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Planning Fundamentals (DFP1_AS_v4)
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1: Instructions for completing and submitting this assignment
2: Case study
3: Assignment questions
(assessor to complete)
Read everything in
this document before you start your assignment for
Financial Planning Fundamentals (DFP1_AS_v4).
This document is the Written Assignment — half of the overall
Written and Oral Assignment.
includes the following parts:
• Part 1: Instructions for completing and submitting the assignment
• Part 2: Case study
• Part 3: Assignment questions (includes uploading an Excel
spreadsheet for Question 2, in addition to uploading this completed
template, i.e. upload 2 documents; this completed template and your
completed Excel spreadsheet).
to use the study plan
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1: The case study
and Natalie Olden
You met Joe Olden
when he came into your office last week. He had been mowing the grass
in the park over the road, saw your business sign and came for a chat
to see if you could help him and his wife.
They live in a small rural community outside town and have been
married for three years. Joe is 26 and is a horticulturalist with the
local council. Natalie is 24 and a librarian. However, she is not
working at present as she looks after their twins. Until the twins
arrived, their focus had been on working hard and saving for a
deposit to buy a house. They rent a nice home on the edge of town and
enjoy the scenic views over the hills.
Their landlord has
approached them saying she wants to sell the house and will give them
first refusal to purchase it. Joe’s parents have offered to help
them with a loan.
They want some help
in making a decision and understanding how it will all work.
You give Joe your
Financial Services Guide (FSG) and a fact-find form and you agree to
meet next week.
and pleasantries, you ask Joe if he has read the FSG and briefly go
through the contents for Natalie. They are comfortable to have an
initial consultation to see where it takes them.
They have completed
the fact find and as you discuss the contents, you make additional
notes on their file. The fact find looks as follows:
and Natalie Olden fact find
Table 1 Personal details
(We just celebrated our third anniversary)
thought about it
(Both in good health and developing normally)
Table 2 Professional relationships
span of relationship
span of relationship
Table 3 Assets and investments
and investments (personally owned)
try to keep at least this amount in the account. We’d like to
have more cash on hand for the unexpected because with the twins
something is always happening.
12 years old and still running well. It’s a great little
only three years old and I love it. The four doors and
hatchback make it great to take the kids out and for shopping.
gardening equipment that Joe uses for their garden and occasional
gardening jobs he does.
were saving quite well and enjoyed a carefree lifestyle until the
twins came along, but for the last year we have often had to
resist the temptation to dip into it. We get extra interest if we
don’t make withdrawals.
Table 4 Liabilities
would prefer to pay it off each month but we spent a lot
rearranging the house when the twins arrived.
have two years until it’s paid out.
is from Natalie’s librarian course.
Table 5 Superannuation
my job with the council. I’ve been with them since I left school
and did my apprenticeship.
my job in the library since I finished university.
Table 6 Income p.a.
Income type per annum
on top of this. I hope to get the supervisor’s job in a couple
of years when he retires.
was on $47,000 before I took time off to have the kids. I’m not
sure how long I’ll be away but I don’t want to lose the
opportunity to work locally. This is my town and I love it.
still do some work from home for the library. I hope to earn
$5,000 a year but we’ll see.
$730 a fortnight.
$22,500 bonus saving account.
combined gross income
Table 7 Estimated annual expenditures
Expense per year
friend does our tax online
and water rates
restaurants, gifts, holidays, etc.
used to go out a lot and take short weekend breaks but we are more
likely to go for a walk than to the pub nowadays
loan ($3,165 p.a.) and minimum payment on the credit card ($600)
things for the kids we easily spend $550 each week
don’t have any
now visit an aunt on the coast if we go anywhere
maintenance and repairs
thought about it
are pretty healthy
phones and internet
vehicle and fuel
don’t get much time to watch TV
Table 8 Investment objectives and attitude
Joe and Natalie did not fill out this part of the fact find.
They said it did not apply to them or they did not understand the
questions or possible answers.
Determining your investor
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.
of the following best describes your current stage of life?
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.
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.
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.
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.
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
Now that you are no longer working you 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.
return do you reasonably expect to achieve from your investments?
return without losing any capital
If you did not need your
capital for more than ten (10) years, for how long would you be
prepared to see your investment performing below your expectations
before you cashed it in?
would cash it in if there were any loss in value
than 1 year
to 3 years
to 5 years
to 7 years
to 10 years
familiar are you with investment markets?
little understanding or interest
had enough experience to understand the importance of
that markets may fluctuate and that different market sectors offer
different income, growth and taxation characteristics
with all investment sectors and understand the various factors
that may influence performance
you can only receive greater tax efficiency from more volatile
investments, which balance would you be most comfortable
guaranteed returns, before tax savings
reliable returns, minimal tax savings
variability in returns, some tax savings
variability in returns, reasonable tax savings
but potentially higher returns, maximising tax savings
months after placing your investment you discover that your
portfolio has decreased in value by 20%. What would be your
Security of capital is critical and you did not intend to take
would cut your losses and transfer your money into more secure
would be concerned; however, you would wait to see if the
was a calculated risk and you would leave the investments in
place, expecting performance to improve.
would invest more funds to lower your average investment price,
expecting future growth.
Which of the following
best describes your purpose for investing?
want to invest for longer than five years, probably to age 55–60.
You are mainly investing for growth to accumulate long-term
are not nearing retirement, have surplus funds to invest and are
aiming to accumulate long-term wealth from a balanced fund.
have a lump sum (e.g. an inheritance or a lump sum payment from
your employer) and you are uncertain about what secure
investment alternatives are available.
are nearing retirement and you are investing to ensure that you
have sufficient funds available to enjoy retirement.
have some specific objectives within the next five years for which
you want to save enough money.
want a regular income and/or totally protect the value of your
profile total points
Investor risk profile
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
are a cautious investor seeking better than basic returns;
however, 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.
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
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
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.
Table 9 Estate planning
They have not
bothered about wills because if one of them died everything would go
to the other. They haven’t got around to doing anything now
they have the kids.
and risk management
Premium per annum
cancelled as she is not working
included in motor vehicle costs
You ask them about the offer from their landlord.
me about this offer from your landlord?
always got on well with her. We pay our rent on time and she
always responded promptly if we had any problems. She likes to
come and collect the rent if she can so she can see our kids. So,
we’re friends, really.
says she’s selling up and moving to the coast and can’t manage
a rental property from far away. She knows we were saving to buy a
house and it would make life easy for her if we bought it and she
didn’t have to pay real estate agent fees. Of course, it would
make life easy for us too as we wouldn’t have to move.
much is she asking?
she wants $280,000. It sounds like a bargain compared to the
prices they pay in the cities nowadays but it’s only a
two-bedroom weatherboard cottage; it suits us just fine though. We
looked at the asking prices for other homes in the window of the
real estate office and it seemed a fair price.
you asked about a mortgage?
we spoke to the bank and they told us if we could make a 20%
deposit they would fund the rest. So that means we would borrow
$224,000 and we need a $56,000 deposit — a bit more than that to
cover legal costs.
you’ve had an offer from Joe’s parents?
we told them we have saved $22,500 but they could see we were
short about $40,000 so they said they’d lend us the money to
help us out. It’s too big an opportunity to pass by.
it’s a loan, not a gift?
right. They are in their mid-50s and plan to retire in 10 years
and will want the money back by then. Joe has two brothers and
neither of them is married yet so he’s the apple of their eye,
having presented them with two grandkids at once. They haven’t
said anything about paying interest but it’s sort of understood
that once we get on top of the mortgage payments and I’m back at
work we can pay them back in instalments.
2: Assignment questions
The first four steps
of the safe harbour are repeated below. They all form part of this
stage in the financial planning process and you must address all four
steps in this first question.
• Step 1: Identify the objectives, financial situation and
needs of the client that were made known through the client’s
• Step 2: Identify the subject of the advice the client is
looking for (whether explicitly or implicitly).
• Step 3: Identify the objectives, financial situation and
needs of the client that would reasonably be considered relevant to
the advice sought on that subject (the client’s relevant
• Step 4: If it is reasonably clear that information
relating to the client’s circumstances is incomplete or inaccurate,
make reasonable enquiries to get complete and accurate
(i) Briefly describe the clients’ financial situation, their
objectives and needs as initially explained by them.
(ii) What do you believe the clients hope to gain from engaging with
a financial planner?
(iii) Describe the importance of completing the fact find at this
point in the financial planning process and the compliance
requirements associated with completing the fact find.
(i) What is the subject of the advice the clients are seeking? What
advice have they asked for?
(ii) What additional advice do you think they need from what you
know about their circumstances?
Assume you have
asked the clients more questions and have explained the areas where
you think they need advice.
Read the fact find
thoroughly and identify all the issues they are concerned about.
Identify what you consider would be reasonable objectives for the
clients. In your answer describe a minimum of six objectives.
This task requires
you to identify what gaps there are in your understanding of the
client’s situation. List five other clarifying questions you
would ask them.
Natalie and Joe have
given you an estimate of what they currently receive from Centrelink
in family benefit payments. In this question you are required to
undertake research to determine and validate the amounts Natalie
currently receives from Centrelink, including rent assistance. You
will need this information for Question 2b. You will need to apply
this process again in determining the payments for Question 2d for
their changed situation.
Resources that you
can use to undertake the tasks include:
• Reread Topic 8 of the study guide on payments to support
• Refer to the latest Guide to Commonwealth Government Payments
booklet available at <https://www.humanservices.gov.au>
Publications and Resources
‘A guide to Australian Government payments’.
• The Human Services website at <https://www.humanservices.gov.au>
for more information on family benefits.
There are three (3)
parts to the question:
(i) You have agreed to meet Joe and Natalie in a week’s time. List
five (5) research steps you will need to undertake, as well as their
order, to prepare you for discussing their eligibility for Centrelink
(ii) Identify five (5) key data items required to determine
Natalie’s eligibility for Centrelink FTBA, FTBB and rent
(iii) Calculate the Centrelink benefits you estimate she will
receive, showing in summary form how you arrived at the calculations.
Note:You are not
required to calculate Energy Supplement payments. You should assume
that the annual supplement paid to Natalie under FTBA is $737 and for
FTBB is $338, and include these figures in the annual cash flow
an Excel spreadsheet
your Excel spreadsheet for Questions 2b, 2c and 2d, in
addition to uploading this completed template, i.e. upload 2
documents; this completed template and your completed Excel
2b, 2c and 2d require you to use spreadsheets in addressing specific
tasks relating to Joe and Natalie’s situation.
will be required to create an Excel workbook and include three
worksheets. The first should be titled ‘Cash flow renting’, the
second ‘Mortgage repayments’, and the third ‘Cash flow buying’.
You must demonstrate that you can match the ‘Cash flow buying’
worksheets to the other two worksheets.
assistance in the use of Excel, refer to the Excel tutorial resources
found under the ‘Assignment’ tab in KapLearn.
(i) Before you start, describe in about 100 words how you would
organise your personal work station to ensure an ergonomically sound
working environment for completing this task.
For guidance, refer to the 2015 HSW Handbook, Workstation Ergonomic
Guidelines, University of Adelaide,
(viewed 5 December 2018).
(ii) Create a worksheet to analyse the clients’ current position
(‘Cash flow renting’) when they are renting the cottage. The
worksheet should show tax and cash flow statements as well as a
statement of net worth. You must set out the worksheet in a form and
style that you can show to your clients (do not use abbreviations and
present the data in a way the clients will be able to understand).
Be consistent in the way you present the data (for instance,
presentation of dollar amounts and percentages). (Reference can
be made to the Kaplan resource ‘How to complete a cash flow table’
when completing this question as well as the case study in Topic 10.)
Following analysis of your worksheet, briefly describe the
conclusions you have formed of their financial situation.
(iii) Using the cash flow data recorded in the worksheet, create a
graph that clearly shows the clients’ overall income compared with
their total expense. The style of graph you use is your choice, but
it must be clearly labeled to show the clients, in simple language,
their overall income and expense position.
spreadsheet to be used.
Create a second
worksheet (‘Mortgage repayments’).
(i) Calculate the costs of a 25-year mortgage if the clients borrow
$224,000. You should determine illustrative interest rates from
searching mortgage provider websites. Find a provider who offers a
‘honeymoon’ interest rate, (i.e. a lower interest rate for an
initial introductory period) and calculate repayments using the
honeymoon rate and, separately, when the loan reverts to the
higher standard rate. Set out your assumptions and workings.
(ii) What is the impact on the repayments when reverting to the
(i) Create a third worksheet (‘Cash flow buying’) showing a
second cash flow statement and net wealth statement if they go ahead
and buy the house, using the mortgage calculations completed in
Question 2c. Assume they cash out their bonus savings account to go
towards the costs of buying the house. Consider every item in the
Note: You are not required to
calculate Energy Supplement payments. You should assume again that
the annual supplement paid to Natalie under FTBA is $737 and for FTBB
is $338 and include these figures in the annual cash flow
(ii) Briefly describe how their income will change as a result of
buying the property, including in your answer the differences you
have identified. Some costs are likely to increase and some may
decrease. Some new cost items will apply. Consider Centrelink
benefits and interest earned.
(iii) After analysing the differences, what advice could you give
them to improve their financial situation?
(iv) Describe the impact on their budget if mortgage interest rates
rose by 2% from the standard rate.
(i) Consider their debt management position if they go ahead and
purchase the house. Briefly describe in what sequence they should pay
off their debts, if they had the capacity. Explain your reasoning.
(ii) What strategies could be considered to reduce their current
Describe three risks
that could detrimentally affect the client’s financial position.
Reread the fact find
and think about what risks they face. You should consider all the
risks to their lifestyle and not just the traditional ones that can
Although you do not
need to provide specific, tailored risk management and estate
planning advice, you can identify issues for the clients to
consider and provide strategic advice that will assist them.
(i) Briefly describe what risks Joe, Natalie and their family face
if either or both of them were to die and what general options do you
believe they should consider to mitigate these risks.
(ii) What other professionals should you refer them to who could
assist in their estate planning needs?
(iii) Write a brief letter that you could provide to an in-house
estate planning specialist, referring Joe and Natalie to them for
help reviewing and advising them on their estate planning needs.
Consider how you would introduce the clients, what relevant
information you could provide, and how the clients prefer to be
(i) In Question 1c, you identified at least six (6) objectives for
Joe and Natalie. For each objective, set out your recommendations to
assist Joe and Natalie in achieving that objective. In your
recommendations describe how your advice meets the clients’ goals,
noting why it is in their best interests. Refer to ‘Step
3 Development of recommendations’ in Topic 10 for one way to
present your answer. (500 words)
(ii) Describe an adviser’s ‘best interests’ obligations when
researching and designing financial advice. Refer to Topic 4 and FPA
Practice Standards. (100 words)
Identify two issues
that Joe and Natalie may wish to change in your recommendations.
Refer to the negotiations that occurred in the advice
process in Topic 10. Explain how you would deal with their objections
or concerns, and how you would incorporate them into your
You have completed
your presentation to Joe and Natalie and they have asked sensible
questions, so you are confident they understand the outcome of your
analysis and your recommendations. They continue talking to each
What if you
overheard Joe say to Natalie, ‘Well, it would be easier to manage a
mortgage if I took on part‑time jobs for cash. And if I borrow
the Council’s slasher I could do some bigger jobs at weekends.
But that means more time away from you and the kids. What do you
think?’ You can assume Joe did not intend you to hear their
Respond to the
following four questions which relate to ethical considerations and
the effect this new information may have on the client’s financial
(i) What are the ethical and legal issues you face now that you have
this extra information? What should you do to meet your
professional responsibilities? Refer to Topics 2, 3 and 4 to help you
consider your position.
(ii) What are the implications for Joe as far as the Income Tax
Assessment Act 1997 (Cth) is concerned? What can you say
to him and what do you recommend he does?
(iii) What are the implications for Joe if he borrows Council
equipment for private use?
(iv) What would be the implications for the family tax payments that
Natalie receives? What can you say to them and what do you recommend
Joe and Natalie
agree to join your ongoing service plan. Identify four specific
issues related to their financial circumstances that you will raise
with them at a review meeting in 12 months.
You are asked by
your team to create and implement a Sustainability Protocol for your
organisation’s work practices. Refer to section 3.5 and ‘Triple
Bottom Reporting’ in Topic 3 for assistance.
(i) Describe two (2) sustainability practices that you could include
in the Protocol and the benefit that each will contribute to the
organisation’s long-term sustainability. (100 words)
(ii) Draft a brief email to your colleagues informing them of the
existence of the new Protocol and highlight how each of the
principles described in Question 8(i) will be implemented. (100
Protocol has been received well; however, three months after its
implementation, you notice that your colleagues are not following its
principles as you intended. List and summarise four (4) team
communication techniques you could use when making sure everybody
understands and follows the sustainability principles. (150 words)
the student need to resubmit?
that need to be resubmitted
To pass this
subject, you will need to be assessed as DEMONSTRATED for either your
first submission or your resubmission.
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