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FNSFPL502A Research Assignment

Research Assignment

FNSFPL502A – FNSFPL508A – FNSINC501A

CASE STUDY

Your clients are Daniel Brown and Louise Brown. They have telephoned you to make an appointment for financial advice.

Daniel Brown (45) is an electrician and works for Energy Australia. He is married to Louise (41). They have two children Oliver (13) and Kel (10).

Daniel receives a salary of $80,000 per annum and Louise has a casual job which pays $29,000 per annum

The children attend private school with annual fees of $7,000 each per annum. They also pay living expenses of $40,000 and mortgage payments of $16,000 per annum.

The family home is valued at $700,000 which has a mortgage of $320,000. The repayments on the mortgage are $50 per annum per $1,000 borrowed.

Daniel has superannuation of $80,000 AND Louise $50,000. It is currently invested in a cash option.

They also have a car loan of $35,000 which costs $900 per month and a credit card debt of $13,000 which costs $800 per month.

Your clients have adequate life, Insurance which costs $2,200 per annum in addition to their other annual expenditure. They do not have any other personal insurance.

Your clients rarely take sick leave and have accumulated entitlements of four weeks each. They also keep two weeks holiday in case of emergency because their elderly parents live in Perth.

Your clients do not have private health insurance and do not have a will and do not have powers of attorney.

Your clients have advised that they do not require retirement advice at this stage and would like to focus on paying off their mortgage.

Question 1

Identify eight financial planning issues contained in the case study?

Question 2

Prepare a budget for Daniel and Louise, including tax and medicare levy.

Question 3

Prepare a personal balance sheet for Daniel and Lousise.

Question 4

Prepare recommendations for Daniel and Louise that will improve their financial position.

Question 5

RG 175.160 says that where an advisor recommends replacing one financial product with another one the SOA must contain statements about:

  • Whether the investor’s existing product has been considered;
  • The cost of the change in product;
  • The potential benefits that may be lost; and
  • Any other significant consequences of the switch for the investor.

Suppose Fredie, a financial planner advises you that the superannuation fund that you are currently invested in is not suitable for you as it had a poor return and he can recommend a better fund. What items do you think Fredie needs to include in the SOA to comply with the law? Search for articles on “switching super” to assist you.

Question 6

Prepare answers for case study 2 (Qinbo and Feilian Wong) Chapter 2, Page 83, Financial Planning, 2nd edition, Wiley.

Question 7

What are the general conditions that need to be satisfied for an expense to be considered an allowable deduction for tax perposes?