Peter is an avid part-time stockmarket player. He has done quite well with his shares even though he has only been in the game a few years. You first met Peter at an AGM when he discovered during your conversation that you worked as an adviser. Peter mentioned that his friend, Joe, was coming into some money, and suggested that you should speak to Joe. As an experienced adviser, you have had this type of conversation many times, so you exchanged phone numbers and thought nothing more about the matter.

Four weeks later Joe rings you. During this initial conversation with Joe you find out that he is a 44 year-old sales representative for a large medical company earning $130,000 per year. He has been married to Brenda for 10 years (Brenda is a stay-at-home mum) and they have two children aged 9 and 6. Joe has recently inherited $250,000 from his grandmother and wants to invest that money, but is unsure about what he should do.

Joe discloses that his only experience in investing has been to purchase Telstra and CBA shares when everyone was buying them. He also has a small number of IAG shares he received as a policyholder, and he purchased Woolworths shares three months ago on Peters advice. Joe has so far concentrated on paying off his home, which he now owns outright, and hardly ever looks at the market.

Peter has advised Joe to put half of his inheritance money into an expanded share portfolio and the other half into managed investments. Peter has also recommended that Joe purchase shares in a company called Helium Ignites, assuring Joe they are a sure thing for the future. Helium Ignites, a newly listed company, is partly owned by Peters cousin and is currently trading below its initial pricing in a competitive market. Joe wants to know if you can assist him. He expects to receive the money from the estate in one months time and he is unsure how the investment process actually works. You make an appointment to see Joe two days later. When you walk into reception to greet Joe, you find Peter there as well. You are slightly taken aback, as you were not expecting Peter to be present, particularly due to the confidential nature of the discussion. Because of the tight time frames for organising the meeting, you are aware of gaps in the documentation that will be needed. You also feel that part of your responsibility will be to educate Joe. You need to provide him with information to assist his initial decisions about his portfolios of shares and managed funds, and then to prepare strategies for both portfolios that will meet Joes goals.

Joe has brought along some basic documentation, including his portfolio, but tax returns and other documents, such as sufficient ID for AUSTRAC purposes, are absent. You had not made specific mention of these in the phone call, as your initial understanding had been that the inheritance would take some time to sort out.

During the first five minutes of the interview, Joe seemed slightly hesitant to open up to you. Peter, on the other hand, seemed more interested in trying to pick your brains and tell you about his latest idea. He constantly interrupts and tends to dominate the discussion. As the interview progresses it becomes quite apparent that Joe is getting more confused about what he wanted to achieve. He seems to be introducing types of investments at random into the discussion, covering a range of areas and sectors. The interview ends after about 30 minutes. Joe asks you for information on what documents he needs to fill in and any other information he needs. He says he will go home and talk to Brenda and then get back to you.

1. As the senior dealer, you have recently employed Margaret as a desk assistant. As part of her ongoing RG 146 training you have asked Margaret to outline the level of ongoing service she would recommend for Joe and Brenda. Outline five (5) components of the ongoing service you would expect Margaret to recommend be provided to Joe and Brenda. In this outline, consider the type of information that you would regularly provide to Joe and Brenda in relation to their portfolio (5 marks)
2. Outline two ways that Joe and Brenda will be made aware of the costs of the ongoing service recommended? (2 marks)

Joe's current share holding 400 CBA Additional information $4,000 Cash in the bank for emergencies. $250,000 Inheritance due in one month. 800 IAG 700 Telstra 300 Woolworths Joe's current share holding 400 CBA Additional information $4,000 Cash in the bank for emergencies. $250,000 Inheritance due in one month. 800 IAG 700 Telstra 300 Woolworths