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Assignment DFP2-1v2.1 Insurance and Risk Protection
Student identification (student to complete) Please complete the fields shaded grey. Student number
INT
Student name
Telephone number
Assignment result (assessor to complete) Result — first submission (details for each activity are shown in the table below) Not yet competent Result — resubmission (if applicable) Not yet competent
Result summary (assessor to complete)
Fact finder Case study assignment questions
First submission
Resubmission (if required)
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 6
Not yet demonstrated
Not yet demonstrated
Statement of advice
Not yet demonstrated
Not yet demonstrated
Cash flow tables
Not yet demonstrated
Not yet demonstrated
(assessor to complete) [insert assessor ]
DFP2-1v2.1 Assignment
Before you begin Read everything in this document before you start your assignment for Insurance and Risk Protection.
About this document This document contains: Instructions for completing and submitting this assignment The case study Insurance and risk protection assignment: – Fact finder and risk profile template – Case study questions – Statement of advice (SOA) template – Cash flow tables (financial position before and after implementation of strategy) – Assumptions
Saving your work this document to your desktop, type your answers in the spaces provided and save your work regularly.
How to use the study plan We recommend that you use your study plan for this subject to help you manage your time to complete the assignment within your enrolment period. Your study plan is in the KapLearn Insurance and Risk Protection subject room.
DFP2-1v2.1 Assignment
Instructions for completing and submitting this assignment Completing the assignment The assignment You are required to complete the following tasks in this assignment document: complete the fact-finder template for your clients (the risk profile template is included in this document for you to view, but you are not required to complete the risk profile template for this assignment) answer the assignment questions as they relate to sections 3, 4 and 6 of the case study complete the statement of advice (SOA) template for your client, using the data in the case study and the fact finder (in a full analysis you would usually also use the risk profile data) complete the two (2) cash flow tables. The information and data you need to do this work is presented as a case study. Some data will have to be externally sourced; the templates clearly indicate where this will be necessary.
The ‘Joseph and Julie Hahn’ case study The case study steps you through the financial planning process: from initial with the Hahns, to the development and documentation of their fact finder, and finally, to your financial strategy documented as a statement of advice (SOA) to meet their needs.
Fact finder, risk profile, statement of advice and financial position templates All these templates are provided in this assignment.
Additional research You will be required to source additional information from other organisations in the financial services industry to find the right product/s to meet the Hahn’s requirements, and to calculate your service fees.
DFP2-1v2.1 Assignment
Submitting the assignment You must submit your completed assignment as a Microsoft Office compatible Word document. You need to save and submit this entire document. Do not remove any sections of the document. Do not save your completed assignment as a PDF. The assignment must be completed before submitting it to Kaplan Professional Education (KPE). Incomplete assignments will be returned to you unmarked. The maximum file size is 5MB. Once you submit your assignment for marking you will be unable to make any further changes to it. You may submit your assignment earlier than the deadline if you are confident you have completed all parts and have prepared a quality submission.
The assignment marking process You have 12 weeks from the date of your enrolment in this subject to submit your completed assignment. Your assessor will mark your assignment and return it to your subject room in KapLearn at the ‘Assessment’ tab.
‘Not yet competent’ and resubmissions If sections of your assignment are graded as ‘not yet competent’ you will be given an additional opportunity to amend your responses so that you can demonstrate your competency to the required level. You must address the assessor’s in your amended responses. You only need to amend those sections where the assessor has determined you are ‘not yet competent’. Make changes to your original submission. Use a different text colour for your resubmission. Your assessor will be in a better position to gauge the quality and nature of your changes. Ensure you leave your first assessor’s comments in your assignment, so your second assessor can see the instructions that were originally provided for you. Do not change any comments made by a Kaplan assessor.
Units of competency This assignment is your opportunity to demonstrate your competency against these units:
DFP2-1v2.1 Assignment
FNSASICX503A
Provide advice in Life Insurance
FNSINC501A
Conduct product research to recommendations
FNSIAD501A
Provide appropriate services, advice and products to clients
FNSCUS506A
Record and implement client instructions
FNSCUS505A
Determine client requirements and expectations
DFP2-1v2.1 Assignment
We are here to help If you have any questions about this assignment you can post your query at the ‘Ask your tutor’ forum in KapLearn subject room. You can expect an answer within 24 hours of your posting from one of our technical advisers or student staff.
DFP2-1v2.1 Assignment
The case study
Page 7 of 76
The case study Section 1 — Meeting your client The first phone call Joseph and Julie Hahn are a young married couple with one child. Recently John, a business associate of Julie, who also has a young family, was seriously injured in a vehicle accident that has resulted in uncertainty about his ability to return to work. Joseph and Julie have also learned that, due to inadequate insurance cover, the family of the injured work colleague are now under financial stress. They do have some insurance cover themselves, but are now unsure if it is adequate or suitable for their needs. Recalling a positive experience Julie had with you a few years ago on another financial matter, she asks Joseph to give you a call to see if you can help them with their insurance needs. You explain to Joseph and Julie the financial planning process and why you will need to ask the couple for certain types of financial information. You stress that any information they give you will be treated confidentially and will only be used to help you recommend appropriate courses of action that the Hahn’s should consider to ultimately meet their needs. You tell them information concerning privacy, you and your firm’s capability, and other disclosure issues is in their firm’s financial services guide (FSG) that you will send to them. You go on to explain that part of the information gathering will include the need to complete a financial profile. This means that they will need to tell you what they own, what they owe, what they earn and their living expenses. All this information will be recorded in a fact-finder form you will compile. You arrange a date and time for them to come to your office. You ask them to bring along to the meeting as much financial information as they can, including income details, expenses, insurance details, superannuation, investments, etc. You also ask them to think about what specific financial goals they want achieved and any issues they wish to ask about at the meeting. When you have concluded the call, you make a file note about the conversation including the date, the potential clients’ names, and any other items that were discussed. This is the start of your paper trail. You also complete some of the initial details in the data collection form as shown in Table 1. Finally you write to Julie and Joseph, as promised during your initial conversation, and include the FSG and a checklist of the information they need to bring to the meeting.
DFP2-1v2.1 Assignment
The case study
Table 1
Page 8 of 76
Personal details Client
Client 2
Title
Mrs
Mr
Surname
Hahn (née Smeg)
Hahn
Given and preferred names
Julie
Joseph
Home address
42 Amazon St
42 Amazon St
Geelong Vic 3220
Geelong Vic 3220
Business address
n.a.
n.a.
phone
(03) 5544 7766
(03) 5544 7766
Age
32
35
Sex
Male
Female
Male
Female
Smoker
Yes
No
Yes
No
Expected retirement age
Probably around the same time as Joseph retires
Probably around age 65
The first meeting Joseph and Julie arrive at your office for the meeting as arranged. After making them comfortable you go through the key elements of your FSG and explain your role and capacity to assist them with their insurance needs. Collecting the data You gather the following information about Joseph and Julie through a process of thorough and polite questioning. From time to time, one or the other provides you with a relevant document to confirm their financial situation. You confirm the details in the fact finder as you proceed.
DFP2-1v2.1 Assignment
The case study
Page 9 of 76
Joseph and Julie’s current situation Joseph, age 35, is married to Julie, who is 32. Julie follows netball and is a keen weekend player in a local competition. Julie and Joseph have one child, a boy named Harry, who was born 12 months ago. Joseph and Julie purchased their home about two years ago for $675,000 and they have a mortgage of $400,000. The mortgage is a variable interest loan with an interest rate of 5.81% p.a. which is linked to a bank offset (Note: An offset is one that allows the credit balance of the offset to offset the interest owing on an outstanding loan or mortgage, reducing the interest payable.) The mortgage has 23 years remaining and their minimum mortgage repayment is $2530 per month. Any excess income they have is paid into the offset . The current amount available in their offset is $30,000. Joseph works full-time as a chemical engineer for an agricultural supplies company that sells agricultural chemicals, seed and fertilisers and takes regular interstate business trips to rural and regional Australia. He has worked full-time for his employer for ten years and earns $135,000 p.a. with additional superannuation guarantee (SG) contributions from his employer paid into the employer’s default fund. Julie has recently returned to work on a part-time basis following maternity leave. She is a marketing manager for a local engineering company and has been with the same firm for ten years as well. She earns $55,000 p.a. with additional SG contributions from her employer paid into the employer’s default fund. Julie advises during the meeting that she feels she would like to change her current employment, and is considering starting up her own consulting business from home. This would enable her to spend more time with their son. They currently use a child care centre to look after Harry when Julie is at work. The fees are $86 per day, which Julie utilises two days per week for 48 weeks per year. These expenses are not included in their day-to-day living expenses. Once Harry starts school, Julie and Joseph hope to send him to the local independent school at a total cost of $65,000 for his whole school life. Other than their cash in the bank, superannuation holdings and house contents, the only other assets they have are their motor vehicles. A 2010 Ford Focus, currently valued at $11,000, is used by Julie and Joseph drives a 2009 Holden HSV performance vehicle, currently valued at $33,000. Both cars are fully paid off and are comprehensively insured. All motor vehicle expenses (except insurance) are included in the clients’ living expenses.
Superannuation Joseph has $280,000 in his employer’s default superannuation fund, the ASSF Super Fund, and is invested in a balanced portfolio. He ed the fund on 1 February 2004. Julie has $124,000 in her employer’s default superannuation fund, the CISF Super Fund and is invested in a balanced portfolio. Julie ed the fund on 19 January 2004.
DFP2-1v2.1 Assignment
The case study
Page 10 of 76
Neither Julie nor Joseph make any additional contributions to their superannuation funds.
Insurance Joseph’s default superannuation fund provides a death and total and permanent disability (TPD) benefit which is currently equal to his annual income (excluding SG contributions). The for this cover is $0.90 p.a. for each $1000 of cover or part thereof, and is deducted from his superannuation contributions. The ASSF Super Fund will allow a member to increase their benefit to twice the member’s annual salary at this rate. The fund will allow a further increase in cover to a maximum of $750,000. However, the will increase to $1.00 per $1000 for any amount of cover that is over twice the member’s annual salary. Although Joseph’s superannuation fund can provide income protection cover, he has not taken out this cover. Julie’s default superannuation fund also provides a death and TPD benefit and she currently has cover of $120,000 for each of life and TPD. The for this level of cover is $2.75 per week deducted from her superannuation contributions. The CISF Super Fund allows for to further increase their cover to a maximum of $2 million and on the following scale: ≤ $500,000 – $2.75 p.w. $500,001 to $1 million – $3.75 p.w. $1 million to $2 million – $5.50 p.w. Julie and Joseph have no other personal insurance cover. They have full comprehensive insurance on their vehicles with a total annual of $2800 p.a. Julie and Joseph also have combined home building and contents insurance cover of: $100,000 home contents $750,000 home building. Their home was built under an earlier version of the local building code. Additionally, the home was purchased in a market much lower than the current one and is estimated to cost much more than the $675,000 purchase price to replace. The policy has a contents excess of $500 and a building excess of $1100. The policy also includes legal liability cover of up to $20 million. Julie and Joseph pay $145 per month for this insurance. The Hahns have adequate private health insurance cover, including hospital cover with a $500 excess, except for Harry, and pay a of $110 per month. This includes the private health insurance rebate. The above vehicle, home and contents and health insurance payments are not included in their general living expenses.
DFP2-1v2.1 Assignment
The case study
Page 11 of 76
Other information Joseph and Julie have a credit card with a monthly limit of $15,000 that they use for all their general expenses and entertainment. However, they never spend up to their limit and always repay within the interest free period. They estimate their average monthly living expenses are $6700 per month. Joseph and Julie used to go on regular annual holidays and spend over $10,000 per trip. However, since the start of their mortgage and the birth of Harry they now plan to take a holiday every two years spending about $5000, in addition to their general living expenses. Joseph advises he is quite healthy and has accumulated 78 days sick leave. However, he advises that he was diagnosed with asthma symptoms in the past for which he was prescribed medication. He has not experienced a return of these symptoms during the past couple of years. Julie took all her accumulated annual and long service leave as part of her maternity leave. Other expenses include a donation by Julie to the National Breast Cancer Foundation of $50 per month and Joseph makes a tax deductible donation to Plan B of $50 per month. They each make tax deductible ‘bucket’ donations of $10 p.a. to disaster relief funds, and ants’ expenses come to $150 p.a. each. These expenses are also in addition to their general living expenses.
Needs and objectives During your conversation with Joseph and Julie it becomes apparent that their main objective is to protect their home and to provide for their son Harry. Julie commented that she is very concerned that they may not be able to maintain their lifestyle if either of them died or suffered a prolonged illness. She would like to make sure that if anything were to happen to them that Harry would be well taken care of. At this time they are not yet concerned with superannuation and retirement planning, believing that it is still a long way off and that they will have time to address this part of their financial plan in the future. Julie and Joseph have a full and comprehensive estate plan that Joseph insisted on when they were married, and was updated when they purchased their house and on the birth of Harry.
DFP2-1v2.1 Assignment
The case study
Page 12 of 76
Closing the interview Prior to closing the interview, you review the information provided by Julie and Joseph to check whether it is complete. You answer some additional questions they have about what happens next and what your likely costs will be, and explain that with their agreement you will now prepare a written financial plan, called a statement of advice or SOA, based on the information collected and their stated objectives. The SOA will describe possible risk management strategies and insurances they should consider, and the reasons behind your recommendations. Joseph and Julie agree to proceed to the next stage of the financial planning process, and you make an appointment to present the SOA in a fortnight.
Section 2 — The fact finder The first step is to complete the fact finder for Joseph and Julie. This is in your assignment at Insurance and risk protection assignment questions – fact finder Joseph and Julie Hahn. Note to completing the fact finder: As this is a ‘risk’ assignment, you must complete the ‘Risk needs’ section. However, where information has not been provided in the case study background, you may leave other sections blank.
DFP2-1v2.1 Assignment
The case study
Page 13 of 76
Section 3 — Analysing the data The next step in the financial planning process is to analyse the collected data. You do this so that you can fully understand your clients’ needs and therefore design a financial plan that addresses their goals and objectives. By analysing the data provided under the following headings you can start preparing a financial planning strategy that will meet your clients’ needs: Review the fact-finding stage Current position Debt management Risk/protection Savings Present and future taxation issues There is a series of questions relating to section 3 in the assignment that you must answer. Use your answers for section 3 to help you decide on your recommendations for Joseph and Julie. Your answers to these questions are your opportunity to demonstrate your ability to analyse clients’ needs in preparation for developing a strategy that aligns with their requirements.
Section 4 — The strategy Now that you have analysed the data, you are in a position to think about appropriate strategy options and start drafting appropriate strategies for them. This should include levels of cover and researching possible products that can the implementation of those strategies. All this information you will use in your SOA for the couple. There is a series of questions relating to section 4 in the assignment that you must answer. You will use your answers for section 4 to help you decide on your recommendations for Joseph and Julie. Your answers to these questions are your opportunity to demonstrate your ability to analysis your clients’ needs and develop a strategy that aligns with their requirements.
DFP2-1v2.1 Assignment
The case study
Page 14 of 76
Section 5 — Completing the SOA When you have determined the financial planning recommendations you believe will meet the couple’s needs, then you can move on to preparing their SOA. Use the SOA template provided in this assignment. TIP: The assessor is looking for an SOA that is of a professional standard and is suitable for presentation to a client. This means your spelling and grammar must be correct and that you have written your recommendations so the client can understand them. : the SOA is an important communication tool you can use to engage your client. A hastily written and poorly presented SOA does not engender client trust or confidence in your expertise or professionalism.
Important instructions for completing the SOA a.
Use the SOA template provided. SOA preparation software: The use of financial planning software and dealer templates to prepare your SOA is not permitted. Submissions that exhibit excessive reliance on SOA templates may be considered a case of plagiarism or collusion and may not be considered to be a reasonable attempt at the assessment.
b.
Your SOA must include strategy recommendations for personal insurances.
c.
You must prepare an implementation schedule detailing all of the recommendations in the SOA and provide the details in the implementation schedule within the SOA.
d.
List any assumptions you made to complete your SOA at the end of the SOA template under the heading ‘Assumptions’. Assumptions will generally include:
e.
missing background information on the clients
cost of s
factors which influence future income calculations
fees relating to the products you have recommended.
While you are not required to provide advice on the following areas, you will need to discuss them in the ‘Things you need to consider’ section of your SOA and include:
debt management
personal investment
superannuation
estate planning.
DFP2-1v2.1 Assignment
The case study
f.
Page 15 of 76
Your insurance product recommendations will need to be based on the research you conducted in section 4 Part B. Please do not include any product disclosure statements (PDS) with your assignment submission.
DFP2-1v2.1 Assignment
The case study
Page 16 of 76
Section 6 — Presenting the SOA You meet with Joseph and Julie as arranged to present the SOA. You take the time you need to reiterate their financial situation and stated objectives and to explain the proposed strategies and recommendations, confirming regularly that both Joseph and Julie understand each component of the plan and how it meets their needs. Even though satisfied with your explanation of the SOA and responses to each of their questions, they have a key concern about one of the products you have selected with regards to the cost of s. Before they agree to your recommendations you have to negotiate this part of the plan with your clients. There is a series of questions relating to section 6 in the assignment that you must answer. Your answers to these questions are your opportunity to demonstrate your ability to continue to engage your clients.
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 17 of 76
Insurance and risk protection assignment Fact finder — Joseph and Julie Hahn Use the data collected in the interviews to complete the fact-finder template on the following pages. Note: As investment strategies are not required for this project, it is not necessary to complete the risk profile section of the fact finder.
Important notice to customers Your planner must have reasonable grounds for making investment or insurance recommendations. Before making a recommendation, the planner must ask you about your investment objectives, financial situation and your particular needs. The information requested in this form will be used strictly for that purpose.
Warning The planner could make inappropriate recommendations or give inappropriate advice if you fail to fully and accurately complete this form. Personal details Client 1
Client 2
Title
Answer here
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Surname
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Given & preferred names
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Home address
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Business address
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phone
Answer here
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Date of birth
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Sex
Male
Female
Male
Female
Smoker
Yes
No
Yes
No
Expected retirement age
Answer here
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Dependants (children or other) Name
Date of birth
Sex
School
Occupation
Answer here
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DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 18 of 76
Answer here
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Employment details Name
Answer here
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Occupation
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Employment status
Business 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
Sole proprietor
Partnership
Sole proprietor
Partnership
Private company
Trust
Private company
Trust
Notes Any other person to be ed? E.g. ant, banker, solicitor, etc. Answer here
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 19 of 76
Income, tax and cash flow Tax calculation
Client 1
Client 2
Combined
Comments
Salary
Answer here
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Salary sacrifice
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Salary after salary sacrifice
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Rental income
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Unfranked dividends
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Franked dividends
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Franking (imputation) credits
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Interest
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Other income (e.g. taxable benefits, trust income, investment income)
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Capital gains < 1 yr
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Capital gains > 1 yr
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Tax-free component of capital gains
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Assessable income
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Deductible expenses
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Donations
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Other
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Taxable income
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Tax on taxable income
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Non-refundable tax offsets (e.g. LITO/SAPTO)
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Medicare levy
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Medicare levy surcharge
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Franking rebate
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Refundable rebates and offsets
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Total tax
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Income from employment
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Cash flow
Page 20 of 76
Client 1
Client 2
Combined
Comment
Salary less any salary sacrificed amount
Answer here
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Non-taxable income
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Rental income
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Unfranked dividends received
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Franked dividends received
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Interest
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Other income (e.g. taxable benefits, trust income, investment income)
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Total income received before tax
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Investment expenses
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Mortgage
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School fees
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Utilities
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Personal insurance
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Car insurance
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Home Building/Contents Insurance
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Health Insurance
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Living expenses
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Holidays
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House maintenance
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Motor vehicle
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Motor vehicle
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Other
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Child care
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Donations
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ant’s fees
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Total expenses
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Total income received before tax less total expenses
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Total tax payable from tax table above
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Total net cash flow
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Expenses
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 21 of 76
Assets and liabilities Asset
Owner
Value
Liabilities
Net value
Notes
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Investment property
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Savings
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Term deposit
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Shares
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Total
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Net worth
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Personal assets
Superannuation
Other Assets
Liabilities Loan
Current debt
Percentage tax deductible
Interest only
Repayment
Home loan
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Investment property
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Investment loan
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Personal loan
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Other
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Total
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DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 22 of 76
Needs and objectives Details
Comments
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Estate planning Estate planning Do you have a will? When was it last updated:
Yes
No
Yes
No
Date
Do you have powers of attorney?
Current superannuation, rollovers, insurances & investments Superannuation Member
Answer here
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Fund name
Answer here
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Date of ing fund
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Type of fund
Accumulati on
Defined benefit
Accumulati on
Defined benefit
Pension
Pensioner
Pension
Pensioner
By employer
By self
By employer
By self
Contribution (9.50% of salary)
SG
Current value of your superannuation fund
Answer here
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Amount of death and disability cover
Answer here
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Is there provision for you to top up or salary sacrifice?
DFP2-1v2.1 Assignment
Yes
Not sure
No
SG
Yes
Not sure
No
Fact finder and risk profile template
Page 23 of 76
Superannuation Taxation Details Name
Answer here
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Current value
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Tax free component
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Taxed element
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Untaxed element
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Preserved
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Unrestricted non-preserved
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Restricted non-preserved
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Year 1
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Year 2
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Year 3
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Year 4
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Year 1
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Year 2
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Year 3
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Year 4
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Taxable Component:
Preservation:
Contributions: Non-concessional contributions:
Concessional contributions:
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 24 of 76
Nominated Beneficiaries: Name
Binding
Non-Binding
Trustee discretion
(Yes/No)
(Yes/No)
Yes/No
Amount
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Yes/No
N
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Is there any current flags or splits on a superannuation benefit of yours following a marriage breakdown?
Details
Answer here
Answer here Answer here Answer here
Are you a beneficiary of any current flags or splits of a superannuation benefit following a marriage breakdown?
Yes/No
N
Details
Answer here
Answer here Answer here Answer here Answer here
Life insurance details Life insured
Owner
Policy type
Company
Policy number
Death benefit
Comments
Annual
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Disability insurance details Life insured
Owner
Policy type
Company
Policy number
Death benefit
Comments
Annual
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DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 25 of 76
Income protection insurance details Life insured
Owner
Policy type
Company
Policy number
Benefit Amount
Waiting Period
Benefit Payment Period
Annual
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General insurance details Item covered
Owner
Policy type
Company
Combined Policy number
Cover Amount
Other benefit
Total Annual
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Investment details Investment type
Company
Purchase date
Units held/fixed rate
Current value
Owner
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DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 26 of 76
Risk needs Insurance Needs — life Name C
Answer here
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Clean-up fund
Settle all outstanding s, including credit cards, bills and funeral costs
Answer here
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Income fund
The lump sum required to produce a level of regular income that maintains the family’s living standard for a defined period
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Mortgage fund
The amount necessary to discharge any existing mortgages
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Education fund
Lump sum determined by calculating each child’s education costs and multiplying by the number of years of school and/or university remaining
Answer here
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Retirement fund
The lump sum necessary to provide adequate funding for retirement
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less value of realisable assets
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less existing life insurance cover
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Recommended sum insured
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Recommended sum insured (rounded up to the nearest $10,000)
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DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 27 of 76
Insurance Needs — TPD Name C
Answer here
Answer here
Clean-up fund
Settle all outstanding s, including credit cards, bills and funeral costs
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
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Income fund
The lump sum required to produce a level of regular income that maintains the family’s living standard for a defined period
Answer here
Answer here
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Answer here
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Mortgage fund
The amount necessary to discharge any existing mortgages
Answer here
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Education fund
Lump sum determined by calculating each child’s education costs and multiplying by the number of years of school and/or university remaining
Answer here
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Retirement fund
The lump sum necessary to provide adequate funding for retirement
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less value of realisable assets
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less existing life insurance cover
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Recommended sum insured
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Recommended sum insured (rounded up to the nearest $10,000)
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DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 28 of 76
Insurance needs — Trauma Name
Answer here
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Funds required to pay out home mortgage
Answer here
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Estimated medical and rehabilitation costs (including cover out-of-pocket health costs)
Answer here
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Other debts
Answer here
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Other expenses
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Less existing realisable assets
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Recommended sum insured
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Recommended sum insured (rounded up to the nearest $10,000)
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Name
Answer here
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Gross annual income
Answer here
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Superannuation Guarantee
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Total insurable income
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Monthly income (i.e. Total insurable income / 12)
Answer here
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Recommended monthly benefit (i.e. 75% of total monthly insurable amount)
Answer here
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Benefit payment period
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Waiting period to be served
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Insurance needs — Income Protection Income Protection
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 a 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 planner has provided me with the completed financial fact finder, signed by me. Customer(s) signature(s) Planner’s name Planner’s signature Date
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 29 of 76
Note: An investment needs analysis is not required for this assignment. These investment attitude details tables have been included to provide a realistic example of the fact-finder process.
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 30 of 76
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?
Why?
I think that I should be able to structure things better to pay less tax like other people seem to do.
How important is liquidity (i.e. funds available) to you?
Why?
Yes/No
Very/Moderately/Not
R O F D E T R I N U E Q M E N R G I T S O S N A S I TH
I would like the money available so I can buy a property in the future.
If you had funds available for investing, how would you choose to invest them? Why?
Term deposits, but don’t know what else is available or how it works. Are there certain sorts of investment that you wish to avoid?
Which ones?
Yes/No
I don’t know really know.
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 planner, you can choose the investments that best match your financial objectives. Which of the following best describes your current stage of life? 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 entertainment.
50
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 you may be in the future.
40
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 saved.
35
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 less supervision. You are starting to think about retirement, although it may be many years away.
30
R O F D E R I T U N E Q E M R N G T I S NO S A S I H T
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 31 of 76
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. Interested in travel, recreation and self-education.
20
Retired: No longer working you must rely on existing funds and investments to maintain your lifestyle. You may be receiving the pension and are keen to enjoy life and maintain your health.
10
What return do you reasonably expect to achieve from your investments? A return without losing any capital
10
3–7% p.a.
20
8–12% p.a.
30
13–15% p.a.
40
Over 15% p.a.
R O F D E R I T U N E Q E M R N G T I S NO S A S I H T
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 it in?
You would cash it in if there were any loss in value
10
Less than 1 year
20
Up to 3 years
30
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 32 of 76
Up to 5 years
40
Up to 7 years
45
Up to 10 years
50
How familiar are you with investment markets?
Very little understanding or interest
10
Not very familiar
20
Would like to know more.
Have had enough experience to understand the importance of diversification
30
Understand that markets may fluctuate and that different market sectors offer different income, growth and taxation characteristics
40
Experienced with all investment sectors and understand the various factors that may influence performance
50
R O F D E R I T U N E Q E M R N G T I S NO S A S I H T
If you can only get greater tax efficiency from more volatile investments, which balance would you be most comfortable with?
Preferably guaranteed returns, before tax savings
10
Stable, reliable returns, minimal tax savings
20
Some variability in returns, some tax savings
30
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 33 of 76
Moderate variability in returns, reasonable tax savings
40
Unstable, but potentially higher returns, maximising tax savings
50
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 34 of 76
Six months after placing your investment you discover that your portfolio has decreased in value by 20%, what would be your reaction?
Horror. Security of capital is critical and you did not intend to take risks
10
You would cut your losses and transfer your money into more secure investment sectors
20
You would be concerned, but would wait to see if the investments improve
30
This was a calculated risk and you would leave the investments in place, expecting performance to improve
40
You would invest more funds to lower your average investment price, expecting future growth
50
R O F D E R I T U N E Q E M R N G T I S NO S A S I H T
Which of the following best describes your purpose for investing?
You want to invest for longer than five years, probably to the age of 55–60. You are mainly investing for growth to accumulate long-term wealth
50
You are not nearing retirement, have surplus funds to invest and you are aiming to accumulate long-term wealth from a balanced fund
40
You have a lump sum (e.g. an inheritance or an eligible termination payment from your employer) and you are uncertain about what secure investment alternatives are available
30
You are nearing retirement and you are investing to ensure that you have sufficient funds available to enjoy retirement
20
You have some specific objectives within the next five years for which you want to save enough money
20
You want a regular income and/or totally protect the value of your savings
10
Investor profile total points
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 35 of 76
Investor risk profile summary 0–70
Conservative — 70% Defensive and 30% Growth
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. 71–130
Moderately Conservative — 55% Defensive and 56% Growth
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
R O F D E R I T U N E Q E M R N G T I S NO S A S I H T Balanced — 40% Defensive and 60% Growth
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 — 30% Defensive and 70% 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 — 10% Defensive and 90% 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.
DFP2-1v2.1 Assignment
Case study questions
Case study questions Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to analyse a client’s needs in preparation for developing a strategy that aligns with their requirements. Section 3 Questions — Analysing the data Section 3 Part A List what you understand to be the couple’s goals, needs and objectives. Categorise them into short, medium and long-term time frames. They should be specific, measurable and have a nominated dollar value where possible. (250 words) Goals/need/objectives
Timeframe
Dollar value
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Notes Assessor :
DFP2-1v2.1 Assignment
Case study questions
Section 3 Part B Analyse the data provided by the couple by answering the following questions. Think carefully about your responses and do not assume that you are in a position to provide answers to everything. You may not have enough information, it may be outside of your licensee’s designated authority for this case study (i.e. the matter needs to be referred to a specialist adviser) or it is not a goal or objective of your clients. Where this might be the case, make sure you make a comment to that effect where relevant. Make sure you constantly refer to the data you have on Joseph and Julie so your responses accurately reflect the information provided to you.
a.
The questions
Your response
Do Julie and Joseph need a debt management solution?
Answer here
If yes, why?
Answer here
If no, why not? b.
Do Julie and Joseph currently have adequate life and TPD cover?
Answer here
If yes, why/how?
Answer here
If not, how much should they have, and why that much? c.
Is their current Life and TPD cover provided through superannuation the best alternate?
Answer here
If yes, why?
Answer here
If not, why? What could be the alternative? d.
Do Julie and Joseph require any other insurance cover?
Answer here
If ‘yes’, what type of cover? How much do they need? How should it be provided?
Answer here
If ‘no’, why? e.
Is there anything that could impact on Joseph’s and Julie’s ability to obtain insurance cover?
Answer here
If ‘yes’, which cover(s)/why?
Answer here
If ‘no’, why not? f.
If Julie commences work from home, will this have any impact on her current or your recommended insurance cover(s)?
DFP2-1v2.1 Assignment
Answer here
The assessors
Case study questions
If ‘yes’, which cover(s)/why? If ‘no’, why?
DFP2-1v2.1 Assignment
Answer here
Case study questions
g.
If Julie commences work from home, would she require any further insurance cover?
Answer here
If ‘yes’, why and what would she require?
Answer here
If ‘no’, why not? h.
Are there any present and/or anticipated future taxation issues associated with your recommendations?
Answer here
If yes, why and what are they?
Answer here
If no, why not? i.
j.
Has any provision been made for estate planning?
Answer here
What could be put in place now for any anticipated requirements?
Answer here
Are there any present and/or anticipated future cash flow implications associated with your recommendations?
Answer here
If ‘yes’, why and what are they?
Answer here
If ‘no’, why not?
DFP2-1v2.1 Assignment
Case study questions
Case study questions Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to analysis a client’s needs and develop a strategy that aligns with their requirements.
Section 4 Questions — Developing a strategy Section 4 Part A Based on your analysis of the data, describe in general the strategy you think will best meet Julie and Joseph’s needs and why. Include what other specialist advice they will need to source so they can have access to a comprehensive financial plan (up to 500 words). Note: Students who may need assistance determining the approximate costs of particular recommendations may refer to website
and use the calculations and comparisons provided there as a guide when answering assignment questions. Answer here Assessor :
DFP2-1v2.1 Assignment
Case study questions
Section 4 Part B Following your conclusions developed in section 4 part A, you are now in a position to research products to meet your clients’ risk management needs. Information on different products and providers is readily available on the internet, or if you are already working for a licensee you may be able to use those from your approved product list. The website at
may be of assistance in determining the likely cost of a recommendation. Research and compare three (3) insurance products of each cover type. List them here, and indicate why you think these may, or may not, be the ‘best fit’ for Julie and Joseph. At the conclusion of this process you will need to have selected the product(s) that you think will meet their needs. (Please add rows as required, or leave rows blank that are not needed.) The product (name and url link)
Why you think it may or may not be the ‘best fit’ for the couple.
Answer here
Answer here
Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
DFP2-1v2.1 Assignment
Indicate which product/s you will use in your plan
Case study questions
Section 6 Questions — Presenting the SOA Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to negotiate aspects of a plan a client is dissatisfied with, and then to gain their consent to proceed with your recommendations. Section 6 Part A In the space provided, write a script for how would you explain to your clients the rationale for the choice of one product selection over another (200 words). Answer here Assessor :
Section 6 Part B Your clients reluctantly agree with your choice but it is clear they are not 100% satisfied. How will you proceed with the conversation from this point on? Think about what you aim to achieve from both a client engagement and compliance perspective. (200 words) Answer here Assessor :
DFP2-1v2.1 Assignment
Case study questions
Section 6 Part C Describe how you will conclude this conversation so that you have met all your compliance requirements. (100 words) Answer here Assessor :
DFP2-1v2.1 Assignment
Statement of advice template
Page 44 of 76
The Statement of Advice Template The following Statement of Advice template must be used to record your advice for your clients Josephy and Julie Hahn. , this is document is the one you will use to communicate to your clients your advice so it must be well written and professionally presented. Apart from not meeting professional standards, a carelessly compiled SOA does not inspire a client’s confidence or trust in your skills as a financial planner.
DFP2-1v2.1 Assignment
Statement of advice template
Page 45 of 76
Statement of advice Prepared for
Delete this box when you have inserted your name here.
Joseph and Julie Hahn Prepared by
Authorised Representative Authorised Representative Number: 66666 AR Address AR details Authorised Representative of
KeyPlan Financial Planning ABN: 1010101010 Australian Financial Services Licensee Licence No. 101010 Head office: 88 Money Lane, Accumulation.
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 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 on 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 information about the particular product to help you make an informed decision about that 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 need to be reviewed for accuracy.
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 46 of 76
Contents Statement of advice
39
Executive summary..........................................................42
Important information about you
44
Present position................................................................44
Strategy recommendations
48
Recommended insurance cover........................................51
Insurance product recommendations
52
Disclosure of remunerations, commissions and other benefits 53 How are we paid?..............................................................53 Ongoing services..............................................................54 Implementation schedule.................................................55 Authority to proceed.........................................................56
Cash flow tables
58
Financial position before implementation of strategy......58 Financial position after implementation of strategy.........61
Assumptions
DFP2-1v2.1 Assignment
64
© Kaplan Professional Education
Statement of advice template
Page 47 of 76
Executive summary In this section, you need to provide your client with a concise summary of: their situation their objectives your recommended strategy to achieve the objectives the outcomes your clients can expect from adopting the strategy. The clients should be able to read this executive summary and understand the advice you are giving, the reason/s underpinning the advice, and be able to determine whether or not their goals have been achieved. There should be sufficient detail to allow the clients to make a decision, taking into any risk/s involved and your fees. It should be written in clear, unambiguous language, without jargon and be appropriate to their level of financial understanding.
Your situation This where you need to summarise your client’s current situation. Answer here Assessor :
Your objectives This where you need to list your client’s objectives: i.e. their financial goals. Answer here Assessor :
Summary of our strategy and recommendations This where you need to summarise your recommendations for your clients. Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 48 of 76
Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 49 of 76
Summary of expected outcomes if you implement our advice For example: If you proceed with the recommendations contained within this report, we estimate that: – You will reduce your debt by $XYZ and/or save $ABC. – You will build wealth in non-superannuation assets through regular contribution of $X. Answer here Assessor :
Risks in our advice Detail the issues clients need to be aware of when following advice. Answer here Assessor :
Summary of our fees and commissions Detail charges that the clients will incur. Answer here Assessor :
Your next steps Outline what your clients will need to do next to decide whether or not to follow the advice. Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 50 of 76
Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 51 of 76
Body While this section contains similar headings to the executive summary, the information provided is at a greater level of detail and s the recommendations made. As with the executive summary, it should be written in clear, unambiguous language, without jargon and be appropriate to your clients’ level of financial understanding.
Important information about you This section contains information about you that we used in preparing our advice, such as: your reasons for seeking advice what you would like to achieve your personal and financial information.
Present position Your reasons for seeking advice Outline why the client sought advice. Answer here Assessor :
What you would like to achieve Summarise here what you understand to be your client’s main objectives. Following our discussions, here is what I/we understand to be your main objectives and needs: Answer here Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
DFP2-1v2.1 Assignment
Page 52 of 76
© Kaplan Professional Education
Statement of advice template
Page 53 of 76
Your personal and financial information Listed below is a summary of your relevant personal and financial details that you have provided. Personal information Personal details Client 1
Client 2
First name(s)
Answer here
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Surname
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Date of birth
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Current age
Answer here
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Marital status
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Health status
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Smoker status
Answer here
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Employment status
Answer here
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Employer name
Answer here
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Occupation
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Annual salary
Answer here
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Relevant notes (add any information that is not included elsewhere) Answer here Assessor :
Children and dependant details Answer here Your existing insurance Personal insurance
Answer here
Car insurance
Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 54 of 76
Home Contents Insurance
Answer here
Health Insurance
Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 55 of 76
Your existing estate planning Summarise the client’s existing estate planning provisions here. Answer here Assessor :
Financial information Current income and expense details Income and expenses Client 1
Client 2
Total
Total income received before tax
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Net tax payable
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Yearly expenses
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Estimated surplus/deficit
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Discussion points: Summarise the discussion points that could/need to be raised here. Answer here Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 56 of 76
Assets and liabilities Value
Liability
Net value
Home
Answer here
Answer here
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Home contents
Answer here
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Motor vehicles
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Personal assets
Answer here
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Employer superannuation
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Savings
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Term deposit
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Other
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Investment assets
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Shares
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Net worth
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Discussion points: Summarise the discussion points that could/need to be raised here. Answer here Assessor :
Incomplete and/or inaccurate information warning Note that if, for any reason, the information on which our advice is based is incomplete or inaccurate, then it may not be appropriate and you should, before acting on the advice consider its appropriateness, in light of your particular circumstances, needs and objectives.
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 57 of 76
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 carefully and ask me if you have any questions.
Recommended action Note to students: You will use your findings from the analysis you did in Section 4 of the assignment above as the basis for the information you will need to provide in this section. For each recommendation below, discuss the reasons, risks, advantages and disadvantages. (Please add or delete ‘Recommendation’ boxes as applicable.) All insurance recommendations should be listed here.
Recommendation 1 Answer here Assessor :
Recommendation 2 Answer here Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 58 of 76
Recommendation 3 Answer here Assessor :
Recommendation 4 Answer here Assessor :
Recommendation 5 Answer here Assessor :
Things you need to consider In addition to the insurance recommendations you are making above, there may be additional information your clients should know about this plan and their financial situation and goals. Use the space below to record that information.
Debt management Answer here Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 59 of 76
Personal investment Answer here Assessor :
Superannuation Answer here Assessor :
Estate planning Answer here Assessor :
Alternative strategies considered Your clients are going to want to know that you have carefully considered their situation and in this process rejected some potential strategies that were not the most suitable for their needs. Insert details of any relevant alternate strategies that you considered and the reasons that they were rejected. Answer here Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
DFP2-1v2.1 Assignment
Page 60 of 76
© Kaplan Professional Education
Statement of advice template
Page 61 of 76
Recommended insurance cover Provide details of the recommended types of insurance, the sums insured, and the ownership structure. In addition, you must justify your recommendations by explaining why these recommendations are applicable to your clients. Answer here Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 62 of 76
Insurance product recommendations Product recommendations Note that I can only recommend products on our recommended list, which have been approved by my licensee. Use the space below to list the products that you are recommending Joseph and Julie use. Joseph and Julie Hahn, following our insurance strategy, we recommend that you purchase the following products: Answer here Relevant research material and product disclosure statements (PDSs) are attached for your attention. It is important that you read these documents carefully and 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. Note: You do not need to include these PDSs as part of your assignment. The above statement is a standard inclusion in a statement of advice. Assessor :
Cooling-off period Details on the cooling-off period for each product are provided in the PDS.
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 63 of 76
Disclosure of remunerations, commissions and other benefits How are we paid? Commissions and fees — upfront, ongoing commissions and financial planning advice fees If you are charging SOA preparation fees, implementation fees, ongoing advice fees, or any other non-product related fees, you must provide the details here. You may need to source information outside of the subject notes to complete this requirement. However, you can use the examples of how fees are shared between advisers and licensees from the sample SOA if needed. If you are not charging these fees fill in the table with ‘$0’ as the fee charged so the client understands there are no charges. Fee type
Initial fee
Initial fee paid to licensee
Initial fee paid to adviser
SOA fee
Answer here
Answer here
Answer here
Implementation fee
Answer here
Answer here
Answer here
Ongoing advice fee*
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
*If you are charging a flat fee, or an hourly fee it should be included in this table. If an initial and/or ongoing service fee is charged as a percentage of the product(s) you have recommended, it should be included in the table below.
Insurance recommendations You will need to source information from your selected product PDS, outside of the subject notes, to complete this table. If you wish to implement the products I have recommended, I will receive commission for some of the insurance products I have recommended. I believe that those are the best products for you; however, there may be other suitable products that pay a lower commission. Product
DFP2-1v2.1 Assignment
Initial commission paid to dealer
Initial commission paid to adviser
Ongoing commission paid to dealer
Ongoing commission paid to adviser
© Kaplan Professional Education
Statement of advice template
Page 64 of 76
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
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Answer here
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Total
Answer here
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The amount of ongoing commission receive by my licensee will depend on the s you pay. Assessor :
Other fees and benefits My licensee and I may also receive additional benefits. Where the benefits received are greater than $300 in value, they will be recorded in a that meets the requirements of the Financial Planning Association (FPA) Code of Practice on alternative forms of remuneration. A copy of the for my licensee is publicly available and can be provided upon your request.
Ongoing services You need to make sure that your client fully understands what you are offering in of ongoing service. Use the space below to record the details of how you will manage this process. Answer here (refer to the sample SOA for the sorts of services you could include here). Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 65 of 76
Implementation schedule In order to ensure that your recommendations will be implemented efficiently, you need to make sure that all tasks that need to be completed, both by the client and yourself, are itemised in the schedule. The schedule should highlight the priority of each task, as well as the order of completion. The time frame should be as specific as possible. Joseph and Julie Hahn, in order to proceed with our recommendations, you will need to complete the steps below: Action
By who
By when
Answer here
Answer here
Answer here
Answer here
Answer here
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Note: The recommendations contained in this SOA are current for 30 days only. Please me for further discussion if you are unable to act on our recommendation within this time frame. Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 66 of 76
Authority to proceed By g this authority to proceed, I/we <Joseph and Julie Hahn> acknowledge the following: I/We acknowledge that the information I provided in the financial needs analysis has been used to arrive at the recommendations contained in this SOA. I/We have read, understood and retained a copy of the SOA prepared by
dated
. This document contains information which accurately summarises our current situation, investments and financial objectives. I/We have been provided with an KeyPlan Financial Planning Financial Services Guide. I/We have read and understood the PDSs for the recommended products. Please note that a cooling-off period may apply to your initial investment or insurance policy. Refer to the PDS. I/We acknowledge that the product(s) listed in the table below are to be implemented in my/our name/s: Product(s)
Amount
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
I/We wish to make the following change/s to the recommendations within the SOA Product(s)
Amount
Answer here
Answer here
Answer here
Answer here
Signed______________________________
Date _____/_____/_____
Client Name Signed______________________________
Date _____/_____/_____
Client Name Signed______________________________
Date _____/_____/_____
Financial Planner
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 67 of 76
Consent to ongoing I/We consent to being ed by our adviser on an ongoing basis, in line with the agreed ongoing service review structure detailed within this recommendation. My/our preferred hours of are between ____ and ____. Signed______________________________
Date _____/_____/_____
Client Name Signed______________________________
Date _____/_____/_____
Client Name
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Cash flow tables Financial position before implementation of strategy Note: The items listed in this template are indicative only and must be adapted to your clients’ personal circumstances. There may be other relevant income or expense items that are not included in this template. You should add, delete or substitute items where appropriate. Accurately completed cash flows are essential in the financial planning process to recommendations. They are key to demonstrating your competency. Tax calculations Client 1
Client 2
Notes
Salary
Answer here
Answer here
Answer here
Salary sacrifice
Answer here
Answer here
(state % if applicable)
Salary after salary sacrifice
Answer here
Answer here
Answer here
Bank interest
Answer here
Answer here
(state % return if applicable)
Interest from other investments
Answer here
Answer here
(state % return if applicable)
Share dividends
Answer here
Answer here
(state % return if applicable
Imputation credits
Answer here
Answer here
(state % return if applicable
Other income liable for tax (e.g. rental income)
Answer here
Answer here
Answer here
Assessable capital gains
Answer here
Answer here
Answer here
Total assessable income
Answer here
Answer here
Answer here
Deductable expenses (e.g. rental repairs)
Answer here
Answer here
Answer here
Taxable income
Answer here
Answer here
Answer here
Income tax on taxable income
Answer here
Answer here
(state tax rates and year applied)
less tax offsets (e.g. LITO/SAPTO)
Answer here
Answer here
Answer here
plus Medicare levy
Answer here
Answer here
Answer here
Income from employment
Other income
DFP2-1v2.1 Assignment
© Kaplan Professional Education
plus Medicare levy surcharge
Answer here
Answer here
Answer here
less Imputation credits
Answer here
Answer here
Answer here
less refundable tax offsets
Answer here
Answer here
Answer here
Net tax payable
Answer here
Answer here
Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Cash flow tables: Client’s financial position before implementation
70
Cash flow calculation Family cash flow Client 1
Client 2
Combined
Comment
Salary less any salary sacrificed amount
Answer here
Answer here
Answer here
Answer here
Non-taxable income (e.g. income from a superannuation pension for a person aged over 60, Family Tax Benefits, etc.)
Answer here
Answer here
Answer here
Answer here
Interest income
Answer here
Answer here
Answer here
Answer here
Dividends received (excluding franking credits)
Answer here
Answer here
Answer here
Answer here
Other income
Answer here
Answer here
Answer here
Answer here
Total income received before tax
Answer here
Answer here
Answer here
Answer here
Investment expenses
Answer here
Answer here
Answer here
Answer here
Living expenses
Answer here
Answer here
Answer here
Answer here
Other expenses
Answer here
Answer here
Answer here
Answer here
Total expenses
Answer here
Answer here
Answer here
Answer here
Total income received before tax less expenses
Answer here
Answer here
Answer here
Answer here
Net tax payable from tax table above
Answer here
Answer here
Answer here
Answer here
Total net cash flow
Answer here
Answer here
Answer here
Answer here
Assets and liabilities Asset
Owner
Value
Liabilities
Net value
Notes
Family home
Answer here
Answer here
Answer here
Answer here
Answer here
Home contents
Answer here
Answer here
Answer here
Answer here
Answer here
Car 1
Answer here
Answer here
Answer here
Answer here
Answer here
Car 2
Answer here
Answer here
Answer here
Answer here
Answer here
Other
Answer here
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
Answer here
Client 1 superannuation
Answer here
Answer here
Answer here
Answer here
Answer here
Client 2 superannuation
Answer here
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
Answer here
Personal assets
Superannuation
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Cash flow tables: Client’s financial position before implementation
71
Assets and liabilities Investment assets Investment property
Answer here
Answer here
Answer here
Answer here
Answer here
Savings
Answer here
Answer here
Answer here
Answer here
Answer here
Term deposit
Answer here
Answer here
Answer here
Answer here
Answer here
Shares
Answer here
Answer here
Answer here
Answer here
Answer here
Other
Answer here
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
Answer here
Net worth
Answer here
Answer here
Answer here
Answer here
Answer here
Liabilities Loan
Current debt
Percentage deductible
Interest only
Repayment
Home loan
Answer here
Answer here
Answer here
Answer here
Investment property
Answer here
Answer here
Answer here
Answer here
Other
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Cash flow tables: Client’s financial position after implementation
72
Financial position after implementation of strategy Note: The items listed in this template are indicative only and must be adapted to your clients’ personal circumstances. There may be other relevant income or expense items that are not included in this template. You should add, delete or substitute items where appropriate. Accurately completed cash flows are essential in the financial planning process to recommendations. They are key to demonstrating your competency. Tax calculations
Client 1
Client 2
Notes
Salary
Answer here
Answer here
Answer here
Salary sacrifice
Answer here
Answer here
(state % if applicable)
Salary after salary sacrifice
Answer here
Answer here
Answer here
Bank interest
Answer here
Answer here
(state % return if applicable)
Interest from other investments
Answer here
Answer here
(state % return if applicable)
Share dividends
Answer here
Answer here
(state % return if applicable
Imputation credits
Answer here
Answer here
(state % return if applicable
Other income liable for tax (e.g. rental income)
Answer here
Answer here
Answer here
Assessable capital gains
Answer here
Answer here
Answer here
Total assessable income
Answer here
Answer here
Answer here
Deductable expenses (e.g. rental repairs)
Answer here
Answer here
Answer here
Taxable income
Answer here
Answer here
Answer here
Income tax on taxable income
Answer here
Answer here
(state tax rates and year applied)
less tax offsets (e.g. LITO/SAPTO)
Answer here
Answer here
Answer here
plus Medicare levy
Answer here
Answer here
Answer here
plus Medicare levy surcharge
Answer here
Answer here
Answer here
less Imputation credits
Answer here
Answer here
Answer here
less refundable tax offsets
Answer here
Answer here
Answer here
Income from employment
Other income
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Cash flow tables: Client’s financial position after implementation
Net tax payable
DFP2-1v2.1 Assignment
Answer here
73
Answer here
Answer here
© Kaplan Professional Education
Cash flow tables: Client’s financial position after implementation
74
Cash flow calculation Family cash flow
Client 1
Client 2
Combined
Comment
Salary less any salary sacrificed amount
Answer here
Answer here
Answer here
Answer here
Non-taxable income (e.g. income from a superannuation pension for a person aged over 60, Family Tax Benefits, etc.)
Answer here
Answer here
Answer here
Answer here
Interest income
Answer here
Answer here
Answer here
Answer here
Dividends received (excluding franking credits)
Answer here
Answer here
Answer here
Answer here
Other income
Answer here
Answer here
Answer here
Answer here
Total income received before tax
Answer here
Answer here
Answer here
Answer here
Investment expenses
Answer here
Answer here
Answer here
Answer here
Living expenses
Answer here
Answer here
Answer here
Answer here
Other expenses
Answer here
Answer here
Answer here
Answer here
Total expenses
Answer here
Answer here
Answer here
Answer here
Total income received before tax less expenses
Answer here
Answer here
Answer here
Answer here
Net tax payable from tax table above
Answer here
Answer here
Answer here
Answer here
Total net cash flow
Answer here
Answer here
Answer here
Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Cash flow tables: Client’s financial position after implementation
75
Assets and liabilities Asset
Owner
Value
Liabilities
Net value
Notes
Family home
Answer here
Answer here
Answer here
Answer here
Answer here
Home contents
Answer here
Answer here
Answer here
Answer here
Answer here
Car 1
Answer here
Answer here
Answer here
Answer here
Answer here
Car 2
Answer here
Answer here
Answer here
Answer here
Answer here
Other
Answer here
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
Answer here
Client 1 superannuation
Answer here
Answer here
Answer here
Answer here
Answer here
Client 2 superannuation
Answer here
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
Answer here
Investment property
Answer here
Answer here
Answer here
Answer here
Answer here
Savings
Answer here
Answer here
Answer here
Answer here
Answer here
Term deposit
Answer here
Answer here
Answer here
Answer here
Answer here
Personal assets
Superannuation
Investment assets
Investment assets continued Shares
Answer here
Answer here
Answer here
Answer here
Answer here
Other
Answer here
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
Answer here
Net worth
Answer here
Answer here
Answer here
Answer here
Answer here
Liabilities Loan
Current debt
Percentage deductible
Interest only
Repayment
Home loan
Answer here
Answer here
Answer here
Answer here
Investment property
Answer here
Answer here
Answer here
Answer here
Other
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Assumptions
76
Assumptions As stated in the instructions for section 5 in the case study (part (d) on page 12), please list all your assumptions here: Value
Current situation
Proposed strategy
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
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Answer here
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Answer here
Answer here
List any other assumptions here: Assumptions
Student identification (student to complete) Please complete the fields shaded grey. Student number
INT
Student name
Telephone number
Assignment result (assessor to complete) Result — first submission (details for each activity are shown in the table below) Not yet competent Result — resubmission (if applicable) Not yet competent
Result summary (assessor to complete)
Fact finder Case study assignment questions
First submission
Resubmission (if required)
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 6
Not yet demonstrated
Not yet demonstrated
Statement of advice
Not yet demonstrated
Not yet demonstrated
Cash flow tables
Not yet demonstrated
Not yet demonstrated
(assessor to complete) [insert assessor ]
DFP2-1v2.1 Assignment
Before you begin Read everything in this document before you start your assignment for Insurance and Risk Protection.
About this document This document contains: Instructions for completing and submitting this assignment The case study Insurance and risk protection assignment: – Fact finder and risk profile template – Case study questions – Statement of advice (SOA) template – Cash flow tables (financial position before and after implementation of strategy) – Assumptions
Saving your work this document to your desktop, type your answers in the spaces provided and save your work regularly.
How to use the study plan We recommend that you use your study plan for this subject to help you manage your time to complete the assignment within your enrolment period. Your study plan is in the KapLearn Insurance and Risk Protection subject room.
DFP2-1v2.1 Assignment
Instructions for completing and submitting this assignment Completing the assignment The assignment You are required to complete the following tasks in this assignment document: complete the fact-finder template for your clients (the risk profile template is included in this document for you to view, but you are not required to complete the risk profile template for this assignment) answer the assignment questions as they relate to sections 3, 4 and 6 of the case study complete the statement of advice (SOA) template for your client, using the data in the case study and the fact finder (in a full analysis you would usually also use the risk profile data) complete the two (2) cash flow tables. The information and data you need to do this work is presented as a case study. Some data will have to be externally sourced; the templates clearly indicate where this will be necessary.
The ‘Joseph and Julie Hahn’ case study The case study steps you through the financial planning process: from initial with the Hahns, to the development and documentation of their fact finder, and finally, to your financial strategy documented as a statement of advice (SOA) to meet their needs.
Fact finder, risk profile, statement of advice and financial position templates All these templates are provided in this assignment.
Additional research You will be required to source additional information from other organisations in the financial services industry to find the right product/s to meet the Hahn’s requirements, and to calculate your service fees.
DFP2-1v2.1 Assignment
Submitting the assignment You must submit your completed assignment as a Microsoft Office compatible Word document. You need to save and submit this entire document. Do not remove any sections of the document. Do not save your completed assignment as a PDF. The assignment must be completed before submitting it to Kaplan Professional Education (KPE). Incomplete assignments will be returned to you unmarked. The maximum file size is 5MB. Once you submit your assignment for marking you will be unable to make any further changes to it. You may submit your assignment earlier than the deadline if you are confident you have completed all parts and have prepared a quality submission.
The assignment marking process You have 12 weeks from the date of your enrolment in this subject to submit your completed assignment. Your assessor will mark your assignment and return it to your subject room in KapLearn at the ‘Assessment’ tab.
‘Not yet competent’ and resubmissions If sections of your assignment are graded as ‘not yet competent’ you will be given an additional opportunity to amend your responses so that you can demonstrate your competency to the required level. You must address the assessor’s in your amended responses. You only need to amend those sections where the assessor has determined you are ‘not yet competent’. Make changes to your original submission. Use a different text colour for your resubmission. Your assessor will be in a better position to gauge the quality and nature of your changes. Ensure you leave your first assessor’s comments in your assignment, so your second assessor can see the instructions that were originally provided for you. Do not change any comments made by a Kaplan assessor.
Units of competency This assignment is your opportunity to demonstrate your competency against these units:
DFP2-1v2.1 Assignment
FNSASICX503A
Provide advice in Life Insurance
FNSINC501A
Conduct product research to recommendations
FNSIAD501A
Provide appropriate services, advice and products to clients
FNSCUS506A
Record and implement client instructions
FNSCUS505A
Determine client requirements and expectations
DFP2-1v2.1 Assignment
We are here to help If you have any questions about this assignment you can post your query at the ‘Ask your tutor’ forum in KapLearn subject room. You can expect an answer within 24 hours of your posting from one of our technical advisers or student staff.
DFP2-1v2.1 Assignment
The case study
Page 7 of 76
The case study Section 1 — Meeting your client The first phone call Joseph and Julie Hahn are a young married couple with one child. Recently John, a business associate of Julie, who also has a young family, was seriously injured in a vehicle accident that has resulted in uncertainty about his ability to return to work. Joseph and Julie have also learned that, due to inadequate insurance cover, the family of the injured work colleague are now under financial stress. They do have some insurance cover themselves, but are now unsure if it is adequate or suitable for their needs. Recalling a positive experience Julie had with you a few years ago on another financial matter, she asks Joseph to give you a call to see if you can help them with their insurance needs. You explain to Joseph and Julie the financial planning process and why you will need to ask the couple for certain types of financial information. You stress that any information they give you will be treated confidentially and will only be used to help you recommend appropriate courses of action that the Hahn’s should consider to ultimately meet their needs. You tell them information concerning privacy, you and your firm’s capability, and other disclosure issues is in their firm’s financial services guide (FSG) that you will send to them. You go on to explain that part of the information gathering will include the need to complete a financial profile. This means that they will need to tell you what they own, what they owe, what they earn and their living expenses. All this information will be recorded in a fact-finder form you will compile. You arrange a date and time for them to come to your office. You ask them to bring along to the meeting as much financial information as they can, including income details, expenses, insurance details, superannuation, investments, etc. You also ask them to think about what specific financial goals they want achieved and any issues they wish to ask about at the meeting. When you have concluded the call, you make a file note about the conversation including the date, the potential clients’ names, and any other items that were discussed. This is the start of your paper trail. You also complete some of the initial details in the data collection form as shown in Table 1. Finally you write to Julie and Joseph, as promised during your initial conversation, and include the FSG and a checklist of the information they need to bring to the meeting.
DFP2-1v2.1 Assignment
The case study
Table 1
Page 8 of 76
Personal details Client
Client 2
Title
Mrs
Mr
Surname
Hahn (née Smeg)
Hahn
Given and preferred names
Julie
Joseph
Home address
42 Amazon St
42 Amazon St
Geelong Vic 3220
Geelong Vic 3220
Business address
n.a.
n.a.
phone
(03) 5544 7766
(03) 5544 7766
Age
32
35
Sex
Male
Female
Male
Female
Smoker
Yes
No
Yes
No
Expected retirement age
Probably around the same time as Joseph retires
Probably around age 65
The first meeting Joseph and Julie arrive at your office for the meeting as arranged. After making them comfortable you go through the key elements of your FSG and explain your role and capacity to assist them with their insurance needs. Collecting the data You gather the following information about Joseph and Julie through a process of thorough and polite questioning. From time to time, one or the other provides you with a relevant document to confirm their financial situation. You confirm the details in the fact finder as you proceed.
DFP2-1v2.1 Assignment
The case study
Page 9 of 76
Joseph and Julie’s current situation Joseph, age 35, is married to Julie, who is 32. Julie follows netball and is a keen weekend player in a local competition. Julie and Joseph have one child, a boy named Harry, who was born 12 months ago. Joseph and Julie purchased their home about two years ago for $675,000 and they have a mortgage of $400,000. The mortgage is a variable interest loan with an interest rate of 5.81% p.a. which is linked to a bank offset (Note: An offset is one that allows the credit balance of the offset to offset the interest owing on an outstanding loan or mortgage, reducing the interest payable.) The mortgage has 23 years remaining and their minimum mortgage repayment is $2530 per month. Any excess income they have is paid into the offset . The current amount available in their offset is $30,000. Joseph works full-time as a chemical engineer for an agricultural supplies company that sells agricultural chemicals, seed and fertilisers and takes regular interstate business trips to rural and regional Australia. He has worked full-time for his employer for ten years and earns $135,000 p.a. with additional superannuation guarantee (SG) contributions from his employer paid into the employer’s default fund. Julie has recently returned to work on a part-time basis following maternity leave. She is a marketing manager for a local engineering company and has been with the same firm for ten years as well. She earns $55,000 p.a. with additional SG contributions from her employer paid into the employer’s default fund. Julie advises during the meeting that she feels she would like to change her current employment, and is considering starting up her own consulting business from home. This would enable her to spend more time with their son. They currently use a child care centre to look after Harry when Julie is at work. The fees are $86 per day, which Julie utilises two days per week for 48 weeks per year. These expenses are not included in their day-to-day living expenses. Once Harry starts school, Julie and Joseph hope to send him to the local independent school at a total cost of $65,000 for his whole school life. Other than their cash in the bank, superannuation holdings and house contents, the only other assets they have are their motor vehicles. A 2010 Ford Focus, currently valued at $11,000, is used by Julie and Joseph drives a 2009 Holden HSV performance vehicle, currently valued at $33,000. Both cars are fully paid off and are comprehensively insured. All motor vehicle expenses (except insurance) are included in the clients’ living expenses.
Superannuation Joseph has $280,000 in his employer’s default superannuation fund, the ASSF Super Fund, and is invested in a balanced portfolio. He ed the fund on 1 February 2004. Julie has $124,000 in her employer’s default superannuation fund, the CISF Super Fund and is invested in a balanced portfolio. Julie ed the fund on 19 January 2004.
DFP2-1v2.1 Assignment
The case study
Page 10 of 76
Neither Julie nor Joseph make any additional contributions to their superannuation funds.
Insurance Joseph’s default superannuation fund provides a death and total and permanent disability (TPD) benefit which is currently equal to his annual income (excluding SG contributions). The for this cover is $0.90 p.a. for each $1000 of cover or part thereof, and is deducted from his superannuation contributions. The ASSF Super Fund will allow a member to increase their benefit to twice the member’s annual salary at this rate. The fund will allow a further increase in cover to a maximum of $750,000. However, the will increase to $1.00 per $1000 for any amount of cover that is over twice the member’s annual salary. Although Joseph’s superannuation fund can provide income protection cover, he has not taken out this cover. Julie’s default superannuation fund also provides a death and TPD benefit and she currently has cover of $120,000 for each of life and TPD. The for this level of cover is $2.75 per week deducted from her superannuation contributions. The CISF Super Fund allows for to further increase their cover to a maximum of $2 million and on the following scale: ≤ $500,000 – $2.75 p.w. $500,001 to $1 million – $3.75 p.w. $1 million to $2 million – $5.50 p.w. Julie and Joseph have no other personal insurance cover. They have full comprehensive insurance on their vehicles with a total annual of $2800 p.a. Julie and Joseph also have combined home building and contents insurance cover of: $100,000 home contents $750,000 home building. Their home was built under an earlier version of the local building code. Additionally, the home was purchased in a market much lower than the current one and is estimated to cost much more than the $675,000 purchase price to replace. The policy has a contents excess of $500 and a building excess of $1100. The policy also includes legal liability cover of up to $20 million. Julie and Joseph pay $145 per month for this insurance. The Hahns have adequate private health insurance cover, including hospital cover with a $500 excess, except for Harry, and pay a of $110 per month. This includes the private health insurance rebate. The above vehicle, home and contents and health insurance payments are not included in their general living expenses.
DFP2-1v2.1 Assignment
The case study
Page 11 of 76
Other information Joseph and Julie have a credit card with a monthly limit of $15,000 that they use for all their general expenses and entertainment. However, they never spend up to their limit and always repay within the interest free period. They estimate their average monthly living expenses are $6700 per month. Joseph and Julie used to go on regular annual holidays and spend over $10,000 per trip. However, since the start of their mortgage and the birth of Harry they now plan to take a holiday every two years spending about $5000, in addition to their general living expenses. Joseph advises he is quite healthy and has accumulated 78 days sick leave. However, he advises that he was diagnosed with asthma symptoms in the past for which he was prescribed medication. He has not experienced a return of these symptoms during the past couple of years. Julie took all her accumulated annual and long service leave as part of her maternity leave. Other expenses include a donation by Julie to the National Breast Cancer Foundation of $50 per month and Joseph makes a tax deductible donation to Plan B of $50 per month. They each make tax deductible ‘bucket’ donations of $10 p.a. to disaster relief funds, and ants’ expenses come to $150 p.a. each. These expenses are also in addition to their general living expenses.
Needs and objectives During your conversation with Joseph and Julie it becomes apparent that their main objective is to protect their home and to provide for their son Harry. Julie commented that she is very concerned that they may not be able to maintain their lifestyle if either of them died or suffered a prolonged illness. She would like to make sure that if anything were to happen to them that Harry would be well taken care of. At this time they are not yet concerned with superannuation and retirement planning, believing that it is still a long way off and that they will have time to address this part of their financial plan in the future. Julie and Joseph have a full and comprehensive estate plan that Joseph insisted on when they were married, and was updated when they purchased their house and on the birth of Harry.
DFP2-1v2.1 Assignment
The case study
Page 12 of 76
Closing the interview Prior to closing the interview, you review the information provided by Julie and Joseph to check whether it is complete. You answer some additional questions they have about what happens next and what your likely costs will be, and explain that with their agreement you will now prepare a written financial plan, called a statement of advice or SOA, based on the information collected and their stated objectives. The SOA will describe possible risk management strategies and insurances they should consider, and the reasons behind your recommendations. Joseph and Julie agree to proceed to the next stage of the financial planning process, and you make an appointment to present the SOA in a fortnight.
Section 2 — The fact finder The first step is to complete the fact finder for Joseph and Julie. This is in your assignment at Insurance and risk protection assignment questions – fact finder Joseph and Julie Hahn. Note to completing the fact finder: As this is a ‘risk’ assignment, you must complete the ‘Risk needs’ section. However, where information has not been provided in the case study background, you may leave other sections blank.
DFP2-1v2.1 Assignment
The case study
Page 13 of 76
Section 3 — Analysing the data The next step in the financial planning process is to analyse the collected data. You do this so that you can fully understand your clients’ needs and therefore design a financial plan that addresses their goals and objectives. By analysing the data provided under the following headings you can start preparing a financial planning strategy that will meet your clients’ needs: Review the fact-finding stage Current position Debt management Risk/protection Savings Present and future taxation issues There is a series of questions relating to section 3 in the assignment that you must answer. Use your answers for section 3 to help you decide on your recommendations for Joseph and Julie. Your answers to these questions are your opportunity to demonstrate your ability to analyse clients’ needs in preparation for developing a strategy that aligns with their requirements.
Section 4 — The strategy Now that you have analysed the data, you are in a position to think about appropriate strategy options and start drafting appropriate strategies for them. This should include levels of cover and researching possible products that can the implementation of those strategies. All this information you will use in your SOA for the couple. There is a series of questions relating to section 4 in the assignment that you must answer. You will use your answers for section 4 to help you decide on your recommendations for Joseph and Julie. Your answers to these questions are your opportunity to demonstrate your ability to analysis your clients’ needs and develop a strategy that aligns with their requirements.
DFP2-1v2.1 Assignment
The case study
Page 14 of 76
Section 5 — Completing the SOA When you have determined the financial planning recommendations you believe will meet the couple’s needs, then you can move on to preparing their SOA. Use the SOA template provided in this assignment. TIP: The assessor is looking for an SOA that is of a professional standard and is suitable for presentation to a client. This means your spelling and grammar must be correct and that you have written your recommendations so the client can understand them. : the SOA is an important communication tool you can use to engage your client. A hastily written and poorly presented SOA does not engender client trust or confidence in your expertise or professionalism.
Important instructions for completing the SOA a.
Use the SOA template provided. SOA preparation software: The use of financial planning software and dealer templates to prepare your SOA is not permitted. Submissions that exhibit excessive reliance on SOA templates may be considered a case of plagiarism or collusion and may not be considered to be a reasonable attempt at the assessment.
b.
Your SOA must include strategy recommendations for personal insurances.
c.
You must prepare an implementation schedule detailing all of the recommendations in the SOA and provide the details in the implementation schedule within the SOA.
d.
List any assumptions you made to complete your SOA at the end of the SOA template under the heading ‘Assumptions’. Assumptions will generally include:
e.
missing background information on the clients
cost of s
factors which influence future income calculations
fees relating to the products you have recommended.
While you are not required to provide advice on the following areas, you will need to discuss them in the ‘Things you need to consider’ section of your SOA and include:
debt management
personal investment
superannuation
estate planning.
DFP2-1v2.1 Assignment
The case study
f.
Page 15 of 76
Your insurance product recommendations will need to be based on the research you conducted in section 4 Part B. Please do not include any product disclosure statements (PDS) with your assignment submission.
DFP2-1v2.1 Assignment
The case study
Page 16 of 76
Section 6 — Presenting the SOA You meet with Joseph and Julie as arranged to present the SOA. You take the time you need to reiterate their financial situation and stated objectives and to explain the proposed strategies and recommendations, confirming regularly that both Joseph and Julie understand each component of the plan and how it meets their needs. Even though satisfied with your explanation of the SOA and responses to each of their questions, they have a key concern about one of the products you have selected with regards to the cost of s. Before they agree to your recommendations you have to negotiate this part of the plan with your clients. There is a series of questions relating to section 6 in the assignment that you must answer. Your answers to these questions are your opportunity to demonstrate your ability to continue to engage your clients.
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 17 of 76
Insurance and risk protection assignment Fact finder — Joseph and Julie Hahn Use the data collected in the interviews to complete the fact-finder template on the following pages. Note: As investment strategies are not required for this project, it is not necessary to complete the risk profile section of the fact finder.
Important notice to customers Your planner must have reasonable grounds for making investment or insurance recommendations. Before making a recommendation, the planner must ask you about your investment objectives, financial situation and your particular needs. The information requested in this form will be used strictly for that purpose.
Warning The planner could make inappropriate recommendations or give inappropriate advice if you fail to fully and accurately complete this form. Personal details Client 1
Client 2
Title
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Surname
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Given & preferred names
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Home address
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Business address
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phone
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Date of birth
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Sex
Male
Female
Male
Female
Smoker
Yes
No
Yes
No
Expected retirement age
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Dependants (children or other) Name
Date of birth
Sex
School
Occupation
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DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 18 of 76
Answer here
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Employment details Name
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Occupation
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Employment status
Business 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
Sole proprietor
Partnership
Sole proprietor
Partnership
Private company
Trust
Private company
Trust
Notes Any other person to be ed? E.g. ant, banker, solicitor, etc. Answer here
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 19 of 76
Income, tax and cash flow Tax calculation
Client 1
Client 2
Combined
Comments
Salary
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Salary sacrifice
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Salary after salary sacrifice
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Rental income
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Unfranked dividends
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Franked dividends
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Franking (imputation) credits
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Interest
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Other income (e.g. taxable benefits, trust income, investment income)
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Capital gains < 1 yr
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Capital gains > 1 yr
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Tax-free component of capital gains
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Assessable income
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Deductible expenses
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Donations
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Other
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Taxable income
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Tax on taxable income
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Non-refundable tax offsets (e.g. LITO/SAPTO)
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Medicare levy
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Medicare levy surcharge
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Franking rebate
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Refundable rebates and offsets
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Total tax
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Income from employment
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Cash flow
Page 20 of 76
Client 1
Client 2
Combined
Comment
Salary less any salary sacrificed amount
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Non-taxable income
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Rental income
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Unfranked dividends received
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Franked dividends received
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Interest
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Other income (e.g. taxable benefits, trust income, investment income)
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Total income received before tax
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Investment expenses
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Mortgage
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School fees
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Utilities
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Personal insurance
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Car insurance
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Home Building/Contents Insurance
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Health Insurance
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Living expenses
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Holidays
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House maintenance
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Motor vehicle
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Motor vehicle
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Other
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Child care
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Donations
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ant’s fees
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Total expenses
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Total income received before tax less total expenses
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Total tax payable from tax table above
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Total net cash flow
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Expenses
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 21 of 76
Assets and liabilities Asset
Owner
Value
Liabilities
Net value
Notes
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Investment property
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Savings
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Term deposit
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Shares
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Total
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Net worth
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Personal assets
Superannuation
Other Assets
Liabilities Loan
Current debt
Percentage tax deductible
Interest only
Repayment
Home loan
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Investment property
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Investment loan
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Personal loan
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Other
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Total
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DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 22 of 76
Needs and objectives Details
Comments
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Estate planning Estate planning Do you have a will? When was it last updated:
Yes
No
Yes
No
Date
Do you have powers of attorney?
Current superannuation, rollovers, insurances & investments Superannuation Member
Answer here
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Fund name
Answer here
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Date of ing fund
Answer here
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Type of fund
Accumulati on
Defined benefit
Accumulati on
Defined benefit
Pension
Pensioner
Pension
Pensioner
By employer
By self
By employer
By self
Contribution (9.50% of salary)
SG
Current value of your superannuation fund
Answer here
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Amount of death and disability cover
Answer here
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Is there provision for you to top up or salary sacrifice?
DFP2-1v2.1 Assignment
Yes
Not sure
No
SG
Yes
Not sure
No
Fact finder and risk profile template
Page 23 of 76
Superannuation Taxation Details Name
Answer here
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Current value
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Tax free component
Answer here
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Taxed element
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Untaxed element
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Preserved
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Unrestricted non-preserved
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Restricted non-preserved
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Year 1
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Year 2
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Year 3
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Year 4
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Year 1
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Year 2
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Year 3
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Year 4
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Taxable Component:
Preservation:
Contributions: Non-concessional contributions:
Concessional contributions:
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 24 of 76
Nominated Beneficiaries: Name
Binding
Non-Binding
Trustee discretion
(Yes/No)
(Yes/No)
Yes/No
Amount
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Yes/No
N
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Is there any current flags or splits on a superannuation benefit of yours following a marriage breakdown?
Details
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Are you a beneficiary of any current flags or splits of a superannuation benefit following a marriage breakdown?
Yes/No
N
Details
Answer here
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Life insurance details Life insured
Owner
Policy type
Company
Policy number
Death benefit
Comments
Annual
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Disability insurance details Life insured
Owner
Policy type
Company
Policy number
Death benefit
Comments
Annual
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DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 25 of 76
Income protection insurance details Life insured
Owner
Policy type
Company
Policy number
Benefit Amount
Waiting Period
Benefit Payment Period
Annual
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General insurance details Item covered
Owner
Policy type
Company
Combined Policy number
Cover Amount
Other benefit
Total Annual
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Investment details Investment type
Company
Purchase date
Units held/fixed rate
Current value
Owner
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DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 26 of 76
Risk needs Insurance Needs — life Name C
Answer here
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Clean-up fund
Settle all outstanding s, including credit cards, bills and funeral costs
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Income fund
The lump sum required to produce a level of regular income that maintains the family’s living standard for a defined period
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Mortgage fund
The amount necessary to discharge any existing mortgages
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Education fund
Lump sum determined by calculating each child’s education costs and multiplying by the number of years of school and/or university remaining
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Retirement fund
The lump sum necessary to provide adequate funding for retirement
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less value of realisable assets
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less existing life insurance cover
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Recommended sum insured
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Recommended sum insured (rounded up to the nearest $10,000)
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M
E
R
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 27 of 76
Insurance Needs — TPD Name C
Answer here
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Clean-up fund
Settle all outstanding s, including credit cards, bills and funeral costs
Answer here
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Income fund
The lump sum required to produce a level of regular income that maintains the family’s living standard for a defined period
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Mortgage fund
The amount necessary to discharge any existing mortgages
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Education fund
Lump sum determined by calculating each child’s education costs and multiplying by the number of years of school and/or university remaining
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Retirement fund
The lump sum necessary to provide adequate funding for retirement
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less value of realisable assets
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less existing life insurance cover
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DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 28 of 76
Insurance needs — Trauma Name
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Funds required to pay out home mortgage
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Estimated medical and rehabilitation costs (including cover out-of-pocket health costs)
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Other debts
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Other expenses
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Less existing realisable assets
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Recommended sum insured
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Recommended sum insured (rounded up to the nearest $10,000)
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Name
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Gross annual income
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Superannuation Guarantee
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Total insurable income
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Monthly income (i.e. Total insurable income / 12)
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Recommended monthly benefit (i.e. 75% of total monthly insurable amount)
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Benefit payment period
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Waiting period to be served
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Insurance needs — Income Protection Income Protection
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 a 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 planner has provided me with the completed financial fact finder, signed by me. Customer(s) signature(s) Planner’s name Planner’s signature Date
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 29 of 76
Note: An investment needs analysis is not required for this assignment. These investment attitude details tables have been included to provide a realistic example of the fact-finder process.
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 30 of 76
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?
Why?
I think that I should be able to structure things better to pay less tax like other people seem to do.
How important is liquidity (i.e. funds available) to you?
Why?
Yes/No
Very/Moderately/Not
R O F D E T R I N U E Q M E N R G I T S O S N A S I TH
I would like the money available so I can buy a property in the future.
If you had funds available for investing, how would you choose to invest them? Why?
Term deposits, but don’t know what else is available or how it works. Are there certain sorts of investment that you wish to avoid?
Which ones?
Yes/No
I don’t know really know.
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 planner, you can choose the investments that best match your financial objectives. Which of the following best describes your current stage of life? 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 entertainment.
50
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 you may be in the future.
40
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 saved.
35
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 less supervision. You are starting to think about retirement, although it may be many years away.
30
R O F D E R I T U N E Q E M R N G T I S NO S A S I H T
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 31 of 76
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. Interested in travel, recreation and self-education.
20
Retired: No longer working you must rely on existing funds and investments to maintain your lifestyle. You may be receiving the pension and are keen to enjoy life and maintain your health.
10
What return do you reasonably expect to achieve from your investments? A return without losing any capital
10
3–7% p.a.
20
8–12% p.a.
30
13–15% p.a.
40
Over 15% p.a.
R O F D E R I T U N E Q E M R N G T I S NO S A S I H T
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 it in?
You would cash it in if there were any loss in value
10
Less than 1 year
20
Up to 3 years
30
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 32 of 76
Up to 5 years
40
Up to 7 years
45
Up to 10 years
50
How familiar are you with investment markets?
Very little understanding or interest
10
Not very familiar
20
Would like to know more.
Have had enough experience to understand the importance of diversification
30
Understand that markets may fluctuate and that different market sectors offer different income, growth and taxation characteristics
40
Experienced with all investment sectors and understand the various factors that may influence performance
50
R O F D E R I T U N E Q E M R N G T I S NO S A S I H T
If you can only get greater tax efficiency from more volatile investments, which balance would you be most comfortable with?
Preferably guaranteed returns, before tax savings
10
Stable, reliable returns, minimal tax savings
20
Some variability in returns, some tax savings
30
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 33 of 76
Moderate variability in returns, reasonable tax savings
40
Unstable, but potentially higher returns, maximising tax savings
50
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 34 of 76
Six months after placing your investment you discover that your portfolio has decreased in value by 20%, what would be your reaction?
Horror. Security of capital is critical and you did not intend to take risks
10
You would cut your losses and transfer your money into more secure investment sectors
20
You would be concerned, but would wait to see if the investments improve
30
This was a calculated risk and you would leave the investments in place, expecting performance to improve
40
You would invest more funds to lower your average investment price, expecting future growth
50
R O F D E R I T U N E Q E M R N G T I S NO S A S I H T
Which of the following best describes your purpose for investing?
You want to invest for longer than five years, probably to the age of 55–60. You are mainly investing for growth to accumulate long-term wealth
50
You are not nearing retirement, have surplus funds to invest and you are aiming to accumulate long-term wealth from a balanced fund
40
You have a lump sum (e.g. an inheritance or an eligible termination payment from your employer) and you are uncertain about what secure investment alternatives are available
30
You are nearing retirement and you are investing to ensure that you have sufficient funds available to enjoy retirement
20
You have some specific objectives within the next five years for which you want to save enough money
20
You want a regular income and/or totally protect the value of your savings
10
Investor profile total points
DFP2-1v2.1 Assignment
Fact finder and risk profile template
Page 35 of 76
Investor risk profile summary 0–70
Conservative — 70% Defensive and 30% Growth
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. 71–130
Moderately Conservative — 55% Defensive and 56% Growth
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
R O F D E R I T U N E Q E M R N G T I S NO S A S I H T Balanced — 40% Defensive and 60% Growth
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 — 30% Defensive and 70% 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 — 10% Defensive and 90% 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.
DFP2-1v2.1 Assignment
Case study questions
Case study questions Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to analyse a client’s needs in preparation for developing a strategy that aligns with their requirements. Section 3 Questions — Analysing the data Section 3 Part A List what you understand to be the couple’s goals, needs and objectives. Categorise them into short, medium and long-term time frames. They should be specific, measurable and have a nominated dollar value where possible. (250 words) Goals/need/objectives
Timeframe
Dollar value
Answer here
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Notes Assessor :
DFP2-1v2.1 Assignment
Case study questions
Section 3 Part B Analyse the data provided by the couple by answering the following questions. Think carefully about your responses and do not assume that you are in a position to provide answers to everything. You may not have enough information, it may be outside of your licensee’s designated authority for this case study (i.e. the matter needs to be referred to a specialist adviser) or it is not a goal or objective of your clients. Where this might be the case, make sure you make a comment to that effect where relevant. Make sure you constantly refer to the data you have on Joseph and Julie so your responses accurately reflect the information provided to you.
a.
The questions
Your response
Do Julie and Joseph need a debt management solution?
Answer here
If yes, why?
Answer here
If no, why not? b.
Do Julie and Joseph currently have adequate life and TPD cover?
Answer here
If yes, why/how?
Answer here
If not, how much should they have, and why that much? c.
Is their current Life and TPD cover provided through superannuation the best alternate?
Answer here
If yes, why?
Answer here
If not, why? What could be the alternative? d.
Do Julie and Joseph require any other insurance cover?
Answer here
If ‘yes’, what type of cover? How much do they need? How should it be provided?
Answer here
If ‘no’, why? e.
Is there anything that could impact on Joseph’s and Julie’s ability to obtain insurance cover?
Answer here
If ‘yes’, which cover(s)/why?
Answer here
If ‘no’, why not? f.
If Julie commences work from home, will this have any impact on her current or your recommended insurance cover(s)?
DFP2-1v2.1 Assignment
Answer here
The assessors
Case study questions
If ‘yes’, which cover(s)/why? If ‘no’, why?
DFP2-1v2.1 Assignment
Answer here
Case study questions
g.
If Julie commences work from home, would she require any further insurance cover?
Answer here
If ‘yes’, why and what would she require?
Answer here
If ‘no’, why not? h.
Are there any present and/or anticipated future taxation issues associated with your recommendations?
Answer here
If yes, why and what are they?
Answer here
If no, why not? i.
j.
Has any provision been made for estate planning?
Answer here
What could be put in place now for any anticipated requirements?
Answer here
Are there any present and/or anticipated future cash flow implications associated with your recommendations?
Answer here
If ‘yes’, why and what are they?
Answer here
If ‘no’, why not?
DFP2-1v2.1 Assignment
Case study questions
Case study questions Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to analysis a client’s needs and develop a strategy that aligns with their requirements.
Section 4 Questions — Developing a strategy Section 4 Part A Based on your analysis of the data, describe in general the strategy you think will best meet Julie and Joseph’s needs and why. Include what other specialist advice they will need to source so they can have access to a comprehensive financial plan (up to 500 words). Note: Students who may need assistance determining the approximate costs of particular recommendations may refer to website
DFP2-1v2.1 Assignment
Case study questions
Section 4 Part B Following your conclusions developed in section 4 part A, you are now in a position to research products to meet your clients’ risk management needs. Information on different products and providers is readily available on the internet, or if you are already working for a licensee you may be able to use those from your approved product list. The website at
Why you think it may or may not be the ‘best fit’ for the couple.
Answer here
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
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Yes
No
DFP2-1v2.1 Assignment
Indicate which product/s you will use in your plan
Case study questions
Section 6 Questions — Presenting the SOA Answer the following questions in the spaces provided. The questions are your opportunity to demonstrate your ability to negotiate aspects of a plan a client is dissatisfied with, and then to gain their consent to proceed with your recommendations. Section 6 Part A In the space provided, write a script for how would you explain to your clients the rationale for the choice of one product selection over another (200 words). Answer here Assessor :
Section 6 Part B Your clients reluctantly agree with your choice but it is clear they are not 100% satisfied. How will you proceed with the conversation from this point on? Think about what you aim to achieve from both a client engagement and compliance perspective. (200 words) Answer here Assessor :
DFP2-1v2.1 Assignment
Case study questions
Section 6 Part C Describe how you will conclude this conversation so that you have met all your compliance requirements. (100 words) Answer here Assessor :
DFP2-1v2.1 Assignment
Statement of advice template
Page 44 of 76
The Statement of Advice Template The following Statement of Advice template must be used to record your advice for your clients Josephy and Julie Hahn. , this is document is the one you will use to communicate to your clients your advice so it must be well written and professionally presented. Apart from not meeting professional standards, a carelessly compiled SOA does not inspire a client’s confidence or trust in your skills as a financial planner.
DFP2-1v2.1 Assignment
Statement of advice template
Page 45 of 76
Statement of advice Prepared for
Delete this box when you have inserted your name here.
Joseph and Julie Hahn Prepared by
Authorised Representative Authorised Representative Number: 66666 AR Address AR details Authorised Representative of
KeyPlan Financial Planning ABN: 1010101010 Australian Financial Services Licensee Licence No. 101010 Head office: 88 Money Lane, Accumulation.
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 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 on 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 information about the particular product to help you make an informed decision about that 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 need to be reviewed for accuracy.
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 46 of 76
Contents Statement of advice
39
Executive summary..........................................................42
Important information about you
44
Present position................................................................44
Strategy recommendations
48
Recommended insurance cover........................................51
Insurance product recommendations
52
Disclosure of remunerations, commissions and other benefits 53 How are we paid?..............................................................53 Ongoing services..............................................................54 Implementation schedule.................................................55 Authority to proceed.........................................................56
Cash flow tables
58
Financial position before implementation of strategy......58 Financial position after implementation of strategy.........61
Assumptions
DFP2-1v2.1 Assignment
64
© Kaplan Professional Education
Statement of advice template
Page 47 of 76
Executive summary In this section, you need to provide your client with a concise summary of: their situation their objectives your recommended strategy to achieve the objectives the outcomes your clients can expect from adopting the strategy. The clients should be able to read this executive summary and understand the advice you are giving, the reason/s underpinning the advice, and be able to determine whether or not their goals have been achieved. There should be sufficient detail to allow the clients to make a decision, taking into any risk/s involved and your fees. It should be written in clear, unambiguous language, without jargon and be appropriate to their level of financial understanding.
Your situation This where you need to summarise your client’s current situation. Answer here Assessor :
Your objectives This where you need to list your client’s objectives: i.e. their financial goals. Answer here Assessor :
Summary of our strategy and recommendations This where you need to summarise your recommendations for your clients. Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 48 of 76
Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 49 of 76
Summary of expected outcomes if you implement our advice For example: If you proceed with the recommendations contained within this report, we estimate that: – You will reduce your debt by $XYZ and/or save $ABC. – You will build wealth in non-superannuation assets through regular contribution of $X. Answer here Assessor :
Risks in our advice Detail the issues clients need to be aware of when following advice. Answer here Assessor :
Summary of our fees and commissions Detail charges that the clients will incur. Answer here Assessor :
Your next steps Outline what your clients will need to do next to decide whether or not to follow the advice. Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 50 of 76
Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 51 of 76
Body While this section contains similar headings to the executive summary, the information provided is at a greater level of detail and s the recommendations made. As with the executive summary, it should be written in clear, unambiguous language, without jargon and be appropriate to your clients’ level of financial understanding.
Important information about you This section contains information about you that we used in preparing our advice, such as: your reasons for seeking advice what you would like to achieve your personal and financial information.
Present position Your reasons for seeking advice Outline why the client sought advice. Answer here Assessor :
What you would like to achieve Summarise here what you understand to be your client’s main objectives. Following our discussions, here is what I/we understand to be your main objectives and needs: Answer here Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
DFP2-1v2.1 Assignment
Page 52 of 76
© Kaplan Professional Education
Statement of advice template
Page 53 of 76
Your personal and financial information Listed below is a summary of your relevant personal and financial details that you have provided. Personal information Personal details Client 1
Client 2
First name(s)
Answer here
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Surname
Answer here
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Date of birth
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Current age
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Marital status
Answer here
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Health status
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Smoker status
Answer here
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Employment status
Answer here
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Employer name
Answer here
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Occupation
Answer here
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Annual salary
Answer here
Answer here
Relevant notes (add any information that is not included elsewhere) Answer here Assessor :
Children and dependant details Answer here Your existing insurance Personal insurance
Answer here
Car insurance
Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 54 of 76
Home Contents Insurance
Answer here
Health Insurance
Answer here
DFP2-1v2.1 Assignment
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Statement of advice template
Page 55 of 76
Your existing estate planning Summarise the client’s existing estate planning provisions here. Answer here Assessor :
Financial information Current income and expense details Income and expenses Client 1
Client 2
Total
Total income received before tax
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Net tax payable
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Yearly expenses
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Estimated surplus/deficit
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Discussion points: Summarise the discussion points that could/need to be raised here. Answer here Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 56 of 76
Assets and liabilities Value
Liability
Net value
Home
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Answer here
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Home contents
Answer here
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Motor vehicles
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Personal assets
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Employer superannuation
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Savings
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Term deposit
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Other
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Investment assets
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Shares
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Net worth
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Discussion points: Summarise the discussion points that could/need to be raised here. Answer here Assessor :
Incomplete and/or inaccurate information warning Note that if, for any reason, the information on which our advice is based is incomplete or inaccurate, then it may not be appropriate and you should, before acting on the advice consider its appropriateness, in light of your particular circumstances, needs and objectives.
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 57 of 76
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 carefully and ask me if you have any questions.
Recommended action Note to students: You will use your findings from the analysis you did in Section 4 of the assignment above as the basis for the information you will need to provide in this section. For each recommendation below, discuss the reasons, risks, advantages and disadvantages. (Please add or delete ‘Recommendation’ boxes as applicable.) All insurance recommendations should be listed here.
Recommendation 1 Answer here Assessor :
Recommendation 2 Answer here Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 58 of 76
Recommendation 3 Answer here Assessor :
Recommendation 4 Answer here Assessor :
Recommendation 5 Answer here Assessor :
Things you need to consider In addition to the insurance recommendations you are making above, there may be additional information your clients should know about this plan and their financial situation and goals. Use the space below to record that information.
Debt management Answer here Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 59 of 76
Personal investment Answer here Assessor :
Superannuation Answer here Assessor :
Estate planning Answer here Assessor :
Alternative strategies considered Your clients are going to want to know that you have carefully considered their situation and in this process rejected some potential strategies that were not the most suitable for their needs. Insert details of any relevant alternate strategies that you considered and the reasons that they were rejected. Answer here Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
DFP2-1v2.1 Assignment
Page 60 of 76
© Kaplan Professional Education
Statement of advice template
Page 61 of 76
Recommended insurance cover Provide details of the recommended types of insurance, the sums insured, and the ownership structure. In addition, you must justify your recommendations by explaining why these recommendations are applicable to your clients. Answer here Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 62 of 76
Insurance product recommendations Product recommendations Note that I can only recommend products on our recommended list, which have been approved by my licensee. Use the space below to list the products that you are recommending Joseph and Julie use. Joseph and Julie Hahn, following our insurance strategy, we recommend that you purchase the following products: Answer here Relevant research material and product disclosure statements (PDSs) are attached for your attention. It is important that you read these documents carefully and 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. Note: You do not need to include these PDSs as part of your assignment. The above statement is a standard inclusion in a statement of advice. Assessor :
Cooling-off period Details on the cooling-off period for each product are provided in the PDS.
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 63 of 76
Disclosure of remunerations, commissions and other benefits How are we paid? Commissions and fees — upfront, ongoing commissions and financial planning advice fees If you are charging SOA preparation fees, implementation fees, ongoing advice fees, or any other non-product related fees, you must provide the details here. You may need to source information outside of the subject notes to complete this requirement. However, you can use the examples of how fees are shared between advisers and licensees from the sample SOA if needed. If you are not charging these fees fill in the table with ‘$0’ as the fee charged so the client understands there are no charges. Fee type
Initial fee
Initial fee paid to licensee
Initial fee paid to adviser
SOA fee
Answer here
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Implementation fee
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Ongoing advice fee*
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Total
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*If you are charging a flat fee, or an hourly fee it should be included in this table. If an initial and/or ongoing service fee is charged as a percentage of the product(s) you have recommended, it should be included in the table below.
Insurance recommendations You will need to source information from your selected product PDS, outside of the subject notes, to complete this table. If you wish to implement the products I have recommended, I will receive commission for some of the insurance products I have recommended. I believe that those are the best products for you; however, there may be other suitable products that pay a lower commission. Product
DFP2-1v2.1 Assignment
Initial commission paid to dealer
Initial commission paid to adviser
Ongoing commission paid to dealer
Ongoing commission paid to adviser
© Kaplan Professional Education
Statement of advice template
Page 64 of 76
Answer here
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Total
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The amount of ongoing commission receive by my licensee will depend on the s you pay. Assessor :
Other fees and benefits My licensee and I may also receive additional benefits. Where the benefits received are greater than $300 in value, they will be recorded in a that meets the requirements of the Financial Planning Association (FPA) Code of Practice on alternative forms of remuneration. A copy of the for my licensee is publicly available and can be provided upon your request.
Ongoing services You need to make sure that your client fully understands what you are offering in of ongoing service. Use the space below to record the details of how you will manage this process. Answer here (refer to the sample SOA for the sorts of services you could include here). Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 65 of 76
Implementation schedule In order to ensure that your recommendations will be implemented efficiently, you need to make sure that all tasks that need to be completed, both by the client and yourself, are itemised in the schedule. The schedule should highlight the priority of each task, as well as the order of completion. The time frame should be as specific as possible. Joseph and Julie Hahn, in order to proceed with our recommendations, you will need to complete the steps below: Action
By who
By when
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Note: The recommendations contained in this SOA are current for 30 days only. Please me for further discussion if you are unable to act on our recommendation within this time frame. Assessor :
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 66 of 76
Authority to proceed By g this authority to proceed, I/we <Joseph and Julie Hahn> acknowledge the following: I/We acknowledge that the information I provided in the financial needs analysis has been used to arrive at the recommendations contained in this SOA. I/We have read, understood and retained a copy of the SOA prepared by
Amount
Answer here
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I/We wish to make the following change/s to the recommendations within the SOA Product(s)
Amount
Answer here
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Signed______________________________
Date _____/_____/_____
Client Name Signed______________________________
Date _____/_____/_____
Client Name Signed______________________________
Date _____/_____/_____
Financial Planner
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Statement of advice template
Page 67 of 76
Consent to ongoing I/We consent to being ed by our adviser on an ongoing basis, in line with the agreed ongoing service review structure detailed within this recommendation. My/our preferred hours of are between ____ and ____. Signed______________________________
Date _____/_____/_____
Client Name Signed______________________________
Date _____/_____/_____
Client Name
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Cash flow tables Financial position before implementation of strategy Note: The items listed in this template are indicative only and must be adapted to your clients’ personal circumstances. There may be other relevant income or expense items that are not included in this template. You should add, delete or substitute items where appropriate. Accurately completed cash flows are essential in the financial planning process to recommendations. They are key to demonstrating your competency. Tax calculations Client 1
Client 2
Notes
Salary
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Salary sacrifice
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(state % if applicable)
Salary after salary sacrifice
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Bank interest
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(state % return if applicable)
Interest from other investments
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(state % return if applicable)
Share dividends
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(state % return if applicable
Imputation credits
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(state % return if applicable
Other income liable for tax (e.g. rental income)
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Assessable capital gains
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Total assessable income
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Deductable expenses (e.g. rental repairs)
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Taxable income
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Income tax on taxable income
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(state tax rates and year applied)
less tax offsets (e.g. LITO/SAPTO)
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plus Medicare levy
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Income from employment
Other income
DFP2-1v2.1 Assignment
© Kaplan Professional Education
plus Medicare levy surcharge
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less Imputation credits
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less refundable tax offsets
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Net tax payable
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DFP2-1v2.1 Assignment
© Kaplan Professional Education
Cash flow tables: Client’s financial position before implementation
70
Cash flow calculation Family cash flow Client 1
Client 2
Combined
Comment
Salary less any salary sacrificed amount
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Non-taxable income (e.g. income from a superannuation pension for a person aged over 60, Family Tax Benefits, etc.)
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Interest income
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Dividends received (excluding franking credits)
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Other income
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Total income received before tax
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Investment expenses
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Living expenses
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Other expenses
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Total expenses
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Total income received before tax less expenses
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Net tax payable from tax table above
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Total net cash flow
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Assets and liabilities Asset
Owner
Value
Liabilities
Net value
Notes
Family home
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Home contents
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Car 1
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Answer here
Answer here
Answer here
Car 2
Answer here
Answer here
Answer here
Answer here
Answer here
Other
Answer here
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
Answer here
Client 1 superannuation
Answer here
Answer here
Answer here
Answer here
Answer here
Client 2 superannuation
Answer here
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
Answer here
Personal assets
Superannuation
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Cash flow tables: Client’s financial position before implementation
71
Assets and liabilities Investment assets Investment property
Answer here
Answer here
Answer here
Answer here
Answer here
Savings
Answer here
Answer here
Answer here
Answer here
Answer here
Term deposit
Answer here
Answer here
Answer here
Answer here
Answer here
Shares
Answer here
Answer here
Answer here
Answer here
Answer here
Other
Answer here
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
Answer here
Net worth
Answer here
Answer here
Answer here
Answer here
Answer here
Liabilities Loan
Current debt
Percentage deductible
Interest only
Repayment
Home loan
Answer here
Answer here
Answer here
Answer here
Investment property
Answer here
Answer here
Answer here
Answer here
Other
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Cash flow tables: Client’s financial position after implementation
72
Financial position after implementation of strategy Note: The items listed in this template are indicative only and must be adapted to your clients’ personal circumstances. There may be other relevant income or expense items that are not included in this template. You should add, delete or substitute items where appropriate. Accurately completed cash flows are essential in the financial planning process to recommendations. They are key to demonstrating your competency. Tax calculations
Client 1
Client 2
Notes
Salary
Answer here
Answer here
Answer here
Salary sacrifice
Answer here
Answer here
(state % if applicable)
Salary after salary sacrifice
Answer here
Answer here
Answer here
Bank interest
Answer here
Answer here
(state % return if applicable)
Interest from other investments
Answer here
Answer here
(state % return if applicable)
Share dividends
Answer here
Answer here
(state % return if applicable
Imputation credits
Answer here
Answer here
(state % return if applicable
Other income liable for tax (e.g. rental income)
Answer here
Answer here
Answer here
Assessable capital gains
Answer here
Answer here
Answer here
Total assessable income
Answer here
Answer here
Answer here
Deductable expenses (e.g. rental repairs)
Answer here
Answer here
Answer here
Taxable income
Answer here
Answer here
Answer here
Income tax on taxable income
Answer here
Answer here
(state tax rates and year applied)
less tax offsets (e.g. LITO/SAPTO)
Answer here
Answer here
Answer here
plus Medicare levy
Answer here
Answer here
Answer here
plus Medicare levy surcharge
Answer here
Answer here
Answer here
less Imputation credits
Answer here
Answer here
Answer here
less refundable tax offsets
Answer here
Answer here
Answer here
Income from employment
Other income
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Cash flow tables: Client’s financial position after implementation
Net tax payable
DFP2-1v2.1 Assignment
Answer here
73
Answer here
Answer here
© Kaplan Professional Education
Cash flow tables: Client’s financial position after implementation
74
Cash flow calculation Family cash flow
Client 1
Client 2
Combined
Comment
Salary less any salary sacrificed amount
Answer here
Answer here
Answer here
Answer here
Non-taxable income (e.g. income from a superannuation pension for a person aged over 60, Family Tax Benefits, etc.)
Answer here
Answer here
Answer here
Answer here
Interest income
Answer here
Answer here
Answer here
Answer here
Dividends received (excluding franking credits)
Answer here
Answer here
Answer here
Answer here
Other income
Answer here
Answer here
Answer here
Answer here
Total income received before tax
Answer here
Answer here
Answer here
Answer here
Investment expenses
Answer here
Answer here
Answer here
Answer here
Living expenses
Answer here
Answer here
Answer here
Answer here
Other expenses
Answer here
Answer here
Answer here
Answer here
Total expenses
Answer here
Answer here
Answer here
Answer here
Total income received before tax less expenses
Answer here
Answer here
Answer here
Answer here
Net tax payable from tax table above
Answer here
Answer here
Answer here
Answer here
Total net cash flow
Answer here
Answer here
Answer here
Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Cash flow tables: Client’s financial position after implementation
75
Assets and liabilities Asset
Owner
Value
Liabilities
Net value
Notes
Family home
Answer here
Answer here
Answer here
Answer here
Answer here
Home contents
Answer here
Answer here
Answer here
Answer here
Answer here
Car 1
Answer here
Answer here
Answer here
Answer here
Answer here
Car 2
Answer here
Answer here
Answer here
Answer here
Answer here
Other
Answer here
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
Answer here
Client 1 superannuation
Answer here
Answer here
Answer here
Answer here
Answer here
Client 2 superannuation
Answer here
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
Answer here
Investment property
Answer here
Answer here
Answer here
Answer here
Answer here
Savings
Answer here
Answer here
Answer here
Answer here
Answer here
Term deposit
Answer here
Answer here
Answer here
Answer here
Answer here
Personal assets
Superannuation
Investment assets
Investment assets continued Shares
Answer here
Answer here
Answer here
Answer here
Answer here
Other
Answer here
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
Answer here
Net worth
Answer here
Answer here
Answer here
Answer here
Answer here
Liabilities Loan
Current debt
Percentage deductible
Interest only
Repayment
Home loan
Answer here
Answer here
Answer here
Answer here
Investment property
Answer here
Answer here
Answer here
Answer here
Other
Answer here
Answer here
Answer here
Answer here
Total
Answer here
Answer here
Answer here
Answer here
DFP2-1v2.1 Assignment
© Kaplan Professional Education
Assumptions
76
Assumptions As stated in the instructions for section 5 in the case study (part (d) on page 12), please list all your assumptions here: Value
Current situation
Proposed strategy
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
Answer here
List any other assumptions here: Assumptions
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