You are a financial advisor operating as an authorised representative of an AFS licensee with Universal Financial Planning (UFP) Pty Ltd. Two new clients approach you seeking some advice. They are a married couple with one child, and their personal and financial information is detailed in the attached file notes.

Q1. Your clients don’t have a strong grasp of financial concepts and tend to only plan for a month or two ahead. You discuss with them the importance of saving for retirement illustrate the impact of superannuation contributions. Explain to your clients how superannuation works in Australia and the concept of the superannuation guarantee. Illustrate the difference in the expected value at retirement of the following retirement plans. Ignore taxes in this illustration and assume an investment growth rate of 7% and a wage growth of 2%, and an inflation rate of 3%. The Superannuation Guarantee should be applied to both primary and secondary income.

1.Contributing the superannuation guarantee only

2.Contributing a further $3000 every second year in addition to the superannuation guarantee

3.Discuss the impact on expected retirement amounts in 1 and 2 if wage growth was 3% and inflation was 2%.

Q2. Your clients have a significant amount of short-term debt that they need help in managing. Conduct an analysis of their current financial position (including financial statements and projections) and suggest a strategy to reduce their short-term debt and illustrate the impact on their financial analysis if the strategy is implemented. Conduct a five-year projected cash flow budget and discuss the impact of your strategy on the savings ratio.