Kit and Jo:

• Kit and Jo have been together for nearly 15 years and have two young children. Kit is a partner at a major accounting firm and Jo is a senior biochemist at a pharmaceuticals company. They both work long hours and hire home help for cleaning and cooking.
• Family is their top priority and they work hard to ensure that their family and work life is balanced and comfortable. The children are settled and happy at a local state school.
• Kit and Jo are concerned that the family home is too small the children will need more space in the near future. They are investigating two options sell the home and buy a larger property, or, keep the home and build a major extension.
• Recently, an elderly family relative of Kit died. This relative was wealthy and Kit will receive a substantial payment from the estate. But the exact amount is not known at the present time.
• Both Kit and Jo consider themselves to be risk takers they assess each opportunity on its merits. But they would never place in jeopardy their family or their family wealth.

Jim:

• Jim is a retired doctor. He was married for 25 years until his wife died about two years ago. He now lives alone. Financially, Jim is comfortable in retirement largely as a result of following a financial plan as a married couple for many years.
• Jim is active, in good health and helps out as a volunteer in several community activities.
• Jim is interested in scuba diving and likes to visit famous reefs and shipwrecks. Many of these sites are overseas. Ideally, he would like to undertake an overseas holiday each year.
• Jim is conservative by nature even more so since retiring and losing his wife. He has no interest in risky investments.

QUESTIONS:

• Advice Kit and Jo on selling their current home and buy a larger property or keeping it and build a major extension.
• Advice Kit and Jo on operating a conservative budget until the children complete high school in about 10 years time.
• Discuss how Jim can use insurance to protect his home against key risks.

You work as a Financial Planning Adviser and have been asked to assist with three new clients. You have received background information on each client (see below). Client Name Chris Kit and Jo Jim 40 and 42 Married, home owners 71 Widower (single), home owner Nil Age 29 Status Single, renter of Studio apartment Dependents Nil Occupation Engineer Net Income AUD115,000 pa from salary (after super and after tax) Expenses AUD85,000 pa including (living and paying rent for the Studio financial) apartment Major assets Cash at bank AUD15,000 Superannuation AUD120,000 Two children (age 6 and 8) Accountant and Biochemist AUD150,000 pa (Kit) and AUD120,000 pa (Jo) from salary Retired Doctor AUD85,000 pa total from retirement fund and investment portfolio of bonds and shares AUD175,000 pa including the home loan AUD55,000 pa Cash at bank AUD75,000 Superannuation AUD250,000 Home AUD1.8 million Car AUD25,000 Cash at bank AUD30,000 Superannuation AUD1.8 million Home AUD1.5 million Investment portfolio AUD250,000 Car AUD50,000 Nil Nil Major liabilities Major financial goals Purchase an apartment within five years (price approx AUDO.7 million) with 20% cash and 80% bank loan Home loan AUD1.2 million (interest only loan) Operate a conservative budget until the children complete high school in about 10 years time Continue self funded retirement and undertake one overseas holiday each year (approx cost AUD30,000 per holiday additional to normal expenses) You have had an introductory meeting with each new client to obtain a better understanding of their circumstances, financial goals and risk preferences. Below are some You work as a Financial Planning Adviser and have been asked to assist with three new clients. You have received background information on each client (see below). Client Name Chris Kit and Jo Jim 40 and 42 Married, home owners 71 Widower (single), home owner Nil Age 29 Status Single, renter of Studio apartment Dependents Nil Occupation Engineer Net Income AUD115,000 pa from salary (after super and after tax) Expenses AUD85,000 pa including (living and paying rent for the Studio financial) apartment Major assets Cash at bank AUD15,000 Superannuation AUD120,000 Two children (age 6 and 8) Accountant and Biochemist AUD150,000 pa (Kit) and AUD120,000 pa (Jo) from salary Retired Doctor AUD85,000 pa total from retirement fund and investment portfolio of bonds and shares AUD175,000 pa including the home loan AUD55,000 pa Cash at bank AUD75,000 Superannuation AUD250,000 Home AUD1.8 million Car AUD25,000 Cash at bank AUD30,000 Superannuation AUD1.8 million Home AUD1.5 million Investment portfolio AUD250,000 Car AUD50,000 Nil Nil Major liabilities Major financial goals Purchase an apartment within five years (price approx AUDO.7 million) with 20% cash and 80% bank loan Home loan AUD1.2 million (interest only loan) Operate a conservative budget until the children complete high school in about 10 years time Continue self funded retirement and undertake one overseas holiday each year (approx cost AUD30,000 per holiday additional to normal expenses) You have had an introductory meeting with each new client to obtain a better understanding of their circumstances, financial goals and risk preferences. Below are some