Case study — Ted and Eliza Hardgraves Background You work for the financial planning company B and N Pty Ltd which is a licensed securities dealer and a registered life insurance broker. Your company specialises in investment insurance and retirement planning advice but does not provide stockbroking real estate evaluations and advice income tax preparation superannuation fund accounting superannuation fund administration or the preparation of legal documents such as Wills or trusts. Ted Hardgraves is a successful senior geologist with an international mining company. He has been working for the same company for the last seven years and due to his success has recently received a significant promotion and pay rise. He believes there is potential for further improvement in his salary as well as growth prospects within the company. His wife Eliza Hardgraves works part-time as a paralegal with the same company she worked for prior to having their children Harriett and Bill. She has a good relationship with the owners of the firm and does not see any change in her current employment situation for the time being. Both Ted and Eliza are in good health and are non-smokers. They have private health cover for the family. Ted and Eliza have approached you for financial advice. They advise you that they are confused in regard to their financial situation. This has come about due to conflicting information they have read which states that although they will be living longer nearly half of all 40-year-olds will die over the next forty years. Also their children have asked questions about the insurance plan advertisements they have seen on television which has raised concerns as to whether they have adequate insurance cover. Further they want to make sure their children will be adequately provided for if something were to happen to them. They also believe they should have surplus income following Ted’s recent promotions and pay rises. They would like to save any surplus in the most tax effective vehicle for the long term. Both Ted and Eliza are concerned that if they have access to these funds they may spend them. Ted and Eliza would like to reduce their mortgage faster than the current repayment schedule and believe that this could help them to get ahead before they have to pay large school fees. Their current loan has a redraw facility. However; they enjoy their annual holidays and have an active social life and want to make sure they have income available to continue these activities. Ted also advised you that his aunt Jenny recently died and he has inherited around $63 700 made up of $10 000 in cash and approximately $53 700 in shares. They have never considered owning shares before but Ted is keen to understand the share market and perhaps buy some shares. Ted is prepared to take some risks in order to accumulate wealth quickly. However Eliza is more concerned about risk and does not wish to ‘gamble’ any of their funds. Detailed below are Ted and Eliza’s current details. Personal information Surname Name: Hardgraves Hardgraves Christian Name: Ted Eliza Salutation Mr Mrs Age/Date of birth 28 March 1970 17 August 1971 Status Married Married Home address 4 Pringle Ave Kensington 4 Pringle Ave Kensington Health Good Good Smoker No No Occupation Senior Geologist Paralegal Employer Lemon Gold Pty Ltd Ranier and Jackson Start date 2004 2008 Sick leave currently available 14 days plus 10 days per annum 6 days plus 10 days per annum Retirement age 65 64 Dependants/Family relationships Harriett (aged 9 years) Bill ( aged 8 years) Professional relationships Solicitor Carlie Mattieson Time span of relationship 10 years Quality of relationship Poor Service provided Conveyancing for home purchase Accountant John Watson Time span of relationship 7 years Quality of relationship Excellent Service provided Annual tax return Annual income details Name: Ted Eliza Salary $140 000 $55 000 Inheritance – interest $510 Dividends (99% franked) $3 436 Notes: Ted and Eliza’s salaries exclude superannuation guarantee (SG) contributions which are currently paid at 9% per annum. Annual expenditure Mortgage $37 800 General living expenses $50 400 Accountant’s fees $550 Donations $1 000 Holidays (annually) $11 000 Assets and investments Principal residence $650 000 Purchased 6 years ago for $550 000. Outstanding mortgage $470 000 – joint names variable rate 6.25% Contents $50 000 Joint names Car $18 000 Fully paid off – joint names Savings Account $5 000 Everyday savings account paying no interest – joint names Cash management account – inheritance $10 000 Cash management account earning 5.1% p.a. – Ted’s name only ABC Superannuation – Ted $220 000 Invested in a retail fund balanced option. No beneficiaries or binding nominations specified. The fund accepts salary sacrifice. SOH Industry Superannuation – Eliza $58 000 Invested in an accumulation industry fund balanced option. The fund only has a defensive balanced or high growth options available. No beneficiaries or binding nominations specified. The fund accepts salary sacrifice. Share portfolio $53 691 Dividend yield of 6.4% p.a. – 99% franked dividends – in Ted’s name only Current share portfolio Number of shares Company ASX Code Current Value (same as value at date of death) Price of Shares when acquired by aunt Jenny 500 AMP Limited AMP $2 158 $4.40 1 300 Insurance Australia Group Limited IAG $5 473 $1.75 400 Commonwealth Bank Limited CBA $22 052 $27.7 400 Telstra Corporation Limited TLS $1 552 $4.48 400 Westpac Banking Corporation WBC $9 900 $19.60 400 BHP Billiton Limited BHP $12 556 $11.41 All shares were acquired by the deceased after 1 January 1986 and prior to 1 December 2011. Investment objectives They have rated their investment objectives using a scale ranging from 1 (not concerned) to 5 (very concerned). Ted Hardgraves Income to keep pace with inflation 2 Legal logical and appropriate tax relief 5 Easy access to your capital 1 Regular income from your investments 1 Easy to administer 3 Capital growth 5 Volatility 2 Eliza Hardgraves Income to keep pace with inflation 2 Legal logical and appropriate tax relief 5 Easy access to your capital 1 Regular income from your investments 1 Easy to administer 4 Capital growth 5 Volatility 4 Estate planning Ted and Eliza have Wills which they quickly wrote using packs bought from the post office when Bill was born. They do not have powers of attorney. Insurance and risk management Ted has three times his salary in term life and total permanent disability (TPD) insurance within his superannuation. He cannot take out any higher cover within this superannuation fund. Eliza has $50 000 of life and TPD in her superannuation fund. Ted and Eliza do not have income protection or trauma cover. They have family private hospital cover. Planning issues * Ted and Eliza are seeking a long-term tax effective investment plan which will provide for them in their retirement. * Ted has recently inherited $63 700 from his aunt and would like advice on how to invest these funds to contribute to securing their future. * Ted has told you that he understands the risks associated with investing and is willing to invest in riskier securities in order to increase their returns. * Eliza is more risk averse. She would like to ensure they do not lose any of their inheritance. * Ted and Eliza’s children currently attend a public school but they would like to send both children to a private school to complete their secondary education. * Ted and Eliza would like to do some renovations to their home such as replacing the old bathroom which they believe will cost approximately $17 500. They are happy to use some of their inheritance to do this and anticipate the work to be done this year. * Both Ted and Eliza are not sure if the current asset allocation used in their superannuation is appropriate and are seeking your advice on determining an asset allocation that they are comfortable with and will improve the potential to meet their lifestyle and financial objectives. They would also like to know if they are on track to reach their retirement income goal of $125 000 per annum when Ted reaches age 65. * Eliza is unhappy with the service she receives from her industry fund and the limited number of choices she has for her account. In addition Ted has been earning better returns every year even after fees are deducted. * They wish to have their full insurance needs reviewed. * Ted and Eliza would like to reduce their mortgage and believe that this could help them to get ahead before they have to pay large school fees. * They express concern about the fees that you charge and seek clarification on your fees. As their financial planner your task is to prepare a Statement of Advice (SOA) that will include strategies to meet Ted and Eliza’s goals. Project questions (student to complete) Section 1 Establish the relationship with the client and identify their objectives needs and financial situation Part A List particular strategies you will use to ensure that the Hardgraves are comfortable with the interview process. (200 words) [insert student response] Part B Give details of any legal requirements you need to comply with at the initial stage of your relationship with the clients. (250 words) [insert student response] Part C If at a later stage Ted and Eliza wish to make a complaint about your advice what are their options* How much information are you required to give them initially about complaints procedures* (150 words) [insert student response] Part D Neither of your clients have trauma insurance and they are unsure about the adequacy of their current level of life and TPD insurance. Prepare a list of questions that you could use during the initial interview to help you determine appropriate levels of cover. You should cover asset preservation income preservation and future expenditure needs and the answers to the questions should enable you to complete the risk needs section of the fact finder (250 words) [insert student response] Part E Discuss the benefits and drawbacks of using tools to gather the information required to develop a financial plan for clients as compared to a more casual conversational style approach. (200 words) [insert student response] Section 2 Analyse client objectives needs financial situation and risk profile to develop appropriate strategies and solutions Part A Record the information you have gathered from your clients in the fact finder below. Include the information you obtained from your questions in Section 1 Part D. [insert student response] Part B Identify any gaps in your data collection form as well as any other issues that would need to be followed up with Ted and Eliza. (100 words) [insert student response] Fact finder Personal and employment details Personal details Client 1 Client 2 Title Surname Given & preferred names Home address Business address Contact phone Date of birth Age Sex Male Female Male Female Smoker Yes No Yes No Expected retirement age Dependants (children or other) Name Date of birth Sex School Occupation Employment details Client 1 Client 2 Occupation Employment status Self employed Employee Self employed Employee Not employed Pensioner Not employed Pensioner Permanent Part time Permanent Part time Casual Contractor Casual Contractor Other Government Other Government Business status Sole proprietor Partnership Sole proprietor Partnership Private company Trust Private company Trust Notes: Any other person to be contacted* E.g. accountant bank solicitor etc. Income expenditure and net worth Cash flow statement Income and expenses Client 1 Client 2 Notes Income from employment Salary Salary sacrifice (state % if applicable) Salary after salary sacrifice Rental income Unfranked dividends Franked dividends (state % return if applicable) Franking (imputation) credits (state franking % if applicable) Interest (state % return if applicable) Other income e.g. taxable benefits Capital gains Capital gains >1yr Tax-free component of capital gains Assessable income Deductible expenses Rental expenses repairs etc. Taxable income Tax on taxable income Non-refundable tax offsets (e.g. LITO/SAPTO) Medicare levy Medicare levy surcharge Franking rebate Refundable rebates and offsets Net tax payable Family cash flow Client 1 Client 2 Combined Comment Salary less any salary sacrifice amount Non-taxable income (e.g. income from superannuation income streams for a person aged over 60 Family Tax Benefits) Interest income Dividends received (excluding franking credits) Rental income Other income Total income received before tax Living expenses Other expenses Total expenses Total income received before tax less expenses Net tax payable from the ‘Income and Expense’ table above Net cash flow Assets and liabilities Asset Owner Value Liabilities Net value Notes Personal assets Total Investment assets Total Superannuation assets Total Net worth Liabilities Loan Current debt Percentage deductible Comments Repayment Total Goals and objectives Details Comments Estate planning Do you have a Will? Yes No When was it last updated? Executor/rix’s name and contact details: Do you have powers of attorney? Yes No Attorney’s name and contact details: Do you have a funeral plan? Yes No Funeral provider and contact details: Amount paid Do you have superannuation beneficiaries in place? Yes No Type Binding Non-binding Beneficiary names and contact details: Current superannuation rollovers insurances & investments Superannuation details Member Superannuation fund name Date of joining fund Type of fund Accumulation Defined benefit Pension Accumulation Defined benefit Pension Contributions By employer By yourself Other By employer By yourself Other Current value of your superannuation fund Amount of death & disability cover Is there provision for additional contributions or salary sacrifice? Yes No Yes No Non-concessional contributions Amount Year Amount Year Amount Year Amount Year Spouse contributions received Amount Year Amount Year Amount Year Amount Year Concessional contributions Amount Year Amount Year Amount Year Amount Year Any other contributions Amount Year Amount Year Amount Year Amount Year Life insurance details Life insured Policy Owner Company Policy number Benefit type Benefit or insured amount Annual premium General insurance details Item covered Owner Policy type Company Policy number Cover Amount Other benefit Annual premium Investment details Investment type Company Purchase date Units held/ fixed rate Current value Owner Risk needs Insurance needs — life and TPD Client 1 Client 2 Gross annual income (before tax) Less business expenses Number of years income required Property repayment Other debts Sub-total = (income × years) debts Less existing realisable assets (Insurance/savings/superannuation) Insured benefit shortfall (before tax) Gross income is the total of earned income (i.e. before tax earnings derived from personal exertion including salary fees commission bonuses fringe benefits or similar payments that would cease on disablement). Business expenses are expenses incurred by you in the process of earning income from your profession business or partnership. Insurance needs – Income protection/trauma Income protection Client 1 Client 2 Gross annual income Employer superannuation contributions Other employer fringe benefits Maximum allowable benefit (75% of annual income) Monthly income Less existing insurance Monthly benefit required (pre-tax) Waiting period to be served Trauma Medical costs (to cover out-of-pocket health costs) Additional expenses of a permanent nature wheelchairs home alterations etc. Additional income: income protection only covers 75% would you need extra? Total funds required Less cash available or assets that can be readily cashed Shortfall/surplus Acknowledgment The information provided in this financial fact finder is complete and accurate to the best of my knowledge. I understand that a policy purchased without the completion of a fact finder or following a partial or inaccurate completion may not be appropriate to my needs. I also understand that a policy purchased that differs from that recommended by the planner may not be appropriate to my needs. I acknowledge that the planner has provided me with the completed financial fact finder signed by me. Customer(s) signature(s) Adviser’s name Adviser’s signature Date Part C Now that you have determined the Hardgraves’ needs and objectives you need to identify their likely risk profile based on the information they have provided. Ted and Eliza completed the risk profile below prior to your meeting with them. Identify any concerns that you may have with their responses compared with the information in the case study and suggest questions you could use to clarify the responses. Justify why you do or do not think that the score and the resulting risk profile category is an accurate reflection of their tolerance to risk. (250 words). [insert student response] Investment attitude details Please answer the following questions regarding your attitude to financial issues. Are you concerned about the amount of tax that you are paying? Yes/No Why? How important is liquidity (i.e. funds available) to you? Very/Moderately/Not Why? If you had funds available for investing how would you choose to invest them? Why? Are there certain sorts of investment that you wish to avoid? Yes/No Which ones? RISK PROFILE Determining your investor risk profile Points This investor risk profile questionnaire has been designed to help you understand the type of investor you are so that with the help of your adviser you can choose the investments that best match your financial objectives. Which of the following best describes your current stage of life? Ted Eliza Single with few financial commitments. You are keen to accumulate wealth for the future. Some funds must be kept available for enjoyment such as cars clothes travel and entertainment. 50 50 A couple without children. You may be preparing for the future by establishing and furnishing a home. There are a lot of things you need to buy. You are probably better off financially now than you may be in the future. 40 40 Young family. This is the peak home purchasing stage. You have a mortgage and a very small amount of savings. Probably dissatisfied with your financial position and the amount of money saved. 35 35 Mature family. You are in your peak earning years and have the mortgage under control. Many partners also work and any children are growing up and have either left home or require less supervision. You are starting to think about retirement although it may be many years away. 30 30 Preparing for retirement. You probably own your own home and have few financial commitments; however you want to ensure that you can afford a comfortable retirement. Interested in travel recreation and self-education. 20 20 Retired. No longer working and must rely on existing funds and investments to maintain your lifestyle. You may be receiving the pension and are keen to enjoy life and maintain your health. 10 10 What return do you reasonably expect to achieve from your investments? Client 1 Client 2 A return without losing any capital. 10 10 3–7% p.a. 20 20 8–12% p.a. 30 30 13–15% p.a. 40 40 Over 15% p.a. 50 50 If you did not need your capital for more than 10 years for how long would you be prepared to see your investment performing below your expectations before you cashed it in? You would cash it in if there were any loss in value 10 10 Less than 1 year 20 20 Up to 3 years 30 30 Up to 5 years 40 40 Up to 7 years 45 45 Up to 10 years 50 50 How familiar are you with investment markets? Very little understanding or interest 10 10 Not very familiar 20 20 Have had enough experience to understand the importance of diversification 30 30 Understand that markets may fluctuate and that different market sectors offer different income growth and taxation characteristics 40 40 Experienced with all investment sectors and understand the various factors that may influence performance 50 50 If you can only get greater tax efficiency from more volatile investments which balance would you be most comfortable with? Preferably guaranteed returns before tax savings 10 10 Stable reliable returns minimal tax savings 20 20 Some variability in returns some tax savings 30 30 Moderate variability in returns reasonable tax savings 40 40 Unstable but potentially higher returns maximising tax savings 50 50 Six months after placing your investment you discover that your portfolio has decreased in value by 20% what would be your reaction? Horror. Security of capital is critical and you did not intend to take risks 10 10 You would cut your losses and transfer your money into more secure investment sectors 20 20 You would be concerned but would wait to see if the investments improve 30 30 This was a calculated risk and you would leave the investments in place expecting performance to improve 40 40 You would invest more funds to lower your average investment price expecting future growth 50 50 Which of the following best describes your purpose for investing? You want to invest for longer than five years probably to the age of 55–60. You are mainly investing for growth to accumulate long-term wealth 50 50 You are not nearing retirement have surplus funds to invest and you are aiming to accumulate long-term wealth from a balanced fund 40 40 You have a lump sum e.g. an inheritance or an eligible termination payment from your employer and you are uncertain about what secure investment alternatives are available 30 30 You are nearing retirement and you are investing to ensure that you have sufficient funds available to enjoy retirement 20 20 You have some specific objectives within the next five years for which you want to save enough money 20 20 You want a regular income and/or totally protect the value of your savings 10 10 Investor profile total points 220 140 INVESTOR RISK PROFILE SUMMARY 0–50 Defensive You are a conservative investor. Risk must be very low and you are prepared to accept lower returns to protect capital. The negative effects of tax and inflation will not concern you provided that your initial investment is protected. 51–130 Moderate You are a cautious investor seeking better than basic returns but risk must be low. Typically an older investor seeking to protect the wealth that you have accumulated you may be prepared to consider less aggressive growth investments. 131–210 Balanced You are a prudent investor who wants a balanced portfolio to work towards medium to long-term financial goals. You require an investment strategy that will cope with the effects of tax and inflation. Calculated risks will be acceptable to you to achieve good returns. 211–300 Growth You are an assertive investor probably earning sufficient income to invest most funds for capital growth. Prepared to accept higher volatility and moderate risks your main concern is to accumulate assets over the medium to long term. You require a balanced portfolio but more aggressive investment strategies may be included. 301–350 High growth You are an aggressive investor prepared to compromise portfolio balance to pursue potentially greater long-term returns. Your investment choices are diverse but carry with them a higher level of risk. Security of capital is secondary to the potential for wealth accumulation. (Section 3 Part D commences on the next page) Part D Given the information you now have on the Hardgraves’ current situation and their tolerance of risk what are the critical issues you need to consider to appropriately advise them? What sorts of investments would they each be comfortable with* (400 words) [insert student response] Part E Prepare appropriate insurance and superannuation strategies for Ted and Eliza and provide a detailed explanation as to why you consider them to be appropriate. Include the lump sum amount that they will need in retirement and strategies to help them reach that goal. Include recommendations on the amounts and types of insurance cover you will recommend. Provide a summary of other recommendations that you will include in your SOA for Ted and Eliza. (500 words) [insert student response] Part F Provide a summary of the research that you have conducted to support one insurance product recommendation you will make for Eliza or Ted. (250 words) [insert student response] Part G You must now prepare a Statement of Advice (SOA) based on the recommendations made which will be used to record this advice (including amendments if any) for Ted and Eliza. Remember that the SOA must be of a standard that is compliant and would be suitable to present to a client. [insert student response] Important instructions • What to submit: you have been provided with a Statement of Advice Preparation Checklist and cash flow templates to use for the project SOA. Please include these with your submission. • Template SOAs and SOA preparation software: it is preferable that you do not use the sample SOA published by ASIC as a basis for your submission. The use of financial planning software and dealer templates to prepare your SOA is also not permitted. Submissions that exhibit excessive reliance on SOA templates may be considered a case of plagiarism or collaboration and may not be considered to be a reasonable attempt at the project. • Assumptions: you must list the assumptions used in your SOA in your project submission. These will generally include: – any assumptions you have made regarding missing background information on the clients – any assumptions you have used to calculate future income from your recommended investments – any assumptions used for fees relating to the products you have recommended. • Strategy advice: you must provide strategy recommendations in the following areas based on the information given: – personal investment or debt reduction – personal insurance – superannuation – estate planning. Use the information on each of these areas given in the subject notes to provide reasons for each of the strategies recommended. • Product advice: product recommendations for any personal investment or estate planning recommendations are not required. However you should recommend an appropriate superannuation and/or life insurance product to implement the advice you have provided. You are required to source or develop your own fund details. It is not necessary to include Product Disclosure Statements in your project for any products you may recommend in your SOA. Including insurance quotes in the SOA is not required. For insurance recommendations you may estimate the premiums based on the clients ages health and occupations but they do not have to be prepared from actual quotes. • Cash flow projections: you must include detailed cash flow tables using Appendix 1 and Appendix 2 as a template showing Eliza and Ted’s situation before and after your recommendations. These should be included as Appendices 1 and 2 to your SOA. Remember to include any insurance premiums in the analysis. • Recommendations: You should include superannuation projections up to the retirement age of your clients before and after your recommendations as Appendix C to your Statement of Advice. In addition please show that your strategy will enable your clients to meet their retirement income goal until Ted is at least 84 (Eliza is 83 her life expectancy). Statement of Advice preparation checklist (student to complete) SOA section Action Completed? i. Cover sheet The following elements should appear on the cover sheet: • the words ‘Statement of Advice’ • the client’s name • the authorised representative’s name AR number and contact details (if different to the licensee) • a statement that the authorised representative is an authorised representative of the licensee • the licensee’s name ABN number AFSL number address and contact details • the date of issue of the SOA • a warning about the importance of the document ii. Table of contents Check that the pages in the table of contents agree with the page numbers in the completed SOA. iii. Executive summary Headings should include: • Summary of our recommendations • Summary of expected outcomes if you implement our advice • Risks in our advice • Summary of our fees and commissions • Your next steps iv. Present position — information about the client Headings should include: • Important information about you • Your reasons for seeking advice • What you would like to achieve • Your personal and financial information • Personal information • Your existing insurance • Your existing estate planning • Financial information • Current income and expense details v. Risk profile Heading: • Your risk profile vi. Strategy recommendations (analysis of the investment strategies) Headings should include: • Recommended action: – personal investment or debt reduction – personal insurance – superannuation – estate planning • Reasons for recommendations: – personal investment or debt reduction – personal insurance – superannuation – estate planning • Things you should consider (risks) vii. Product selection You are only required to provide a superannuation and or insurance product recommendation. Do not provide product recommendations for personal investments or estate planning. Headings should include: • Product recommendations • Cooling off period advice viii. Recommended asset allocation Headings should include: • Recommended asset allocation • Comments on proposed asset allocation versus your risk profile ix. Disclosure of fees commission and/or benefits Headings should include: • How are we paid • Commission and fees — upfront ongoing commissions and financial planning advice fees • Product management and/or operational fees • Other benefits x. Ongoing service and review Headings should include: • Ongoing services • Implementation xi. Authority to proceed Headings should include: • Authority to proceed • Consent to ongoing contact xi. SOA Appendix 1 Use the family cash flow template below. Heading: • Financial position before implementation of strategy xii. SOA Appendix 2 Use the family cash flow template below. Heading: • Financial position after implementation of strategy xii. SOA Appendix 3 Include detailed projections of the clients’ super account balances before and after your recommendations up to their retirement age. Also show how the resultant balance can be drawn down until Eliza reaches age 84 her current life expectancy. You should include all assumptions for calculations and rates of return should be in today’s dollars (i.e. net of inflation). SOA Appendix 1 Note: The items listed in this template are indicative only and must be adapted to your client’s personal circumstances. There may be other relevant income or expense items that are not included in this template. You should add delete or substitute items where appropriate. Cash flow statement Income and expenses Client 1 Client 2 Notes Income from employment Salary Salary sacrifice (state % if applicable) Salary after salary sacrifice Rental income Unfranked dividends Franked dividends (state % return if applicable) Franking (imputation) credits (state franking % if applicable) Interest (state % return if applicable) Other income e.g. taxable benefits Capital gains Capital gains >1yr Tax-free component of capital gains Assessable income Deductible expenses Include income protection premiums if held outside superannuation Rental expenses repairs etc. Taxable income Tax on taxable income (state year applied) Non-refundable tax offsets (e.g. LITO/SAPTO) Medicare levy Medicare levy surcharge Franking rebate Refundable rebates and offsets Net tax payable Family cash flow Client 1 Client 2 Combined Salary less any salary sacrifice amount Non-taxable income (e.g. income from superannuation income streams for a person aged over 60 Family Tax Benefits) Interest income Dividends received (excluding franking credits) Rental income Other income Total income received before tax Investment expenses Interest payments Rental expenses Other Living expenses General living expenses Home mortgage Car payment Credit cards Holiday Children’s education Other loans e.g. personal Insurance premiums Other Total expenses Total income received before tax less expenses Net tax payable from the ‘Income and Expense’ table above Net cash flow Assets and liabilities Asset Owner Value Liabilities Net value Notes Personal assets Family home Home contents Car 1 Car 2 Other Total Investment assets Investment property Savings account Term deposit Shares Other Total Superannuation assets Client 1 superannuation Client 2 superannuation Total Net worth Liabilities Loan Current debt Percentage deductible Interest only Repayment Loan Home loan Investment property Other Total SOA Appendix 2 Note: The items listed in this template are indicative only and must be adapted to your client’s personal circumstances. There may be other relevant income or expense items that are not included in this template. You should add delete or substitute items where appropriate. Cash flow statement Income and expenses Client 1 Client 2 Notes Income from employment Salary Salary sacrifice (state % if applicable) Salary after salary sacrifice Rental income Unfranked dividends Franked dividends (state % return if applicable) Franking (imputation) credits (state franking % if applicable) Interest (state % return if applicable) Other income e.g. taxable benefits Capital gains Capital gains >1yr Tax-free component of capital gains Assessable income Deductible expenses Include income protection premiums if held outside superannuation Rental expenses repairs etc. Taxable income Tax on taxable income (state year applied) Non-refundable tax offsets (e.g. LITO/SAPTO) Medicare levy Medicare levy surcharge Franking rebate Refundable rebates and offsets Net tax payable Family cash flow Client 1 Client 2 Combined Salary less any salary sacrifice amount Non-taxable income (e.g. income from superannuation income streams for a person aged over 60 Family Tax Benefits) Interest income Dividends received (excluding franking credits) Rental income Other income Total income received before tax Investment expenses Interest payments Rental expenses Other Living expenses General living expenses Home mortgage Car payment Credit cards Holiday Children’s education Other loans e.g. personal Insurance premiums Other Total expenses Total income received before tax less expenses Net tax payable from the ‘Income and Expense’ table above Net cash flow Assets and liabilities Asset Owner Value Liabilities Net value Notes Personal assets Family home Home contents Car 1 Car 2 Other Total Investment assets Investment property Savings account Term deposit Shares Other Total Superannuation assets Client 1 superannuation Client 2 superannuation Total Net worth Liabilities Loan Current debt Percentage deductible Interest only Repayment Loan Home loan Investment property Other Total SOA Appendix 3 Use an excel spreadsheet to project the balance of the clients’ super funds up until the age of retirement (i.e. Ted is 65) before and after your recommendations. You should then show the analysis that proves that the clients can generate $125 000 per annum from their super up until Eliza is aged 83. You can use the FV formula in excel to calculate annual balances for the accumulation and you can also use it to show drawdown of the income in a separate calculation. Assume that in retirement the clients’ funds are invested in the same asset allocation and have the same rate of return. All rates of return should be net of inflation and net of fees. Copy the projections into tables like the one shown below and complete the list of assumptions in the table on the following page. Please ensure that you use a rate of return that is net of inflation and is appropriate to the clients risk profile. Include details of all assumptions that you have made. You may ignore the impact of contributions tax on the SG and salary sacrifice if any. Table 1: Superannuation account balance projections Current situation After recommended strategy Ted’s age Ted’s account balance at year end Eliza’s account balance at year end Combined account balance Ted’s account balance at year end Eliza’s account balance at year end Combined account balance Table 1(a): Assumptions. Assessors note: This table should be complete and appropriate for the clients. Value Ted: current Eliza: current Ted: strategy recommendations Eliza: strategy recommendations Contribution amount: SG and any other(pmt) Contribution frequency Rate = the rate of return of the fund net of inflation Hints for using the FV formula in Excel to predict account balances. Nper = either 1 for annual or 12 for monthly contributions; PV = value of the super at the end of the previous year and should be entered as a negative value; rate = annual rate divided by the frequency of contributions; pmt is the contribution amount and should be a negative value when accumulating funds and positive when funds as being drawn from the super; type can be left blank and indicates that the payments happen at the end of each period. Table 2: Superannuation income analysis post-retirement Ted’s age Combined account balance Assumptions Combined fund 60 Rate of return net of inflation 61 Frequency of drawdown 62 Income per annum $125 000 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 (Section 3 commences on the next page) Section 3 Present appropriate strategies and solutions to the client and negotiate a financial plan policy or transaction Part A The SOA has been completed and a meeting has been organised with Ted and Eliza to present the recommendations and if they agree to implement them. Describe the steps that should be followed in presenting this advice to Ted and Eliza. In your answer you should address at least four of the following requirements regarding presentation of advice: the order in which you present the information what back-up information and documents you might need? any risks associated with the solution two predictable questions the Hardgraves might ask you and the answers you will give the language you will use to present the strategy to Ted and Eliza. (250 words) [insert student response] Part B Suggest a minimum of two concerns that the Hardgraves might have with the strategy that you have proposed. Explain how you would address each of these concerns. (100 words) [insert student response] Part C During the course of your discussion with Ted you discover that he has suffered from a back injury and you suspect that this may result in a premium loading being applied to his income protection. Explain how you would justify the need for this policy to him despite the extra costs. * (150 words) [insert student response] Section 4 Agree on the plan policy or transaction and complete documentation Part A Ted and Eliza have finally agreed to proceed with your recommendations. Explain your fee and cost structure to Ted and Eliza. Ensure that you use language that Ted and Eliza will understand. (100 words) [insert student response] Part B Prepare a timeframe for implementing the plan. Explain the reasons behind the timeframe. (100 words) [insert student response] Part C Identify the documentation that you may require from Ted and Eliza to implement your insurance recommendations. (100 words) [insert student response] Section 5 Provide ongoing service where requested by the client Part A Draft an outline of the level of ongoing service you intend to recommend to Ted and Eliza. In your outline discuss the type of information that you would regularly provide to Ted and Eliza in relation to their superannuation. (250 words) [insert student response] Part B What would you do to ensure that Ted and Eliza know the specific costs relating to an ongoing service* (100 words) [insert student response]Case study — Ted and Eliza Hardgraves Background You work for the financial planning company B and N Pty Ltd which is a licensed securities dealer and a registered life insurance broker. Your company specialises in investment insurance and retirement planning advice but does not provide stockbroking real estate evaluations and advice income tax preparation superannuation fund accounting superannuation fund administration or the preparation of legal documents such as Wills or trusts. Ted Hardgraves is a successful senior geologist with an international mining company. He has been working for the same company for the last seven years and due to his success has recently received a significant promotion and pay rise. He believes there is potential for further improvement in his salary as well as growth prospects within the company. His wife Eliza Hardgraves works part-time as a paralegal with the same company she worked for prior to having their children Harriett and Bill. She has a good relationship with the owners of the firm and does not see any change in her current employment situation for the time being. Both Ted and Eliza are in good health and are non-smokers. They have private health cover for the family. Ted and Eliza have approached you for financial advice. They advise you that they are confused in regard to their financial situation. This has come about due to conflicting information they have read which states that although they will be living longer nearly half of all 40-year-olds will die over the next forty years. Also their children have asked questions about the insurance plan advertisements they have seen on television which has raised concerns as to whether they have adequate insurance cover. Further they want to make sure their children will be adequately provided for if something were to happen to them. They also believe they should have surplus income following Ted’s recent promotions and pay rises. They would like to save any surplus in the most tax effective vehicle for the long term. Both Ted and Eliza are concerned that if they have access to these funds they may spend them. Ted and Eliza would like to reduce their mortgage faster than the current repayment schedule and believe that this could help them to get ahead before they have to pay large school fees. Their current loan has a redraw facility. However; they enjoy their annual holidays and have an active social life and want to make sure they have income available to continue these activities. Ted also advised you that his aunt Jenny recently died and he has inherited around $63 700 made up of $10 000 in cash and approximately $53 700 in shares. They have never considered owning shares before but Ted is keen to understand the share market and perhaps buy some shares. Ted is prepared to take some risks in order to accumulate wealth quickly. However Eliza is more concerned about risk and does not wish to ‘gamble’ any of their funds. Detailed below are Ted and Eliza’s current details. Personal information Surname Name: Hardgraves Hardgraves Christian Name: Ted Eliza Salutation Mr Mrs Age/Date of birth 28 March 1970 17 August 1971 Status Married Married Home address 4 Pringle Ave Kensington 4 Pringle Ave Kensington Health Good Good Smoker No No Occupation Senior Geologist Paralegal Employer Lemon Gold Pty Ltd Ranier and Jackson Start date 2004 2008 Sick leave currently available 14 days plus 10 days per annum 6 days plus 10 days per annum Retirement age 65 64 Dependants/Family relationships Harriett (aged 9 years) Bill ( aged 8 years) Professional relationships Solicitor Carlie Mattieson Time span of relationship 10 years Quality of relationship Poor Service provided Conveyancing for home purchase Accountant John Watson Time span of relationship 7 years Quality of relationship Excellent Service provided Annual tax return Annual income details Name: Ted Eliza Salary $140 000 $55 000 Inheritance – interest $510 Dividends (99% franked) $3 436 Notes: Ted and Eliza’s salaries exclude superannuation guarantee (SG) contributions which are currently paid at 9% per annum. Annual expenditure Mortgage $37 800 General living expenses $50 400 Accountant’s fees $550 Donations $1 000 Holidays (annually) $11 000 Assets and investments Principal residence $650 000 Purchased 6 years ago for $550 000. Outstanding mortgage $470 000 – joint names variable rate 6.25% Contents $50 000 Joint names Car $18 000 Fully paid off – joint names Savings Account $5 000 Everyday savings account paying no interest – joint names Cash management account – inheritance $10 000 Cash management account earning 5.1% p.a. – Ted’s name only ABC Superannuation – Ted $220 000 Invested in a retail fund balanced option. No beneficiaries or binding nominations specified. The fund accepts salary sacrifice. SOH Industry Superannuation – Eliza $58 000 Invested in an accumulation industry fund balanced option. The fund only has a defensive balanced or high growth options available. No beneficiaries or binding nominations specified. The fund accepts salary sacrifice. Share portfolio $53 691 Dividend yield of 6.4% p.a. – 99% franked dividends – in Ted’s name only Current share portfolio Number of shares Company ASX Code Current Value (same as value at date of death) Price of Shares when acquired by aunt Jenny 500 AMP Limited AMP $2 158 $4.40 1 300 Insurance Australia Group Limited IAG $5 473 $1.75 400 Commonwealth Bank Limited CBA $22 052 $27.7 400 Telstra Corporation Limited TLS $1 552 $4.48 400 Westpac Banking Corporation WBC $9 900 $19.60 400 BHP Billiton Limited BHP $12 556 $11.41 All shares were acquired by the deceased after 1 January 1986 and prior to 1 December 2011. Investment objectives They have rated their investment objectives using a scale ranging from 1 (not concerned) to 5 (very concerned). Ted Hardgraves Income to keep pace with inflation 2 Legal logical and appropriate tax relief 5 Easy access to your capital 1 Regular income from your investments 1 Easy to administer 3 Capital growth 5 Volatility 2 Eliza Hardgraves Income to keep pace with inflation 2 Legal logical and appropriate tax relief 5 Easy access to your capital 1 Regular income from your investments 1 Easy to administer 4 Capital growth 5 Volatility 4 Estate planning Ted and Eliza have Wills which they quickly wrote using packs bought from the post office when Bill was born. They do not have powers of attorney. Insurance and risk management Ted has three times his salary in term life and total permanent disability (TPD) insurance within his superannuation. He cannot take out any higher cover within this superannuation fund. Eliza has $50 000 of life and TPD in her superannuation fund. Ted and Eliza do not have income protection or trauma cover. They have family private hospital cover. Planning issues * Ted and Eliza are seeking a long-term tax effective investment plan which will provide for them in their retirement. * Ted has recently inherited $63 700 from his aunt and would like advice on how to invest these funds to contribute to securing their future. * Ted has told you that he understands the risks associated with investing and is willing to invest in riskier securities in order to increase their returns. * Eliza is more risk averse. She would like to ensure they do not lose any of their inheritance. * Ted and Eliza’s children currently attend a public school but they would like to send both children to a private school to complete their secondary education. * Ted and Eliza would like to do some renovations to their home such as replacing the old bathroom which they believe will cost approximately $17 500. They are happy to use some of their inheritance to do this and anticipate the work to be done this year. * Both Ted and Eliza are not sure if the current asset allocation used in their superannuation is appropriate and are seeking your advice on determining an asset allocation that they are comfortable with and will improve the potential to meet their lifestyle and financial objectives. They would also like to know if they are on track to reach their retirement income goal of $125 000 per annum when Ted reaches age 65. * Eliza is unhappy with the service she receives from her industry fund and the limited number of choices she has for her account. In addition Ted has been earning better returns every year even after fees are deducted. * They wish to have their full insurance needs reviewed. * Ted and Eliza would like to reduce their mortgage and believe that this could help them to get ahead before they have to pay large school fees. * They express concern about the fees that you charge and seek clarification on your fees. As their financial planner your task is to prepare a Statement of Advice (SOA) that will include strategies to meet Ted and Eliza’s goals. Project questions (student to complete) Section 1 Establish the relationship with the client and identify their objectives needs and financial situation Part A List particular strategies you will use to ensure that the Hardgraves are comfortable with the interview process. (200 words) [insert student response] Part B Give details of any legal requirements you need to comply with at the initial stage of your relationship with the clients. (250 words) [insert student response] Part C If at a later stage Ted and Eliza wish to make a complaint about your advice what are their options* How much information are you required to give them initially about complaints procedures* (150 words) [insert student response] Part D Neither of your clients have trauma insurance and they are unsure about the adequacy of their current level of life and TPD insurance. Prepare a list of questions that you could use during the initial interview to help you determine appropriate levels of cover. You should cover asset preservation income preservation and future expenditure needs and the answers to the questions should enable you to complete the risk needs section of the fact finder (250 words) [insert student response] Part E Discuss the benefits and drawbacks of using tools to gather the information required to develop a financial plan for clients as compared to a more casual conversational style approach. (200 words) [insert student response] Section 2 Analyse client objectives needs financial situation and risk profile to develop appropriate strategies and solutions Part A Record the information you have gathered from your clients in the fact finder below. Include the information you obtained from your questions in Section 1 Part D. [insert student response] Part B Identify any gaps in your data collection form as well as any other issues that would need to be followed up with Ted and Eliza. (100 words) [insert student response] Fact finder Personal and employment details Personal details Client 1 Client 2 Title Surname Given & preferred names Home address Business address Contact phone Date of birth Age Sex Male Female Male Female Smoker Yes No Yes No Expected retirement age Dependants (children or other) Name Date of birth Sex School Occupation Employment details Client 1 Client 2 Occupation Employment status Self employed Employee Self employed Employee Not employed Pensioner Not employed Pensioner Permanent Part time Permanent Part time Casual Contractor Casual Contractor Other Government Other Government Business status Sole proprietor Partnership Sole proprietor Partnership Private company Trust Private company Trust Notes: Any other person to be contacted* E.g. accountant bank solicitor etc. Income expenditure and net worth Cash flow statement Income and expenses Client 1 Client 2 Notes Income from employment Salary Salary sacrifice (state % if applicable) Salary after salary sacrifice Rental income Unfranked dividends Franked dividends (state % return if applicable) Franking (imputation) credits (state franking % if applicable) Interest (state % return if applicable) Other income e.g. taxable benefits Capital gains Capital gains >1yr Tax-free component of capital gains Assessable income Deductible expenses Rental expenses repairs etc. Taxable income Tax on taxable income Non-refundable tax offsets (e.g. LITO/SAPTO) Medicare levy Medicare levy surcharge Franking rebate Refundable rebates and offsets Net tax payable Family cash flow Client 1 Client 2 Combined Comment Salary less any salary sacrifice amount Non-taxable income (e.g. income from superannuation income streams for a person aged over 60 Family Tax Benefits) Interest income Dividends received (excluding franking credits) Rental income Other income Total income received before tax Living expenses Other expenses Total expenses Total income received before tax less expenses Net tax payable from the ‘Income and Expense’ table above Net cash flow Assets and liabilities Asset Owner Value Liabilities Net value Notes Personal assets Total Investment assets Total Superannuation assets Total Net worth Liabilities Loan Current debt Percentage deductible Comments Repayment Total Goals and objectives Details Comments Estate planning Do you have a Will? Yes No When was it last updated? Executor/rix’s name and contact details: Do you have powers of attorney? Yes No Attorney’s name and contact details: Do you have a funeral plan? Yes No Funeral provider and contact details: Amount paid Do you have superannuation beneficiaries in place? Yes No Type Binding Non-binding Beneficiary names and contact details: Current superannuation rollovers insurances & investments Superannuation details Member Superannuation fund name Date of joining fund Type of fund Accumulation Defined benefit Pension Accumulation Defined benefit Pension Contributions By employer By yourself Other By employer By yourself Other Current value of your superannuation fund Amount of death & disability cover Is there provision for additional contributions or salary sacrifice? Yes No Yes No Non-concessional contributions Amount Year Amount Year Amount Year Amount Year Spouse contributions received Amount Year Amount Year Amount Year Amount Year Concessional contributions Amount Year Amount Year Amount Year Amount Year Any other contributions Amount Year Amount Year Amount Year Amount Year Life insurance details Life insured Policy Owner Company Policy number Benefit type Benefit or insured amount Annual premium General insurance details Item covered Owner Policy type Company Policy number Cover Amount Other benefit Annual premium Investment details Investment type Company Purchase date Units held/ fixed rate Current value Owner Risk needs Insurance needs — life and TPD Client 1 Client 2 Gross annual income (before tax) Less business expenses Number of years income required Property repayment Other debts Sub-total = (income × years) debts Less existing realisable assets (Insurance/savings/superannuation) Insured benefit shortfall (before tax) Gross income is the total of earned income (i.e. before tax earnings derived from personal exertion including salary fees commission bonuses fringe benefits or similar payments that would cease on disablement). Business expenses are expenses incurred by you in the process of earning income from your profession business or partnership. Insurance needs – Income protection/trauma Income protection Client 1 Client 2 Gross annual income Employer superannuation contributions Other employer fringe benefits Maximum allowable benefit (75% of annual income) Monthly income Less existing insurance Monthly benefit required (pre-tax) Waiting period to be served Trauma Medical costs (to cover out-of-pocket health costs) Additional expenses of a permanent nature wheelchairs home alterations etc. Additional income: income protection only covers 75% would you need extra? Total funds required Less cash available or assets that can be readily cashed Shortfall/surplus Acknowledgment The information provided in this financial fact finder is complete and accurate to the best of my knowledge. I understand that a policy purchased without the completion of a fact finder or following a partial or inaccurate completion may not be appropriate to my needs. I also understand that a policy purchased that differs from that recommended by the planner may not be appropriate to my needs. I acknowledge that the planner has provided me with the completed financial fact finder signed by me. Customer(s) signature(s) Adviser’s name Adviser’s signature Date Part C Now that you have determined the Hardgraves’ needs and objectives you need to identify their likely risk profile based on the information they have provided. Ted and Eliza completed the risk profile below prior to your meeting with them. Identify any concerns that you may have with their responses compared with the information in the case study and suggest questions you could use to clarify the responses. Justify why you do or do not think that the score and the resulting risk profile category is an accurate reflection of their tolerance to risk. (250 words). [insert student response] Investment attitude details Please answer the following questions regarding your attitude to financial issues. Are you concerned about the amount of tax that you are paying? Yes/No Why? How important is liquidity (i.e. funds available) to you? Very/Moderately/Not Why? If you had funds available for investing how would you choose to invest them? Why? Are there certain sorts of investment that you wish to avoid? Yes/No Which ones? RISK PROFILE Determining your investor risk profile Points This investor risk profile questionnaire has been designed to help you understand the type of investor you are so that with the help of your adviser you can choose the investments that best match your financial objectives. Which of the following best describes your current stage of life? Ted Eliza Single with few financial commitments. You are keen to accumulate wealth for the future. Some funds must be kept available for enjoyment such as cars clothes travel and entertainment. 50 50 A couple without children. You may be preparing for the future by establishing and furnishing a home. There are a lot of things you need to buy. You are probably better off financially now than you may be in the future. 40 40 Young family. This is the peak home purchasing stage. You have a mortgage and a very small amount of savings. Probably dissatisfied with your financial position and the amount of money saved. 35 35 Mature family. You are in your peak earning years and have the mortgage under control. Many partners also work and any children are growing up and have either left home or require less supervision. You are starting to think about retirement although it may be many years away. 30 30 Preparing for retirement. You probably own your own home and have few financial commitments; however you want to ensure that you can afford a comfortable retirement. Interested in travel recreation and self-education. 20 20 Retired. No longer working and must rely on existing funds and investments to maintain your lifestyle. You may be receiving the pension and are keen to enjoy life and maintain your health. 10 10 What return do you reasonably expect to achieve from your investments? Client 1 Client 2 A return without losing any capital. 10 10 3–7% p.a. 20 20 8–12% p.a. 30 30 13–15% p.a. 40 40 Over 15% p.a. 50 50 If you did not need your capital for more than 10 years for how long would you be prepared to see your investment performing below your expectations before you cashed it in? You would cash it in if there were any loss in value 10 10 Less than 1 year 20 20 Up to 3 years 30 30 Up to 5 years 40 40 Up to 7 years 45 45 Up to 10 years 50 50 How familiar are you with investment markets? Very little understanding or interest 10 10 Not very familiar 20 20 Have had enough experience to understand the importance of diversification 30 30 Understand that markets may fluctuate and that different market sectors offer different income growth and taxation characteristics 40 40 Experienced with all investment sectors and understand the various factors that may influence performance 50 50 If you can only get greater tax efficiency from more volatile investments which balance would you be most comfortable with? Preferably guaranteed returns before tax savings 10 10 Stable reliable returns minimal tax savings 20 20 Some variability in returns some tax savings 30 30 Moderate variability in returns reasonable tax savings 40 40 Unstable but potentially higher returns maximising tax savings 50 50 Six months after placing your investment you discover that your portfolio has decreased in value by 20% what would be your reaction? Horror. Security of capital is critical and you did not intend to take risks 10 10 You would cut your losses and transfer your money into more secure investment sectors 20 20 You would be concerned but would wait to see if the investments improve 30 30 This was a calculated risk and you would leave the investments in place expecting performance to improve 40 40 You would invest more funds to lower your average investment price expecting future growth 50 50 Which of the following best describes your purpose for investing? You want to invest for longer than five years probably to the age of 55–60. You are mainly investing for growth to accumulate long-term wealth 50 50 You are not nearing retirement have surplus funds to invest and you are aiming to accumulate long-term wealth from a balanced fund 40 40 You have a lump sum e.g. an inheritance or an eligible termination payment from your employer and you are uncertain about what secure investment alternatives are available 30 30 You are nearing retirement and you are investing to ensure that you have sufficient funds available to enjoy retirement 20 20 You have some specific objectives within the next five years for which you want to save enough money 20 20 You want a regular income and/or totally protect the value of your savings 10 10 Investor profile total points 220 140 INVESTOR RISK PROFILE SUMMARY 0–50 Defensive You are a conservative investor. Risk must be very low and you are prepared to accept lower returns to protect capital. The negative effects of tax and inflation will not concern you provided that your initial investment is protected. 51–130 Moderate You are a cautious investor seeking better than basic returns but risk must be low. Typically an older investor seeking to protect the wealth that you have accumulated you may be prepared to consider less aggressive growth investments. 131–210 Balanced You are a prudent investor who wants a balanced portfolio to work towards medium to long-term financial goals. You require an investment strategy that will cope with the effects of tax and inflation. Calculated risks will be acceptable to you to achieve good returns. 211–300 Growth You are an assertive investor probably earning sufficient income to invest most funds for capital growth. Prepared to accept higher volatility and moderate risks your main concern is to accumulate assets over the medium to long term. You require a balanced portfolio but more aggressive investment strategies may be included. 301–350 High growth You are an aggressive investor prepared to compromise portfolio balance to pursue potentially greater long-term returns. Your investment choices are diverse but carry with them a higher level of risk. Security of capital is secondary to the potential for wealth accumulation. (Section 3 Part D commences on the next page) Part D Given the information you now have on the Hardgraves’ current situation and their tolerance of risk what are the critical issues you need to consider to appropriately advise them? What sorts of investments would they each be comfortable with* (400 words) [insert student response] Part E Prepare appropriate insurance and superannuation strategies for Ted and Eliza and provide a detailed explanation as to why you consider them to be appropriate. Include the lump sum amount that they will need in retirement and strategies to help them reach that goal. Include recommendations on the amounts and types of insurance cover you will recommend. Provide a summary of other recommendations that you will include in your SOA for Ted and Eliza. (500 words) [insert student response] Part F Provide a summary of the research that you have conducted to support one insurance product recommendation you will make for Eliza or Ted. (250 words) [insert student response] Part G You must now prepare a Statement of Advice (SOA) based on the recommendations made which will be used to record this advice (including amendments if any) for Ted and Eliza. Remember that the SOA must be of a standard that is compliant and would be suitable to present to a client. [insert student response] Important instructions • What to submit: you have been provided with a Statement of Advice Preparation Checklist and cash flow templates to use for the project SOA. Please include these with your submission. • Template SOAs and SOA preparation software: it is preferable that you do not use the sample SOA published by ASIC as a basis for your submission. The use of financial planning software and dealer templates to prepare your SOA is also not permitted. Submissions that exhibit excessive reliance on SOA t
