Financial Plan

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FINS5510 Financial Plan Assignment Case Introduction

Introduction

This guideline provides a high-level overview of your clients’ situation. It should be read in conjunction

with the supplied Financial Needs Analysis (FNA) which is the primary source of information you should

rely on for client details.

Russell and Emily Field are 35 and 31 years of old respectively and married with a four-year old daughter

Julie. They live in a three-bedroom apartment in the inner suburbs of Sydney and pay a rent of $800 per

week.

Russell, a senior software engineer, works full-time for a consulting firm and earn a total salary of

$140,000 per annum plus 10% Super Guarantee (SG) contribution. Emily currently works as a

relationship manager in a financial service firm, earning $100,000 per annum plus 9.5% SG.

They come to you for advice on a range of issues they have been pondering. You have had a first

meeting with them and completed the relevant sections of the FNA document. The main discussion

involves helping the family to sort out their finance to achieve several goals and obtain better protection

through insurance. Due to limited meeting time, you noted down their most important goals in the

relevant FNA section. However, you know there are other goals mentioned and recorded in the FNA.

The budget discussion you had with them reveals that they currently do not have a saving plan in place.

They want to buy their own property in Sydney as soon as possible and having the deposit within a

reasonable time frame is therefore important. They have some specific requirement for the location of

the property and the schools nearby for their daughter’s education. They own an investment property in

Melbourne which they are willing to sell if necessary.

They have each completed a risk profile with you which included a detailed discussion about the

differences in their risk profiles.

Given that Russell is the main income earner and has a family history of heart attack, they wonder what

they can do to protect the family in case of anything unfortunate happens to Russell.

They start to think about preparing for their retirement and seek advice on their superannuation

savings. They know little of super and have always gone with the employer’s default choice. Emily has

multiple super accounts due to the various jobs she had in the past.

Scope of advice:

You need to determine the scope of the advice given the personal circumstances and objectives of the

clients. Note you should cover all the goals of the clients.

All copyright reserved by the School of Banking and Finance, University of New South Wales. Not to be distributed without written consent.

Suggestions on completing the financial advice:

• It is very important to read the FNA and understand the clients’ circumstances and goals

• The key is to provide advice which meets clients’ goals.

• The most important part of the advice is the strategy itself. What strategies have you

considered, what have you recommended and why? How do they meet your clients’ goals and

what are the risks of implementing (or not implementing) the advice?

• Note a financial plan is not educational material. You should avoid excess explanation of

theories, products or regulation. Copying materials from lecture notes directly will lead to

penalty. Supporting material should be placed in Appendices.

• The asset allocation you recommend needs to distinguish between asset classes and investment

products in consideration of the risk profile of the clients.

• Do not include or attach any product brochures, prospectuses, and advertising material. You can

summarize important product information in a table.

• Explanations should be clear and concise, and in language that your clients can understand.

Appropriate tone and style should be used.

• Appendices only support your strategic advice and will not be separately assessed. An appendix

could, for example, include details of any financial projections you have used. A set of standard

economic and investment assumptions can also be included.

Assumptions of clients’ situation

Due to the hypothetical nature of the case, you cannot obtain additional information of the clients.

Therefore, you can make reasonable (justifiable based on common sense/research) assumptions to fill in

any missing details of the clients if you think these details can improve the quality of the advice. For

example, you could make assumptions regarding the detailed expenditure of the family as long as it is

reason. Another example is the assumption of clients’ employment. You could make assumptions

regarding their employment but assuming a very high growth rate in salary so that all of clients’ goals

can be achieved is not an acceptable approach. The marking will focus on the quality of your strategies

and your logic given those assumptions.

Licensing condition:

You are a fully qualified and accredited financial planner. You are an employee and representative of

“Prosperity Financial Advisors” which holds an Australian Financial Services License. You have agreed a

flat fee for service to provide this advice to Russell and Emily. That fee is $3,250, including GST and has

already been paid by your clients. Your Financial Services Guide (FSG) was provided to your clients at

your first meeting. This enabled you to cover all legislative and compliance requirements.