Client's name:Jack and Bex Whitfield

WORKING PAPER

Client's name:Jack and Bex Whitfield

Date of contact:2 September 2024

Re:Initial client interview

FSG AND ADVISER PROFILE

Jack and Bex were handed Financial Services Guide (FSG) version 2 010724 and my Adviser Profile at the interview on 2 September 2024. The FSG and financial planning process were explained to them, and they agreed to proceed.

SCOPE OF ADVICE

The SOA will provide advice on the achievement of wealth creation and lifestyle goals, personal insurances (that is life, total & permanent disability (TPD), income protection (IP), trauma and private health insurance), superannuation (including salary sacrifice, personal tax-deductible contributions and/or after-tax contributions), estate planning and taxation planning where relevant.

The SOA excludes any budgeting and cash flow analysis, debt repayment and social security. Clients advised on the risks of not receiving advice in these areas.

CURRENT SITUATION

Your personal profile Jack Bex

Full name Date of birth Current age Marital status Residency Status Residential address Telephone Email address Employment status Dependents / children Current age & date of birth

Your health Jack Bex

Current health Pre-existing medical conditions? Member private health fund Hospital / extras / both Smoker? Family history considerations? Lifestyle Assets Owner Value

e.g. house, cars, home contents etc Subtotal Financial Assets Non-Super Owner Value

e.g. bank accounts, shares, rental property, managed funds etc Subtotal Financial Assets Super [Fund name / owner] Fund type Investment mix Value

Provide details of any superannuation fund(s) held Subtotal Assets Total $

Liabilities Owner Limit / time period Amount outstanding Interest rate Repayment

Provide details of any liabilities Liabilities Total Net Worth (Assets Liabilities) $x

Client Income $

Income source e.g. salary / wages, dividends, rental income etc Income Total Expenses N/A for this assignment

Estimated Cash Surplus / (Deficit) per month $

INSURANCE

Owner Insurance Type Insurance Provider Benefit Amount Waiting Period Benefit Period Premiums

e.g. clients name / super fund e.g. income protection e.g. Medibank Estate planning Jack Bex

Do you have a Will? Provision for testamentary trust Do you have a Power of Attorney? Type / Attorneys name Binding Death Nomination? Name? POTENTIAL ISSUES / SPECIAL CONSIDERATION

x

OBJECTIVES

x

RISK PROFILE

x

WEALTH CREATION & LIFESTYLE RECOMMENDATIONS OUTSIDE SUPERANNUATION

Goal [honeymoon]

Recommended strategy:

x

Advantages of strategy [reasons why]

x

Disadvantages of strategy

x

Alternatives considered

x

Goal [house deposit]

Recommended strategy:

x

Advantages of strategy [reasons why]

x

Disadvantages of strategy

x

Alternatives considered

x

WEALTH CREATION RECOMMENDATIONS SUPERANNUATION

Goal [sort out superannuation]

Recommended strategy:

x

Advantages of strategy [reasons why]

x

Disadvantages of strategy

x

Alternatives considered

x

WEALTH PROTECTION (INSURANCE) RECOMMENDATIONS

Goal [sort out insurances]

LIFE INSURANCE

x

TOTAL AND PERMANENT DISABILITY (TPD) INSURANCE

x

INCOME PROTECTION (IP) INSURANCE

x

TRAUMA INSURANCE

x

PRIVATE HEALTH INSURANCE

x

ESTATE PLANNING RECOMMENDATIONS

Goal [sort out estate planning]

Recommended strategy(s) and reasons why strategy(s) is appropriate

x

APPENDIX 1 FUTURE VALUE (FV) CALCULATIONS

WORKING PAPER

Client's name:Jack and Bex Whitfield

Date of contact:2 September 2024

Re:Initial client interview

WEALTH CREATION & LIFESTYLE RECOMMENDATIONS OUTSIDE SUPERANNUATION

Goal [honeymoon]

Recommended strategy:

As for they are just a short-term goal, saving for Jack and Bex honeymoon, they are advised to put their money into a High Interest Savings Account (HISA). This will enable them to be able to earn reasonable returns out of their investment that is close enough for easy access should it be needed soon. HISA provides for safety of principal, flexibility, and guaranteed interest rate which makes it well suited to any short-term objectives.

Advantages of strategy

Guaranteed returns: The funds in an A HISA have a predetermined interest rate meaning they will not dwindle while also growing at a slow rate CITATION Jon13 l 1033 (Jonubi, 2013).

Liquidity: At the time of payment of the honeymoon expenses, Jack and Bex can easily get access to their money.

Low risk: Since the funds are placed in a savings account, there is no chance for the capital to be lost, which is especially important when the abovementioned goal is orientated for the short-term period CITATION Far16 l 1033 (Farrell, 2016).

Disadvantages of strategy

Lower returns: In comparison to risky products such as stocks or even Exchange Traded Funds, the interest yielded from savings account is extremely low.

Interest rate fluctuation: Savings accounts may be paid a lower interest for their funds in case market conditions in relation to interest rates decline.

Alternatives consideredAlternatives considered: Short-term bond fund: This choice gives roughly better returns than a HISA but is comparatively risky and less liquid than the latter. Requesting to mention emergencies and important occasions such as the couples honeymoon; the couple may not be able to get the actual value of the bond funds when they want to.

Term deposit: An example of a 612-month term deposit could help them earn a slightly higher interest rate than a HISA, but it ties their money up for that time period, and is less liquid

Goal [house deposit]

Recommended strategy:

For the house deposit goal, I suggest using low-risk ETFs and buying government bonds. Such a strategy adheres to the growth and acceptable risk since their house deposit target is a little medium-term plan of 3-5 years.

Advantages of strategy

Growth potential: Jack and Bex can participate in the upward movement of the market by holding low-risk ETFs and government bonds so that they can obtain the house deposit much faster than just using the savings account.

Diversification: Portfolio diversification also contribute to risk minimization because they prevent random movement in the market from affecting them.

Inflation protection: Savings in bonds as well as ETFs guarantee the deposit to retain its purchasing power that hedges inflation while the savings account does not.

Disadvantages of strategy

Market risk: While this strategy entails low-risk investment opportunity, there is likely short-term volatility; they are likely to be trapped in the volatile situation which may force them to delay the saving plan and get further away from affording a house deposit.

Fees: Sometimes managing an investment portfolio may involve certain charges such as brokerage and management fees which somehow may lower their yields.

Alternatives considered

100% government bonds: Though this is relatively safer, the returns which would be received in such a portfolio would be far less than the recommended portfolio of diversified stocks. Other investments, such as bonds, may not stand high inflation rates and the purchasing capability of the saved amount is minimised CITATION Yat10 l 1033 (Yates, 2010).

High-interest savings account: This option ensure safety but would likely not usher in the growth needed in order to achieve the house deposit within the intended time within the insurance company CITATION Law12 l 1033 (Lawson, 2012).

APPENDIX 1 FUTURE VALUE (FV) CALCULATIONS

Goal Honeymoon House Deposit

Investment Strategy High-Interest Savings Account Diversified Portfolio (ETFs & Bonds)

Initial Investment 10,000 50,000

Investment Duration 1 year 3 years

Annual Interest Rate 0.03 0.05

Future Value Formula FV = P(1 + r)^n FV = P(1 + r)^n

Future Value (FV) $10,000(1 + 0.03)^1

= $10,300 $50,000(1 + 0.05)^3

= $57,665.13

References

Farrell, L. F. (2016). The significance of financial self-efficacy in explaining womens personal finance behaviour. Journal of Economic Psychology, 53, 8597.

Jonubi, A., & Abad, S. (2013). The impact of financial literacy on individual saving: An exploratory study in the Malaysian context. Transformations in Business & Economics, 12(1), 4155.

Lawson, J. M. (2012). Housing supply bonds: A suitable instrument to channel investment towards affordable housing in Australia? Journal of Housing and the Built Environment, 27(4), 457471.

Yates, J., & Bradbury, B. (2010). Home ownership as a (crumbling) fourth pillar of social insurance in Australia. Journal of Housing and the Built Environment, 25(2), 193211.