MAA318 Advanced Financial Planning Assignment Questions

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MAA318 Advanced Financial Planning Assignment 2:
Statement of Advice (SOA)
Ellie Smith

Part A: Written Statement of Advice

  • Completed individually.
  • This assessment is worth 40% of the overall marks
  • Due date: 11.59pm XX XX XXXX

Part B: Oral presentation of SOA

  • Completed individually.
  • This assessment is worth 20% of the overall marks
  • Due date: XX XX XXXX
  • On campus, students are required to present their presentation personally.
  • Off campus, students are required to submit a video of their oral presentation by the due date.

MAA318 Advanced Financial Planning

Learning Outcome Details

Unit Learning Outcome (ULO) Graduate Learning
Outcome (GLO)
ULO 1: Analyse and evaluate the legal, social and ethical responsibilities of financial GLO1, 2, 3, 4, 5 and 8.
planners and the Australian regulatory framework within which they operate.
ULO 2: Develop interview and questioning techniques and communication skills to
assist in ascertaining the needs and objectives of a client and in building client
relationships.
ULO 3: Analyse, research and critically evaluate a comprehensive set of client
circumstances as it applies to satisfying the needs and objectives of the client.
ULO 4: Construct a compliant comprehensive Statement of Advice (SOA) to meet
client requirements in an ethical and professional manner.

 

Deakin’s Bachelor of Commerce and MBA are internationally EPAS accredited.

Deakin Business School is accredited by AACSB.

T2 2017 MAA318 Advanced Financial Planning

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Part A: Requirements

  • Prepare a comprehensive SOA to industry standards based on the client scenario provided below.
  • The SOA should be submitted electronically as two documents only:
  1. The first document is the Client Fact Finder which must be created in XPLAN. Other aspects of this SOA are also able to be completed using XPLAN if you wish but is not mandatory.
  2. The second document is your SOA which will be in the form of a Word document. Where Excel data is used within this Word document it should be pasted in using – Paste Special/Microsoft Excel Worksheet Object.
  • The SOA should be directed to the client, Ellie, in the first person.
  • All pages must have a footer which includes the student ID and the page numbers e.g. page 4 of 8.
  • All text based/Word information should in a 12 point Calibri font with a minimum line spacing of 1.15. The assignment should have standard left and right and top and bottom margins.
  • Recommendations must be made on the basis of real products and real prices that you have researched. Finding accurate insurance quotes can be difficult and you might choose to use XPlan Risk Researcher to assist with this task. Finding suitable superannuation products is less difficult nonetheless the XPlan WealthSolver may assist with this task.
  • You can assume that the client has been provided with a Financial Services Guide (FSG) and the relevant Product Disclosure Statement (PDS). Where you recommend a product/service for which a PDS is available on the web you should reference the relevant URL.
  • All financial modelling should be done in real terms and the impact of modelling in real terms needs to be made clear to Ellie. Where nominal rates have been quoted you should use an inflation rate of 2.0% to adjust nominal rates into real rates.
  • The SOA is limited to 4,000 words and 30 pages in length.
  1. The word count excludes the Client Fact Finder and any spreadsheets and tables.
  2. The page count includes all pages except the Client Fact Finder.
  • Given the strict word limit students will be penalised where standard wording from templates such as XPLAN are simply copied into their SOA.

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Part B: Requirements

  • You are required to provide an oral presentation of the findings of your Statement of Advice prepared in Part A above. The main focus of this assessment piece will be on your communication and presentation skills rather than the technical content.
  • The oral presentation of the SOA is limited in time to no more than 20 minutes.
  • The oral presentation should be conducted as if you were presenting the findings to a client. On‐campus students will present their SOA in front of a practitioner acting as the client. Off‐ campus students will be required to submit a video of their presentation as if they were presenting in front of a client.
  • Off‐campus students are required to upload an electronic copy of their video via CloudDeakin by the due date.
  • On‐campus students should bring a hard copy of their SOA to their presentation to provide to the client (practitioner). You are not required to prepare a Powerpoint presentation of your plan when presenting to the “client” although you may wish to illustrate some of your recommendations to the client by way of a summary document where appropriate.

Other submission information

You must keep a backup copy of every assignment you submit until the marked assignment has been returned to you. In the unlikely event that one of your assignments is misplaced, you will need to submit your backup copy.

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Any work you submit may be checked by electronic or other means for the purposes of detecting collusion and/or plagiarism.

When you are required to submit an assignment through your CloudDeakin unit site, you will receive an email to your Deakin email address confirming that it has been submitted. You should check that you can see your assignment in the Submissions view of the Assignment dropbox folder after upload, and check for, and keep, the email receipt for the submission.

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Notes

  • Supporting materials – we have provided you with a range of additional and supporting materials on CloudDeakin under Topic 2 to assist you in the preparation of a comprehensive SOA drawn up according to industry standards. Please make use of these resources, particularly the example SOA’s to assist in guiding you with the required format. However, you should not simply copy slabs of material from either XPLAN or the example SOA’s and you will be penalised if you do so.
  • Penalties for late submission: The following marking penalties will apply if you submit an

assessment task after the due date without an approved extension: 5% will be deducted from available marks for each day up to five days, and work that is submitted more than five days after the due date will not be marked. You will receive 0% for the task. ‘Day’ means working day for paper submissions and calendar day for electronic submissions. The Unit Chair may refuse to accept a late submission where it is unreasonable or impracticable to assess the task after the due date.

  • For more information about academic misconduct, special consideration, extensions, and assessment feedback, please refer to the document Your rights and responsibilities as a student in this Unit in the first folder next to the Unit Guide of the Resources area in the CloudDeakin unit site.
  • Building evidence of your experiences, skills and knowledge (Portfolio) – Building a portfolio that evidences your skills, knowledge and experience will provide you with a valuable tool to help you prepare for interviews and to showcase to potential employers. There are a number of tools that you can use to build a portfolio. You are provided with cloud space through OneDrive, or through the Portfolio tool in the Cloud Unit Site, but you can use any storage repository system that you like. Remember that a Portfolio is YOUR tool. You should be able to store your assessment work, reflections, achievements and artefacts in YOUR Portfolio. Once you have completed this assessment piece, add it to your personal Portfolio to use and showcase your learning later, when applying for jobs, or further studies. Curate your work by adding meaningful tags to your artefacts that describe what the artefact represents.

T2 2017 MAA318 Advanced Financial Planning

Scenario: Ellie Smith Case Study

Ellie Smith

3/20 Masterton Parade

Brunswick VIC 3056

Introduction

In June 2017 Ellie will turn 33 years old. Ellie is a CA and she has just been appointed the Chief Financial Officer (CFO) of a professional sporting team. The position of CFO comes with a salary package of $180,000 per annum and this includes the standard superannuation guarantee contributions (SGC) her employer must make on her behalf. Ellie’s employer is happy for her to package her salary in any way that she likes provided this does not increase her total employment cost. Ellie’s employer has just concluded an Enterprise Bargaining Agreement (EBA) with its employees and as a result Ellie can expect her salary to increase by a nominal 2.5% for each of the next 5 years. In 2016/17 Ellie earned $140,000.

Ellie has a long term ‘partner’ named Brenton however they live apart and there are no plans for them to move in together. Ellie is not sure where her relationship with Brenton is going and is worried that her financial planning needs continue to drift along with no major plan in place. Ellie believes that it would be better to put a plan in place now and then change the plan if required than to have no plan at all. Ellie would like to know where she will be financially in 10 years time and what actions she can take now to improve that situation.

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Ellie lives in a townhouse in Brunswick that she purchased seven years ago. Ellie bought the townhouse for $380,000 and she has had it recently valued at $720,000. When Ellie bought the townhouse she borrowed $300,000. The loan term was 25 years and Ellie decided to fix the rate for the first 10 years at 6.5% per annum with fortnightly repayments.

On the weekends Ellie regularly competes in triathlons. On the odd occasion her friends have talked her into sky diving, white water rafting and caving. Both her parents are also fit and active.

On the weekends Ellie also makes the time to visit her aging grandparents. They retired in 2008 not long after the Global Financial Crisis had decimated their retirement savings. They now rely entirely on the aged pension for their income needs in retirement and Ellie is determined that she will not allow this to happen to her.

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Superannuation

As at the 30th of June 2017 Ellie has $147,350 in MLC MasterKey Super (Horizon 4 Balanced Portfolio). Her new employer has just asked her whether she wants her SGC contributions paid into this fund.

In 2016/17 Ellie salary sacrificed $10,000 into her superannuation. Ellie is keen to continue to contribute the maximum concessional contribution she can into superannuation

Investment Assets

Two years ago Ellie borrowed $100,000 and combined this with some of her own money to buy a share portfolio. The $100,000 loan was an interest only loan at a fixed rate of 6.8% per annum for a period of three years.

Share Purchase price Number of shares
CSL $86.47 700
WOW $26.96 700
NAB $33.31 600

 

Ellie had intended to follow the performance of these shares carefully and actively buy and sell in anticipation of market changes. However since she bought these shares she has barely looked at their performance and gets annoyed by the mail and email associated with these three shares. She has no idea how people find the time to manage a portfolio with many different shares.

All dividends are received in cash and are not re-invested.

Other Assets

Ellie has a bank account with a balance of $54,000 which effectively pays zero interest.

Ellie’s car ‘died’ last week. She was not upset at its passing because the repair bills in recent times had been creeping up. Ellie’s new job is only a short tram ride away from home. She estimates that she drives less than 5000 kilometres a year. Ellie had entertained the idea that she might lease a car through her new employer but thought that she didn’t drive enough kilometres to justify leasing a car. However a friend told her recently that under the current leasing rules it does not matter how many kilometres you drive. Ellie does like the look of the new Toyota Prado Turbo Diesel which costs around $65,000.

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Insurance

Policy Amount Comments
Life $200,000 Base level of cover automatically provided by Ellie’s superannuation
insurance fund. Ellie does enjoy the occasional cigarette.
TPD Nil
Trauma Nil
Income Nil As part of her employment contract with her new employer Ellie gets
protection 15 days of sick leave credits.
Health Nil
Townhouse $500,000 This level of cover is provided via the payment of body corporate fees.
(building)
Townhouse $50,000 This was the original sum insured seven years ago and Ellie has simply
(contents) paid her renewal each year without reviewing the sum insured.

 

Attitude to risk

Ellie has recently completed a risk profile questionnaire using the template provided on p593 of McKeown, Warren, Mike Kerry, Marc Olynyk. Financial Planning 2nd Edition: Update Edition for Deakin, 2nd Edition. John Wiley & Sons Australia.

 

Do you like to make all your investment decisions yourself? Yes
Do you expect to leave your investments where they are for the next 5–10 years? Yes
When considering long‐term investing, do you aim to maximise returns accepting Yes
the possibility of short‐term declines in the value of your investment?
Is your major investment objective to grow your investment portfolio quickly? No
Do you want your investments to significantly outpace inflation?
Have you ever put money into shares or other volatile investments? Yes
If the value of one of your investments fell by 15% 6 months after you bought it, No
would you consider buying more?
Do you decide on your investments quickly before the opportunity is gone? No
Does the opportunity of increasing the value of your investments outweigh Yes
concern about market fluctuations?
Would you be willing to consider an investment which returned 50% in a good year Yes
and −25% in a bad year?
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Liabilities

In addition to the mortgage on her apartment and her investment loan Ellie has a VISA credit card.

During the financial year, the average amount owing on this card was $25,000.

Estate Planning

Ellie has recently updated her will and does not expect to receive any substantial inheritances in the future.

Expenses for the 2016/17 financial year

Mortgage $24,293
Investment loan $6,800
Credit card payments $12,000
Body corporate $2,800
Household (e.g. food, clothes) $21,000
Utilities (e.g. light, power, telephone) $6,600
Motor vehicle $4,800
Tax deductible expenses $2,560
Sundries $7,150

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Client Objectives

Ellie has three stated objectives:

  • In the short term to buy/lease a new car
  • In the medium term (10 years) to build wealth
  • In the longer term to maximise her superannuation savings

Ellie is comfortable with her existing estate planning arrangements and she also feel well informed on her social security entitlements and she is therefore happy for you to exclude these two areas from the SOA you are preparing. Your SOA should acknowledge that your advice has been limited/scaled in this way.