Develop an awareness of the client situation (a) List five (5) topics you would discuss with Sarah and Stan at your first meeting. Why are these topics important? Give a brief reason for the need to discuss each (Each discussion topic: 1 mark each , Reason: 1 mark each) 10 marks topic. 1. Personal Details As a financial planning organization we are subject to certain legislative and regulatory requirements which necessitate us to obtain personal information about Sarah and Stan. 2. Privacy act involved/ privacy statement Inform thebe trice the reason of recording and data collection.
The privacy of your arsenal information has always been important to us. 3. Employment detail By discussing this topic will give me information about Sarah and Stan current employment situation. This helps me to understand any issues needing consideration when providing advice to Sarah and Stan. 4. Explaining the purpose of the fact finder The objective of the fact finder is to accurately establish the client’s position and identify their objectives so as to act in their best interest. Fact-finding begins at the first meeting with a thorough interview. B) Discuss two (2) ways you would make Sarah and Stan feel comfortable with the iris meeting and the interview process. 4 marks To make Sarah and Stan feel comfortable with the first meeting and interview process I will; * Sit side by side and explain today’s agenda * Draw a diagram so she can have better understanding what I’m talking about Offer a coffee or tea * Communicate clear and friendly to avoid misunderstanding
We are committed to respecting your right to privacy and protecting your personal information. To assure Sarah and Stan the information give we will not be disclose to third party. List the type of information you would need to obtain from Sarah and Stan at this initial stage before you give any financial advice. Explain what legal requirement applies in this context. Marks Before I give any financial advice to Sarah and Stan the relevant information I will obtain will include: * Personal details * Employment details * Family holdings Retirement planning * Risk profile * Marginal tax rates * Goals and objectives * Financial Position * Asset and liability * Will/ Estate planning * Previous financial history * Family structure and dependents * Home ownership * General and life insurance and superannuation arrangements * Investment funds/ planning * All relevant client facts, financial personal histories and completed disclosure documents are completed and filed in accordance with company policy and guidelines and relevant legislation and regulatory requirements. * Proposal and other documents must be completed and where appropriate, signed off * Confirmation including relevant documentation and contract variations have to be provided to the client and the final plan to be accurately implemented; * Reference material facilitates the selection of appropriate products to meet client’s needs and must be updated on a regular basis. (e) Sarah and Stan do not have complete and up to date records of their superannuation and managed funds. What would you do to obtain the documentation? Marks I will give advice Sarah and Stan to complete and update records of her superannuation and managed funds. If they cant do that then I will suggest them to write me authority letter which include her/his signature it will give me permission to act on her behalf to complete and update the superannuation and managed fund. (f) Sarah and Stan have told you that they were not happy with their previous adviser. Imagine you are speaking to Sarah and Stan and write down what you would tell them about your company’s complaints procedure. 5 marks I will tell her if you have a complaint, please tell us so we can fix the problem. We will investigate the complaint, answer your questions and do all we can to resolve the situation to your satisfaction.
Our Compliant procedure is below; 1. Gather all supporting documents about the matter of your complaint. Then think about the questions you want answered and decide what you want us to do. It might also be useful to speak with your financial adviser about the issue. 2. Next, contact us and explain the problem. You can contact us by phone, fax, mail or email. We will review the situation and if possible resolve it straight away. Letting us know about the problem is often all that’s required to resolve most issues. 3. If at this stage the matter hasn’t been resolved to your satisfaction, please contact our Complaints Resolution Officer. They will review your case.
Total: 30 marks Question 2 – Obtain relevant knowledge of client’s financial position and risk profile (A) Before giving Sarah and Stan advice, what methods would you use to gather sufficient information about them in order to determine their needs and objectives? 5 marks Financial Service Guide (FIG) * Adviser must give a Financial Services Guide (FIG) to a person as soon as practicable once it is clear they may become a client * FIG should include * Identity of OAFS holder and authorized representative status * Services available * Associations * Fee disclosure Dispute resolution processes Quantitative questions relate to the clients current financial position (assets, liabilities and budgets) * Qualitative information count. * Determine level of financial understanding of the client objectives? Qualitative information count. * Financial decision making style * Learning style * What are their goals / * General attitude to risk * Financial risk taking Qualitative includes: Data Collection Form * Most financial planners will use a data collection form which should be completed in a methodical way – to save time the client could be requested to complete the form before the interview. The data collection form is central to the client file and is of vital importance in the event of a dispute relating to the client’s needs and objectives or the adequacy of the plan (B) List and describe any tools and/or techniques you would use for the information-gathering process.
A data gathering instrument is used to obtain essential information about the client and to ensure that all relevant issues have been discussed with the client. Essentially it is a checklist of questions or issues that need to be addressed by the adviser in the written plan. To gather information from Sarah and Stan * Interview * Questioning Fact finder * Feedback from Sarah and Stan * Database or spread sheet to record Fact Finder position and future goals. Financial Planner to gain an insight to your true and total financial structure and open doors to some exciting strategies that may assist in the development of your personal financial portfolio.
Risk tolerance tools * Provides clear articulation of any conflict of the asset allocation that the adviser believes will meet the financial goals of a client, and the clients ability to sleep at night * Transfers the responsibility of the plan for the decision-making back to the client – Liability shifting tools. C) What are the advantages and disadvantages of using questionnaires and online tools? 5 marks Advantages of using On-line Tools * They are relatively easy to analyses * A large sample tot the given population can be contacted at relatively low cost They are simple to administer * The format is familiar to most client; * They should be simple and quick for the client to complete * Information is collected in a standardized way * They are usually straightforward to analyses * Clients have time to think about their answers; they are not usually required to reply immediately.
Disadvantage of using On-line Tools It is sometimes difficult to obtain a sufficient number of responses * Client may ignore certain questions (Open Ended, Standard Question) * Questionnaires may appear impersonal * Questions may be incorrectly completed * They are not suitable to investigate long, complex issues * Client may misunderstand questions because of poor design and ambiguous language * They may require follow up research to investigate issues in greater depth and identify ways to solve problems highlighted. * Sometime to completed to understand questionnaire. (D)What are the advantages and disadvantages of gathering information through an informal discussion? Marks Advantages * Get to hear winder range of opinions from clients and enable them to contribute more. * Let client speak comfortably and express their needs. * Informal discussion to get deeper and encourages the client to talk in details and let client discuss frankly about their life style. Disadvantages * Informal discussion can take longer time but sometimes client cannot become comfortable and not provide you all the details that are must to make. (May not be focused) * Could devolve into an argument. * Client can misunderstand the question of the financial planner * Client may be assistant to provide any personal or financial information, which may lead to incorrect recommendations.
Total: 20 marks Question 3 – Determine client expectations and requirements with respect to financial markets advice (a) Analyses all information and facts provided by the client and determine appropriate risk or reward and asset allocation strategies in accordance with client requirements, industry regulation and codes of practice. 20 marks What is asset allocation? Asset allocation is the most influential factor driving investment performance. A portfolio strategy that involves periodically refinancing the portfolio in order to maintain a long-term goal for asset allocation. Asset Allocation Strategies The two most commonly used terms when referring to asset allocation are strategic and tactical asset allocation.
This update elaborates on the different strategies that investors can use while implementing tactical asset allocation. Based on the Sarah and Stan financial situation and their risk profiles, my financial plan is shown below. * Sarah must have to put money in superannuation. * Sarah is up to $14,000 Salary Scarify per year no more than that otherwise she can pay more tax. * If Sarah can’t any salary scarify than she can accumulate perpetuation $627,000 after 13 years (Retirement on 60 years). * Stan will be accumulates $268,000 superannuation after 13 years without any salary scarify. Stan is up to $19,000 maximum salary scarify per year not more than that otherwise pay more tax. * Sarah must have take a income protection insurance. If both salary scarify as below than $14,000 salary scarify for Sarah and $19,000 salary scarify for Stan Assume superannuation (Sarah 1. 36 million & Stan 650,000 super). Advantages and Disadvantages putting more money into the Superannuation. Advantages * Advantage is less risk if they putting more money into the superannuation. Sarah & Stan are earning inside the Superannuation 15%. * Once they earn 60 years than no tax inside the Superannuation. Disadvantages * Sarah & Stan can’t withdraw the money until they Retirement. * Earning money outside the superannuation, you have to paying normal Tax rate. * Earning money outside the superannuation, after 60 year you have to pay tax.
Cost of advice The upfront cost of implementing this advice is $2000 and will charge a 1% funds under management fee for ongoing management of your financial affairs. The relevant legislation / industry code of practice includes * Consumer Affairs Act Consumer Credit Code * Contract law * Corporations Act * Financial Services Reform Act (FAST) * Industry codes of practice * National Guarantee Fund rules * Privacy Act * Relevant financial association’s business rules and codes of practice Taxation Act * Trade Practices Act and * Trust law Now that you know Saran and Stain’s goals and needs, you need to look at their risk profile. How do you determine Sarah and Stain’s risk profile? List the tools and techniques you would use, describing the strengths and weaknesses of each. Marks The financial planner helps you identify both financial and personal goals and objectives as well as clarify your financial and personal values and attitudes. These may include providing for supporting elderly parent’s or relieving immediate financial pressures which would help maintain your current lifestyle and provide for retirement. These considerations are important in determining the best financial planning strategy for you. Income Stain’s = $80,000 Sarah’s = $120,000 Total = $200,000 Before Tax Cash Investment ($15,000) Sarah ; Stan earn per year $450 (3%). Superannuation $70,000 Stain’s Sarah’s = $170,000 Investment Unit 4% of $400,000 = $16,000 earn per year but $2000 expenses. Sarah ; Stan are raring $14,000 p. A.
Sarah ; Stan have a loan in Joint names for the investment unit and pay $18,000 p. A. = $4,000 loss p. A. Sarah and Stain’s risk profile is Growth List the tools and techniques * By asking more detail questions we can determine the appropriate investment strategies to match Sarah and Stain’s investment risk profile. To do that * Record all information given by Sarah and Stain’s Questioning Beatrice * Listening to Sarah and Stain’s * Use risk profile questions (9 or 12 very important risk profile question that Sarah and Stain’s will need to answer every question got a score from O to 20) * After implementing the risk profile questions add up the score. Assessment of a client’s risk profile will cover:
Where the client priorities their goals or objectives, and therefore the scope of advice, you need to warn the client of the risk of not addressing all their stated goals and objectives, recommending these are dressed in the future. These discussions should be reflected in the client file notes and reinforced in the written advice to the client. Marks Total: 30 Question 4 – Prepare and update necessary documentation where required .