Stage Adviser Client Hi Damian, welcome to our financial No trouble at all thanks. Rapport planning firm. Did you have any trouble finding us? Can I get you a tea or coffee? Coffee would be great thanks. [Advisor organises this] How's your day been so far today? Busy! Nice to sit down with a coffee, I feel I'll need it for the rest of the day. Haha I know those days - what have you Well I started the day negotiating with my 3 been up too? year old - what to wear, what to eat, brushing teeth, getting her to daycare etc then I got to work and negotiated with contractors and tenants, so this is a nice change. I'm sure. What's your daughter's name? Mia. She loves unicorns and bugs. Weird and what's she interested in right now? combination I know, but you just have to go with it sometimes. Very true, it's a fun age, but it can be Definitely. I'm a commercial property pretty full on too. So what do you do for manager. work? That sounds interesting, what does a It's different every day, which is great typical day look like for you? Sometimes I'm in the office dealing with paperwork, other times I'm on site talking to tenants or contractors. It's good, keeps me busy. I'm sure. So, can I ask, in a nutshell - how So firstly, I'm a single dad, so I want to Broad goals can I help you today? make sure Mia is financially protected if [what's on your anything was to happen to me. I also want mind?] to save up some money to pay for her high school education. My partner Serena passed away last year, and she really wanted Mia to go to a private high school near us, so I'd like to honour her wishes. I'm so sorry to hear about Serena. How We have our moments. My parents have are you and Mia coping now? helped a lot with Mia, picking her up from daycare etc and stepping in when I need help, but it's been challenging. Definitely not what I thought the future would look like.Stage Adviser Client I'm sure. That's really hard. It is, though I'm lucky that we have a good support system. Definitely. Well I'm glad you've come to Great Bridge between see us, we'll get to the specifics shortly, rapport and though from what you've said so far I'm compliance confident we can help you achieve... (state the client's goal(s)]. Before, we go any further, have you ever No, a workmate suggested it. seen a financial planner before? That's great, so what we'll do today, is I'll Sounds good. firstly explain how we work, ask a few more questions, and then get an understanding of your current situation. How does that sound? [Advisor goes through the Financial Client receives a copy of the FSG to take Advisor goes Services Guide (FSG), explaining: home and review in their own time.] through FSG / key points, including the company, FP Process authorisation, services, fees, privacy policy and complaints process how the financial advice process will work, including the various stages, ongoing reviews etc.] Before I make any recommendations, I Sounds great - based on what I've heard Bridge between need to understand more about your I'm keen to proceed. FSG and Fact goals and objectives and then we'll Find consider your current financial situation. Every financial plan is unique to each client. Having you achieve your goals is as important to us as it is to you. To do this, if you can answer the questions as openly and accurately as possible - we can better understand your needs and concerns. Any details you don't know we'll itemise and follow up. If you have any questions - don't hesitate to ask - let me give you my card - for future reference. How does that sound? Before we look more closely at your goals [USING FACT FIND: collect details re Gather some and objectives - let me find out more client's background, goals and objectives personal about you personally. and current financial situation] details What is your full name? Damien Malcom Jones What is your date of birth? 12 July 1995 [aged 27] Just for our records, are you currently seeing anyone? [marital status] No [single / widowed] Do you have any dependents other than No Mia?Stage Adviser Client What is Mia's date of birth? 2 February 2019 [aged 3] Are you an Australian Resident? Yes What is your current address? 18 Corella St, Forest Glen Do you own or rent this property? Own What is your best contact number? 0412 345 678 Email address? Damian. Jomes@gmail.com Thanks for that. Looking at your goals in Basically, I want to make sure that if I What's on your more detail now. You mentioned that passed away, or became seriously ill or mind making sure Mia is financially protected if injured, she would be financially taken care anything was to happen to you is of and there wouldn't be the added stress concerning you, can you tell me more on my parents about paying for her about this? schooling or expenses. I just want to be sure she would be financially set up if something did happen to me That sounds reasonable, we can definitely Sure, there is a private high school near us look into this. We'll discuss how much that Serena wanted Mia to attend, the fees insurance you may need shortly when we are around $12k a year now, though do what's called an insurance needs probably more like $15k (or more), by the analysis. time Mia gets there (2031]. As it is a while away, what I would like to do is have a lump Now, you also mentioned that you would sum saved - say $50k before she starts like to save some money for Mia's high high school, which would give us options if school education too, can you tell me our circumstances change. For example, if more about this? we ended up moving and we were in a more expensive schooling area. I know some of the private schools in Brisbane are more like $25k a year at the moment... Yes, there are some very expensive Yes that's correct. schools out there that's for sure... ok that all sounds reasonable, so just to confirm, you want to aim for $50,000 in a little over 8 years' time? [8 years and 4 months] Great, what we can do too is keep in That would be great, thanks. touch and refine and revise the goal closer to the time, particularly if your (Note that this does not have any impact for circumstances do change. your assessment item - please work on his goal of $50,000 in 8 years 4 months' time]. Great. Now was there anything else that Yes, I also want to make sure my super is Other goals? was concerning you or that we can assist sorted, it's an area I haven't put too much with? thought into. That's definitely a common problem and Not really, I just want to make sure my something we can help with. Was there super money is invested well. anything specific that you wanted us to look into? Of course, we can do this. Was there Yes actually, I was planning on taking Mia anything else you wanted to discuss? Or to the UK to see her grandparents - any purchases or travel plans that you Serena's parents before she starts school in were thinking about? 2024.Stage Adviser Client That sounds great, when were you We're planning on going for Christmas next thinking of going? And do you have a year [16 months], so hopefully Mia will get budget in mind? to enjoy a white Christmas. In terms of a budget, with the cost of everything increasing, including flights, let's aim for $15k to be safe. That sounds exciting. Will that be Mia's Yes it will be, and it's a long flight, so first overseas trip? hopefully it'll go ok! What's Fingers crossed! OK let's determine the Definitely high priority, it's something I know important to priorities for each of your goals now. I need to get sorted. you? Using a scale of low / medium / high, what priority would you say getting appropriate insurance cover in place was? Ok great, what priority would you give It's also a high priority, though not as high saving for Mia's high school education? as getting my insurances sorted. Sure, now what about getting your Probably medium, I know it needs to get superannuateon sorted? done, though it just doesn't feel that urgent. I get that and I know that retirement Definitely. probably feels a long time away right now, though you're taking an important step by getting your superannuateon looked at early, as making sure you are in the right fund for you can make a significant difference over time. Now what would you say your priority is Again, high priority, as we really do need to for saving for your UK trip? visit Serena's parents - they aren't in the best of health and can't travel themselves at the moment. Ok thanks for that. That all sounds I've actually done a lot of work on my Budgeting reasonable. Now that I have a good idea budgeting recently, so I'm ok with that side of what you want to do, let's talk about of things, it's more the investment advice your cash flow and budgeting now. I'm concerned about. (Budgeting and cashflow are out of scope for this advice]. Ok, that's fine, do you know how much Yes, I typically save around $500 a month. you're saving each month? Great, just to confirm, the $500 a month is Yes that's correct. what you wanted to use towards achieving your goals? Ok great. Now that I have a good Risk Profile understanding of your needs and Questionnaire objectives the next task is to look more closely at your risk preferences. To do this 4Stage Adviser Client we will conduct a risk profile questionnaire. It will take a little time but it's very important - it's all about making sure you can sleep at night. With any investment there is risk. Understanding how much risk you are comfortable with and prepared to take is an important part of any financial plan. Here is a copy of the risk profile questionnaire. Before we go through it - tell me what is your understanding of risk in terms of investment? [Damian gives his understanding of risk.] Great, let's go through it together. The questions are designed to determine how to match your risk preferences with recommended investment strategies. When we've finished the questions, we'll discuss your scores and whether or not you are comfortable with the outcome. [Damian answers the questionnaire]. Discussing [Advisor gives a detailed explanation of Risk how risk and return works, how each investor could be categorised into one of at five different risk profiles etc. e.g.] Your attitude to investment risk is a crucial factor in determining an appropriate investment strategy to meet your goals. Investing is considered risky because there is uncertainty about the investment and how it will perform over the short and long-term. Different types of investments experience different levels of volatility. Negative retums can happen at any time, so during periods of poor performance, remaining invested for the recommended minimum investment term will provide an opportunity for your portfolio to recover. Damian, you are a 'conservative investor. A conservative investor's objective is to achieve a combination of income and growth but with low risk. Therefore, a conservative investor's portfolio will usually have a greater weighting of defensive assets such as cash and fixed interest (around 70%), but also consider some of the less aggressive growth investments such as shares and property (around 30%) in order to provide capital growth.Stage Adviser Client The minimum suggested investment Yes that sounds about right, I'm definitely timeframe for a conservative investor is 2- less comfortable with risk now since having 3 years. The likelihood of negative returns Mia for a conservative investor is 1 year in every 20 years. Key answers as part of Damian's risk profile questionnaire which lead to his result Do you agree with this description? include: No experience with investment markets, but willing to consider investment alternatives . A preference for ensuring capital is secure, though accepting some volatility of returns in order to achieve capital growth Moderately concerned about investments keeping pace with inflation Some interest in pursuing tax savings, though not at the expense of stable, reliable returns and capital]. In some cases, it may be appropriate to No, that sounds good thanks. I'm Are there any use a different risk profile approach to comfortable investing, I just don't want to changes you your assets or strategies. For example, have to manage the investments myself as I would like to we may recommend that a specific risk don't have time to do this. Otherwise, I'm make? profile be applied to your superannuateon happy to go with what you recommend. investment due to your timeframe, which may be different to other savings you have available. Further, if your risk profile doesn't align with your timeframe, or your capacity for risk we may recommend a different approach. This is something we will discuss further at our next meeting. Do you have any questions regarding this or are there any changes you would like to make? That's fine, I completely understand. Let's Sure, I'm employed on a full-time, About your talk more about your employment and permanent basis and I'm paid $65,000 per income and Income now. We collect details of your year. I also get the standard 10.5% super expenses current employment as this information on top of this too. can affect your eligibility for certain insurances as well as the cost of your insurance premiums. You mentioned earlier that you work as a commercial property manager, can you tell me what your employment arrangements are and what you earn per year? Thanks for that. Do you typically receive Unfortunately not. any bonuses or overtime pay? 6Available Cash 0k just to conrm. Is your salary your only source of Income? 0k great. Now In terms of your available cash, how much do you currently have saved? Of course, It's important to have access to some cash in case you were to need it Urgently. Just to conrm. whem is this money invest now? Great. thanks for that. Now you mentioned earlier that you own your own home - well done on that by the way. Do you have any idea how much it's worth? Yeah. I've seen a slowdown In the housing market too. Do you have a mortgage on the house? It's good that you were able to do that. having someone you love pass away is stressiul enough without adding the nancial stress on top of it. So other than your bank acmu nt and your home. do you have any other assets? Thanks for that, let's look at your Superannuation superannuation now. Can you tell me Assam more about your fun d? Thanks for providing that, it makes ourjob a bit easier. For completeness. do you know it your employer allows salary sacrice? [Adviser explains salary sacrificing and how it could apply to Damian)1 Yes. that's correct. I've got $19k total, though I'll like to keep $10k aside as an emergency fund. [Please exclude the \"0.090 emergency funds from any future value calculations. as per the working paper insoocabns}. It's all in a savings account with BOO. Thanks, it's likely worth around $300k, though it's hard to know at the moment, as prices seem to be dropping again. Not anymore. I used &rena's life Insurance payout to pay oifthe mortgage and our car loans. Yeah very tme. I've got a car wonh around $30k and some home contents worth around $10k. As requested, I brought my latest superannuation statement with me. I'm with SuperSu per and according to the latest statement I have $42,550 in this. {Damian produces his latest superannuation statement which show his superannuation is invested with SmerSuperin an accurrnulation fund which is invested in tile default 'lflecgle' investment option}. Yes they do, but I don'tknow much about it. Ok that makes sense, thanks. At this stage. I'm probably more intemsted In making sUre I'm In the rightfund and making the most of my employer's contributions than anything else. Though I'm open to discussing any extra contributions if you think it's in my best interests. Stage Adviser Client Ok great, we'll discuss this further in our I don't have any personal or car loans and I Personal next meeting. Let's look at your personal don't use afterpay or zippay. liabilities liabilities now. This section captures including credit information about your personal liabilities I do have a credit card though, I have cards. so that we can consider the impact of around $1,500 owing on it at the moment, these when providing advice to you. though I pay everything off in full each month so I don't pay any interest. I pretty Do you have any personal liabilities, such much just use it to buy things online. as personal or car loans, or credit card debts or outstanding afterpay or zippay commitments? Great. Just for completeness, do you I've got a $6,500 limit and the interest rate is know what your credit card limit and the around 20%. interest rate on this is? Thanks for that. Let's move on to I've got comprehensive car insurance with Insurance insurance. What insurance cover do you RACQ. I may have insurance inside super currently have in place? but I'm not sure... That's fine, we can contact your If you can do this that would be great, I'm superannuateon fund to check this. If happy to sign this. you're happy to let us do this, we just need to get you to sign a 'authority to [Damian signs an authority to release release information' form. information form which allows you to contact his superannuateon fund. After doing so, you confirm that he has $100,000 of any occupation Total and Permanent Disability (TPD) insurance with YourCovered Insurance within his SuperSuper fund. This cover will expire when he is aged 60]. Do you have any particular health Nothing particular for me, other than my left concerns that you are worried about or shoulder - I've dislocated it a few times any family history that I should know playing waterpolo. But other than that I'm about? generally pretty healthy and I don't smoke. My mum suffers from osteoporosis and my dad has heart disease in his family, though he doesn't seem to have inherited it yet thankfully. Mia's pretty healthy, though she has the usual coughs and colds and childhood injuries - she fractured her arm last year falling off the jungle gym at school. I have been considering getting private health insurance for us both though I'm not sure... Ok thanks for that Is there a particular Well you never really know what's going to reason you've been considering private happen or when you will need hospital health insurance? cover. Children's health care is quite expensive too... 8Stage Adviser Client Ok fair enough. Now, to help me Ok sounds good. Insurance understand how much insurance you Needs Analysis need we need to talk about your [As part of this process, Damian requirements and do what is called an emphasises his concern of making sure that Insurance Needs Analysis (INA). So let's Mia's financially protected should he pass outline your key insurance requirements. away or become ill or injured and can't work for a period of time. [Advisor goes through INA with Damian. As part of these discussions, Damian Please note an INA and/or the amount of advises you that he has approximately 10 cover he should take out is not required days of sick leave and 20 days of annual as part of this assignment and will be leave owing to him]. discussed further in the Risk Management and Insurance course. Please refer to the working paper instructions for further information). Estate Planning [Excluded from this assignment]. Ok, thanks for all of the information you No - I think we've covered everything. I'm Wrap Up have provided today. Now I have asked happy to proceed with the advice. all the standard questions - and I feel I have a strong understanding of your situation. But I have just one last question... Is there a question - related to your financial situation - that I haven't asked - or one that you hoped I wouldn't ask? Great - so my job is to go away and analyse the information you have given me and prepare my recommendations based on this. In doing so, we may have further questions or may require further information from you. In either case, we will be in touch. Once we have all of the required information, we will prepare your Statement of Advice. This will go through 2 compliance checks and will be ready in approximately 2 - 3 weeks' time. So can we diarise the next appointment? How would you like to pay the deposit? [Set the date, pay the deposit] Thanks for that, until our next meeting here's a little reading material - a couple of good news stories about people just like you - working effectively to create and protect their wealth