For this assessment, you are required to extract data from a data collection instrument and analyse the information provided. You are then required to undertake research and analysis on a client scenario, then recommend suitable strategies and/or product/s appropriate to the needs of your client and write a report outlining your analysis and recommendations. This comprises of two areas of advice, one is Financial Planning – Budgeting and debt management. The format of the report must be in accordance with the ASIC requirements (source: www.asic.gov.au) and the example will provided to students by the teacher. Written submissions should be a minimum of 1,200 and maximum of 2,000 words in length, professionally presented according to the ASIC requirements. Assignments must be typed in a legible font at least 12 point in size, Calibri, with numbered pages, printed single-sided on A4 paper (with at least a 2cm margin) and double spacing. A Strategy Report template to be used will be provided on Moodle. All submissions must comply with the requirements listed in the Course Handbook. Refer to the next page for the specific requirements of this assessment task. Subject Guide: ACBUS107A Financial Planning Fundamentals © TAFE NSW – Higher Education Semester 2, 2019 Page | 23 Case Study: Mark Garcia Introduction You are a financial adviser for “St George Financial Planning Pty Ltd” and the following information is an extract of data you gathered as part of the Financial Needs Analysis during the initial client meeting with Andrew Ferrell. The information below is used to formulate an appropriate analysis of Andrew’s needs. Your Client The client for this case study is Mark. His concerns are about not having adequate savings and available funds for a deposit on his first home. Read Mark’s details below. Financial Needs Analysis Details Personal Details Name Mark Garcia Gender Male Nationality Australian Date of Birth 03/03/1987 Marital Status In a relationship Address 35/190 – 196 Jubilee Ave, Carlton, NSW, 2217 Preferred contact 0451557226 Email Mark.email@example.com Private Health Cover Yes Employment Details Employer Wollongong Council Work Status Fulltime Occupation Civil Engineer Income $95,000 p.a. (gross) Dependants Name Date of Birth Age (next birthday) NO N/A N/A Subject Guide: ACBUS107A Financial Planning Fundamentals © TAFE NSW – Higher Education Semester 2, 2019 Page | 24 Assets Description Owner Current Value Home Contents (replacement value) Mark $40,000 Car Mark $25,000 Savings Account Mark $ 1,000 Share Portfolio Mark $ 5,000 Liabilities Description Owner Current Value Car Loan Mark $17,000 Finance Card Mark $10,000 Credit Card debt Mark $ 8,000 Loan Details Type Car Loan Finance Loan Credit Card Remaining balance $28,000 $10,000 $8,000 Lender St George GE Virgin Interest Rate 6.49% (fixed) 19.01% (variable) 16.49% (variable) Remaining Term 4yrs 1.5yrs After 55day interest free period Repayment Amount $500 monthly $660 monthly minimum Subject Guide: ACBUS107A Financial Planning Fundamentals © TAFE NSW – Higher Education Semester 2, 2019 Page | 25 Superannuation Fund Owner Current Value Other Details Local Government Super – Conservative Mark $50,000 Life & TPD cover of $100,000 Perpetual WealthFocus Super – Balanced Mark $40,000 Life & TPD cover of $25,000 Insurance Description Owner Benefit Value Provider Contents Mark $20,000 GIO Comprehensive Car Mark $20,000 GIO Life and Total Permanent Disability As stated above Income Name Mark Salary (gross) $95,000 p.a. Bank interest $200 Dividends (reinvested) $950 Fully Franked Risk Profile Name Risk Tolerance Mark Growth Subject Guide: ACBUS107A Financial Planning Fundamentals © TAFE NSW – Higher Education Semester 2, 2019 Page | 26 Expenses client gave us Expense Amount pa ($) Rent 6,000 Electricity/Water/Gas 1,130 Telephone/Mobile/Internet 1,250 Insurance – home & contents 800 Insurance – car 1,000 Private Health Insurance 1,000 Petrol/maintenance 4,500 Car registration 1,000 Food 5,200 Grooming 300 Credit card 15,000 Other loans 15,120 Medical/Dental 1,000 Entertainment/Dinners 2,500 Clubs/Prof. Memberships 1,300 Holidays 3,000 TOTAL $55,000 Subject Guide: ACBUS107A Financial Planning Fundamentals © TAFE NSW – Higher Education Semester 2, 2019 Page | 27 Client Objectives What the client hopes to achieve Following discussion with your client, goals to be addressed are as follows: 1. Maintain a net income of $60,000 per annum. 2. Establish and maintain a cash reserve of $10,000. 3. Reduce debt as soon as possible. 4. Review his budget, as he seems to think he is spending too much. 5. Save for a deposit on a first home in the next 5 years. 6. Replace car in five years. 7. Maintain his holiday allowance of $3,000 p.a. 8. Would like to propose to his girlfriend in 6 months and fund for engagement rings for approximately $8,000. 9. Boost his superannuation contributions in order to pay less tax into his employer superannuation fund (Local Government Super). 10. Ensure he has adequate Life and Total Permanent Disability insurance within the current superannuation funds. Assumptions: § Start date for projections at 1 July 2019. § Salary increases by 4% per annum. § Use current financial year tax rates. § Expenses are non-deductible with the exception of his Professional Subscriptions. § All expenses to be adjusted to inflation at 2.5% per annum. § Client is exempt from Medicare levy surcharge. Subject Guide: ACBUS107A Financial Planning Fundamentals © TAFE NSW – Higher Education Semester 2, 2019 Page | 28 Part A questions form the workings required to complete Part B, The Strategy Report. Please submit all workings and your answers to all Questions in Part A in the Appendix of the Strategy Report (Part B). Part A 1. From the first meeting with your client, was there any missing information that you would need to clarify. Please state the following: A. What information is missing or what would you like more detail on? B. How would you communicate the collection of this information? and C. Where would you document your questions and the client’s reply of this additional information required? 2. What issues do you believe you should discuss with your client? Include other goals or risks you may identify, if they are not listed in the case study. 3. Identify, set and prioritise your client’s S.M.A.R.T goals and objectives. Include the goals you have identified and list whether they are short, medium or long term goals. 4. What goals are there that you may identify (or the client has stated) that you may suggest the client address at a later stage (when their more urgent goals are met)? 5. What risks are there to Andrew not meeting his goals? Think about personal risks, legislative risks, market cycle risks. 6. Calculate client’s annual after-tax income (include Medicare levy). Use current financial year tax rates. 7. a. Prepare a Cash Flow Analysis and Net worth Statement for your client to determine what the current income surplus/deficit is and net worth position. b. Assume from your discussions with client that his credit card expenditure is largely discretionary (clothes, coffees, bought lunches etc) and that he is prepared to follow a budget limiting these expenses. Redo client’s Cash Flow Analysis planning for him to stick to a credit card spend of $700 per month, determining a new surplus/deficit amount. 8. Using the Life Insurance Calculator (on Moodle), how much Life Insurance (Life, TPD and Income Protection) does client ideally need? 9. What suitable outcomes (strategies) can you match to the goals you have identified and prioritised, utilising any surplus identified? 10. Explain how you would deal with client’s superannuation? Part B 1. List what strategies you would advise your clients to write in your Strategy Paper. Include your recommendations on two areas of advice, ONE MUST be budgeting and debt management. 2. Research products (where applicable) from your St George Financial Planning Approved Product List (overleaf) and explain why they would achieve the strategy. Show your analysis. 3. Construct a Strategy Report using the template provided (on Moodle) and Strategy Report Checklist (on next page) and the answers from Part A with your final recommendations following ASIC guidelines and learned content. Subject Guide: ACBUS107A Financial Planning Fundamentals © TAFE NSW – Higher Education Semester 2, 2019 Page | 29 Notes: § Show assumptions; use an Excel spread sheet for calculations and relevant disclaimers in your Strategy Report. Follow the ASIC guidelines and refer to the sample Statement of Advice documents in the prescribed text. § While answering requirements involving calculations, you are expected to describe your approach and explain your calculations. If assumptions are made, these assumptions must be clearly stated. § In order to answer the requirements of the Case Study, you may need to access resources other than the study material and prescribed text. § All sources used in your assignment must be clearly referenced both in-text and at the end. Scaled Statement of Advice (and as per template/s and samples provided) Content Done (tick) Cover letter & page Table of contents Scope of advice (include what the advice doesn’t cover) Summary of Advice (Executive Summary) SMART Goals and Objectives Current Situation: personal and financial circumstances of the clients Risk Profile of clients Cash flow, Net Worth, Investment strategy, Life Insurance Needs Analysis & product research report, Retirement Needs, Centrelink (as applicable) Comparison of product (include consequences of replacing current product with recommended) Areas of advice may include: Budgeting & Savings Plan, Debt Management (MUST), Life Insurance (including Insurance inside Superannuation), Superannuation, Managed Investments & Risk profile match with investment portfolio Sub headings and explanations under each strategy area – a. What is it – structure & features of service/investment vehicle b. How it works – SWOT, Cash flow, Investment strategy Analysis, Insurance & Retirement Needs Analysis (if applicable) with explanation/s c. Comparison of product (include consequences of replacing current product with recommended) – if applicable d. Advantages & Drawbacks (at least 2 of each) e. Why – ‘Best Interest Duty’ (at least 3 reasons why this advice) f. Outcome – Overall outcome following each strategy to goal/s Cash flow projection of base year plus 5 years Current and recommenced Statement of financial position (Balance Sheet) in year 5 Fees (include fee for services, product fees, AR remuneration, bonuses & insurance commissions) Next Steps (Implementation documents for each recommendation) Any warnings, disclosures & disclaimers Authority to proceed Subject Guide: ACBUS107A Financial Planning Fundamentals © TAFE NSW – Higher Education Semester 2, 2019 Page | 30 STUDENT NAME SCORE /100 WEIGHTING /30 GRADE: STRATEGY REPORT RUBRIC Fail Pass Credit Distinction High Distinction Score 0 – 3 3.5 – 6.5 7 – 8 9 – 10 11 – 12 /12 Content Knowledge & Research 12 marks Very little original content OR Any cut and paste work OR Does not cover the topic sufficiently AND Insufficient appropriate sources of information Over reliance of quotations, with little explanation or coherence AND Insufficient support from references OR Missing key information OR All facts with little structure or creativity AND Core texts and minimal appropriate sources have been referred to A passing understanding of content AND References all graphic sourced from elsewhere OR Not all ideas are fully developed AND Have to read a few times to understand AND Evidence of reading beyond the core texts and minimum number of appropriate sources A good knowledge of content May use original graphics Clearly defined ideas Easy to understand what the author is telling you Research of relevant current and contemporary academic sources is evident in addition to core texts and minimum number of appropriate sources ALL Inclusive Mastery of content Tasteful use of originally generated graphics to make the ideas clear Key facts and ideas are ‘obvious’ to the reader Extensive research of relevant current academic sources is evident in addition to core texts and minimum number of appropriate sources ALL Inclusive 0 – 5 5.5 – 8 8.5 – 10 10.5 – 12.5 13.5 – 15 /15 Analysis 15 marks Response is not correct Response is descriptive rather than analytical AND At least 50% of analysis provided and correct. Response is partially descriptive but an analytical approach has been attempted AND at least 65% of analysis provided and correct. Displays a critical and analytical approach AND at least 75% of analysis provided and correct. Displays an original approach to the question AND at least 85% of analysis provided and correct. 0 – 5 5.5 – 8 8.5 – 10 10.5 – 12.5 13.5 – 15 /15 Calculations and/or graphs 15 marks More than half of the calculations or graphical tasks are incorrect and/or not adequately completed Calculations or graphical tasks are incomplete or contain some errors but more than half that are required are correct AND At least 50% of calculations provided and correct. At least 2/3 of all required calculations or graphical tasks are correct and complete AND At least 65% of calculations provided and correct. At least 3/4 of all required calculations or graphical tasks are correct and complete AND At least 75% of calculations provided and correct. All of the required calculations or graphical tasks are correct and complete AND At least 85% of calculations provided and correct. 0 – 5 5.5 – 8 8.5 – 10 10.5 – 12.5 13.5 – 15 /15 Recommendations (Strategy &/or Product) 15 marks Response is superficial, inadequate or incomplete Two advise areas are identified but there is limited elaboration of the issues Two advise areas are identified and at least 65% of the recommendations are provided and appropriate to issues identified & elaborated Two advise areas are identified and at least 75% of the recommendations are provided and appropriate to issues identified & elaborated Two advise areas are identified and at least 85% of the recommendations are provided and appropriate to issues identified & elaborated 0 – 5 5.5 – 8 8.5 – 10 10.5 – 12.5 13.5 – 15 /15 Subject Guide: ACBUS107A Financial Planning Fundamentals © TAFE NSW – Higher Education Semester 2, 2019 Page | 31 Structure 15 marks Structure is not congruent with report requirements Structure contains all of the relevant sections with clear headings but supporting paragraphs are vague Structure contains all of the relevant sections with clear headings some supporting paragraphs link with clear executive summary, introduction and conclusion. Structure contains all of the relevant sections with clear headings and well linked supporting paragraphs. Very good executive summary, introduction and conclusion Well-structured response with supporting paragraphs which link and flow from one to another methodically and is easy to follow with an excellent executive summary, introduction and conclusion. 0 – 3 3.5 – 6.5 7 – 8 9 – 10 11 – 12 /12 Language application 12 marks Mostly written in third person perspective or excessive use of jargon/figurative/colloquial speech or Does not apply simple business language which is easily read by any age group/level of knowledge Some sentence structures requiring improvement or some presence of figurative/colloquial speech or a couple of references to third person No sentence structure issues and No presence of jargon/figurative/colloquial speech and Written entirely objectively in first/second person No sentence structure issues and no presence of jargon/figurative/colloquial speech and Written entirely objectively in first/second person Excellent use of concise simple language, absent of jargon, figurative speech, colloquialism and Written entirely objectively in first/second person which is easily read by any age group/level of knowledge of the topic 0 – 4 4.5 – 5.5 6 – 7 7.5 -8.5 9 – 10 /10 Language accuracy 10 marks Poor grammar, spelling, punctuation or sentence structure – please see your Learner Support Centre for assistance Some errors in grammar, spelling, and punctuation or some sentence structures requiring improvement Minimal grammatical spelling or punctuation errors and no sentence structure issues No grammatical spelling or punctuation errors and no sentence structure issues Excellent use of language and is concise in response 0 – 1 1.5 – 2.5 3 – 4 4.5 – 5 5.5 – 6 /6 Application of referenced material & documents 6 marks An inappropriate referencing system applied or referenced material does not support the answer/argument. Response is not relevant to the task Significant paraphrasing of sourced material but all citations appropriately referenced. Response is descriptive rather than analytical AND At least 50% of supporting documents provided and correct. Referenced material supports the answer/argument, rather than mere paraphrasing and all citations appropriately referenced. An analytical approach has been attempted AND At least 65% of supporting documents provided and correct. Some links are made between core texts and contemporary or current issues. All citations appropriately referenced. Displays a critical and analytical approach AND At least 75% of supporting documents provided and correct. Referenced material is well linked throughout the body of the essay and exceptional skills in the topic area are demonstrated. All citations appropriately referenced. Displays an original approach to the question which demonstrates a critical and analytical approach AND At least 85% of supporting documents provided and correct
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