum
    allowable limit of 75% of her current salary
   take out trauma of $100,000 insurance outside of superannuation
   make salary sacrifice contribution of $600 (about 10% of her salary) per month to her
    superannuation

I recommend that:

   you double your mortgage repayments on your home to $4,784 per month
   use $17,500 from the inheritance to renovate your house.
   keep $15,000 in bank account as emergency fund
   review your existing home and contents insurance and ensure it is sufficient

For the long term – more than five years

   Invest $62,500 in a moderately conservative managed fund with a monthly contribution
    of $600, and then be accessed when your children start their secondary studies




                                                                                          3
Summary of expected outcomes if you implement our advice

Should you decide to follow through with the recommendations of this report, we estimate
that:

   You will have appropriate insurance and health cover in the unlikely event that either
    of you should die or become sick or injured
   Establish appropriate levels of general insurance
   you will have enough fund for emergency purpose
   Repayment of inefficient debt
   Improved growth performance for both of your superannuation funds which ultimately
    will result in match your retirement need
   your children’s education funds should grow over time and meet the financial needs to
    pay for their studies
   The managed investment fund and your share portfolio should grow over time
   your updated Wills can protect your family in the case of unlikely events

Risks in our advice

As has been discussed, all investment options do carry some risk. You should be aware
that the value of your managed investments may not increase as quickly as you expect, or
the value may not change or go down.

Summary of our fees and commissions

The fees for our service and the preparation of making this Statement of Advice total
$2,400 (including GST). Markson and Co is entitled to receive $1,600 and I will receive the
balance.
Neither Markson and Co nor I will receive initial or ongoing commission costs for our
investment recommendations. Where necessary, the costs will be rebated to you.
However, if you follow our insurance advice, Markson and Co may be entitled to receive
initial and ongoing commission. You may be charged fees for purchasing and investing in
some products we recommend.
Further details on the fees, commissions and benefits relevant to our advice can be found
in the Disclosure of commissions, fees and benefits section.

Your next steps

In order to decide whether to take our advice you should:

   Read the Statement of Advice fully to understand our advice.
   Feel free to ask us any questions you have as a result of reading the Statement of
    Advice.
To follow our advice, please simply complete the ‘Authority to Proceed’ at the end of this
Statement of Advice and return it to us.

                                                                                             4
Important information about you

This section contains information about you that we used in preparing our advice, such as:

   Why you are seeking advice
   What you would like to achieve
   Your personal and financial information

As you read through this section, please inform us if you think any of this information is
incorrect or incomplete because it may affect our advice.

Your reasons for seeking advice

George and Rebecca – we agreed that we would provide advice on:

   Risk management and Insurance
   Investments
   Superannuation
   Estate Planning

What you would like to achieve

Following our discussion, we understood your main objectives and needs as follows:

   You would like to ensure you have protection in the unlikely event that something
    should happen to either of you
   You would like to have a long-term tax effective investment that could give sufficient
    funds for your future needs and for your children to complete secondary education
   You would like to do some renovation to your home
   You would like to have your annual family holiday
   You expect to retire at 60 (George) with $60,000 per annum
   You want to ensure that your estate planning is adequate

Because the information you have provided to us and our understanding of your financial
circumstances, need and objectives is limited, you should consider if our advice is
appropriate before acting on it.




                                                                                         5
Your personal and financial information

List below is a summary of your relevant personal and financial details that you have
provided.

Personal information

Personal details
Surname                George                             Rebecca
Given names            Brown                              Brown
Date of birth          28 March 1970                      17 August 1971
Age                    42                                 41
Marital status         Married                            Married
Health status          Excellent                          Excellent
Smoker status          No                                 No
Employment status      Full-time                          Part-time
Employer name          Knight & Co.                       Renier and Jackson
Occupation             Senior engineer                    Paralegal
Annual salary          $120,879                           $60,440


Children and dependant details
Name                   Date of birth      Sex        School             Occupation
Sienna                 30 April 2001      Female     Kensington Primary Student
Ruby                   01 May 2004        Female     Kensington Primary Student



Your existing insurance

George: you currently have $360,000(three times salary), life and TPD cover under your
superannuation fund. Rebecca: you have $50,000 life and TPD cover also under your
superannuation. Your home is insured for $850,000 and the contents for $50,000. You
both have private health insurance.

Your existing estate planning

You have advised that both of you have not reviewed your Wills since 2004. Neither of you
has a Power of Attorney (POA) in place.




                                                                                         6
Financial information

Current income and expense details

Income and expenses
                                           George             Rebecca             Total
Assessable income                          $116,688            $55,462             $172,150
Income after tax                           $84,541             $45,059             $129,600
Annual expenses                            $42,600             $42,600              $85,200
Estimated surplus/deficit                                                           $44,400

George and Rebecca – based on the above income and expenditure schedule you have a
surplus of $44,400 income available. Please see ‘Cash Flow Statement’ in SOA Appendix
1 for details.

Assets and liability
                                            Value             Liability         Net value
Total personal assets                      $918,000           $300,000             $618,000
Total investment assets                    $397,000           $397,000             $397,000
Net worth                                                                        $1,015,000

Please refer to ‘Assets and Liabilities’ table in SOA appendix 1 for details.

Incomplete and/or inaccurate information warning

Note that if, for any reason, the information on which our advice is based upon, is either
inaccurate or not complete, then it may be necessary to consider its appropriateness in
respect to your particular circumstances, needs and objectives.




                                                                                              7
Your risk profile

All investments have a certain element of risk. However, as a general rule, investment that
have high rates of return involve high levels of risk, and more conservative investments
bear lower returns.

From our discussions, and from the answers of your risk profile questionnaire, we believe
that Mr. Brown is a ‘Growth’ investor and Mrs. Brown is a ‘Balanced’ investor.



For Growth investors:

You are relatively assertive investors, probably earning sufficient income to invest most
funds for capital growth. You are prepared to accept higher volatility in the short to medium
term to accumulate growth asset over the long term. You investment will spread across all
asset sectors but will consist of more growth assets, which would be:

   About 30% in defensive assets, e.g. cash, fixed interest, and
   About 70% in growth assets, e.g. Australian equities, international equities, property

The target asset allocation for your risk profile is illustrated below.




                                                                                             8
For Balanced investors:

You are a cautious investor who is equally concerned with risk and return. You are willing
to chase medium to long-term goals while accepting the risk of short to medium-term
negative returns. Your investment mix is likely to include an equal mix of assets which
would be:

   About 40% in defensive assets, e.g. cash, fixed interest, and
   About 60% in growth assets, e.g. Australian equities, international equities, property

The target asset allocation for your risk profile is illustrated below.




                                                                                             9
Strategy recommendations

This section tells you:

    what our advice is and why it is appropriate for you
    reasons for our recommendations
    things you should consider and risks of our advice

Read this section and ask if you have any questions.

Recommended action

Personal Investment

I recommend that:

    you double your mortgage repayments on your home to $4,784 per month
    use $17,500 from the inheritance to renovate your house.
    keep $15,000 in bank account as emergency fund
    maintain your share portfolio and reinvest the dividend proceeds
    Invest $62,500 in a moderately conservative managed fund, and then be accessed
     when your children begin their secondary education, suggest $600 monthly
     contribution for 10 years

Personal Insurance

I recommend the following

    Name          Type of cover                  Product            Total amount of cover
George             Life and TPD            Medi Future insurance         $1,500,000
Rebecca            Life and TPD              SOH Super Fund              $1,000,000
           Income protection (to age 60)
George                                       ABC Super Fund              $7,288 p.m.
           60 days waiting period*
           Income protection (to age 60)
Rebecca                                      SOH Super Fund              $3,463 p.m.
           60 days waiting period*
George               Trauma                Medi Future Insurance          $100,000
Rebecca              Trauma                Medi Future Insurance          $100,000


*A waiting period of 60 days has been recommended as it is estimated you will have
enough funds available to enable you service any debts for this period of time. A 60-day
waiting period will also reduce the cost of premiums. The longer the waiting period, the
lower the premiums you pay.
A Product Disclosure Statement (PDS) has been included for the trauma product from
Medi Future Insurance. This will explain all details of your cover.

                                                                                        10
Although we are not authorised to provide general insurance, I would recommend that you
ensure that your home and contents are reviewed with adequate levels in place.

Superannuation

I recommend that:

   George moves his current superannuation investment strategy from a balanced
    investment to a growth investment.
   George makes salary sacrifice contribution of $1,200 (about 10% of his salary) per
    month. to his superannuation
   Rebecca makes salary sacrifice contribution of $600 (about 10% of her salary) per
    month to her superannuation

Estate Planning

I recommend that you seek advice immediately to review your Wills and establish Power of
Attorney. You should also ensure that the binding nomination in your superannuation is
up-to-date as this need to be renewed every third year.

Product recommendations

Note that I can only recommend products on our recommended list, which have been
approved by Markson and Co.

Reasons for recommendations

Personal investment

As can be seen in the Cash Flow Statement in Appendix 1, you currently have surplus
funds of $44,400 per year, which can be invested. It can also be used to increase your
mortgage repayment. The quicker your debt is paid off, the sooner you will have more
disposable money. Please check SOA Appendix 5 for recommended mortgage repayment
projection.
Managed funds will give you diversified investment over different types of assets that can
create wealth. The funds are managed by professional fund managers who have access to
a range of investments and opportunities that are either not normally available to or
affordable for individual investors.
There is a large amount of cash $95,000 being deposited in the bank with a 5% rate of
return per year. It would be very beneficial to you if you could use some of this money to
set up a fund to cover your children’s education expenses in the near future.
The recommendation to invest $62,500 in a moderately conservative managed fund is for
your children’s secondary education expenses. This fund will provide a relatively low level
of risk and will likely provide greater growth of funds than simply keeping the money in a
bank account. Since Rebecca is the personal with lower marginal income tax rate it would
be tax effective to put this investment under her name.




                                                                                        11
Keeping your shares could provide you with long-term capital growth. Reinvesting
dividends would be a good way to further increase your potential returns. There could be
large differences between a flat rate return and a compound rate return (reinvesting
dividend) for investment in the long run. The table below illustrate the possible outcomes
by adopting these two different methods assuming 6.48% return per annum for 10 years.

Share portfolio without dividend reinvestment
                Initial
                            Year 1    Year 2            Year 3    …     Year 8       Year 9   Year 10
             Investment
Portfolio
                $27,000       $27,000      $27,000     $27,000    …    $27,000      $27,000   $27,000
Value
Dividend
                               $1,750      $1,750       $1,750    …     $1,750      $1,750    $1,750
Received
Total value in Year 10 = 27000 + 1750*10 years = $44,500 ; Total Return = $17,500

Share portfolio with dividend reinvestment
                  Initial
                               Year 1      Year 2       Year 3    …     Year 8       Year 9   Year 10
               Investment
Portfolio
                $27,000       $28,750      $31,630     $32,596    …    $41,903      $44,618   $47,509
Value
Dividend
                               $1,750      $1,860       $2,050    …     $2,550      $2,715    $2,891
Reinvested
Total value in Year 10 = $47,509 ; Total Return = $20,509


The re-investment method may eventually generate 11% more returns than put dividend
back to pocket every year. Besides, many companies also have dividend reinvestment
plan that do not require additional transaction fees. It would be a cost-effective way to
purchase shares through reinvesting dividends.

Personal insurance

Insurance can provide a cost-effective way that offers financial protection for you and your
family if you become ill, injured or die. Life insurance may help to you pay off debts and
maintain your family’s standard of living if you can no longer provide them.

An amount of $1,500,000 for George and $1,000,000 for Rebecca is considered
appropriate at this time. These amounts will cover the shortfall as identified in your client
questionnaire and should be sufficient. Additional life and TPD insurance is recommended
to George because he cannot take out higher cover within his superannuation fund.

By holding the insurance within your current super fund you can pay for the cost through
your super fund and the premium are tax deductible to the fund.

Income protection insurance is designed to provide a regular income in the event that you
are unable to work due to sickness or injury. The income protection recommended is the
maximum available for George and Rebecca at this time.



                                                                                                   12
Nobody likes to think about the possibility of suffering a serious illness or injury in the
future. It’s hard to foresee unexpected event, however you can make plans to help support
yourself. Trauma insurance will pay a lump sum to cover the medical costs for certain
medical conditions, e.g. cancer, heart attack or stroke. Having this type of insurance will
ensure you are not out-of-pocket and can afford the best of care should any of these
events arise.

Superannuation

The main purpose to change George’s superannuation risk preference is to match up with
his risk profiles. Rebecca should maintain her superannuation in a balanced investment
style. The salary sacrifice contribution will help you to further build your wealth in a tax
effective way over the long term.

Estate planning

Estate planning can be extremely complex, you should visit expert to seek advice. A will
should be reviewed regularly or following a major change in personal circumstances (e.g.
marriage or divorce, or the birth of children) to ensure it is up to date. As a guide you
should consult with your legal advisor for a review or when your circumstances change. If
you do not have a legal advisor, we will be more than happy to make a referral.

Generally speaking, superannuation benefit is not included as an estate asset in your Will.
However, by using a binding nomination, you can nominate a beneficiary (e.g. your
spouse) to receive the proceeds from superannuation plan and/or distributed to your Will.

A binding nomination is a formal document that must be signed and dated by the member
in the presence of two independent witnesses who are at least 18 years old. It is valid for
three years from the date you sign it. You can renew, change or revoke your nomination at
any time.

Things you should consider

Paying off the mortgage

Please be aware there may be discharge or legal fees associated with paying off the
mortgage early. You will have to discuss this with your mortgage provider.

Taxation issues

You need to be aware that I am not tax advisor and can only supply limited taxation
advice. I recommend that you consult with a taxation expert on any taxation advice you
may require.




                                                                                         13
Product recommendations

George and Rebecca, following our investment strategy, we recommend that you invest in
the following products:

   Medi Future Insurance: This Company has been providing insurance services for more
    than 30 years. It offers a comprehensive range of insurance products with affordable
    premiums.
   Education Foundation Investments: It is a boutique investment fund manager providing
    a solid return for the past two decades. The fund has a conservative investment style
    with a long-term focus, and aim to deliver consistent returns for clients. The fund is
    diversified across a range of specialist investment managers with an emphasis on
    cash and fixed interest securities.
Relevant research material and Product Disclosure Statements (PDS) are attached for
your attention. It is very import that you read these documents carefully and contact us
should you have any questions or if there are areas of the document that you do not fully
understand. All of these products are on our approved recommended list.



Cooling off period

You have 14 days from the time your investment is confirmed to change your mind on any
products. If you wish to return a product and get a refund you must notify us within 14 days
after confirmation. Please note that if you return a product within the cooling off period you
may get back less than you originally paid for. This can be due to market fluctuations,
taxes and administrative costs.
*Details on the cooling off period for each product are also provided in PDS.




                                                                                           14
Recommended asset allocation

Your investment assets are invested across different asset classes. The table below
summarises:

      Weight: the proposed asset allocation resulting from our recommendations.
      Risk profile weight: the recommended asset allocation for your investment risk profile.
      Variance (weight): the variance between the recommended and proposed asset
       allocation.

Comment on proposed asset allocation versus your risk profile

As shown in the table 1 below, George’s current asset allocation does not match his risk
profile weighting very well.

Table 1: Current Asset allocation
                                            George                        Rebecca

           Asset Allocation                  Risk                          Risk
                                                      Variance                      Variance
                                   Weight   Profile              Weight   Profile
                                                      (Weight)                      (Weight)
                                            Weight                        Weight
    Defensive Assets
    Australian Cash                 34.4%    5%        29.4%     19.5%     10%       9.5%
    Australian Fixed Interest       12.6%    15%       -2.4%     17.9%     20%       -2.1%
    International Fixed Interest    6.3%     10%       -3.7%     8.9%      10%       -1.1%
    Total for Defensive Assets      53.3%    30%       23.3%     46.3%     40%       6.3%
    Growth Assets
    Australia Equities              27.8%    35%       -7.2%     26.8%     30%       -3.2%
    Australian Property             6.3%     10%       -3.7%     8.9%      10%       -1.1%
    International Equities          12.6%    25%      -12.4%     17.9%     20%       -2.1%
    Total for Growth Assets         46.7%    70%      -23.3%     53.7%     60%       -6.3%

These asset allocations are calculated using all your current investment assets, including
superannuation and excluding your principal residence.
The asset allocation for recommended managed funds is shown in table 2 below (also
available in the PDS from the fund manager). Please be aware the fund manager may
very their asset allocation at any time in accordance with their view of the investment
market.




                                                                                               15
Table 2 illustrates the asset allocation for managed fund. This information is also available
in the PDS from the fund manager.

Table 2: Asset allocation for managed funds

                               Education Foundation
     Asset Allocation
                                Investments Funds

Defensive Assets
Australian Cash                       15%
Australian Fixed Interest             25%
International Fixed Interest          15%
Total for Defensive Assets            55%
Growth Assets
Australia Equities                    25%
Australian Property                   10%
International Equities                10%
Total for Growth Assets               45%
Grand Total                           100%


Table 3 below estimates your new asset allocations once you follow my recommendations.
The proposed asset allocation for George is more in line with his risk profile as Growth
investor.

Please note the change of Rebecca’s risk weighting after recommendation is mainly
affected by the managed funds that adopt more conservative investment style. This
variance however may be diminished as more funds would be added to her
superannuation in the future.
Table 3: Asset allocation after implementation of recommendations
                                           George                         Rebecca

       Asset Allocation                     Risk                           Risk
                                                      Variance                      Variance
                                  Weight   Profile               Weight   Profile
                                                      (Weight)                      (Weight)
                                           Weight                         Weight
Defensive Assets
Australian Cash                    6.6%      5%        1.6%      15.9%     10%       5.9%
Australian Fixed Interest         11.7%      15%       -3.3%     21.2%     20%       1.2%
International Fixed Interest       7.8%      10%       -2.2%     11.6%     10%       1.6%
Total for Defensive Assets        26.1%      30%       -3.9%     48.7%     40%       8.7%
Growth Assets
Australia Equities                46.6%      35%       11.6%     26.7%     30%       -3.3%
Australian Property                7.8%      10%       -2.2%     9.6%      10%       -0.4%
International Equities            19.5%      25%       -5.5%     15.1%     20%       -4.9%
Total for Growth Assets           73.9%      70%       3.9%      51.3%     60%       -8.7%
Grand Total                        100%     100%        0%       100%     100%        0%




                                                                                               16
Table 4 shows the change of your asset allocation in dollar value.
Table 4: Asset value
                                           George                          Rebecca
      Asset Allocation                           Value after                     Value after
                               Current Value                   Current Value
                                              recommendation                  recommendation
Defensive Assets
Australian Cash                  $104,000        $18,184         $18,500         $27,469

Australian Fixed Interest        $38,000         $32,051         $17,000         $46,454

International Fixed Interest     $19,000         $21,367          $8,500         $19,969

Total for Defensive Assets       $161,000        $71,601         $44,000         $83,892

Growth Assets
Australia Equities               $84,000        $127,785         $25,500         $45,968

Australian Property              $19,000         $21,367          $8,500         $16,484

International Equities           $38,000         $53,418         $17,000         $25,999

Total for Growth Assets          $141,000       $202,569         $51,000         $88,451

Total Value                      $302,000       $274,171         $95,000        $172,343

Note: The assets valuation above reflects the estimation for 2012/2013 financial year.




                                                                                           17
Disclosure of fees, commissions and/or benefits

How are we paid?

Commission and fees – upfront, ongoing commissions and financial planning
advice fees

The total fee for our advice and for the preparation of this Statement of Advice is $2,400
(including GST). Markson and Co is entitled to receive $1,600 and I will receive the
balance. Please pay this fee within 14 days of receiving this Statement of Advice.

If you wish to implement the products I have recommended, I will receive commission from
the issuer of the products I have recommended. I believe that these are the best products
for you; however, there may be other suitable products that may pay a lower commission.

                                             Initial           Initial        Ongoing         Ongoing
                                             commission        commission     Commission      commission
Insurance Product              Premium
                                             paid to           paid to me     paid to         paid to me
                                             Dealer                           Dealer

                                             $120 (equal                       2% per year
                                                               $90 (75% of                     90% of the
Life and TPD insurance for                   to 10% of the                    based on that
                                 $1,200                        the upfront                      ongoing
George                                       premium for                         year’s
                                                               commission)                    commission
                                             the first year)                    premium

                                             $312 (equal
                                                               $280.80        5% per year
                                             to 120% of                                       80% of the
                                                               (90% of the    based on that
Trauma insurance for George       $260       the premium                                      ongoing
                                                               upfront        year’s
                                             for the first                                    commission
                                                               commission)    premium
                                             year)

                                             $288 (equal
                                                               $259.20        5% per year
                                             to 120% of                                       80% of the
                                                               (90% of the    based on that
Trauma insurance for Rebecca      $240       the premium                                      ongoing
                                                               upfront        year’s
                                             for the first                                    commission
                                                               commission)    premium
                                             year)



                                             Initial           Initial        Ongoing         Ongoing
                               Amount to     commission        commission     Commission      commission
Investment Product             be invested   paid to           paid to me     paid to         paid to me
                                             Dealer                           Dealer

                                                               $125 (50% of
Education Foundation
                                 $62,500          $250          the upfront        nil            nil
Investments Funds
                                                               commission)


The amount of ongoing commission received by the Markson and Co will depend on the
amount of premium you pay. There will be no initial or ongoing commission paid for the life
and TPD insurance recommended.

Neither Markson and Co nor I will receive any commission earned for any superannuation
recommendations, and where necessary will be rebated.




                                                                                                   18
Product management and/or operational fee

You may be charged for buying and investing in products that have been recommended in
this statement.

The product provider will also charge a fee for the management of the funds. Education
Foundation Investments and charge a 1.2% fee. For example, a $62,500 investment will
incur $750 management cost.

Other benefits

Markson and Co and I may also receive additional benefits. With benefits exceeding $300,
they will be recorded in a register that meets the requirement of the Financial Planning
Association (FPA) Code of Practice on alternative forms of remuneration. A copy of the
Register for Attain Financial Planning Pty Ltd or I is publicly available and can be provided
at your request.




                                                                                          19
Ongoing service

The advice is this SOA is based on your current circumstance, needs and objectives,
which may change over time. Government will continue to change the tax and
superannuation rules that may apply to your investment. They may also introduce new
legislation that may be beneficial to you. Additionally, new products and services will be
introduced to the market and some products will perform better than others.

These changes should be assessed on an ongoing manner in relation to your particular
situation. This will ensure you have the most appropriate investments to meet your goals
and objectives.

The ongoing review process aims to:

   Keep us updated on your circumstances, both personal and financial
   Revisit your risk profile
   Keep you updated on the economy and any investment and legislative changes that
    may impact your recommended strategy
   Keep you updated on your investment portfolio performance
   When applicable, recommend any changes to your investment or insurance strategy

Please note: One 6-month review and one annual review will be given for free in the first
year. A fee of $200 per hour will be charged for any additional services performed. The
estimated total cost will be confirmed with you prior to any work being commenced.




                                                                                       20
Implementation

George and Rebecca – in order to proceed with our recommendations, you will need to
complete the steps below:

   Read, sign and return the Authority to Proceed attached.
   Read the attached Product Disclosure Statement and supporting material.
   Complete and sign the applicable form/s contained in the Product Disclosure
    Statement for Medi Future Insurance Pty., Ltd.
   Complete and sign the applicable form/s contained in the Product Disclosure
    Statement for Education Foundation Investments, including your tax file number.
   Arrange an appointment with me and bring any completed application forms.
   Please see SOA Appendix 6 for a detailed implementation program.

Note: The recommendations contained in this SOA are current for 30 days only. Please
contact me for further discussion if you are unable to act on our recommendation within
this time frame.




                                                                                    21
Authority to proceed

We acknowledge that the product(s) listed in the table below are to be implemented in our
names:

    Insurance Product                                                      Amount of Cover
    Life and TPD cover for George with Medi Future Insurance                     $1,500,000
    Trauma cover for George with Medi Future insurance                             $100,000
    Trauma cover for Rebecca with Medi Future insurance                            $100,000
    Investments                                                               Amount
    Education Foundation Investments Funds                                          $62,500

Before signing this document, please check that I have:

    given you the ‘Markson and Co’ Financial Services Guide (FSG)
    given you all the Product Disclosure Statements for the products recommend
    confirmed that the personal information I have collected is correct
    discussed your goals and objectives
    confirmed that you are happy with your risk profile
    discussed any risks in the recommendations
    discussed fees that need to be paid
Also before signing this document, confirm that:

    we have kept a copy of the SOA and we have had the opportunity to read, consider
     and understand the document, supporting material and have asked questions
    the SOA dated 19 Oct 2012 accurately summarises our current situation, investments,
     insurances and financial goals. We understand that any inaccurate or incomplete
     information provided to us, may bring risk to meeting our needs appropriately
    we have read and understood the ‘Disclosure of commissions, fees and benefits’
     section of SOA
    we understand that the value of recommended investments may rise and fall in line
     with the market conditions and you cannot guarantee future performance
    we understand that this statement is solely for our use of the clients to whom it is
     addressed and Markson and Co Pty., Ltd, does not accept any liability whatsoever to
     third parties who use or rely on the whole or any part of the content, and
    we hereby request Wei Chen to provide services detailed in the section ‘Ongoing
     Services’




                                                                                          22
Consent to ongoing contact

We consent to being contacted by our adviser on an ongoing basis, in line with the agreed
ongoing service review structure detailed within this recommendation.



Our preferred hours of contact are between ______ (am/pm) and ______ (am/pm).



Signed _________________________________               Date ____ / ____ / ____
                    Client Name


Signed _________________________________               Date ____ / ____ / ____
                    Client Name


Signed _________________________________               Date ____ / ____ / ____
               Financial Planner




                                                                                       23
 SOA Appendix 1 – Financial position before implementation of
 strategy
                                        Cash Flow Statement
                                              George      Rebecca    Notes

Income from employment

Salary                                         $120,879    $60,440

SG Contribution                                $10,879     $5,440    9% SG

Salary after salary sacrifice                  $110,000    $55,000

Rental income

Unfranked dividends

Franked dividends                               $1,750               27000*6.48% = $1,750 (96.7% franked)

Franking (imputation) credits                   $725                 1750*(30/70)*96.7% = $725

                                                                     15000 @ 5% p.a. = $750
                                                                     5000 @ 3.5% p.a. = $175
Interest                                        $4,213      $463
                                                                     Total = $925, 50% share = $463 each
                                                                     75000 @ 5% p.a. = $3,750

Other income, e.g. taxable benefits

Capital gains <1yr

Capital gains >1yr

Tax-free component of capital gains

Assessable income                              $116,688    $55,463

Deductible expenses

Rental expenses, repairs etc.

Taxable income 2012/2013                       $116,688    $55,463

Tax on taxable income                          $31,122     $9,572

Non-refundable tax offsets (e.g. LITO/SATO)

Medicare levy                                   $1,750      $832

Medicare levy surcharge

Franking rebate                                 -$725

Refundable rebates and offsets

Total tax                                      $31,147     $10,404

Income after tax                               $84,541     $45,059




                                                                                                     24
Family cash flow
                                                            George              Rebecca          Combined

Income after tax (as calculated above)                      $84,541             $45,059             $129,600

Living expenses

Home mortgage                                               $14,350             $14,350              $28,700

General living expenses                                     $22,500             $22,500              $45,000

Accountant’s fee                                               $250              $250                   $500

Donations                                                      $500              $500                  $1,000

Annual Holiday                                              $5,000               $5,000              $10,000

Total expenses                                                                                       $85,200

Net cash flow                                                                                        $44,400




                                         Assets and liabilities
Asset                               Owner           Value         Liabilities      Net value        Notes
Personal assets
Family Home                     Joint tenant       $850,000           $300,000      $550,000
Home contents                   Joint tenant         $50,000                         $50,000
Car                             Joint tenant         $18,000                         $18,000
Total                                              $918,000           $300,000      $618,000
Investment assets
Superannuation                  George             $190,000                         $190,000
Superannuation                  Rebecca              $85,000                         $85,000
Cash management account         Joint                $15,000                         $15,000
Savings account                 Joint                 $5,000                            $5,000
Cash management account -       George
                                                     $75,000                         $75,000
inheritance
Shares                          George              $27,000                          $27,000
Total                                              $397,000                         $397,000
Net worth                                                                          $1,015,000
Liabilities
                                                        Percentage
Loan                            Current debt                                Interest only        Repayment
                                                        deductible
Home loan                       $300,000                                    No.                  $2392 p.m.
Total                           $300,000




                                                                                                            25
 SOA Appendix 2 – Financial position after implementation of
 strategy (2012/2013 financial year)

                                        Cash flow statement
                                              George     Rebecca   Notes

Income from employment

Salary                                        $120,879   $60,440

SG Contribution                               $10,879    $5,440    9 % SG

                                                                   Contribution start from early Nov 2012,
Salary Sacrifice Contribution                  $9,600    $4,800    effectively 8 month contributions

Salary after salary sacrifice                 $100,400   $50,200

Rental income

Unfranked dividends

Franked dividends                              $1,750              27000*6.48% = $1,750 (96.7% franked)

Franking (imputation) credits                  $725                1750*(30/70)*96.7% = $725

                                                                   15000 @ 5% p.a. = $750
Interest                                       $375       $375
                                                                   50% share = $375 each

Other income, e.g. taxable benefits

Capital gains <1yr

Capital gains >1yr

Tax-free component of capital gains

Assessable income                             $103,250   $50,575

Deductible expenses

Rental expenses, repairs etc.

Taxable income 2012/2013                      $103,250   $50,575

Tax on taxable income                         $26,150    $7,984

Non-refundable tax offsets (e.g. LITO/SATO)

Medicare levy                                  $1,549     $759

Medicare levy surcharge

Franking rebate                                -$725

Refundable rebates and offsets

Total tax                                     $26,973    $8,743

Income after tax                              $76,277    $41,833




                                                                                                      26
Family cash flow
                                                                     George              Rebecca          Combined

Income after tax (as calculated above)                               $76,277             $41,833             $118,109

Living expenses

Home mortgage                                                        $23,917             $23,917              $47,834

General living expenses                                              $22,500             $22,500              $45,000

Accountant’s fee                                                       $250                 $250                 $500

Donations                                                              $500                 $500                $1,000

Annual Holiday                                                       $5,000               $5,000              $10,000

EF Managed Fund @ $600 p.m. for 8 month                              $2,400               $2,400                $4,800

Medi Future Trauma insurance cover                                     $260                 $240                 $500

Medi Future Life and TPD cover                                       $1,200                                     $1,200

Total expenses                                                                                               $110,833

Net cash flow                                                                                                   $7,275
Note: mortgage expense includes old repayments(July 2012 – Oct 2012) and new repayment(Nov 2012 – Jun 2013)




                                              Assets and liabilities
Asset                                      Owner             Value         Liabilities       Net value       Notes
Personal assets
Family Home                           Joint tenant          $850,000           $274,249       $575,751
Home contents                         Joint tenant           $50,000                           $50,000
Car                                   Joint tenant           $18,000                           $18,000
Total                                                       $918,000           $274,249       $643,751
*Assume that approximately $25,751 has been paid off home loan from Nov 2012 t0 June 2013
Investment assets
Superannuation                        George                $213,671                          $213,671
Superannuation                        Rebecca                $95,143                           $95,143
Cash management account               Joint                  $15,000                           $15,000
Shares                                George                 $28,750                           $28,750
EF managed investment                 Rebecca                $69,706                           $69,706
Total                                                       $422,369                          $422,269
Net worth                                                                                    $1,066,020
*Assume contributions period for superannuation & managed investment is from Nov 2012 to June 2013
Liabilities
                                                                 Percentage
Loan                                  Current debt                                    Interest only       Repayment
                                                                 deductible
Home loan                             $274,249                                        No.                 $4783 p.m.
Total                                 $274,249



                                                                                                                     27
SOA Appendix 3 – Superannuation Projections
Table 1        Superannuation account balance projections
                                                              Current situation                                                  After recommended strategy
                                    George’s                Rebecca’s                                            George’s account     Rebecca’s
   George’s                                                                     Combined                                                                 Combined
                   Date             account balance         account balance                                      balance at year      account balance
   age                                                                          account balance                                                          account balance
                                    at year end             at year end                                          end                  at year end
         42          Oct-2013              $190,000                 $85,000                         $275,000          $190,000                   $85,000                            $275,000
         43          Jun-2013              $204,008                 $91,003                         $295,011          $213,671                   $95,143                            $308,813
         44          Jun-2014              $226,097                 $100,390                        $326,486          $251,307                   $111,004                           $362,311
         45          Jun-2015              $249,548                 $110,257                        $359,805          $291,664                   $127,676                           $419,340
         46          Jun-2016              $274,445                 $120,629                        $395,074          $334,939                   $145,202                           $480,141
         47          Jun-2017              $300,878                 $131,532                        $432,410          $381,342                   $163,624                           $544,966
         48          Jun-2018              $328,942                 $142,992                        $471,934          $431,099                   $182,988                           $614,088
         49          Jun-2019              $358,736                 $155,039                        $513,775          $484,454                   $203,344                           $687,797
         50          Jun-2020              $390,368                 $167,702                        $558,070          $541,665                   $224,740                           $766,405
         51          Jun-2021              $423,950                 $181,013                        $604,964          $603,012                   $247,232                           $850,244
         52          Jun-2022              $459,605                 $195,005                        $654,610          $668,794                   $270,874                           $939,668
         53          Jun-2023              $497,458                 $209,713                        $707,171          $739,332                   $295,726                          $1,035,057
         54          Jun-2024              $537,646                 $225,173                        $762,819          $814,968                   $321,849                          $1,136,817
         55          Jun-2025              $580,313                 $241,425                        $821,737          $896,073                   $349,308                          $1,245,381
         56          Jun-2026              $625,611                 $258,508                        $884,118          $983,040                   $378,173                          $1,361,213
         57          Jun-2027              $673,703                 $276,464                        $950,167         $1,076,294                  $408,514                          $1,484,809
         58          Jun-2028              $724,761                 $295,340                       $1,020,101        $1,176,290                  $440,408                          $1,616,698
         59          Jun-2029              $778,969                 $315,181                       $1,094,150        $1,283,514                  $473,933                          $1,757,448
         60          Mar-2030              $821,807                 $330,725                       $1,152,533        $1,368,989                  $500,198                          $1,869,188

Table 1(a)     Assumptions:
                                                                                                                    George: strategy                        Rebecca: strategy
 Value                                    George: current                      Rebecca: current
                                                                                                                    recommendations                         recommendations

 Contribution amount: SG and any          $906.60 before contribution tax      $453.30 before contribution tax      $2,106.60 before contribution tax       $1,053.30 before contribution tax
 other (pmt)                              $770.60 after contribution tax       $385.30 after contribution tax       $1,790.60 after contribution tax        $895.30 after contribution tax

 Contribution frequency                   Monthly                              Monthly                              Monthly                                 Monthly

 Rate = the rate of return of the fund,   6% p.a.                              5% p.a.                              7% p.a.                                 5% p.a.
 net of inflation


                                                                                                                                                                                                28
Table 2 Superannuation income analysis post retirement
 George’s age      Combined               Assumptions               Combined fund
                account balance
      60           $1,869,188     Rate of return net of inflation        3%
      61           $1,865,209     Frequency of drawdown                Monthly
      62           $1,861,109     Income per annum                     $60,000
      63           $1,856,885
      64           $1,852,532
      65           $1,848,046
      66           $1,843,425
      67           $1,838,662
      68           $1,833,755
      69           $1,828,698
      70           $1,823,488
      71           $1,818,119
      72           $1,812,587
      73           $1,806,887
      74           $1,801,013
      75           $1,794,961
      76           $1,788,724
      77           $1,782,298
      78           $1,775,677
      79           $1,768,854
      80           $1,761,823
      81           $1,754,579
      82           $1,747,114
      83           $1,739,422
      84           $1,731,496



                                                                                    29
SOA Appendix 4 – Managed Investment Projections

 Year   Sienna's age    Ruby's age       Date       Withdraw   Fund Balance
                                       Oct-2012                  $62,500
  1           11              8
                                       Dec-2012                  $64,277
                                       Dec-2013                  $75,287
  2           12              9
                                                    $12,000      $63,287
                                       Dec-2014                  $74,241
  3           13             10
                                                    $12,000      $62,241
                                       Dec-2015                  $73,136
  4           14             11
                                                    $12,000      $61,136
                                       Dec-2016                  $71,969
  5           15             12
                                                    $24,000      $47,969
                                       Dec-2017                  $58,059
  6           16             13
                                                    $24,000      $34,059
                                       Dec-2018                  $43,365
  7           17             14
                                                    $24,000      $19,365
                                       Dec-2019                  $27,842
  8           18             15
                                                    $12,000      $15,842
                                       Dec-2020                  $24,119
  9           19             16
                                                    $12,000      $12,119
                                       Dec-2021                  $20,187
  10          20             17
                                                    $12,000       $8,187


Assumptions:
Opening balance: $62,500
Monthly Contribution: $600
Rate of return net of inflation: 5.5% p.a.
All cash withdraw will be made at the end of year




                                                                              30
SOA Appendix 5 – Mortgage Projections

                                  Current situation           After recommended strategy
 Year         Date
                                  Account Balance                    Account Balance
           Oct-2012                              $300,000                       $300,000
   0
           Jun-2013                              $293,749                       $274,249
  1        Oct-2013                              $290,521                       $260,950
  2        Oct-2014                              $280,407                       $219,285
  3        Oct-2015                              $269,616                       $174,830
  4        Oct-2016                              $258,102                       $127,397
  5        Oct-2017                              $245,817                        $76,788
  6        Oct-2018                              $232,709                        $22,789
  7        Oct-2019                              $218,723                       -$34,826
  8        Oct-2020                              $203,801
  9        Oct-2021                              $187,879
  10       Oct-2022                              $170,891
  11       Oct-2023                              $152,765
  12       Oct-2024                              $133,425
  13       Oct-2025                              $112,791
  14       Oct-2026                               $90,774
  15       Oct-2027                               $67,282
  16       Oct-2028                               $42,218
  17       Oct-2029                               $15,474
  18       Oct-2030                              -$13,060


Assumptions:
Opening balance: $300,000
Mortgage interest rate: 6.5% p.a.
Current monthly repayment: $2,392
Recommended monthly repayment: $4,784

Please note:
The mortgage will be fully repaid in 17.6 years if under current repayment
The mortgage will be fully repaid in 6.4 years if under recommended repayment




                                                                                           31
SOA Appendix 6 – Implementation schedule

                       Action                                    By Whom         Timeframe
Arrange time for next meeting (2 weeks)                      Wei Chen           Immediately
Read and sign Authority to Proceed                           George & Rebecca   1 week
Read Product Disclosure Statement                            George & Rebecca   1 week
Complete application forms                                   George & Rebecca   1 week
Arrange to meet with accountant to discuss
                                                             George & Rebecca   1 week
accounting /tax issues
Contact super fund to increase insurance                     Rebecca            2 weeks
Contact super fund to change asset/risk allocation           George             2 weeks
Contact super fund to add insurance                          George & Rebecca   2 weeks
Contact bank to increase mortgage repayments                 George & Rebecca   2 weeks
Meet with George & Rebecca to collect forms and
                                                             Wei Chen           2 weeks
check on progress
Deposit funds from savings into managed
                                                             George & Rebecca   2 weeks
investment
Arrange to meet with solicitor to update Will and
                                                             George & Rebecca   2 weeks
powers of attorney
Arrange for review meeting                                   Wei Chen           6 months



                               (Section 3 commences on the next page)




                                                                                           32
Section 3 Present appropriate strategies and solutions to the client and negotiate a
          financial plan, policy or transaction

Part A
The SOA has been completed and a meeting has been organised with George and Rebecca to
present the recommendations and, if they agree, to implement them.
Outline the steps that should be followed in presenting this advice to George and Rebecca. In your
answer, you should address at least four of the following requirements regarding presentation of
advice:
•   the order in which you present the information
•   what back-up information and documents you might need
•   any risks associated with the solution
•   two predictable questions the Browns might ask you and the answers you will give
•   the language you will use to present the strategy to George and Rebecca. (250 words)

The following procedures shall apply when presenting the advice to George and Rebecca:

   Restate the reasons why they come to seek the financial advice and they expectations (goals
    & objectives)
   Reconfirm whether there is any significant change to their situation
   Revisit all information collected from the data find form and summarise their current situation
    including the area where they can make improvement
   Talk about their risk profile and explain the rationale behind
   Go through each recommendations and explain how these recommendation can meet their
    goals and objectives, including further explanation about particular recommended product’s
    Product Disclosure Statement if necessary
   Give a summary of recommendations and strategies; explain how their asset allocations can
    meet with their risk profile after taking recommendations
   Explain the cost of taking recommendations and associated risks
   Disclose fees, commissions and benefit involved
   Explain the ongoing service and implementation plan
   Ensure they are clear about every forms that need to signed

It is also important to ask questions when following above steps to ensure both George and
Rebecca are fully understand the plan and the implications of the advice provided.
Part B
Suggest a minimum of two concerns that the Browns might have with the strategy that you have
proposed. Explain how you would address each of these concerns. (100 words)
Concern 1: How are these investment funds selected?
These investments are all from our approved product list (APL). The APL is a result of extensive
research, analysis and approved by our licensee – Markson and Co. I have also carefully
investigated these investment products and ranked them as the best options to suit your current
risk profile.
Concern 2: What if we do not like the investments you recommend?
If you are not happy with taking the recommended investment you can simply inform us your
wishes. Prior to undertaking any actions on investment, we have to get your permission first. That’s
why the ‘Authority to proceed’ is provided to you.

Part C
During the course of your discussion with George, you discover that he has suffered from a back
injury and you suspect that this may result in a premium loading being applied to his income
protection. Explain how you would justify the need for this policy to him, despite the extra costs.
(150 words)
It would be beneficial to George’s family if he take adequate income protection insurance. Imagine
he is unable to work due to unexpected illness/injury/partial or total disability; the family will lose
approximately $84,000 annual income (after tax). They may even find difficulties to keep the life
style they used to enjoy as Rebecca’s income can only cover their general living expenses. They
probably need to extend their mortgage, cancel their annual holiday, and save more for their
children’s future education.
Unlike life & TPD insurance (protection on death & disability) and trauma insurance (protection on
defined medical conditions), Income protection insurance can provide a monthly payment (usually
up to 75% of the income) if the insured is temporarily unable to work due to illness or injury.
Income protection insurance is perhaps the easiest policy on which to make a claim, given a
legitimate disability and a reasonable contract of insurance. This type of policy only requires the life
insured to be able to prove they are disabled at least one month at a time The Australian Taxation
Office allows tax deductions for insurance premiums where it can be proven that those premiums
relate to the earning of assessable income; therefore income protection insurance is also tax
deductible.
If George is more concerned about the cost of loading, certain adjustments on waiting period/
benefit period may help to reduce the premium.
Section 4 Agree on the plan, policy or transaction and complete documentation

Part A
George and Rebecca have finally agreed to proceed with your recommendations. Explain your fee
and cost structure to George and Rebecca in plain English. (100 words)
The total fee for our advice and for the preparation of this Statement of Advice is $2,400 (including
GST). Markson and Co is entitled to receive $1,600 and I will receive the balance.
If you wish to implement the products I have recommended, I will receive commission from the
issuer of the products I have recommended (please refer to SOA – Disclosure of commissions,
fees and benefits).
All fees and commissions are clearly disclosed in both the SOA and the PDS. All remuneration,
commission and other benefits are presented in dollar terms in the SOA.
A fee of $200 per hour will be charged for any additional services performed (e.g. ongoing service).




Part B
Prepare a timeframe for implementing the plan. Explain the reasons behind the timeframe.
(100 words)
                         Action                                  By Whom              Timeframe
Arrange time for next meeting (2 weeks)                     Wei Chen                 Immediately
Read and sign Authority to Proceed                          George & Rebecca         1 week
Read Product Disclosure Statement                           George & Rebecca         1 week
Complete application forms                                  George & Rebecca         1 week
Arrange to meet with accountant to discuss accounting
                                                            George & Rebecca         1 week
/tax issues
Contact super fund to increase insurance                    Rebecca                  2 weeks
Contact super fund to change asset/risk allocation          George                   2 weeks
Contact super fund to add insurance                         George & Rebecca         2 weeks
Contact bank to increase mortgage repayments                George & Rebecca         2 weeks
Meet with George & Rebecca to collect forms and check
                                                            Wei Chen                 2 weeks
on progress
Deposit funds from savings into managed investment          George & Rebecca         2 weeks
Arrange to meet with solicitor to update Will and powers
                                                            George & Rebecca         2 weeks
of attorney
Arrange for review meeting                                  Wei Chen                 6 months

George and Rebecca should have enough time to read and review all the application and PDS
during the first week. They should also talk with their accountant to make sure they understand all
the accounting/taxation implications that may affect them after taking the recommended actions.
Increasing mortgage repayment involves lots of money; they may need more time to think about it.
Once their written confirmation and application are being received during the meeting in two weeks
time, further actions can be implemented. Lastly, it would be easy for them to meet with solicitor
when everything else has been arranged. Another meeting in 6 months time should be enough to
perform a review on their progress.
Part C
Identify the documentation that you may require from George and Rebecca before proceeding with
your advice. (100 words)
The final updated SOA with ‘Authority to proceed’ that signed by Rebecca and George is needed
before implementing the advice. It simply gives the planner a permission to proceed with planned
actions. The application forms for recommended insurance and investment products have to be
completed and signed as well. The identity verification document (e.g. Driver’s licence, passport)
may also be need for confirming the signature.

Part D
List the documentation that you may need to present to George and Rebecca at this stage.
(100 words)
A checklist of all the possible activities associated with the provision of financial advice
Product Disclosure Statements for all recommended insurance and investment products
Copies of all singed documents (e.g. SOA and application forms)
The implementation schedule
A letter to the solicitor that explains their needs for updating the Will and establishing powers of
attorney
A confirmation of next meeting for review
Section 5 Provide ongoing service where requested by client

Part A
Draft an outline of the level of ongoing service you intend to recommend to George and Rebecca.
In your outline, discuss the type of information that you would regularly provide to George and
Rebecca in relation to their portfolio. (250 words)
Ongoing financial planning reviews are important part of ensuring the financial plan remains
relevant over time. The ongoing review is similar to what have been done in the previous meeting
before implement SOA. The planner will collect data, examine resources, prioritise clients’ goals
and objectives, make recommendation and initiate implementation plan if necessary. The review
process will normally address changes to the following areas and adjusts the financial plan
accordingly:

   Income and expenditure: it’s vital to maintain their budget in an acceptable level and make
    sure Rebecca and George have adequate savings. A change in career, or earning ability, may
    have a significant impact on their lifestyle habits or retirement planning capabilities.
   Balance sheet: it is important to ensure that all their assets and liabilities are reflected
    accurately. These will affect not only the content of the advice relevant to them, such as level
    of assurance cover, but also impact investments where tax is relevant.
   Their family situation: they may be able to receive more social benefits as their family situation
    changes.
   Their financial planning needs and objectives should be reviewed before considering any
    changes on your financial and investment strategies
   Their insurance needs: their family member might need more health insurance cover as
    everyone grows older.
   The general economic environment: the economy can change without notice, a new regulation
    or legislation will impact on their financial plan.
   Superannuation: if either George or Rebecca decides retire earlier, they would have to adopt
    relevant adjustment to their superannuation so that to have sufficient income stream when
    they retire.
   Investment product: there may be a new product available in the market which better suits
    their risk profile and need.
   Taxation: their taxation position and any relevant changes in the current tax law should be
    updated regularly. There may be opportunities to reduce the tax payable.
   Estate Planning: If they've had any life or family changes, such as a birth, adoption or divorce,
    they may need to revise their beneficiary designations.

The above points should be reviewed at least once a year through a formal meeting. If there is any
change needs to be handled in an urgent manner, a special review can be arranged.
Reviewing their financial plan at least once a year could help ensure George and Rebecca are on
track to reach their long-term goals. It is also an opportunity for them to compare their investment
portfolio performance with the original expectations. Although the purpose of the review process is
not necessarily to change the investment, making certain investment amendments may be needed
if there are significant difference between the existing performance and the expectation. The
review simply offers a chance to implement any new plan of action that has been developed in light
of changing goals or changing performance.
Any urgent issue should be reviewed immediately; the investment portfolio could be reviewed
every 3 to 6 months; a full review would be given on an annual basis.
Part B
What would you do to ensure that George and Rebecca know the specific costs relating to an
ongoing service? (100 words)
Other than simply explaining the cost structure to George and Rebecca, a written service fee
schedule should be given to them. Any remuneration, commission, fees or other benefits in relation
to providing ongoing service and how these cost are calculated shall all be explained and included
in the fee schedule. The estimated total cost of an ongoing service will be confirmed with them
prior to any work being commenced.

				
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