YOUR TASK
Create a financial plan/statement of advice which will assist Dina and Tones in achieving their life objectives.
The below marking rubric shows how marks will be awarded and what needs to be considered in the financial plan:
Complete required tasks (A) Marks Total Marks
Short term goals clearly identified (A.1) 1
Long term goals clearly identified (A.2) 1
Income and income statement clearly tabulated including tax and child budgeted. (A.3) 1
Balance sheet clearly tabulated (A.4) 1
Financial ratio analysis is sound (A.5) 1
Direct and indirect assets clearly identified (A.6) 1
Asset allocation of couple’s assets and recommended asset allocation (A.7) 1
Reasonable assumptions for estimates of income, expenses, assets and liabilities used and clearly stated in a separate section. (A.8) 1
TOTAL (A) 8
Presentation, structure, readability clarity (B)
The format follows a statement of advice structure from a respected source (e.g. Textbook , ASIC website or financial planner website). ‘Boilerplate’ statements need not to be made (B.1) 2
The structure is easy to follow (headings and sub headings, follows the financial planning steps (B.2) 1
There is an executive summary which clearly summarises the recommendations to the couple and reasons (B.3) 1
Very few grammatical or spelling mistakes. (B.4) 1
Easy to read and understand, even for non-financial (use of point form helps) (B.5) 1
Table and text font are consistent and neat. (B.6) 1
TOTAL (B) 7
Critical analysis (C)
Recommend a realistic solution in detail of how to fund the birth of their second child. (C.1) 1
Recommend a realistic solution in detail of how to fund their comfortable retirement using superannuation. Quantify their retirement needs and how they will achieve it taking into consideration their risk profile, recommended asset allocation amongst other things.(C.2) 2
Recommend and quantify their insurance needs using the risk management approach. How much insurance do they need, what kind of insurance need and how much would it cost to suit their budget? How would you convince them that insurance is important given the reason they provided for not having insurance? (C.3) 2
Recommend a detailed and suitable strategy so the Ying’s may attain their dream home. (C.4) 2
Consider your recommendations on asset allocation, budget, taxation, debt repayment, insurance and retirement as an integrated recommendation which affects one another. For example acknowledging that budgeting for retirement impedes on their other life priorities. There are many other constraints and so the recommendations should be considered together rather than individually.(C.5) 3
TOTAL (C) 10
GRAND TOTAL (A+ B + C) 25
Penalties (P)
Lateness (P.1) 2.5 marks per day
Plagiarism (P.2) Up to 100% deduction.
Exceed page limit (excluding title/cover page but includes appendices) (P.3) 2 marks per page exceeded
Notes
I will award fractions of marks depending on how well each criteria is met. E.g. a 1 mark criteria may be split into 1/4’s or 1/2’s.
The entire assignment is to be 18 pages maximum (excluding title page and references but including appendices).
ASSIGNMENT FAQ
Q. When we do the current budget, do we need to put tax in it? If we do, should the tax include the income tax and super contribution tax?
A. You should think of the budget as a cash flow statement. So yes eventually tax would come out of it if the couple will have to pay it to the government.
Q. When we analyse the financial position of this couple, I think we should use the financial ratios from lecture 2, but we are not quite clear how to get some figures, such as current debt in liquidity ratio, in this assignment, is it the credit card+overdraft+the part of mortgage & car loan which should be repaid this year?
A. Yes some figures aren’t clear. You would need to get some estimates for things such as the current year’s mortgage repayments and car loans. This is up to your judgment and research.
Q. How should we allocate the asset category of personal items and home contents and superannuation?
A. Superannuation is usually decomposed into different asset classes. It is not a separate asset class. Personal items and home contents insurance is not part of asset allocation.
Q. What are the projected returns of their investments?
A. You must do some research into similar funds to find what are reasonable rates of returns for their given investments or investments that you recommends to them. This also applies to other items such as superannuation and insurance premium costs.
Q. What are some tips to doing well in the assignment?
A. Read ahead of lecture notes as there may be strategies there to help couple (e.g. on retirement planning). Follow the weekly tips in class. Also follow the marking rubric.
