Financial Planning and Forecasting Official e-mail - Free Solution

Question: Discuss about the Financial Planning and Forecasting for Official e-mail. Answer: a) Before the first meeting the financial planner executives has to fix the time and place of the meeting with the clients via telephone or official e-mail. After fixing the meeting time the executive has to maintain requisite discipline and punctuality and attend the meeting on scheduled time so that improve the perceptions of the clients on the financial planner executive and the company which he/she represent as people like the people who maintain discipline and punctuality. In the first meeting with the clients the financial planning executive has to produce his/her business card and valid identity proof in order to achieve the trust of the client so that the executive can improve his/her trustworthy in front of the client. b) The clients should be instructed to prepare with the information on the their prior investments schemes with proper documentations. Besides this, the investment queries must be prepared from the client side. c) The financial planner has to explain in detail about the financial planning services offered by the Mentor Financial Planning Pty Ltd. Besides this, he/she can produce the itinerary of the company to the clients so that the client can depend on him/her and on the Mentor Financial Planning Pty Ltd. Besides this, some personal inputs may enhance the relationship with clients. d) In order to make effective financial planning, the financial planner has to go through the following: Determination of the current financial position of the client Development of the financial goals Identification of substitute course of action Evaluation of the substitutes Creation and implementation of a plan for financial action Reevaluation and revision of the prepared plan e) The financial planner executive have to produce his/her detail like the detail of the company he/she represent, here as per the case study, the company is: Mentor Financial Planning Pty Ltd ABN 99 109 240 897 AFSL xxxxxx Level 2, Suite 2 349 Collins Street Melbourne Vic 30000 Besides this the executive Business card with the name and ASIC Authorization Representative Number will be produced to the client. Besides this, the executive also provide the information of his financial background such as his qualification for providing such types of services, his experiences, etc will improve the trust of the client on the executive. f) The company is authorized to give advice on financial product as well as arrange the following services: Effective risk management services as well as protection of asset. Economizing and redundancy advice Strategies for wealth creation Guidance for accessing direct share Social security Besides this, the company provides general advice as well as personal advice. g) The executive would tell the client about his academic background along with the experiences in the financial planning field besides this, he/she can share about his/her family and personal experience in order to make good rapport with the clients. h) The company charges the fees on the basis of the time spend for developing the plan for the clients. Alternatively the company may receive payment on the cost of the investment done by the clients as a brokerage. i) The executive has to ask the client on their understand about the fee structure of the company for providing financial advice and if the clients have any queries then it is the responsibility of the financial planner to explain the clients clearly about the fees structure of the company. j) (i) In case of the client do not understand English properly then the financial planner has to take help from a interpreter who will translate both parties languages so that they can understand correctly what they want to say. ii) In this case the financial planner executive should avoid to advice. iii) In this types of situation the financial planner has to use his/her efficiency so that effective advice can be given. iv) Try to balance the financial situation. v) If the clients are disabled then the financial advisor must take extra care of the clients. Vi) The executive has to be sympathize to the cultural background of the clients. vii) The age related need must be given to the client by the financial planner. k) The three steps that your client should take if they have a complaint or dispute prior to contacting the ASIC are as follows:- Step 1- Contact the business with your complaint This step provides on spot solving of problems that are provided by the client. If this step of provides unhappiness regarding the problem solved, and then the client prefers the next step that is the step 2. Step-2- Further taking your complaints This step provides the views regarding the problem solved with thereby launching an email with appropriate heading and title of the problem faced with the contact details. The original copies of the invoices must be provided for solving the problem. If the client does not receive the solution during the reasonable time period or the response accordingly then the client must prefer the process of step 3. Step-3- Contact an external dispute resolution schemes For the resolution of these types of dispute, the EDR schemes must be followed by the client and for these the complaints are heard for free with providing the solutions for the problems mentioned. Personal Details (a) Contact details DETAILS CLIENT 1 CLIENT 2 Mark 1. Title: 2. Given Name: Donna Dennis 3. Preferred Name: Donna Dennis 4. Surname: Barker Barker 5. Date of Birth: 6. Marital Status: Married Married / 1 Home Address: Address: Suburb/Town: State: Postcode: Home Telephone No. Preferred Contact No. /1 (b) Child / dependant details Name: Megan / 1 Relationship: Daughter Date of Birth: Current Age: Financially Dependent: No (c) Financial arrangements involving siblings, parents or others Name: / 1 Relationship: Financial Arrangement Date Commenced: Amount of Money: (d) Relationship history involving financial implications According to the case, there is no previous marriages and history involving financial implications. / 1 (e) Health details Do you Smoke: No / 1 State of Health: Excellent Are you aware of any health issues that may impact your ability to earn an income? (please provide details) No, there is no health issues that will impact my ability to earn an income Work Details (a) Other personal financial arrangements Donna and Dennis earns salary from their jobs and has no other personal financial arrangements / 1 (b) Investment Experience CLIENT 1 CLIENT 2 Mark Donna paid annually an amount of $17,000 into her superannuation fund as the personal contribution. Dennis has superannuation savings of amount $51000 held within PP superannuation fund. / 1 (c) Acting as guarantor No / 1 (d) Employment details CLIENT 1 CLIENT 2 Mark 1. Employment Status: Full Time Employed Full Time Employed 2. Employer Name: Best Marketing Newbolds Pty Ltd / 1 3. Position Title: / 1 4. Primary Duties: 5. Work Address: 6. Work Phone No.: 7. Previous Job 8. Employment Security: Yes Yes / 1 9. Are you contemplating leaving your employer? 10. Do you foresee any substantial change in your income in the next 2-5 years? Yes Yes / 1 Notes: (e) Previous financial history Mark Do you have a previous financial history such as: Bankruptcy; No Refusal of credit: No / 1 f) Estate planning issues CLIENT 1 CLIENT 2 Do you have a current Will? No No Date of Will / Last Reviewed: No / / No / / Power of attorney No No Type / Name of Attorney? Do you have Funeral Plans? No No Do you have any specific intentions regarding your estate distribution? No No g) Retirement planning Retirement Details CLIENT 1 CLIENT 2 Planned Retirement Age: 53 52 Retirement Income required: $90,000 (todays dollar) $45,000 After retirement, do you intend to work again either on a full-time or part-time basis? N0 Yes Expected Income $: $25,000 Till age: 65 What capital expenses will you have in retirement? (Please state expense and value) $40,000 $40,000 Would you like some assets left to your estate? (Please detail) No No Special Needs a) Special Needs Description a deficient in English No, the client does not have any problem regarding the need mentioned. variety of products and services outside authority Yes, the service varies according to the demand made by the client. complex estate planning situations No, simple estate planning situations. unbalanced financial situations No, the client is provided with the simple and the biased financial situation a disability No, the ability is created for the changes needs of different cultural backgrounds No age related needs (i.e. very young or older age groups) Yes, the needs vary dependent on the age group. (b) Other adviser details Accountant Name: Alex Mentor Company: Mentor Financial Planning Pty Ltd, ABN No. 99 109 240 897, AFSL No. xxxxx. Level 2, 349 Collins Street, Melbourne, VIC 3000 Contact Detail: Phone: 1300 306 146 Fax: 03 9614 1807. Client expectations, priorities and objectives Client expectations and requirements Description Reasons for seeking financial advice: o Relatively small amount, o Simple financial strategy, o Limited or preset range of product o Product specific advice and/or service, o Comprehensive financial planning, o Portfolio advice, or o Product specific advice and/or service Explain: The descriptions consist of the advices which the client expects for the financial planning process. It must be executed for the enhancement of the portfolio advices and thereby the comprehensive financial planning with appropriate services can be executed. (b) Client priorities For example, current income needs, retirement income needs, diversification, tax minimisation, capital growth, investment security, wealth creation, eliminate mortgage etc Description The client specially demands to get an appropriate retirement plan so that they can live life freely without any tension. The clients priorities consists of the current income needs with respect to the retirement needs must be fulfilled with the process of tax minimization and appropriate wealth creation. (c) Client objectives i. Short Term (1 to 3 years) The objective is to invest into different saving schemes such as Superannuation Fund ii. Medium Term (4 to 7 years) To manage the funds and assets for future purpose. iii. Long Term (7 year plus) The main objective of the client is to utilize saved money and invest in bonds and shares. (a) Lifestyle Assets Asset Owner Date Acquired Purchase Price Current Value CGT Impact Debt Net Value Mark Principal Residence: Joint 750,000 130,000 620,000 / 2 Contents: 50,000 50,000 Motor Vehicle(s): Caravan, Boat, Trailer: Investment Property: Other: Total 840,000 710,000 Mark (b) Investment Assets Asset Reference Number Owner Date Invested No of Units Purchase Value Current Value Retain Yes/No CGT Impact Debt Net Value Mark / 4 Bank Account Joint 9000 Yes 9000 Term Deposit Joint 12000 12000 Cash management fund Joint 12000 12000 Total 36000 36000 Mark (c) Liabilities Finance Provider Owner Guarantor Date Commenced Repayment Amount Repayment Frequency Interest Rate Balance Mark Home Loan: 130000 / 2 Investment Loan: Personal Loan: Credit Cards: Other: Total (d) Total Gearing (Lending to Valuation Ratio) Total Liabilities _____130000________ / Total Assets __746000___________ = __17.42___________% Income details Income: Investment Income: 504800 53040 Centrelink Income: Pension/Annuity Income Other Income: 30000 10000 Less Income Tax -160440 -1328 Less Medicare Levy -10696 -1260 Add Low Income Tax Offset Total Tax Total Net Income 363664 60452 Marginal Tax Rate 30 21 / 10 (b) Expense details COMBINED Mark Food: / 3 Entertainment: Transport/Vehicle: 40000 Council Rates: Amenities: Rent: Mortgage Repayments: 130000 Other Total Net Expenses 170000 (c) Surplus disposable income COMBINED Mark Annual: 135000 /2 Monthly: 11250 Superannuation and Insurance arrangements (a) Superannuation Company Policy No. Employer/ Personal Owner Eligible Start Date Contribution Rate/ Amount Current Cash Value Mark Best Marketing 220000 / 2 Newbolds Pty Ltd 51000 (b) Insurance within superannuation Do any of the above policies have insurance attached? Yes / 1 Are any of the above policies preserved? No As a tax deduction been claimed for part/all? Yes Are there any exit fees applicable? No (c) Leave payments Type Expected Receipt Date Anticipated Amount / 1 Annual: Long Service: Other: Have you recently received a redundancy package? No If you have recently received a redundancy package, please provide notice of payments. (d) General insurance Insurance Description Policy Number Owner Date Commencement Sum Insured Premium Payable Maturity Date / 1 TPD insurance Generic Needs Current Financial Position/Requirements Marks 1. Assets The asset value shows strong financial position of the client / 1 2. Tax Minimization The tax has to the paid as per the income tax law / 1 3. Income The income of the clients has increased which is good / 1 4. Superannuation The clients are getting returns from the funds / 1 5. Expenses The clients are having high expenses that need to be manage / 1 6. Debt Reduction The liabilities of the client are not so high / 1 7. Investment Planning The investment planning of the clients are appropriate / 1 8. Wealth protection The deposits in banks and saving plans will help to increase funds / 1 9. Estate Planning / 1 10. Business Planning / 1 Risk, fraud and conflict of interest assessment Risk and Fraud indicators Comments Mark 1. Conflict of interest risk Eg. Is this client involved in a financial dispute with another client of the licensee? No, the client is not involved in any financial disputes. / 2 2. Cost/profit risk Eg. Is there a cost or profit risk to the business in providing advice to the client? No there is no profit or cost risk to business in providing advice to the client 3. Credit risk Eg. Has this client ever been declared bankrupt? No, the client never been declared bankrupt 4. Insurance risk Eg. Has this client previously made a claim on insurance that was declined? No, the client does not made a claim on the insurance that was declined 5. Litigation risk Eg. Is the client involved in any legal litigations? No the client is not involved in any legal litigation 6. Opportunity risk Eg. Is there a risk that a better opportunity will present after a decision has been made? Yes, there can be risk if there is a better opportunity for the client. It may affect their financial position 7. Product satisfaction (value) risk Eg. Is there a risk that products recommended will contradict instructions given by the client? Yes, there can be risk, if the product contradict instruction given by the client 8. Regulatory risk Eg. Will the client act all times within legal boundaries? Yes, the client will act all times within the legal boundaries 9. Relationship risk Eg. Has this client entered into a relationship with another financial adviser? No, the client never client entered into a relationship with another financial adviser 10. Reputation risk Eg. Does this person have a media profile and involved in a major litigation case? No the client have no media profile and involved in a major litigation case Identify concerns Description Mark (a) How would you encourage your clients to express and clarify their expectations from the financial planning process? The clients expression provides the information about the responses which determines the positivity or negativity as explained by the advisers regarding financial planning process. / 2 Establish investment needs, preferences and priorities Generic Needs Requirements (e.g. Income and investment needs) Preferences (e.g. retain an emergency fund) Team Rank (1 to 5) 1. Assets Investment needs The asset value shows strong financial position of the client  Adviser 1 2. Tax Minimization Income needs The tax has to the paid as per the income tax law  Adviser 2 3. Income Income needs The income of the clients has increased which is good  Adviser 3 4. Superannuation Investment needs The clients are getting returns from the funds  Adviser `1 5. Expenses Investment needs The clients are having high expenses that need to be manage  Internal 2 6. Debt Reduction Income needs The liabilities of the client are not so high  Internal 4 7. Investment Planning Investment needs The investment planning of the clients are appropriate  Adviser 3 8. Wealth protection Investment needs The deposits in banks and saving plans will help to increase funds  Adviser 2 9. Estate Planning Investment needs  Specialist 2 10. Business Planning Income needs  Specialist 2 Investor Risk Profile 1. If my investment value fluctuated more than 20%, I would find it hard to sleep at night. Score Client 1 Score Client 2 Score Joint Score 1 Strongly Agree 2 Agree 31 33 64 3 Neutral 4 Disagree 5 Strongly Disagree 2. I am willing to accept more risk to possibly achieve higher returns and reach my goals. Score Client 1 Score Client 2 Score Joint Score 1 Strongly Disagree 2 Disagree 40 31 71 3 Neutral 4 Agree 5 Strongly Agree 3. If you had an investment portfolio, how often would you re-arrange it? Score Client 1 Score Client 2 Score Joint Score 1 Any loss of value 24 21 45 2 Less than 3 years 3 3 5 years 4 Whenever my investments go up significantly 5 5 years or more 4. I am willing to experience the ups and downs of the market for the potential of greater returns over the long term. Score Client 1 Score Client 2 Score Joint Score 1 Strongly Disagree 2 Disagree 3 Neutral 16 16 32 4 Agree 5 Strongly Agree 5. Which of the following best describes your attitude to financial risk? Score Client 1 Score Client 2 Score Joint Score 1 A very low risk taker 2 A low risk taker 3 An average risk taker 24 24 48 4 A high risk taker 5 A very high risk taker 6. Which statement best describes your understanding of financial markets and investments? Score Client 1 Score Client 2 Score Joint Score 1 2 I am not very familiar 3 I have had enough experience to understand the importance of diversification 24 24 48 4 I understand that markets may fluctuate and that different market sectors offer different income growth and taxation characteristics 5 I am experienced with all investment sectors and understand the various factors that influence performance. 7. My main concern is security. Keeping my money safe is more important than earning high returns. Score Client 1 Score Client 2 Score Joint Score 1 Strongly Agree 2 Agree 24 24 48 3 Neutral 4 Disagree 5 Strongly Disagree 8. How do you normally feel after you have made a significant financial decision? Score Client 1 Score Client 2 Score Joint Score 1 Very Concerned 2 Concerned 24 24 48 3 A little uneasy 4 Content that Ive made the right decision 5 Optimistic that the decision Ive made will provide substantial benefits 9. Investments that have experienced high volatility have generally compensated investors with higher returns over the long term. If you could invest in a portfolio between 10 and 20 years, which of the following would most suit you? Score Client 1 Score Client 2 Score Joint Score 1 A portfolio that may have a negative return every 15 years but a range between 0.2% and 9.1% pa. 24 24 48 2 A portfolio that may have a negative return every 8 years but a range between 1.1% and 12.01% pa. 0 0 0 3 A portfolio that may have a negative return every 5 years but a range between 2.5% and 15.3% pa. 36 36 72 4 A portfolio that may have a negative return every 5 years but a range between 2.9% and 16.3% pa. 25 25 50 5 A portfolio that may have a negative return every 4 years but a range between -4.2% and 18.9% pa. 25 25 50 Total Score Client 1 Score Client 2 Score Joint Score Mark Add up totals for each question and write the total for each client or for joint as appropriate. 50 50 100 / 2 According to the information below, what is your clients risk profile? 60 60 120 / 2 Dennis and Donna Barker is a middle aged couple and the financial planning is done for them. It is a planning for the next seven year on behalf of the couple as well as this planning help them in retirement settling. Donna is 53 years old whereas Dennis is 52 years old and they are married for 29 years. Donna earns $90,000 P.A. plus an additional superannuation Guarantee Contribution of 9.5%. Moreover, if she sacrifices her salary then she may build more handsome fund at the time of retirement. Besides this, she receives $17,000 for next 7 years. Her superannuation balance is $220,000as well as earns an average of 7%. She has $100,000 in term life. Dennis earns $45,000 P.A. plus an additional superannuation Guarantee Contribution of 9.5%. His superannuation saving is $51,000 and he get 4%. Their home valued $750,000 and they have mortgage loan $130,000 and for the interest they have to pay 7% interest. Their expense around $40,000/Year and they spent $10,000 additionally on holidays. Standard of living assets Asset Owner Value $ Liabilities $ Net asset value $ Home Joint 750,000 130,000 620,000 Cars Joint 40,000 Nil 40,000 Contents Joint 50,000 Nil 50,000 Total Joint 840,000 710,000 Investment asset Asset Owner Value $ Return % Liabilities $ Net asset value $ Bank Account Joint 9,000 4 Nil 9,000 Term Deposit Joint 15,000 4 Nil 15,000 Cash management fund Joint 12,000 5 Nil 12,000 Total Joint 36,000 Nil 36,000 Client Statement and Authorisation We hereby declare that all the information provided in this form is true to the best of our knowledge. We are not aware of any other information other than the information regarding the form provided. We have not disclosed this information to any other else other than the recommended mentor of Financial Planning Representative. We have given permission for the usage of this information for the preparation of our financial plan and henceforth we understand the recommendations regarding the investment based on the solely information with providing investment recommendations. We acknowledge that:- We have received, read and understood the financial services guide before the advisory services are provided. We permit this document to be passed in confidence to any member of Member Financial Planning Pty Ltd. We have provided Limited Financial Information. We have limited objectives which can be advised on to: Appropriate returns must be received during the time period Tax must be reduced for the assets and the liabilities that are produced. We have provided our tax file numbers which must be only held by the Mentor Financial Planning which must be forwarded to the financial institution. Adviser Declaration I declare that: The information provided by the client are appropriate and correct for the record obtained from the clients The clients are provided with a copy of the Financial Services Guides before the advisory information related to services are provided. The clients information must be kept confidential and managed in accordance to the requirements under: Consumer Affair Act Consumer Credit Code Industry Codes of Practices Privacy Act Setting the Standards of Companies Policies and Procedures Alex Mentor Advisers Signature Date Authority to Provide Information Date: DD / MM / YY To Whom It May Concern Please accept this letter as our authority to provide all the necessary information for the documentation of the requisites for the Mentor Financial Planning or their representative __________________. Please accept a photocopy of this letter, as original will remain in file at the office of Mentor Financial Planning. Correspondence should be sent to Level 2, 349 Collins Street Melbourne VIC 3000 This authority should remain in force until withdrawn in writing by me/us. Thank-you. Client 1 Name Donna Signature Client 2 Name Dennis Signature Client 1 D.O.B. ___/___/___ Client 2 D.O.B. ___/___/___ Address Client file checklist Client Name Dennis Barker Donna Barker Date of initial interview 02.09.16 Date Advice presented 16.09.16 Date of first transaction 19.09.16 Actions/Documentation Obtained Completed Date Data Collection Forms Salary information, Sala Yes 02.09.16 Superannuation fund information Yes 02.09.16 Other investment by the clients Yes 02.09.16 Expenses of the clients Yes 02.09.16 Supporting Documentation Salary slip Yes 02.09.16 Certificate of superannuation fund Yes 02.09.16 Other investment document Yes 02.09.16 Bank statement Yes 02.09.16 Certificate of insurances Yes 02.09.16 Certificate from capital management fund Yes 02.09.16 Certificate of the mortgage loan Yes 02.09.16 References Elliott, B. and Elliott, J. (2008).Financial accounting and reporting. Harlow: Financial Times Prentice Hall. Hillier, D. (2010).Corporate finance. London: McGraw-Hill Higher Education. Holton, R. (2012).Global finance. Abingdon, Oxon: Routledge. Spiceland, J., Sepe, J. and Nelson, M. (2011).Intermediate accounting. New York: McGraw-Hill Irwin.