Assessment Task 1
1.0 Evaluate the client’s current situation and identify the issues
FNSFPLN502.1
FNSFPL508.1 The first assessment involves the evaluation of the case study allocated to you, to assess the client’s current situation and identify the issues.
This requires that you:
• undertake an analysis of the integrity of information provided by the client,
• identify and quantify the client objectives and expectations and test them for viability, and
• establish the basis for strategy development based on confirmed objectives.
For this activity, refer to the case study and complete your answers to these assessment tasks in the space provided in the following pages.
Marks / 77
Assessment Task 1
1.1 (a) Analysis of integrity of client information
FNSFPLN502.1.1
FNSFPL508.1.1 From the scenario in your case study, list in the table below what documents you would review to analyse the integrity of the information provided by the client.
Enter your answers in the space provided below.
Information provided by client What documents would you review to confirm accuracy or analyse the integrity of the information provided? Marks
Cashflow Management
1. Income
$ K
$ K i) Wife’s income: / 1
ii) Husband’s income: / 1
2. Tax
i) Wife’s annual tax: / 1
ii) Husband’s tax: / 1
3. Expenses
$ K
$ K i) Living expenses/mortgage: / 1
ii) Discretionary expenses (holidays etc): / 1
Subtotal / 6
continued
Assessment Task 1, continued
Information What documents would you review to analyse
the integrity of the information provided? Marks
Wealth Creation
4. Super
$ K
$ K
i) Wife’s superannuation: / 1
ii) Husband’s superannuation: / 1
5. Investments
($ K)
i) Cash Investments Held: / 1
6. Debt Reduction
($ K)
($ K)
i) Mortgage: / 1
ii) Credit Cards: / 1
Wealth Protection
7. Personal Insurance
$ K
$ K
i) Wife’s current Life/TPD insurance : / 1
ii) Husband’s current Life/TPD insurance : / 1
8. Estate Planning
yes / no
yes / no i) Wife’s estate planning: / 1
ii) Husband’s estate planning: / 1
/9 (Total out of 15)
continued
Assessment Task 1
1.1 (b) Analysis of integrity of client information
FNSFPLN502.1.1
FNSFPL508.1.1 Use the http://www.taxcalc.com.au/ and a current tax rate to calculate Dennis and Donna’s:
• Investment income
• Superannuation contributions, and
• Surplus income after tax.
Use the Financial Planning Research spreadsheet provided to assist you in your calculations and then enter your results in the table below. You should use the copy and paste function to copy the calculations from the spreadsheet in to the tables below.
As your clients have private health insurance, the Medicare Levy surcharge does not apply. Also, assume that investments are jointly held so that 50% of the income is earned by each.
Investment Income
Investment Amount Rate Income
Bank Account
Term deposit
Cash Management Account
Total
/ 2
Superannuation Contributions (current situation)
Base Salary SG Rate Amount
Donna
Dennis
Total
/ 2
Surplus Income (current situation)
Base Salary Investment Income Taxable Income Tax on Income Medicare levy Tax Payable
(incl LITO) Expenses
(incl mortgage payment) Surplus income
Donna
Dennis
Total
/ 6
/ 10 (Total out of 25)
continued
Assessment Task 1
1.2 Identify client objectives and expectations
FNSFPLN502.1.2
FNSFPL508.1.2 From the scenario in your case study,
a) write down one or more specific financial objectives and expectations for the generic needs provided,
b) quantify the objective by expressing the amount in today’s dollars (PV- Present Value), and
c) Describe how you would verify each objective.
Generic Needs (a) Specific client objectives and time frames (if applicable) (b) Amount
(PV) (c) How would you verify the amounts in (b) or test for viability? (No calculations are required)
Marks
Cashflow Management
1. Income /3
2. Tax minimisation
/ 3
3. Expenses /3
Wealth Creation
4. Superannuation
/ 3
5. Investment Planning
/ 3
6. Debt reduction / 3
Wealth Protection
7. Personal Insurance
/ 3
8. Estate Planning / 3
/ 24 (Total out of 49)
Continued
Assessment Task 1, continued
1.3 a) Develop strategic options
FNSFPLN502.1.3
FNSFPL508.1.3 From the scenario in your case study, establish the basis for strategy development by identifying the strategic options for each generic need.
You should develop a minimum of three options for each generic need which would act as a hypothesis for you to investigate further.
Generic Needs Possible Options Marks
Cashflow Management
i) Income / 3
ii) Tax minimisation
/ 3
iii) Expenses / 3
Wealth Creation
iv) Superann-uation
/ 3
v) Investment Planning
/ 3
vi) Debt Reduction / 3
Wealth Protection
vii) Personal Insurance
/ 3
viii) Estate Planning / 3
/ 24 (Total out of 73)
continued
Assessment Task 1, continued
1.3 b) Develop strategic options, continued
FNSFPL508.1.3 (b) From the various options that you have given in 1.3 (a), please list four (4) options / alternatives that you would want to present to the clients to get their approval before conducting detailed research.
For example, you might start this discussion to confirm objectives with “I understand that you have a preference to do X, but if I could show you a significant advantage in doing Y, would you consider it?”
Would you consider:
Marks
1
/1
2
/1
3
/1
4
/1
/ 4
Total / 77
Assessment Task 2
2.0 Identify research requirements and parameters
FNSFPLN502.2
FNSFPL508.2 The next step in the Financial Service Advice Process includes the identification of research requirements and parameters.
This requires that:
• Aims and objectives of research including strategy, product and performance parameters are established against client requirements and expectations with all issues identified,
• Intended use of the research information is clearly established
• A wide range of relevant internal and external information resources required for the research are identified and accessed,
• Information requirements not met by regular sources are identified and strategies developed to access them legitimately, and
• Timeframes are established and requests for information prioritised to ensure milestones are met.
Complete your answers to this assessment task in the space in the table provided:
The first column you are required to fill in is (b) – What are some research questions that you could ask to determine the clients’ aims and objectives?
You are required to provide 1 or 2 additional Research Questions for each generic need, but no calculations or sums are required at this stage.
The second column you are required to fill in is (c) – Where would you find this information?
You are required to provide some examples of websites, on-line calculators type of spreadsheet etc. you could utilise to answer the questions in part (b).
The final column (d) – Priority requires you to allocate a level of importance to each generic need.
Use the numbers 1 – 3 with 1 being the highest priority.
An example of a research question is provided in the first row for each generic need.
Marks / 29
Assessment Task 2, continued
Generic Needs (a) What is the expected outcome for the clients?
(Intended use or reason) (b) What are some research questions that you could ask to determine the clients’ aims and objectives?
(Please provide 1 or 2 additional research questions for each)
(c) Where would you find this information?
(e.g. websites, calculators, spreadsheets etc)
(d) Priority
1 – 3
(1 being highest) Marks
Cashflow Management
• Income • Maximise savings
• Maintain current level of income • How much of the surplus income can be allocated to other investments to maximize savings over the next 7 years?
• • • Spreadsheet• 1 /2
• Tax Minimisation
• Pay lower rate of tax
• Identify cost of paying off mortgage
• Obtain tax benefits • How much tax is currently being paid in the cash and fixed interest investments?
• • / 4
• Expenses • Reduce after tax costs • Is the client’s estimate of $40,000 pa for living expenses and $10,000 pa for holidays an accurate estimate?
• • / 4
Wealth Creation
• Superannuation
• Maximise growth of fund
• Identify contributions required to achieve retirement income
• Is there a portfolio within Dennis’ current superannuation fund that is more in line with his risk profile and more likely to have an average annual return of more than 4%?
• • / 4
Subtotal / 14
continued
Assessment Task 2, continued
Generic Needs (a) What is the expected outcome for the clients?
(Intended use or reason) (b) What are some research questions that you could ask to determine the clients’ aims and objectives?
(Please provide 1 or 2 additional research questions for each) (c) Where would you find this information?
(e.g. websites, calculators, spreadsheets etc) (d) Priority
(1 – 3 with 1 being the highest ) Marks
• Investment Planning
• Establish investment for grandchildren’s future education costs • Will the clients need access to these funds before the 12 year time frame?
• • / 4
• Debt Reduction • Clear non-deductible debt before Donna retires
• How long it would take to pay off the home loan if a lower rate is obtained?
• • / 4
Wealth Protection
• Personal Insurance
• Wealth protection without losing any current benefits
• What other (if any) insurances are available under their current superannuation funds?
• • / 4
• Estate Planning • Estate protection • What do the clients know about having a valid will, powers of attorney, testamentary trusts etc?
• • / 3
Subtotal / 15
Total / 29
Assessment Task 3
3.0 Extract and analyse information
FNSFPLN502.3
FNSFPL508.3 The next step in the Financial Service Advice Process includes the extraction and analysis of information according to research requirements and parameters.
This requires that:
• Data extraction criteria are established that are relevant to intended use and client requirements and do not unduly limit the scope of research,
• Trends are identified to provide meaningful information on performance of possible strategies, products and markets,
• Financial products are analysed within appropriate timeframes to ensure currency of decision making and comprehensive risk assessment is made of products identified through the research,
• Obtained information is prioritised according to client requirements and expectations, and
• Issues that require specialist research or advice are identified and appropriate advice obtained.
Complete your answers to this assessment task in the spaces provided in the following pages.
(Marks 170)
Assessment Task 3.1
3.1 Research tax minimisation
FNSFPLN502.3
FNSFPL508.3 Referencing the Tax Calculator research the four (4) different tax minimisation options specified below and calculate the potential annual tax that could be saved by your clients.
Use the Financial Planning Research spread sheet provided to assist you in your calculations and then enter your results in the table below. You should use the copy and past function to copy the calculations from the spreadsheet in to the tables below.
Complete your answers in the space provided below.
Tax Minimisation Options Calculations Potential Tax saving (pa) Marks
1. How much tax is currently paid on the cash and fixed interest investments?
Income Tax rate Tax
x =
x =
N/A – Current situation / 3
2. If the cash and fixed interest investments were transferred from a joint ownership to Dennis’ name how much tax would be saved? Income Tax rate Tax
x =
x =
/ 3
3. How much would Donna save in tax if she salary sacrificed up to the concessional contribution cap?
/ 3
4. How much extra Low Income Tax Offset would Dennis be entitled to, if he salary sacrificed to meet the 19% marginal tax rate?
(Note: Do not include investment income) / 3
Subtotal / 12
Assessment Task 3.2
3.2 Research surplus income
FNSFPLN502.3
FNSFPL508.3 Using the previous Tax Calculator for the current financial year, Calculate the tax payable and surplus income available if the client were to implement the tax minimization options identified in the previous assessment task.
Do not include the interest income in this calculation and complete your answers in the space provided below.
In your summary, consider the changes to total tax payable, surplus income and increased superannuation contributions.
Table 1- Surplus Income (current)
Base Salary Salary Sacrifice SG (9.5%) Total Super Contribution Taxable Income Tax on Income
Medicare levy Tax payable (incl LITO) Expenses (incl mortgage payment) Surplus income
Donna
Dennis
Total
Table 2-Surplus Income (after salary sacrifice)
Base Salary Salary Sacrifice SG (9.5%) Total Super Contribution Taxable Income Tax on Income Medicare levy Tax payable (incl LITO) Expenses(incl mortgage payment) Surplus income
Donna
Dennis
Total
Table 3-Change between above
Base Salary Salary Sacrifice SG (9.5%) Total Super Contribution Taxable Income Tax on Income Medicare levy Tax Payable(incl LITO) Expenses(incl mortgage payment) Surplus income
Donna
Dennis
Total
/ 6 marks
Summary Mark
/ 3
Subtotal / 9
/ 21
Assessment Task 3.3
3.3 Research super contributions
FNSFPLN502.3
FNSFPL508.3 Calculate the NET impact of the contemplated salary sacrifice strategies on annual superannuation savings (after tax).
You should refer to the Key super rates and thresholds on the ATO website to identify the current contribution tax and cap on contributions.
In your summary, consider the impact of the proposed changes in annual contributions on accumulated superannuation, contribution tax paid by the funds in relation to the change in surplus income.
Superannuation (Current)
Annual Contribution (SG) Concessional Contributions Tax Amount over Concessional Cap Tax on amounts over the cap Total Tax Payable Annual Contribution (after tax)
Donna
Dennis
Total
Superannuation (after salary sacrifice)
Annual Contribution (SG and salary sacrifice) Concessional Contributions Tax Amount over Concessional Cap Tax on amounts over the cap Total Tax Payable Annual Contribution (after tax)
Donna
Dennis
Total
Net change between above 2 tables
Annual Contribution Concessional Contributions Tax Amount over Concessional Cap Tax on amounts over the cap Total Tax Payable Annual Contribution (after tax)
Donna
Dennis
Total
/ 6
Summary Mark
/ 4
/ 10
Subtotal / 31 Continued
Assessment Task 3.4
3.4 Research super target
FNSFPLN502.3
FNSFPL508.3 Using the Super Simulator on the Australian Super website, calculate both Donna and Dennis’:
https://www.australiansuper.com/tools-and-advice/calculators/super-projection-calculator
• Target super savings required to generate their desired retirement income (i.e. combined $40,000pa).
Simulator Instructions
• On the ‘About You’ section You will run the simulator for Dennis Barker
• On the “balance” page set Dennis’s before-tax annual contributions
• Include Dennis’s part-time work plans (for the purpose of the simulator Dennis will work 2.5 days)
• Set Dennis’s relationship status on the Age Pension tab
• On the Partner tab include Donna’s information
• One the above information has been set-up you will need to adjust the client’s target retirement income
• Mouse over the graph and hover over ‘age 65’ Dennis’s projected balance will be in orange, and Donna’s in blue. You will use this information to complete the projected balance table.
• The projected income will be taken from ‘Income tab’. Please use the figures displayed when hovering over ‘age 65’.
Use the ‘Print Screen’ command on your computer to copy the image of the projected superannuation savings and income for both Donna and Dennis and paste in the space provided below. Then read the Assumptions and Methodology section and list the key assumptions used by the Super Simulator under the headings provided.
Current Savings Projected Balance at retirement Projected Income at retirement Mark
Donna $290,000
Dennis $138,000
Total $428,000 /10
Assessment Task 3.4, continued
Results Mark
Paste your superannuation simulation balance and income results here: (You will have 2 separate screenshots).
/ 2
/ 12
Subtotal /43
Assessment Task 3.4, continued
Assumptions (% or $), Methodolgy and/or Risks Mark
1. Salary Increase
/ 1
2. Rates of Investment Returns for an average market
/ 1
3. Fees
/ 1
4. Pension
/ 1
5. Today’s dollars
/ 1
/ 5
Subtotal / 48
Assessment Task 3.5
3.5 Compare superannuation funds
FNSFPLN502.3.3 and 3.4
FNSFPL508.3.3 and 3.4 Compare two alternative superannuation funds of your choice (refer to Personal Super Fund Profiles on the Rainmaker website to find fund if required). In your analysis, you should consider the security of the fund in terms of the reputation of the product provider, their experience in the superannuation market, the long-term average return and whether the investment options match Dennis’ risk profile. On the following page recommend one fund that will enable Dennis to receive a return in line with his risk profile.
Question Fund 1 Fund 2 Marks
1. Provider / 1
2. Product name / 1
3. URL of PDS / 1
4. PDS version No. & issue date / 1
5. Experience / 1
6. Return 1 Yr / 1
7. Return 3 Yr / 1
8. Return 5 Yr / 1
9. All Fees (MER, admin, exit and entry) / 1
10. Investment options / 1
11. Risks / 1
/ 11
Subtotal / 59
Assessment Task 3.5, continued
Graph Returns
Create a graph using the Financial Planning Research Spreadsheet (Excel Worksheet) comparing the last year’s return of the two funds on the previous page to Dennis’ current fund. Copy and paste it in the space below.
Copy and paste the graph here.
Recommend a fund, either Dennis existing super fund or one of the funds that you researched. Ensure that the investments are in line with Dennis risk profile. Explain your reasons to justify your recommendation, but not based on just investment returns alone. Given that there is limited information on Dennis existing fund you are allowed to make your own assumptions in comparing it against the ones that you researched.
Recommend a fund Mark
/ 2
/ 2
Subtotal / 61
Assessment Task 3.6
3.6 Research using investments to pay down mortgage
FNSFPLN502.3
FNSFPL508.3 Calculate whether your clients would be better off in after tax dollars:
• Using their investment monies ($36,000) to pay down their mortgage; or
• Retaining the investments
You will need to calculate comparison savings in after tax dollars over the next 7 years to clear the debt before Donna retires.
Interest saved
(by using investment to pay down mortgage) Interest earned
(by retaining investments in Dennis’ name) Marks
/ 4
Would Dennis and Donna be better off keeping their investments (bank account, term deposit and cash management account) or use the funds to pay down their mortgage? By how much?
Keep Investments OR Pay Mortgage? Marks
1. Keep their investments? Yes / No / 1
2. Show your calculations / 1
3. By how much? / 1
l / 7
Subtotal / 68
Assessment Task 3.7
3.7 Calculate the future value of investment needs
FNSFPLN502.3
FNSFPL508.3 Using the ‘ Compound Interest Formula’ , calculate the future value of your client’s investment needs, assuming a:
• 3% pa rate of inflation (net of inflation), and
Complete your answers in the table provided below bearing in mind the different timing requirements for funds. Show calculations using 8 decimal places, but the final results in two decimal places.
Then summarise your findings in terms of the future values (FV) arrived at, in relation to the client’s stated present values (PV).
Calculations Marks
Uni Fees
Present Value (PV) = $120,000
Inflation rate per year (r) = 3%
Number of years (n) = 12
/ 2
/ 2
/ 2
Formula:
FV = PV(1 + r)n
Uni Fees
FV =
=
= $
/ 2
/ 2
/ 2
Summarise what the future value of investment needs will be
Summary Marks
/ 3
/12
Subtotal / 83
Assessment Task 3.8
3.8 Calculate the future investment needs
Using the formula provided below to calculate the regular investment required to create a future value from the previous page, determine how much Donna and Dennis would need to invest each year for 12 years into an Investment Bond so as to provide for their grandchildren’s university education (Show calculations using eight decimal places, but the final results in two decimal places..
In your calculation, assume
• a 6% pa return (after management fees),
• no entry fee (rebated), and
• compounded annually.
Provide your answers in the space provided below
Calculations Marks
Variables:
Future Value (FV) =
Interest rate expressed as a decimal (r) =
Number of years (n) =
/ 1
/ 1
/ 1
Formula:
Savings Required (PMT) = [FV x r]
[(1 + r)n -1]
Calculation:
Savings Required (PMT) =
=
=
/ 1
/1
/ 1
The advantage of Investment Bonds:
Add this annual amount to the total expenses in the second table in task 3.2 to give you an updated surplus income figure.
Calculations Amount Marks
Surplus income after current expenses and tax minimisation / 1
LESS allocation for investment bonds / 1
Updated surplus income / 1
/ 9
Subtotal / 92
Assessment Task 3.9
3.9 Compare investment bonds
Click on the below links to research Investment Bonds in order to make a recommendation for the clients. All the information required to answer the questions below can be found by clicking on appropriate links and downloading the Product Disclosure Statements when in the websites:
Commbank Investment bond
Centuria Investment Bond
In your analysis, you should consider the security of the fund in terms of the reputation of the product provider, their experience in the investment bond market, the long term average return and whether the investment options match your client’s risk profile.
Question Product 1 Product 2 Marks
1. Provider / 1
2. Product name / 1
3. URL of PDS / 1
4. PDS version No. & issue date / 1
5. Experience / 1
6. Return 1 Yr / 1
7. Return 5 Yr / 1
8. All Fees (MER, admin, exit & entry) / 1
9. Investment options / 1
10. Risks / 1
Preferred Option: Why? / 5
/ 15
Subtotal / 107
Assessment Task 3.10
3.10 Calculate mortgage payments to pay-out home loan
FNSFPLN502.3
FNSFPL508.3 After researching their current home-loan, Donna and Dennis would save money by considering lowering the interest rate on their mortgage to 4.5%.
Using the Home Loans Repayment Calculator from Your Mortgage , calculate what their current repayments would need to be increased to so as to pay-out the home loan over 7 years.
Complete your answers in the table provided below.
Calculations Marks
Variables:
Loan Amount (after strategy in task 3.6) $
Interest Rate %
Term 7 years
New Repayments pa $ pa ( p/mth x 12 )
Current Repayments $ pa
Net change $ pa
/ 1
/ 1
/ 1
/1
/1
/1
Do you think that 7 years to pay-out the home loan is:
o too short,
o too long, or
o appropriate.
Provide a justification for the selection that you have made above:
/ 1
/1
Calculations
Using the Net Change amount show the effect this will have on the cash-flow table after Task 3.8 to update the total expenses and surplus income figures.
Amount Marks
Surplus income after current expenses and tax minimization, LESS allocation for investment bonds
Net Change to repayments / 1
Updated surplus income / 1
/ 10
Subtotal / 117
Assessment Task 3.11
3.11 Calculate the value of investments on retirement
FNSFPLN502.3
FNSFPL508.3 Using the Future Value of a Cashflow formula, calculate the gross value of potential additional savings of $2,000 every 6 months assuming:
• Additional savings will continue until Dennis retires at 65, and
• An investment return of 8% pa compounding.
For the purpose of this calculation, you will need to calculate the number of periods until Dennis retires and the 8% interest rate will be compounded half yearly (ie. 4% per period)
Complete your answers in the table provided below.
Calculations Marks
Variables:
6 monthly contribution (PMT) =
Interest rate per period (i) =
Number of periods (n) =
/ 1
/ 1
/ 1
Formula:
Calculate investment savings:
(Show your workings)
FV =
=
=
= $
/ 1
/ 1
/ 1
/ 1
Will these additional savings assist the clients with meeting any previous goals or objectives identified? Please explain and complete an updated cash flow table. Marks
Updated cash-flow table:
Net cashflow after Task 3.10 less annual amount required above = $____________ / 1
/ 8
Subtotal / 125
Assessment Task 3.12
3.12 Additional super contributions
FNSFPLN502.3
FNSFPL508.3 Would non-concessional super contributions be better than Education Bond for saving for the grandchildren’s university education?
In this activity, you are required to explain the subjective reasons why an alternative strategy to Investment Bonds, namely making non-concessional superannuation contributions may be a better option for saving towards university fees for your client’s grandchildren.
Mark
/3
/ 03
Subtotal / 128
Assessment Task 3.13
3.13 Research insurance needs
FNSFPLN502.3
FNSFPL508.3 Determine the personal insurance needs for your clients, considering their current insurance, appropriate policy ownership and changing needs as they transition towards retirement.
Since there are a number of methods that can be used by you to calculate insurance needs, you will be assessed on whether you can provide a reasonable basis for your calculations. Therefore, it is important to provide details of your calculations and to fully explain your method of calculation.
I. What insurance cover do your client’s already have?
insurance cover Marks
1 / 1
II. What are your client’s Term Life insurance requirements?
In your calculations, you should assume that the:
• remaining spouse continues working to retirement as planned,
• deceased bequeaths all assets to the remaining spouse,
• remaining spouse is the beneficiary of existing insurance held,
• no provision in the life insurance calculation needs to be made for topping up superannuation, and
• Donna is able to increase her Life and TPD cover under her current superannuation fund, and Dennis can establish Life and TPD cover under his superannuation fund.
How much should Donna’s life insurance cover be increased by?
How much Life insurance does Dennis require?
Notes Donna Dennis Marks
Clear Debt (after strategy in Task 3.6)
Income Replacement (annual income times years until retirement, plus Dennis’ part time income) /1
Grandchildren’s University Fees /1
Funeral Costs /1
Total /1
LESS
Insurance currently held /1
Superannuation currently held /1
Additional Cover Required
/ 1
Total Cover (Insurance held + Additional) /1
/ 9
Subtotal / 137
Assessment Task 3.13
III. What are your client’s TPD insurance requirements?
(Assume $100K Home modification, medical costs)
Notes Donna Dennis Marks
Clear Debt (after strategy in Task 3.6) /1
Income Replacement (annual income times years until retirement, plus Dennis’ part time income) /1
Home Modification/Medical Costs /1
Total /1
LESS
Insurance currently held /1
Superannuation currently held /1
Additional Cover Required
/ 1
Total Cover (Insurance held + Additional)
IV. What are your client’s Trauma insurance requirements? (assume $50K is required for medical expenses)
Notes Donna Dennis Mark
Clear Debt
/2
Medical Expenses
Total
V. What are your client’s Income Protection insurance requirements?
Notes Donna Dennis
Income
Plus SG (9.5%)
Equals Insurable Income / 2
Maximum Monthly Benefit Available (75%)
/ 11
Subtotal / 148
ADDITIONAL INFORMATION
Assume you have obtained 3 Trauma & 3 Income Protection insurance quotes from 3 different Product Providers
COMPANY TRAUMA ($ per-month) INCOME PROTECTION ($ per-month)
Donna Dennis Donna Dennis
A Life Insurance Company 153.07 181.24 182.58 121.87
Ins at its best co 155.84 180.16 181.44 120.55
AMP 152.06 179.14
Zurich 179.37 118.05
Please pick the quotes from the company that has quoted you the lowest premium and use this information to complete the assessment task 3.13.
VI. Using the information provided in above stated table. Complete the quotation of the monthly cost for Trauma
Monthly Cost Donna Dennis Mark
/1
VII. Using the information provided in the above stated table. Complete the quotation of the monthly cost for Income protection
Monthly Cost Donna Dennis Mark
/1
VIII. What is the total annual cost of insurance cover proposed? (Monthly premiums x 12 for Trauma and Income Protection)
Donna Dennis Mark
Total Monthly Insurance cost
/1
Annual cost for recommended Cover
IX. Complete an updated cash-flow analysis after all of your previous recommendations have been taken into consideration and comment on the final outcome:
Calculations Amount Marks
Surplus income after Task 3.11
/ 1
LESS annual cost of recommend insurance cover
Total surplus income
/ 4
Subtotal / 152
Assessment Task 3.14
3.14 Identify insurance ownership
FNSFPLN502.3
FNSFPL508.3 In the table below, indicate whether the insurance premiums would be:
a) Fully tax deductible
b) Partly tax deductible
c) Not tax deductible.
Then make a recommendation on whether which insurance policies should be held by your clients’ superannuation fund or personally and state your reasons.
a) Tax Treatment of Insurance Premium
Policy
Ownership Life
Insurance TPD
Insurance Trauma
Insurance Income Protection
Super Fund
Personally
b) Policy Ownership
Policy
Ownership Life
Insurance TPD
Insurance Trauma
Insurance Income Protection
Donna
Dennis
c) Why?
Indicate in the table below the reason why you chose the above ownership structure:
Policy
Ownership Life
Insurance TPD
Insurance Trauma
Insurance Income Protection
Reason
Mark /1 /1 /1 /1
/ 4
Subtotal / 156
Assessment Task 3.15
3.15 Compare Life Insurance products
FNSFPLN502.3.3 and 3.4
FNSFPL508.3.3 and 3.4 Using information obtained from the previous activity, analyse the respective insurance products offered by both AMP Elevate Insurance and Zurich Futurewise. In your analysis you should consider the experience of the product provider, definitions of Income Protection and Trauma, their claims process and the cost of insurance.
To ensure that you are dealing with the current PDS, please provide the internet link (URL), version number and release date.
Please refer to attached AMP & Zurich PDS to complete this section
Question AMP Macquarie Marks
1. Provider/Underwriter / 1
2. Experience/ reputation / 1
3. Product name / 1
4. PDS version number & release date / 1
5.Definition of Income Protection / 1
6.Definition of Trauma / 1
7.Claims process / 1
8. Cost of Income
Protection / 1.5
9.Cost of Trauma /1.5
10. Risks / 1
/ 11
Subtotal / 167
Assessment Task 3.16
3.16 Research estate planning needs
FNSFPLN502.3.6
FNSFPL508.3.6 Your clients have expressed a preference to see a female wills and estate specialist who lives relatively close to them in Hurstbridge Victoria (postcode 3099) to help them establish a will and power of attorney for your clients.
Using the Accredited Specialist Directory on the Law Institute of Victoria website, identify the two specialists located near your clients who can help can provide appropriate advice.
a) List eight (8) local Wills & Estate Specialists
Local Wills & Estate Specialists Marks
1
2
3
4
5
6
7
8 / 1
b) List below the details of the 1st female Wills & Estate Specialist
First Female Wills & Estate Specialists Marks
1 / 1
c) List below the details of the 2nd female Wills & Estate Specialist
Second Female Wills & Estate Specialists Marks
1 /1
/ 3
Total / 170
Assessment Task 4
4.0 Summarise and present results of research
FNSFPLN502.4
FNSFPL508.4
The next step in the Financial Service Advice Process includes the extraction and analysis of information according to research requirements and parameters.
This requires that:
• Information on financial strategies and products is collated and checked against research specification,
• Written performance, trend and risk analyses are prepared and checked against research specification,
• Any qualifications or issues for further research are described and documented, and
• Research findings are presented to the financial planner.
Complete your answers to this assessment task in the space provided in the following pages.
Marks / 36
Assessment Task 4.1
4.1 Check findings
FNSFPLN502.4.1 and 2
FNSFPL508.4.1 and 2 For each one of the Research Questions that you investigated in relation to the case study, summarise your:
• answer to the research question, and
• assessment of risk on a scale of 1 to 3 (where 1 is high)
Provide your answer in the table provided below.
Generic Needs (a) Research Specifications / Question (b) Answer (c) Risk Mark
Cashflow Management
1. Income 1. Given the annual adjustment to the superannuation contributions contemplated in the tax minimisation strategy in 3.2, how would this affect surplus savings?
2. How much surplus income is now available each year to invest?
/ 1
/ 1
2. Tax minimisation
3. How much tax is paid on the cash and fixed interest investments?
4. If the cash and fixed interest investments were transferred to Dennis’ name how much tax would be saved?
5. How much tax would Donna save if she salary sacrificed to her super contribution limit?
6. How much extra Low Income tax Offset would Dennis be entitled to if he salary sacrificed all of his income above the 19% tax bracket?
/ 1
/ 1
/1
/ 1
3. Expenses 7. How much can the interest rate on the mortgage potentially be reduced by?
8. How much interest pa could potentially be saved if the cash and fixed interest funds were applied to the mortgage?
/ 1
/ 1
Wealth Creation
4. Superann-uation
9. Given the contemplated salary sacrifice changes, how would this affect the annual superannuation savings (after tax)?
10. What would be Donna and Dennis’ projected super savings in an average market at retirement?
11. What would be Donna and Dennis’ target super savings to fund their desired retirement income?
/ 1
/ 1
/ 1
Subtotal / 11
continued
Assessment Task 4.1, continued
Generic Needs (a) Research Specifications / Question (b) Answer (c) Risk Mark
5. Investment Planning 12. What is the future value of car on retirement (7 years)?
13. What is the future value of $120K university fees in 12 years?
14. How much do Dennis and Donna need to contribute each year towards the grandchildren’s education bonds to reach their goal?
15. Once all recommendations have been put in place, what is their annual surplus income?
16. What future value of investment savings can be generated if they save an additional $2,000 every six months at a rate of 8% pa compounded six monthly?
17. How much of these funds will need to be contributed towards the future value price for the purchase of Donna’s vehicle at retirement?
/ 1
/ 1
/ 1
/ 1
/ 1
/ 1
6. Debt reduction 18. How long it would take to pay off the home loan if the new rate and additional repayments recommendation is followed?
19. Is it financially better to retain the investment and put it into Dennis’ name or to use the funds to pay down the mortgage?
20. By how much?
/ 1
/ 1
/ 1
Wealth Protection
7. Personal Insurance
21. How much Term Life insurance does Donna require?
22. How much TPD insurance does Donna require?
23. How much Trauma Insurance do Donna and Dennis require?
24. What is the maximum amount of Income Protection Donna can apply for?
25. What is the maximum amount of Income Protection Dennis can apply for?
26. What would be the approximate monthly cost of their stand-alone insurance cover? / 1
/ 1
/ 1
/ 1
/ 1
/ 1
8. Estate Planning 27. Who are the local will and estate specialists?
/ 1
/ 16
Subtotal / 27
Assessment Task 4.2
4.2 Further research
FNSFPLN502.4.3
FNSFPL508.4.3 In the space provided below, detail:
• At least one additional research question that you believe needs answering, and
• If specialist research or advice is required.
You should consider the above in relation to each of the eight generic needs specified.
Generic Needs Additional Research Questions Mark
Cashflow Management
1. Income • Are there are any potential additional sources of income, such as an inheritance?
• / 1
2. Tax Minimisation • Can we confirm with your accountant if there are any issues that should be considered in relation to the proposed strategy?
• / 1
3. Expenses • Do you think that your current expenses will continue to be appropriate into retirement?
• / 1
Wealth Creation
4. Superann-uation • Are you comfortable with Dennis’ superannuation being rolled into a more appropriate fund to match his risk profile?
• / 1
5. Investment Planning • Do you understand how Investment bonds work? • / 1
6. Debt Reduction • Are there any other debts that should be considered in the plan (e.g. credit card debt)?
• / 1
Wealth Protection
7. Personal Insurance • Are there any insurance providers that you would prefer we not recommend?
• / 1
8. Estate Planning • Do you have your own solicitor that could help you with your Estate Planning requirements?
• / 1
Subtotal / 8
Total / 35
