1 Appendix B: Case Information The information contained in this document provides a high level overview of your client’s situation. It should be read in conjunction with the supplied populated fact find document (Appendix C) which is the primary source of truth for client details. The case is adopted from AMP University Challenge. The information contained in this document is confidential information and is for education purposes only. Case study introduction: Harry (34) and Sally (31) are married with a 2 year old son - Mario. They own their own home and have a mortgage of $600,000. Harry works as an Architect earning $105,000 per annum plus Super Guarantee (SG) contribution. Sally is a Call Centre Manager earning $110,000 plus SG. They have come to you for advice on organising Harry’s superannuation as they are finding Harry’s super fund situation is getting out of control and hard to manage with multiple funds. You have had a comprehensive meeting and discussion with them and completed relevant sections of the fact find document (Appendix C). The budget discussion you had with them reveals they expect to be able to save approximately $12,000 per annum. However, this does not take into account payment of the $5,000 credit card debt they have accumulated over the last three years. They have each completed a risk profile with you that included a detailed discussion about their individual risk profiles as well as their joint investment risk profile. Both Harry and Sally have expressed their desire to get their immediate financial issues sorted as a priority. Primary goals: Harry has accumulated three funds due to job changes over his career and hasn’t exercised superannuation choice to date. Harry doesn’t want to be “sold a new fund”, he just wants you to provide advice on which of his current funds is most suitable for the others to be consolidated into. Harry also sees himself as a balanced investor and also wishes to align his superannuation funds to his preference to risk and return. Harry and Sally want help on strategies to pay off their mortgage faster but without draining all their available cash flow in to the mortgage and losing access to funds. Sally’s sister suffered a serious back injury that prevented her from earning an income and both Harry and Sally are concerned about the loss of income and the effect on Mario if either of them suffered a similar event. Harry and Sally would like to send Mario to a private school but are unsure whether this is feasible given their other goals. The family would also like to make the trip to Ireland for Christmas this year as Sally’s parents and extended family have not yet seen Mario face to face. 2 Scope of advice: Your clients have limited the scope of your advice to include the following: • Rollover Harry’s super accounts into one of his existing funds • Pay off their remaining mortgage as soon as possible • Financial protection in the event of illness and/or injury that prevents them from earning an income • Advice on savings outside of super to potentially send Mario to a private school and/or to fund an overseas holiday. You will not recommend any specific investments, investment products or insurance products (aside from selecting one of Harry’s existing super funds as his recommended fund). You will recommend generic product groups e.g. managed funds, insurance bonds, income protection etc. These recommendations can only include generic product features available across this group of products. Your licensing conditions: You are a fully qualified and accredited financial adviser. You are an employee and representative of “The Practice” which is licensed by AMP Financial Planning. You receive a salary and bonus based on achieving agreed key performance measures. You have agreed on a flat fee for service to provide this advice to Harry and Sally. That fee is $3,300, including GST and has already been paid by your clients. Your Financial Services and Credit Guide (FSCG) was provided to your clients at your first meeting. This enabled you to cover all legislative and compliance requirements. Assumptions Your advice should be based on the information contained in the fact find (Appendix C). You may need further information to develop your strategy and in practice you would have sought this additional information from the client(s). However, for the purpose of the group assignment you may need to make assumptions to clarify a number of issues relating to the client’s personal information which could affect your advice. These should be clearly documented in your discussion paper. Any assumptions used MUST NOT change or be in conflict with the existing information contained in the fact find. You should not introduce any new information that significantly alters their current financial situation, such as promotional salary increases or inheritances. A set of standard economic and insurance premium rate assumptions have been provided in “Appendix 2: Economic Assumptions” and “Appendix 3: Insurance premium rates for non-super policies” in the populated fact find and should be used in your submission. Projections The timeframe for the clients’ goals range from one year to their respective life expectancy ages (Harry’s life expectancy is until 82 years old, Sally’s is 85 years old). You do not need to make financial projections beyond this period. 3 Summaries of cash flows should be contained in the body of the discussion paper and can take the form of tables and/or charts. Any details supporting these results should be contained in the appendix to the discussion paper. Note: these projections will not be separately assessed. You are not permitted to use any commercially available financial planning modelling software. You are permitted to use spreadsheets (e.g. Excel) or publicly available tools and calculators which are available from public websites e.g. the AMP University Challenge website, Money Smart website, financial institutions or industry websites. Premium quotations for insurance costs (outside of Harry’s super funds) should be based on the insurance premium rate tables provided by the AMP University Challenge in “Appendix 3: Insurance premium rates for non-super policies” attached to the fact find.