Dear Sir/Madam, hope you are well, could you please help me to develop retirment
ID: 2747797 • Letter: D
Question
Dear Sir/Madam,
hope you are well, could you please help me to develop retirment strategy for the attached. your help will be much appreciated and thank you very much in advance. Regards Magda
Whether they can meet their retirement goals and objectives. • What strategy you would recommend to them to prepare for their retirement in 5 years’ time. • You are to undertake modelling using the MoneySmart calculators to illustrate/model the outcome of your recommendations. (http://www.moneysmart.gov.au/) • Discuss how much they should contribute to superannuation (develop a contribution schedule), providing information about the contribution rules, including contribution caps and eligibility to make concessional and non-concessional contributions, where appropriate. • Your advice should address the issue of capital gains tax and how Thomas and Jessica could manage their capital gains tax liability if they sell their capital assets at some time in the future. • You may ignore Centrelink entitlements. • You are to advise Thomas and Jessica of the investment asset allocation (but not investment products) that would best meet their needs. (You will find information on risk and return and portfolio construction in the MLC Navigator Retirement Plan (PRP) Product Disclosure Statement (PDS).) • You are required to complete application forms for the MLC Navigator Retirement Plan Product Disclosure Statement to rollover their superannuation to MLC Navigator. You are to complete the non-binding death benefit nomination form in favour of each other.
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XXXX Pty Ltd
AUSTRALIAN FINANCIAL SERVICES LICENCE NUMBER: 123321
Confidential Client Data Form
Client Name: Thomas & Jessica West
Date: 20 February 2016
Representative/Adviser:
Has FSG been provided to client? Yes o No
Date 20 February 2016
*IMPORTANT NOTICE TO CLIENT: The Corporations Law requires that an adviser
making investment recommendations must have reasonable grounds for
making those recommendations. This means that an adviser must conduct an
appropriate investigation as to the financial objectives, situation and particular
needs of the client. The information requested in this form, is necessary to
enable recommendations to be made and will be used solely for that purpose.
We accept no liability for any advice given on the basis of inaccurate or
incomplete information.
2
PERSONAL DETAILS
YOURSELF
Mr
PARTNER (IF APPLICABLE)
Mrs
Surname ……West………………………… …… West ……………………………
First Names ……Thomas
…………………………….
……Jessica ……………………………
Date of Birth ……21/1/1955…………………………
.
……17/11/1955………………………
Anticipated Retirement Date ……1/7/2021………………………… ……1/7/2021
………………………………..
Occupation ……Electrician … ……Florist ……
Marital Status ………Married………………………… …………Married………………………
Employment Status Self Employed
Employed
Not Employed
Self Employed
Employed
Not Employed
Employment/Business Name Sparky Electricals………………. Back to the Fuschia………………..
Employment/Business Address …………………………………………. The Hub
…………………………………………. Everest Vic
Business Telephone …………………………………………. ………………………………………..
Home Address 29 Esther Court
Brickhill Vic 3999
………………………………..………………………………………………
Home Telephone 9999 8888
………………………………..
ALL DEPENDENTS/NON DEPENDENTS
(include current and previous relationships)
Name Date of Birth Sex F/M Support required
to age
Isabelle………………………………………..…………
…
……19/05/1983……
…
………F…………. not dependent
James………………………………………..………… ……23/3/1986…… ………M…………. not dependent
………………………………………..…………………. …………………. …………………. ………………..
POSTAL ADDRESS DETAILS
Postal Address Home Work Other
Postal Address (eg. PO Box) ………………………………………………………………………………………
Suburb ……………….………..State ………….. Postcode…………..
Country …………………………………………………………….….
Address Format Client Joint
3
Do you intend to stay with your
current employer?
Do you feel your current employment
situation is secure?
Yes No
Yes No
Yes No
Yes No
Do you foresee any substantial
change to your income in the next
two to five years?
Yes No
(Retirement)
Yes No
(Retirement)
After retirement do you intend to work
again either on a full time or past time
basis?
Yes No Yes No
Who recommended our service to you?
NAME OF
Company ……NIL……...………………………………………………………………………………………
Trust ……NIL……...………………………………………………………………………………………
SuperFund ……NIL……...………………………………………………………………………………………
PROFESSIONAL ADVISERS
Name Address Telephone
Accountant ……………………………. ……………………………………. ………………..
Solicitor ……………………………. ……………………………………. ………………..
Financial Adviser ……………………………. ……………………………………. ………………..
Other (ie Bank
Manager)
……………………………. ……………………………………. ………………..
Authority to Contact Yes No
Date of First Contact ……./……./…….
Copy of Recommendation Yes No To Accountant Solicitor
Date Recommendation Sent ……./……./……. Financial Adviser Other
PENSIONS
Are you and/or your partner eligible to receive a government
pension/allowance?
Yes No
If Yes, what type of Pension for yourself?
AGED
WIDOWS
SOLE PARENT
INVALID
JOB SEARCH
VETERANS*
If Yes, what type of Pension for partner?
AGED
WIDOWS
SOLE PARENT
INVALID
JOB SEARCH
VETERANS*
*What type of Veterans Pensions?
WAR WIDOWS
SERVICES
DISABILITY
OTHER (Specify)
……………………………………….
4
ASSETS & LIABILITIES
ASSETS ($) LIABILITIES ($)$ OWNERSHIP
Yourself Partner Joint
Principal Residence …………………$500,000……… ………………$150,000……………
Cash and Bank Deposits …………………$4,000………… ………………………………..
Motor Vehicles …………………$45,000……… ………………………………..
Motor Vehicles ………………$17,000…….. ………………………………..
Investment Property …………………$300,000……… ……………$175,000…………..
Investment Property ………………………………… ………………………………..
Home Contents …………………$25,000……… ………………………………..
Business Interests …………………Nil……………. ………………………………..
Managed Funds …………………$85,000……… ………………………………..
Shares and Debentures …………………Nil……………. ………………………………..
Shares and Debentures …………………Nil……………. ………………………………..
Surrender value of
traditional life insurance
…………………Nil……………. ………………………………..
Collectables …………………Nil……………. ………………………………..
Superannuation
Client
Client
…………$270,000………
………………………………..
………………………………..
………………………………..
Superannuation
Partner
Partner
………$100,000…
………………………………..
………………………………..
………………………………..
Caravan/Boat ………………… ……………. …………………Nil…………….
Holiday Home ……..……$250,000………. …………………Nil…………….
Recreational Property ………………… ……………. …………………Nil…………….
Other Assets ………………… ……………. …………………Nil…………….
Other Assets ………………… ……………. …………………Nil…………….
Personal Loans/ Overdrafts
etc (Business) *
………………… ……………. ………… …$20,000…………….
Credit Cards, etc# ……………………………. ………………$2,000…………….
Credit Cards, etc ………………… ……………. …………………Nil…………….
Other Liabilities
………………… …………….
…………………Nil…………….
Other Liabilities
………………… …………….
…………………Nil…………….
TOTALS ……………$1,596,000..(A) …………$327,000…..(L)
NET ASSETS
(A) – (L) = $
………………$1,269,000.…….. ……………………………..
Have you borrowed monies for any of the above investments? Yes No If yes, provide details.
______________________________________________________________________________________________________
* NB $20,000 overdraft is to cover outstanding debtors in the plumbing business. Expected overdraft will be nil when debtor
payments received. # Credit card outstanding balance is paid in full each month.
______________________________________________________________________________________________________
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ANNUAL INCOME AND EXPENDITURE
YOURSELF ($) PARTNER ($) JOINT ($)
Taxable Salary/Pension ……$130,000……… ……$30,000……… ………$160,000……….
Investment Income ……$1,757 . ………$6,757 ……… ………$8,514……….
Personal Income …………Nil……… …………Nil……… ……………………….
Other Income …………Nil……… …………Nil……… ……………………….
TOTAL INCOME ……$131,757……. ………$36,757…… ………$168,514…….
Income Tax (approx.) + Medicare Levy
……$36,670……. ……..…$3,525… … $40,195 ………
Net Income ……$95,087 ………$33,232 … ………$128,319 …….
EXPENDITURE
Mortgage principle home $28,700
Mortgage investment property
Household Expenses
(Food, Utilities, Insurance, Rates etc)
$42,000
Motor Vehicle Expenses ……………………. ……………………… ……………………….
Clothing/Entertainment ……………………. ……………………… ……………………….
Super/Life Contributions …………………… ……………………… ……………………….
Business Expense ……………………. ……………………… ……………………….
Personal Loans/Credit Cards ……………………. ……………………… ……………………….
Other Expenses ……………………. ……………………… ……………………….
TOTAL EXPENDITURE (approx..) ………$70,700 …
Annual Income Surplus/Deficit
(Income less Expenditure) (approx.)
………$57,619…
Extraordinary Expenses $ ………………Nil………………………………………………….…………
…
Your minimum income required $ Approx. $80,000 now. $55,000 in retirement ………………………………
Surplus income for savings / gearing $ ………………………………………………………………….……………
Client(s) overall tax position: ……………………………………………………………….……………
CURRENT INVESTMENTS * Y = Yourself P = Partner J = Joint O = Other
DESCRIPTION PURCHASE
DATE
PURCHASE
COST
MATURITY
DATE
CURRENT
VALUE
ANNUAL
INCOME
*OWNER
Y/P/J/O
SUBJECT
TO CGT.
*Investment
Property.
…1/11/2001 $220,000 ……………... $300,000 $314
(net of
allowable
deductions)
J Yes...
UA Managed
funds
21/04/2013 $100,000 $85,000 $5,000 P Yes
……………... ……………... ……………... ……………... …………... …………... …………….
..
Do you desire to minimise fees and costs? Yes No Not important
For investment purposes only, do you have any particular views concerning labour standards, or environmental,
social or ethical considerations?
Yes No If yes, provide details.
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SUPERANNUATION DETAILS
YOURSELF PARTNER (IF APPLICABLE)
Fund Name ………Best Choice Statewide
………..
……… Best Choice Statewide ………..
Type of Fund ………Retail…….. …………… Retail…………..
Contributions
- S.G.C
- Other Employer
- Salary Sacrifice
- Personal (non-concessional)
- Personal (concessional)
…………………N/A……………….
……………….………………….
………………….……………….
……………….…………………
$10,000 pa
…………………………………
……………… $2,850………...
………………………………….
…………………………………
…………………………………
………………………………….
Life Cover ……………Nil……………….. …………… Nil ………………..
Current Value ……………$270,000……………… ……………$100,000……………..
Transfer Value ……….…$270,000…………….. ……………$100,000……………..
Policy Numbers ………9234795……….. …………………123456……………….
Tax free Amount …………$50,000………… …………………$40,000………………
..
Does a Nomination of Beneficiaries apply? Yes No
ESTATE PLANNING
YOURSELF
PARTNER (IF APPLICABLE)
Do you have -
Will Yes No Yes No
Last Reviewed …15…./…06…./…2010…. …15…./…06…./…2010
Enduring Power of Attorney Yes No Yes No
Funeral Plan Yes No Yes No
Details of Funeral Plan ………………………………….. …………………………………..
Estate Planning Objectives (Please consider non-dependent children or children from another
relationship)
…None – anything left will go to the children equally
……………………………………………………………………………………………………………………..……………..
………………………………………………………………………………………………………………………..……………..
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RISK PROFILE (N/A for insurance product advice)
In how many years do you plan to use your investment/superannuation funds?
(a) Parking (Less than a year)
(b) Short Term (1-2 years)
(c) Medium Term (2-5 years)
(d) Long term (5-7 years)
Inflation erodes the value of your savings. Growth investing can counter the eroding effect on
inflation but also expose you to the risk of short -term losses.
(a) Inflation may erode my savings but I have no tolerance for loss
(b) I am conscious of the risk inflation presents, but would prefer a middle ground that limits losses
(c) I am comfortable with this trade off to beat inflation
How familiar are you with investment markets?
(a) Very little understanding or interest
(b) Not very familiar
(c) Have enough experience to understand the importance of diversification
(d) Understand that markets fluctuate and that different market sectors offer different income, growth
and taxation characteristics
What is the most aggressive investment you have made or likely to make?
(a) Cash management trust
(b) Own home
(c) Investment property
(d) Managed funds
(e) Shares, technology fund, smaller companies fund
What would your reaction be, if six months after placing your investment you discover that, in
line with what is happening in the financial markets generally, your portfolio has decreased in
value by 20%?
(a) Horror, security of your capital is critical and you did not intend to take risks
(b) You would cut your losses and transfer your funds into more secure investment sectors
(c) You would be concerned, but would wait to see if the investments improve
(d) This was a calculated risk and you would leave the investments in place, expecting future growth
Income Requirements:
(a) Maximum possible income is required
(b) Substantial income is required with some capital growth
(c) Income is required however capital growth is equally important
(d) A small amount of income is required but mainly capital growth
(e) The focus should be on capital growth with income reinvested
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Liquidity Requirements
(a) Easy access to invested funds is required at all times
(b) The ability to access the majority of investments at short notice is required
(c) A reasonable level of invested funds should be accessible at short notice
(d) Only a small proportion of invested funds needs to be readily accessible
(e) There is no need to maintain easy access to invested fund
In relation to tax Benefits from investments, what is your most comfortable mix?
(a) You seek guaranteed returns before tax savings
(b) You prefer stable and consistent returns even if it means minimal tax savings
(c) You will accept some variability in investment returns and tax savings
(d) You prefer a potentially higher return producing maximum tax savings even though this means
higher volatility and risk
To what extent are you concerned about preservation of your capital?
(a) Security of capital is required regardless of potential returns
(b) A small degree of risk would be acceptable for a slight increase in potential returns
(c) A moderate degree of risk would be acceptable given the potential for increased returns
(d) Volatility in investment values is acceptable given longer term capital growth objectives
(e) Maximising potential returns is preferred regardless of risk
INVESTOR PROFILE
Defensive
You are a Defensive 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 your initial investment is protected.
Moderate
You are a Moderate Investor seeking better than basic returns, but risk must be low. Typically an older investor
seeking to protect the wealth which you have accumulated, you may be prepared to consider less aggressive growth
investments.
Balanced
You are a Balanced investor who wants a balanced portfolio to work towards medium to long term financial goals.
You require an investment strategy which will cope with the effects of tax and inflation. Calculated risks will be
acceptable to you to achieve good returns.
Growth
You are Growth investor, probably earning sufficient income to invest most funds for capital growth. Prepared to
accept higher volatility and moderate risks, your primary concern is to accumulate assets over the medium to long
term. Your portfolio may include more aggressive investments.
High Growth
You are a High Growth investor prepared to compromise portfolio balance to pursue potentially greater long-term
returns. Your investment choices are diverse, but carry with them a higher level of risk. Security of capital is
secondary to the potential for wealth accumulation.
Based on the above questions I would recommend the following risk profile:
If the client does not agree with this risk profile, please indicate what they have requested and
reasons why:
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RISK INSURANCE
Existing Risk Insurance Cover – Client One
TYPE OF COVER
Term Trauma Income
Protection
Whole of Life Endowment
Name of Company
Sum Insured
270,000 Nil Nil Nil Nil
Commencement
Date
Annual Premium/
Monthly Premium
Renewal Premium
Surrender Value
Maturity Date
Maturity Value
Policy Owner
Life Insured
Substanded
Loadings
Last Review Date
Adviser Name
Existing Risk Insurance Cover – Client Two
TYPE OF COVER
Term Trauma Income
Protection
Whole of Life Endowment
Name of Company
Sum Insured
100,000 Nil Nil Nil Nil
Commencement
Date
Annual Premium/
Monthly Premium
Renewal Premium
Surrender Value
Maturity Date
Maturity Value
Policy Owner
Life Insured
Substanded
Loadings
Last Review Date
Adviser Name
10
FUTURE REVIEWS
How often do you want to review your Statement of Advice? (tick appropriate box)
p Quarterly p Half Yearly Yearly
Our next review date will be ________________
YOUR OBJECTIVES AND NEEDS
• To plan for their retirement in ~5 years’ time (5 financial years’ including FY 15/16)
• To pay off their mortgages by retirement and have sufficient funds to purchase a new car
($30,000) and take a holiday ($25,000) (a total of $55,000 on top of any outstanding
mortgage).
• To restructure their affairs with a view to having ~ $55,000pa in retirement
• To maximize their resources to fund their retirement
• To minimize tax both now and in retirement
• To invest their money so that it will last during their retirement years
• To self-support if possible (clients would prefer not to rely on Age Pension support)
• Get control of their financial affairs and have help to guide them with their financial
decisions.
• To give the two children $40,000 each to start their savings plans (ideally by retirement)
• The home mortgage is scheduled to be paid off in approx. 6 years
• The investment property mortgage is interest only.
ADVISER NOTES
Clients have advised that they are concerned about the low rental return on their investment
property but are reasonably happy with the capital growth, especially as it has maintained its
value throughout volatile sharemarkets. They would be happy to sell the investment property if
there was a better way to invest for their retirement.
Clients are not happy with their superannuation and have had no advice on the investments in
their super.
Jessica’s mother has passed away and she will receive a cash inheritance of $100,000 in the
next month.
The clients plan to stay in their current home, which has recently been renovated and retain
their holiday home for family holidays.
The clients have had some experience investing but have not previously had help with their
financial planning.
Thomas is self-employed. He doesn’t receive SG from an employer (he does however pay
annual concessional contributions of $10,000).
Clients have private health insurance
Explanation / Answer
So, following are the answers to the above questions:
i) In how many years do you plan to use your investment/superannuation funds?
A: Option C, Medium Term (2-5 years).
ii) Inflation erodes the value of your savings. Growth investing can counter the eroding effect on
inflation but also expose you to the risk of short-term losses.
A: Option B, I am conscious of the risk inflation presents, but would prefer a middle ground that limits losses.
iii) How familiar are you with investment markets?
A: Option C, Have enough experience to understand the importance of diversification.
iv) What is the most aggressive investment you have made or likely to make?
A: Option C, Investment Property.
Regards.
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