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Within the practical example pack provided is a Financial Services Guide (FSG). Clearly identify any shortcomings it may have and provide suitable recommendations for correction.

Extracts from this document...

Introduction

ENTRY LEVEL COMPETENCIES COURSE ASSIGNMENT SEPTEMBER 2003 PART 1: Financial Services Guide Format: Written Report or Table Word Limits: 1400 (approx. 1264) Within the practical example pack provided is a Financial Services Guide (FSG). Clearly identify any shortcomings it may have and provide suitable recommendations for correction. Shortcoming The introductory page should be a summary of what is to follow in the FSG. Recommendation INSERT as the opening paragraph ... The matters covered by the FSG include, who we are, how we can be contacted, what services we are authorised to provide to you, how we are remunerated, details of our internal and external dispute resolution procedures and how you can access them. Shortcoming The introductory page should also state that the client can instruct the firm to take any type of action in regards to his or her portfolio at any time. Recommendation INSERT as the closing paragraph ... Any instructions you have in regards to your portfolio may be sent to the address outlined or the fax number stated in this guide. Shortcoming The 'Who will be providing the financial service to me?' section does not contain enough detailed background information on the 360 degrees financial solutions advisory group. Recommendations INSERT as the second last paragraph within this section... We have a strong commitment to adding value, and to making a positive impact on our clients' long-term financial futures. We strive to form a strong relationship with our clients - a financial partnership for life. The 360 degrees Financial Solutions team has been carefully selected and includes a diversity of professional experience, combining a wealth of skill and expertise to provide a unique level of personalised, professional service to all clients. From our client service and administrative team to strategists and advisers, each member of 360 degrees Financial Solutions is working for you. Some will become well known to you, while others working hard behind the scenes may not be familiar, but you can be assured we all work for one goal.... ...read more.

Middle

So did either of you claim a transitional RBL? Ken, do you know the components of which the $50,000 withdrawal from your Superannuation came from? This will allow us to see if the withdrawal was counted towards your RBL. We may need to see your RBL listing to ensure our recommendations do not effect your RBL position in later years. Part 3: Data Analysis Format: Written Report or table Word Limit: 400 (approx. 363) With reference to the client's stated investment profile contained in the pack provided and your knowledge of financial markets what steps would you take to determine whether their current investments are appropriate? STEPS 1. Determine the capital clients require from investment to achieve their income requirements. Ken Sally Income needed per annum $66,500 $21,700 Capital required per annum $1,677,500 $557,500 From the above table we can see that Ken needs high income while Sally only needs medium income. 2. Determine both Ken and Sally's balanced asset allocation based on the notion of the income level needed from the portfolio. Asset Ken Sally Cash 25% 10% Fixed Interest 45% 40% Shares (Australian) (International) 25% 0% 30% 10% Property 5% 10% 3. Determine which of the shares currently held by Ken and Sally are Australian and which are International. All shares currently held are listed on the Australian Stock Exchange (ASX) and are therefore all Australian shares. 4. Determine the clients' current direct investment asset allocation. Ken Sally Cash 8.5% 7.2% Fixed Interest (FI) 0% 9.5% Shares (Australian) (International) 34% 0% 28% 0% Property 58% 48% Collectables 0% 7.8% 5. Determine each clients' level of managed funds. Fund Ken Sally BT Balanced 8.6% Westpac 23.7% ABN Amro 26% Colonial 9.2% ING 7.8% AMP Fixed 2.9% 2.4 Commonwealth 13.8% 11.6% MLC 51% 43% 6. Evaluate the overall overexposure within each clients portfolio. While each of the fund managers set up its own appropriate asset allocation for both Ken and Sally, the clients will experience overexposure in each asset sector of their overall portfolio. ...read more.

Conclusion

o You need to stop avoiding the acceptance of some responsibility for important decisions about investment strategy and fund choices. o Your attitudes towards risk were low to medium at the time your investment portfolios were decided upon. o If you wish to increase your exposure to growth we can increase the proportion of your assets in growth investments, similar to that of your geared investment portfolio and managed funds investment portfolio. > Sally has had a heart attack during the year and although she is now feeling like her old self she has chosen to retire immediately rather than waiting another 2 years. In order to recommend how you shall meet the $31,000 shortfall in your income needs before Ken retires we will first need to model your current position in terms of: o Changes in personal circumstances o Current Superannuation balances and component details o Current level of cash at bank From this information we can compare our options: o Immediate Annuity o Allocated Pension o Draw down on cash at bank And further choose the most appropriate for you. > Ken has seen a report on 'A Current Affair' relating to superannuation fund operators folding and wants to know how safe his Super investments are. The platform recommended: o Is one of Australia's leading investment administration providers. o Administers savings worth more than $15 billion for over 200,000 Australians. o Is easy for you to diversify your savings and manage your investments through one central contact point. o Has over 5 years experience in master fund administration. o Won the Retail Master Trust of the Year award last year in recognition of its ongoing high quality service and commitment. o Has a proven track record in investment management technical expertise and portfolio administration, so that you can invest with confidence. o Allows you to view your personal account details 24 hours a day, seven days a week. I, as your financial planner, can ensure you with the greatest confidence that the recommended fund operator is a professional, reputable and reliable fund in which your monies are safely secured. ...read more.

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