+1 862 207 3288 Due to be submitted no later than week 12 (regular weekly lecture time) in both hard
copy and soft copy.
You are required to submit both
1- Task one, the strategy discussion- (part of the University challenge) and
2- Task two, submitting a complete SOA (with task one in the appendix).
The group assignment needs to be submitted in hard copy format at the lecture
in week 12 and online by week 12 (refer to link on Moodle) in a soft copy format
via the Turnitin link placed on the Moodle unit website.
You are also expected to also submit (in hard copy only) 8-10 PowerPoint slides
presenting the key elements of your statement of advice
Mark allocation: Task one (15 marks). Task 2 (25 marks) – Total weighting 40 Marks
Important Note: You need to answer the question in a Statement of Advice (SoA)
format in accordance with ASIC guidelines. The SoA must have a 2 page “Executive
Summary” section where you summarise the client’s current situation, needs &
concerns, goals & objectives and your recommended strategy.
Important Notes:
• The assignment must be typed (font 11)
• Attempt ALL questions asked
• Where appropriate, the use of tables, graphs, flowcharts, etc. is encouraged
to help illustrate your point clearly
• Show workings and calculations where applicable
• Check your spelling and grammar
• Assumptions must be clearly stated, assumptions need to be reasonable and
logical and cannot conflict with the facts in the question/s
• Clearly state your source references
Assumptions
o The investment growth rate is to be provided by you, however, you must apply
due diligence on the rate provided and provide your source or research
reference/s
o Use 2015-2016 tax rates where applicable
o Use FBT rates effective 1 April 2015
o Further assumptions – refer to the fact find – case study
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Case Study – The O’Neil Family – Fact find from the University Challenge
James and Seren, have later provided you with further information following their
first interview and the work you have prepared for the strategy discussion. They
would like you to advise them on the issues below in addition to what was
discussed in the initial fact find interview. You need to clearly address the
following issues:
• Their goals, objectives, needs, and concerns and whether they can achieve their
objectives and how (maybe present them with options where possible).
• They also ask you to address and take into account the following specific
issues:
o James and Seren would like to pay off their home loan as soon as possible.
o They would like to save and invest.
o They are happy to consider the concept of borrowing to invest if they feel it
can help them achieve their goals and objectives.
o James and Seren would also like to take the family on a trip to Disney Land
in the USA in the next 5 years for which the expected cost is approximately
$20,000 in today’s dollars.
o They asked you about the ability of starting their own SMSF as some of his
friends have done just that.
o Seren has read an article in the newspaper stating that SMSFs can borrow
to purchase a property under a Limited Recourse Borrowing type
arrangement. James and Seren would like to know more about this and the
possibility to use such a facility through an SMSF to buy an apartment and
rent it out to Seren’s brother who is getting married this summer. They are
also exploring the possibility of the fund purchasing a commercial office
space for Seren to run her business from some time in the future.
o To help them make a decision, they asked you for the key issues they need
to consider in the establishment of the SMSF, including the advantages and
risks of running an SMSF.
o Seren and James also asked you for information on the tax benefits and
compliance concessions provided specifically to small businesses including
CGT concessions/ exemptions. You need to discuss this with them including
their eligibility and the potential benefits of these concessions as these
concessions relate to James and Seren’s personal situation.
o James and Seren heard from one of their friends about a strategy that was
referred to as “using salary sacrifice to superannuation to maximise
retirement income”. They are questioning whether such a strategy would be
suitable to either and/or both of them (provide a calculation illustration with
your explanation).
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o James and Seren would like to ensure they have adequate general and
personal insurance. Provide specific advice.
o James and Seren would like you to consider their estate planning needs.
o Projections should be made up to James and Seren’s life expectancy + 8
years.
• Risk Profiling – need to provide specific asset class split i.e. % allocation
between the different asset classes (cash, fixed interest, property, etc. both
domestic and international).
• Provide information on your recommended asset allocations and diversification
strategy.
• Investment portfolio recommendations providing reasoning and justifications.
• Cash flow and asset projections (include projections of cash flows for James
and Seren, presenting both pre-tax and post-tax results).
• Cash flow and net worth tables.
• Provide assumptions used and justifications (cost, risk, suitability, etc.) when
required.
• Use diagrams and charts to assist with your illustrations.
Your task now is to prepare a complete a Statement of Advice (SOA) for James and
Seren. The information provided in the client scenario is to be used in preparing your
calculations and advice. As the assignment is to be a SOA for clients, it should be in a
suitable format and use appropriate language. Clarity and conciseness are important
but full explanations are required.
• Your SOA should clearly show the structure you recommend for their portfolio,
how they can achieve their goals and where the capital and income will be
sourced. Your SOA should address a long-term plan to provide income and
should include projections.
