an overview of the interview | My Assignment Tutor

Part B: detailed instructions As per the Course Profile, Part B requires you to submit your full file note [strategy paper] which includes; an overview of the interview with Lucas, including his current situation, his goals and objectives and any issues raised, and then based on this information, your strategic recommendations that address how he should achieve these goals. These recommendations should include wealth creation (both inside and outside of superannuation), wealth protection (insurance), estate planning, social security and lifestyle recommendations (as appropriate). This is worth 60% of your final grade. For Part B: Your submission must be prepared using the Part B template provided on L@G; Your submission is a strategy file note document only, as such you are NOT required to price any actual quotes or recommend specific investment products; As illustrated in the template, please bullet point your responses. Please start a new bullet point for each separate point you make. There is no word limit for Part B. As a guide, your submission should be roughly 4,000 to 5,000 words, though you may exceed this, particularly if you are providing detailed explanations for each section with the aim of achieving an excellent result. However, please remember it is quality over quantity! A reminder that as part of your Part B submission you are required to include recommendations on the wealth creation and lifestyle objectives that you submitted for Part A. As discussed, you can choose to update / change any recommendations made for these sections for Part B and there is no word or page limit associated with this section for Part B. Please refer to the detailed template instructions below which sets out what you need to cover for each section in detail. Please also ensure you refer to the Appendices at the end of this document. Appendix 1 contains information about the future value calculations required for his goals outside of superannuation (including the rates and fees you must use). Appendix 2 contains information on the calculations required for his superannuation goals and the rates and fees you are required to use for this. Appendix 3 contains answers to frequently asked questions for Part B. Finally, please ensure you have reviewed the Part B marking rubric on L@G as well as the Part B checklist. Part B detailed template instructions Client’s name: Lucas Blacksmith Date of contact: 15 April, 2021 Re: Initial Appointment FSG and adviser profile Lucas Lucas was handed Financial Services Guide (FSG) version 9.0, issued 30/06/2020, at the interview on . The FSG was explained to Lucas and he agreed to proceed. Scope of advice The SOA will provide advice on: the achievement of wealth creation and lifestyle goals;personal insurances i.e. life, total & permanent disability (TPD), income protection (IP), trauma and private health insurance;superannuation and retirement planning (including before and/or after-tax contributions);estate planning; andany social security and taxation planning considerations (where relevant). The SOA excludes any budgeting and cash flow analysis. Client to be advised on the risks of not receiving advice in these areas. Current situation Complete the tables provided as accurately and as thoroughly as you can. Please refer to the Part A wealth creation example to assist you.This should be fact based. Do not make up additional information if you do not have it. Potential issues / special consideration Detail any potential issues or special considerations that you would like to mention e.g. anything unusual or issues that may not be relevant to your current advice, but could be an issue in the future etc. This may include anything you wish to expand on based on his current situation.Overall, please ensure these are relevant to him rather than generic potential issues / special considerations. For example, saying he could get married again when there is no mention of a current partner would be a generic consideration (i.e. could apply to anyone). So please do not include these. Objectives Clearly state all of Lucas’s goals / objectives, including non-financial objectives (e.g. ‘play more golf’) if relevant.Do not include your goals or objectives or what you will recommend to the client. This section simply covers what the client’s goals are. Your recommendations will be discussed later in the file note / strategy plan.Best practice is to be as specific as possible, e.g. where possible include timeframes, priorities and $ amounts. Risk profile State the risk profile you arrived at in the interview and any details arising from your discussion about risk.Best practice is to include how you determined your client’s risk profile (e.g. did they just tell you or did you complete a questionnaire with them etc), what it means (in terms of timeframes, asset allocation etc) and what the client thought about this.If you will be recommending an asset allocation that is not in line with the client’s risk profile (as discussed in Topic 4), please include your reasoning for this in the recommendations section(s) below, as it is easier for us to identify your rationale when applied to the individual recommendations. Wealth creation / lifestyle recommendations – outside superannuation [same as Part A] Before completing this section, I strongly suggest you watch the ‘Getting started: how to complete Part A’ and ‘Investment choices’ videos on L@G. For each wealth creation and lifestyle goal that you are advising on, you need to detail your recommended strategy(s) which should be linked to the client’s objectives and the advantages and disadvantages of each strategy, i.e. why the recommended strategy is appropriate to the client and any potential costs / downsides. You also need to include details of any alternative strategies considered and why these were not recommended. The specific requirements of each section are provided below. Objective 1 [change the title to the client’s objective you are advising on – try to make these ‘SMART’ goals where possible] Recommended strategy: State your recommended strategy to achieve this goal, i.e. what should Lucas do? This may be multiple steps, if so; a separate bullet point should be used for each step.Make sure you are specific about the type of investment; i.e. not he should invest in x or y – which one? (or both?) How much should he invest? For how long? In whose name? Should the investment have any particular features?Please be as specific as possible without actually recommending a particular product. Your advantages / disadvantages below should then be directly relevant to your recommendations (not just generic advantages / disadvantages that could apply to any client). Please refer to the ‘investment choices’ video for more information in this regard.Overall, your recommendations must be clear on where his savings (both current and any monthly surplus) arebeing directed to achieve his specific goals.Where Lucas has a specific dollar ($) goal he is wanting to achieve, make sure your recommendations do give Lucas a chance to achieve his goal.For any goals greater than 1 year, you are required to prove your recommendations do give Lucas a chance to achieve his goal. To do this, please either use the Future Value (FV) calculations (covered in Topic 2) or use an online calculator as shown in the Future Value calculations video [we recommend the latter]. For these calculations, you are required to use the rates and fees provided in Appendix 1 below. As noted there, for the purposes of this course, you are not required to adjust these to take tax and inflation into account, so please simply use the stated rates and fees provided below.Show any workings / online calculators used (including your inputs) in Appendix 1 below. Before completing this, please refer to the video, ‘Future value calculations’ on L@G.Make sure you do actually provide recommendations on how Lucas can achieve his goals – leaving it up to the para-planner (the person who will receive your file note/strategy plan) or saying we will discuss this further with Lucas is not acceptable.The reasons for your recommendations should form part of your advantages below. This section is simply what Lucas should do to achieve his first objective. Advantages of strategy [reasons why] This is where you need to include the reasons why you have recommended the strategy above.As per above and the marking rubric, please ensure you provide specific advantages for Lucas, not just generic advantages that may apply to any client / investor in that particular product. You should be explaining each decision you have made. Disadvantages of strategy There are always disadvantages with any recommended strategy. For your recommended strategy(s) what are the disadvantages? Again, be specific rather than general. For example, rather than stating ‘taxation implications’ as a disadvantage you would need to explain what the taxation implications are and how this is a disadvantage for Lucas.If there are severe disadvantages with your recommended strategy that cannot be overcome you should consider changing your strategy – particularly if your strategy means he cannot achieve his goals. Alternatives considered You need to consider all ‘reasonable’ alternatives and most importantly, why these where not recommended.For example, if you are recommending a defensive investment option you should include other defensive investment options and why these were not recommended. Likewise, with any growth investment recommendations. You could also consider changing the level of risk undertaken or how the investment is structured (i.e. different ownership options).Typically, an alternative strategy is a strategy that still meets the client’s goal, but one you haven’t recommended for a particularly reason(s). Please ensure you explain what this reason(s) is, so it is clear why your actual recommendation is more appropriate for your client.Remember too, that one possible investment alternative is to do nothing. That is, leave the investment as is. If you are not recommending this, why not? Repeat this process for all of Lucas’s wealth creation and lifestyle goals (including his superannuation goals below). Additional information [updated from Part A] You may use Lucas’s $1,650 monthly savings as you wish (i.e. you do not have to limit yourself to $550 per month as with Part A). However, as with Part A, remember that once you have allocated these (e.g. for one goal) they are no longer available for another goal. Accordingly, we strongly recommend you prioritise his goals. This is discussed further in the Part B: wealth creation video available on L@G. A reminder too, please keep any funds for the holiday goal outside of superannuation to ensure they have flexibility with these funds. Wealth creation recommendations – superannuation / retirement planning Before completing this section and the remaining sections of the file note, we strongly suggest you watch the ‘Getting started: how to complete Part B’ video on L@G. Overall, Lucas wants to sort out his superannuation and ensure he is on track for a comfortable retirement. As part of this, there are three overall recommendations you need to make: Should he consolidate (combine) his superannuation funds?What investment option should he use for his superannuation fund(s)?Is he on track to achieve his retirement objective? These are expanded on below. For completeness, please ensure any reasoning why / why not is included in the ‘advantages of strategy’ section below. Should he consolidate his superannuation funds? Why / why not? Remember you don’t know anything about the superannuation funds he holds so you can’t recommend one of these above the other. It may be that neither fund is appropriate for him, so instead, consider any particular features his superannuation fund should have and the benefits / risks of consolidating his funds. Explain your reasoning.In practice, this is likely to be easier since you can directly compare the superannuation funds and available options and make clear recommendations based on this. For the purposes of this assignment, please use the limited information provided and provide recommendations based on this.Remember you arenot required to recommend a specific product. What investment option should he use for his superannuation fund(s)? As discussed, you should assume he does not have access to a defined benefit fund, accordingly, any superannuation fund recommended will be an accumulation fund and therefore, you need to recommend an investment option for him (e.g. conservative, balanced, growth, high growth, lifecycle etc) and explain why you have recommended this, that is, what it is appropriate for him. Is he on track to achieve his retirement objective? The answer is most likely no, and that he will need to make additional contributions and/or look at increasing his investment option (if appropriate).If he does need to make additional contributions, your advice will need to cover how much he should be contributing each month and the type of contributions. That is should they be before tax (i.e., salary sacrifice and/or personal tax-deductible contributions), or after tax, or a combination? And most importantly, why?When considering how much he should be contributing each month you need to ensure you are still working within his available funds taking in to account the funds required to achieve his goals outside superannuation (remember, you can only use these funds once).Likewise, for any before tax contributions, please ensure you are taking into account the after-tax impact on his cash-flow. This is discussed further in Topic 8.Please also ensure you are working within the contribution limits as well.You should also consider whether he should start a Transition to Retirement (TTR) pension as well, and if so, when? And why? Or why not?For completeness, in terms of the retirement income he requires to achieve his desired retirement lifestyle, you may increase the amount mentioned in the interview transcript if you wish. If you choose to do so, please justify your reasons for this. Please do not decrease this amount. Continued over page Is he on track to achieve his retirement objective? (continued…) As part of this section, you are required to use MoneySmart’s retirement planner to demonstrate that it is possible for Lucas to meet his retirement goals based on your recommendations. Please include a screenshot of your calculations in the Appendix. Your screenshot(s) need to show both your inputs and the results. Please use the investment returns, tax on earnings and investment fees provided in Appendix 2 below.If you are not recommending Lucas make any additional contributions your reasons for this must be included in the ‘alternatives considered’ section below to show you have thought of this and did not recommend it because of … Advantages of strategy [reasons why] As per above (e.g. if you are recommending consolidating the super funds what are the advantages / disadvantages of this etc etc).You may choose to cover the advantages / disadvantages / alternatives for each of the 3 points above, or you may prefer to do these altogether. This is up to you. Disadvantages of strategy As per above Alternatives considered As per above Wealth protection (insurance) – recommendations Note 1: as discussed, all insurance recommendations should be done on a needs basis. That is, what are the financial consequences if an accident / illness / injury occurred? Could he still achieve his goals and objectives? Note 2: in this course you are not required to price insurance. In practice, any insurance recommendations outside of superannuation will have an impact on Lucas’s cash flow, though for the purposes of this assessment item you do not need to consider how Lucas would fund this (i.e. feel free to use his entire monthly surplus for any wealth creation / lifestyle goals, including superannuation). You will do so in later courses. Note 3: if you are recommending Lucas not take out a particular insurance cover, you must explain why. Life insurance Advise whether you recommend Lucas take out life insurance cover or not and whyIf recommending Lucas obtain life insurance, please advise whether this should be inside / outside superannuation and whyWhat should he do (if anything), with his current life insurance policy?Provide any advantages / disadvantages with your recommendation Total and permanent disability (TPD) insurance Advise whether you recommend Lucas take out TPD cover or not and whyIf recommending Lucas obtain TPD insurance, please advise whether this should be:own occupation or any occupation TPD and why; andinside / outside superannuation and whyProvide any advantages / disadvantages with your recommendation Income protection (IP) insurance Advise whether you recommend Lucas take out IP cover or not and whyIf recommending Lucas obtain IP insurance, please advise:What level of cover he should obtain (e.g. what % of his income);What his waiting periods / benefit periods should be;Whether this should be an agreed value or indemnity policy;Whether this should be held inside / outside superannuation; andFor each of the above points, please ensure you explain your reasons why.Provide any advantages / disadvantages with your recommendations Trauma insurance Advise whether you recommend Lucas take out trauma cover or not and whyA reminder trauma insurance must be held outside of superannuationProvide any advantages / disadvantages with your recommendation Private health insurance Should Lucas continue to hold his hospital cover? Why / why not?Should he take out extras cover as well? Why / why not? Estate planning Detail below any estate planning recommendations you have for Lucas. Please refer to Topic 9 for the various estate planning considerations we have discussed.Please ensure you explain why you have made the particular estate planning recommendation(s) for Lucas. For example, why should Lucas update his will (if required)? Why should he set up a testamentary trust? Or why not? Should he set up a binding death benefit nomination? And to who? Why? etc etc.Where possible, please ensure this is specific to Lucas, rather than generic. Other Insert any other objectives / issues that you have not previously dealt with. For example, if you have any recommendations that may impact on Lucas’s future age pension entitlements that you have not previously covered as part of another section above, then include these here.If you have previously covered everything, you wouldn’t be expected to have anything for this section – so just delete. Appendix 1 – Future value (FV) calculations [outside superannuation – same as Part A] Include in this section any FV workings and/or a screenshot of any online calculators you have used (including your inputs), which show that Lucas has a chance of meeting his goal(s) if he follows your recommendations. A reminder that this section is requiredfor any goals greater than 1 year and forms part of the Part A and Part B marking rubrics. Accordingly, students who do not complete the Appendix will have their marks reduced. Before completing this, please refer to the video, ‘FV calculations’ on L@G which goes through how to complete the FV calculations, why these are required as part of your file note, and what you need to include in this section of your file note. For completeness, please do not include Lucas’s emergency funds (or any interest potentially generated from these), in your FV calculations. For your FV calculations you are required to use the investment return rates given below. Please note that you are not required to take tax or inflation into account for any of your ‘Part A’ calculations, though this should form part of your overall considerations (reasoning).  Investment rates of return (per annum) – assume compounded monthly ABC Bank and LMN Bank – Savings accounts: 0.10% for every day ‘at call’ account and 0.75% for a high interest ‘at call’ account when $100 is deposited monthlyTerm deposit & bonds: ABC Bank and LMN Bank – compounded monthly: 3 months 0.75%6 months 0.70%12 months 0.70%2 years 0.80% Australian shares (Direct): 8.1%International shares (Direct): 8.1%Managed Fund/Superannuation Funds – diversified funds:  (Active / Passive ) Defensive fund (90% defensive, 10% growth assets):     (2.2% / 1.7%)Conservative fund (70% defensive, 30% growth assets): (3.6% / 3.1%)Balanced fund (40% defensive, 60% growth assets):        (7.4% / 6.9%)Growth fund: (20% defensive, 80% growth assets):           (7.9% / 7.4%)High growth fund: (10% defensive, 90% growth assets):  (8.3% / 7.8%)Managed Fund/Superannuation Funds – single sector funds: (Active / Passive) Cash fund: (1.65% / 1.15%)Government bond fund: (2.95% / 2.45%)Fixed interest fund: (2.8% / 2.3%)Australian property fund: (4.5% / 4.0%)International property fund: (4.7% / 4.2%)Australian share fund: (8.5% / 8.0%)International share fund: (8.1% / 7.6%) Fees Assume the administration /management fees are as follows: Actively managed fund: 1.00% per annumPassively managed fund: 0.50% per annum Appendix 2 – Future value (FV) calculations [superannuation / retirement planning] Include in this section please include a screenshot(s) of your MoneySmart Retirement Planner (including your inputs), which show that Lucas has a chance of meeting his retirement goal(s) if he follows your recommendations. Before completing this, please refer to the video, ‘Part B: wealth creation’ on L@G which goes through these calculations in more detail. As discussed in this, in the ‘advanced settings – you’, you may change the fee level to ‘low to medium’. For the investment before / after retirement options, please choose the investment option ‘other’ and use the investment rate of return as per Appendix 1 and a flat fee of 0.5% or 1.00% depending on the investment management. For the ‘tax on earning’ percentage, please use the following: Investment option (as per Appendix 1)Tax on earningCash fund15%Government bond fund12%Fixed interest fund12%Conservative fund10.6%Balanced fund8.3%Australian property fund8%International property fund8%Growth fund5.8%Australian share fund4.1%High growth fund4.1%International share fund8% For example, if recommending an international share fund for Lucas’s superannuation, go into the ‘advanced settings – you’ and under the heading investment before retirement and investment after retirement you would select ‘other’ and use a return of 8.1% (as per Appendix 1), tax on earnings of 8% as per above and fees of 1.0%(for active management). Please note, the tax on earnings usually decreases the more Australian shares and/or growth assets are included in a portfolio, due to greater tax savings with these investments. The tax savings are generally the result of franking credits (Australian shares) and the capital gains tax (CGT) discount on any capital gains (growth assets). For completeness, once an individual has retired and the superannuation fund is in ‘pension mode’ (discussed further in Retirement and Estate Planning), no tax is paid on investment earnings hence this box has been removed from the ‘investment after retirement’ section. Appendix 3 – Frequently asked questions I received feedback suggesting I change something for Part B, do I need to resubmit Part A? Answer: No. Part B is the submission of your full file note [strategy paper], which will include Lucas’s lifestyle and wealth creation recommendations (outside super) that you would have done for Part A. As per the instructions, you can choose to update / change any recommendations made for these sections for Part B. You may wish to do this as a result of feedback you have received, or you may need more / less funds to achieve Lucas’s superannuation goals, or you may determine there is a better way to achieve Lucas’s goals. Accordingly, please feel free to update / change this as required. Please also be aware that the marking criteria for these sections is different for Part B, so please ensure you have referred to the Part B marking rubric. For completeness, Part A has less focus on making sure the recommendations are appropriate (only 20% of the assessment mark) and more on making sure your recommendations are clear and well justified. Whereas Part B has a much greater focus on making sure the recommendations are appropriate and well justified (including well thought out alternatives). Do I need to amend the ‘FSG and adviser profile’ and ‘Scope of advice’ sections? Answer: No. There are no marks for these sections and therefore they have been completed for you.  How do I work out which insurance products Lucas needs? Answer: please complete your insurance recommendations on a needs-based approach. That is, ensuring you are focused on the financial consequences of an event (i.e. death, total and permanent disability, loss of income etc) occurring if the client was not adequately insured as discussed in Topic 7.  Please do not focus on the likelihood of an event occurring – in this situation, we would all be recommending that 90-year old’s take out life insurance, however, there may be minimal financial consequences if they did not have life cover and passed away. Accordingly, focus instead, on the client’s needs. As a general comment, remember that if an event is unlikely to occur (from an actuarial point of view), then any insurance is likely to be relatively inexpensive. A reminder, you are not expected to calculate the amount of cover your client requires as this will be discussed in the Personal Risk Management course. Do I need to leave some of Lucas’s savings aside to account for any insurance that may be held outside of super? Answer: No – for the purposes of this course you do not need to consider how Lucas would fund any insurance held outside of superannuation as we do not price insurance (you will do so in later courses). Accordingly, please feel free to use his entire monthly surplus for any wealth creation / lifestyle goals, including superannuation. How do I structure the insurance section of the file note? Do I need to include alternatives like the wealth creation section? Answer: I would follow the Part B instructions, that is, explain what you are recommending and then advantages and disadvantages of your recommendation. In terms of wording this, I suggest you word these along the lines of “we recommend Lucas take out life insurance inside super / outside super” or “we do not recommend Lucas take out life insurance at this stage” [whatever you are recommending] and then explain why. For TPD, you would need to include as part of your recommendations whether it was own/any occupation TPD etc. So something along the lines of “we recommend Lucas take out own/any occupation TPD insurance inside super / outside super” [whatever you are recommending].  Then you would go through the advantages (i.e. reasons why) and disadvantages of what you are recommending.  Please note for the insurance section, there is no ‘alternatives’ section. This is because you should effectively be explaining your choices clearly in each section. For example, if you recommend an own occupation TPD policy, part of your reasoning about why own occupation would also cover off why any occupation TPD wasn’t recommended for Lucas [or vice versa], so you are effectively discussing your alternatives as you go with this section.  If I am recommending Lucas salary sacrifice into superannuation do I need to take into account this will reduce his take home pay? Answer: Yes. Salary sacrificing will always result in a decrease in a person’s take home pay. Accordingly, if you are recommending Lucas salary sacrifice into superannuation, the reduction in his take home pay needs to be factored into his $1,650 per month savings (i.e. that he will have $1,650 per month less the impact of salary sacrificing per month). Please be aware that if you are using any of the online calculators (e.g. AMP’s salary sacrifice calculator) sometimes it looks like an increase in take home pay if the calculator is comparing after tax and before tax contributions. But in Lucas’s case, he is not making any after tax contributions. Accordingly, by sacrificing a portion of his income, he will be reducing his take home pay. While he is saving tax, if he sacrifices $100 of income he doesn’t save $100 of tax, so he will be worse off from a cash flow perspective, hence this needs to be factored in. If I am recommending a re-contribution strategy do I need to explain how much he should withdraw and re-contribute? And should this be included in the estate planning or superannuation section? Answer: If you are recommending a re-contribution strategy, you don’t need to include details on what a re-contribution strategy is, (the same way you don’t have to explain what a managed fund is, what is income protection insurance etc). However, we do need information on what condition of release from superannuation he meets, how much you are recommending he withdraw and re-contribute and when he should do this (e.g. now / age 60 / 65 etc) and a brief explanation of why you are recommending this as well as any disadvantages. Make sure you consider the withdrawal and contribution limits as well. Any recommendations re this could be included in either the superannuation or estate planning section – whatever works best for you. What should I do if I have surplus cash remaining? Answer: If after achieving all of his objectives, you have surplus cash remaining, I suggest you include one or two lines about what you are recommending he do re this surplus. Please note, we’re not expecting you to include a detailed cash flow analysis in your submission (as you don’t have the information to do this in any case), so if you do have some surplus cash it should be sufficient to say any surplus should be redirected to xyz and explain your reasons for this. This could include further emergency funds / additional contributions to superannuation (whether before or after tax), or you could achieve a wealth creation goal earlier, or simply have a greater buffer to allow for increased costs. This is discussed further in the Part B: Wealth Creation video. Do I need to take tax and/or inflation into account? Answer: you are not required to take tax or inflation into account for your calculations outside of superannuation (i.e. his ‘Part A’ goals), though this should form part of your overall considerations (reasoning). However, for your superannuation calculations, a reminder that you DO need to consider the after-tax impact of salary sacrifice as per the Part B instructions and FAQ 6 above. Please note that MoneySmart’s retirement calculator will take into account inflation as well as the concessional contributions tax and any tax on investment earnings (assuming you set the latter up correctly as per the Part B instructions), so there is no need to separately factor this in. In the Part B marking rubric, the excellent column in “Attention to auditable track record” mentions including conversation quotes where relevant. Do I need to include a quote in every section or is there a specific number of quotes you are looking for? Answer: This section looks at your overall reasoning which is strengthened by including relevant conservation quotes. You do not need to include conversation quotes in every section, rather if there are certain recommendations you are making because of a relevant comment the client has said, it would make sense to include this “conversation quote” to support your argument. Please note that not all firms will have an interview transcript, as they may choose not to record the interview. Therefore, adding conversation quotes into your file note / strategy plan significantly strengthens this. What is meant by ‘private health insurance’, and how does this fit in with hospital cover and extra’s cover? Answer: Generally, private health insurance refers to hospital cover, which usually covers some or all of the costs of hospital treatment as a private patient, including doctors’ fees and hospital accommodation. Extra’s cover is an optional additional level of coverage which provides cover for things like physiotherapy, chiropractor, optometry (glasses), dentistry etc. It is possible to have stand-alone hospital cover, stand-alone extras cover, or a combined hospital and extras cover policy. Please remember that private health insurance (whether hospital or extra’s cover or both) must be held in your own name. Part A: frequently asked questions [that are still relevant for Part B] The example file note recommends an investment bond or education bond – is this the same as a Government or Corporate bond? And can I recommend this? Or use it as an alternative? Answer: An investment or education bond is very different from a Government or corporate bond that we discussed in Topic 5. An investment bond is only suitable for investment timeframes of greater than 10 years, which will not apply to Lucas, accordingly do not recommend this. Please do not include this as an alternative either, as these should be appropriate (possible) investment alternatives. Accordingly, please simply use the example file note as a guide as to how to write / format your recommendations. For more information on investment bonds (for your information only), please refer to: https://www.moneysmart.gov.au/investing/complex-investments/investment-and-insurance-bonds Can I advise Lucas that he needs to save more to achieve his goals? Answer: No. In practice, you may be able to discuss his savings levels and look for opportunities for him to save more by analysing his cash flow, however any budgeting / cash flow analysis has been excluded from this assignment. Likewise, please do not suggest that Lucas sell other assets, such as his campervan or home contents to achieve his goals. If my investment recommendations are the same for two different objectives (e.g. two managed funds or two term deposits etc) do I need to go through the same advantages and disadvantages again? Answer: No – just ensure you fully detail your advantages / disadvantages for the first objective and then put ‘as above’ for the second. If there are any differences, e.g. still a managed fund but say a different risk level, or a different length of time used, make sure you clearly explain the reason for these differences as part of the second objective. Overall, please ensure you are very clear on where his savings are being allocated for each objective. Should I work on each goal separately or together? Answer: as per the Part A instructions, as his goals have different timeframes and he wants to keep Gina’s house deposit funds separate, it is unlikely to be appropriate to combine all of Lucas’s funds into one investment for multiple goals. Accordingly, we suggest you work on one goal at a time (as shown in the Part A template). Therefore, for each goal, you need to consider how much of his current savings (if any) and how much of the ongoing savings (if any) are you allocating towards this goal (remembering you can only use these once) and how these funds are being invested. Please refer to the investment choices video on L@G for further information. Should I advise Lucas to pay off his credit card? Answer: No. Lucas pays his credit card off in full each month, so there is no need to advise him to repay this. Putting all your expenses on a credit card and then repaying this in full at the end of the month is a common strategy people may choose to use to increase their savings (due to the extra interest earned during the month) or to reduce their mortgage interest by using an offset account (discussed in Topic 5). Provided individuals are actually achieving these savings and are not spending more than they earn (very easy to do with credit cards), this can be a valid strategy. Given Lucas is managing to save each month while doing this there is no need to advise him to stop doing this.  How many alternatives should I have? Answer: there is no set number and will depend solely on what you are recommending. As per the Part A instructions above, you need to consider all ‘reasonable’ alternatives (i.e. similar investment options as well as ownership alternatives where relevant) and most importantly, why these where not recommended. Students who provide strong, clear reasoning why the various alternatives were not recommended tend to do particularly well in the assignment, as it is clear they have considered all relevant options and why these were rejected, which in turns helps support the assertion that their recommendations are in fact, in the client’s best interests. How do I complete the future value calculations? Answer: Start by watching the video, ‘Future value calculations’ available on L@G as well as reading through the information on investment rates and fees provided in the Appendix 1 above. Overall, please remember that your FV calculations are designed solely to support your recommendations and prove your client does have a chance of achieving his goal in the desired timeframe. Accordingly, please ensure the FV calculations align with your recommendations provided. For example, if you are recommending your client initially deposit $10,000 into a managed fund, along with monthly contributions of $1,000 for 5 years, this is what should be shown in the FV calculations. Please ensure information on how much the client is contributing to an investment is included within the file note [strategy paper] itself, not just the appendix. Please only provide FV calculations for your recommendedstrategy, not your alternatives. Do I need to reference? That is, include where we got the investment rates from, any online calculators used and acknowledge where we got ideas for any advantages and disadvantages of the recommended strategies? Answer: as per Appendix 1 above, you are required to reference where you got informaion that is not your own work eg moneysmart calculators. A link to the website is sufficient, together with a screenshot of your FV calculations (refer FV calculations video). In terms of the advantages and disadvantages, while it is fine to use websites etc for general ideas, please make sure these are in your own words and are relevant to your client. We had an issue in a previous teaching period where a student copied and pasted all advantages and disadvantages from online sites, including those not relevant to the client, and was given 0 for the assessment item (as well as having an academic integrity concern noted on their record), so please don’t do this!  Accordingly, as the assignment should be in your own words and specific to your client, there should not be any need to reference. You only need to place a reference at the end of the appendix if you used a website such as moneysmart or xplan. Overall, please remember this is a practice based assignment, not a theoretical discussion of the issues. Accordingly, please ensure any theory we have discussed as part of this course is applied to your client. Students will be awarded marks for the practical application of the course content to a given situation, as shown in the marking rubrics.