FPC009 Complex Financial Planning - Assignment Help

Part 1: Instructions for completing Assignment 1

Background to the assessment tasks

As a financial adviser, you must provide advice to your clients which is in their best interests and demonstrate that the advice will place them in a better position. The two assignments in this subject are designed firstly to enable you to critically assess these aspects of advice when the advice has been provided by another financial adviser and, secondly, apply this critical thinking when giving your own advice to clients.

In Assignment 1, you will be assessed on your ability to critically analyse the advice provided to Peter and Sarah Ruck, and to assess whether:

• the advice provided satisfies the key elements of the financial adviser’s best interests duty owed to

their client

• it is likely to put them in a better position if implemented
• in addressing the previous two points, there are errors or omissions in the advice, when compared to the information gathered about the clients.

A ‘file’ of materials relating to the advice provided to Peter and Sarah is included as part of this assignment. This material is contained in Part 3. The following documents are included in the file:

• a client data form completed by the financial adviser following discussions with Peter and Sarah Ruck
• file notes created by the adviser
• a completed statement of advice (SOA) that you can assume was presented to the

Required tasks

Following your analysis of all the materials in the file, you are required to respond to six (6) questions about the advice provided in the SOA which Peter and Sarah Ruck may rely on. Some questions have multiple tasks.

Note: You will need to compare information collected about the clients during the fact-finding exercise and meetings (file notes) to statements (or omissions) in the SOA.

The questions

You should read all the materials provided with the assignment carefully, so you understand the clients’ financial situation, attitudes, goals and values. Read the assignment questions in Part 2 and start to make your own notes on where you believe a potential conflict or error seems to have arisen and, correspondingly, where you believe the advice provided appears valid.

In responding to each of the assignment questions, you will need to refer to the ‘safe harbour’

requirements that a financial adviser should adhere to, pursuant to the ‘best interests duty’ obligations.

When you begin to compile your responses to each of the questions, make sure you read each one carefully because the wording will provide guidance on what is required. For example, where you are asked to provide an answer and reasons for your answer, marks will be allocated to both the answer and the reasons. If you only address part of a question or your answer is deemed inadequate, marks will be deducted.

Word count

Word limits for responses are provided for each question. The total word limit for this assignment is 3,000 words. Your responses should be clear and concise yet comprehensive enough to satisfactorily answer each question, while remaining within the word limits for each question. Some questions require only short answers while others may require more detail.

You will need to refer to ASIC regulatory guides and information papers, and research websites in preparing responses to some of the questions, for example, ASIC’s Regulatory Guide RG 175 and Information Sheets INFO 205 and INFO 206.

You should also ensure you refer to the obligations imposed by the Financial Planners and Advisers Code of Ethics 2019 (Code of Ethics). The following required readings, which are included in your topic notes, will also assist in understanding these obligations:

1. Financial Adviser Standards and Ethics Authority (FASEA) 2019, Financial Planners and Advisers Code of Ethics 2019, Australian Government, 8 February, retrieved 31 May 2022,

<https://www.legislation.gov.au/Details/F2019L00117>.

2. Financial Adviser Standards and Ethics Authority (FASEA) 2019, Financial Planners and Advisers Code of Ethics 2019 – Explanatory Statement, Australian Government, 11 February, retrieved 31 May 2022,

<https://www.legislation.gov.au/Details/F2019L00117/Explanatory%20Statement/Text>.

3. Financial Adviser Standards and Ethics Authority (FASEA) 2019, FG002 Financial Planners and Advisers Code of Ethics 2019 guidance, FASEA, retrieved 31 May 2022, <https://www.afa.asn.au/wp- content/uploads/FASEA-Financial-Planners-and-Advisers-Code-of-Ethics-2019-Guidance.pdf>.

Part 2: Assignment questions

Question 1

The personal details collected about the clients are recorded in the SOA: ‘Section 1: Where you are now’.

Describe at least one (1) piece of relevant information relating to the data collection process for Peter and Sarah Ruck that should have been referred to in section 1.

Question 2

The following questions relate to the development of an appropriate investment strategy for a client, which can be affected by their attitude to investment risk.

• Describe whether ‘Section 3: Your risk profile’ of the SOA correctly reflects both clients’ attitudes to

risk. (4 marks)

• What (if anything) should the SOA in Section 3 have stated about the clients’ risk profile?

Explain your answer. (3 marks)

• Should the clients’ risk profile be the key factor in the construction of an appropriate asset allocation

model? Why or why not? (3 marks)

Question 3

‘Section 4: My advice to you and why it is appropriate’ of the SOA details the course of action the Ruck’s should be considering (i.e. the financial adviser’s recommendations). The recommendations the Ruck’s should consider are summarised in Section 4.

• Describe at least three (3) technical statements made in Section 4 of the SOA that are incorrect. Explain your answer. (9 marks)
• In Section 4, under ‘Superannuation advice’, the financial adviser has recommended that Peter and Sarah establish a self-managed superannuation fund (SMSF) to roll over existing superannuation balances and to undertake the purchase of a property with

Identify five (5) key disadvantages of commencing and operating an SMSF that the adviser has omitted. (10 marks)

• ‘Insurance advice’ in Section 4 addresses the clients’ insurance
  • Is the needs analysis undertaken and described appropriate to the clients’ circumstances? Give reasons for your answer, including amounts where appropriate. Note that tables do not count towards the word (8 marks)
  • Are there any inconsistencies between the needs analysis and the insurance recommendations

(3 marks)

• Consider ‘Investment advice’ in Section
  • What statements made under ‘Investment advice’ appear to be inconsistent with information

that has been collected about the clients and their circumstances? Explain your answer. (5 marks)

• What are the key advantages and disadvantages of the ‘Investment advice’ recommendations (you may need to consider best interests obligations)? (5 marks)

Question 4

Alternative strategies that were discussed with Peter and Sarah are set out in ‘Alternative strategies and products’ in Section 4 of the SOA.

Describe at least three (3) inconsistent statements made in this section. Provide reasons in your answer.

Question 5

Do the details laid out in ‘Section 5: Fees’ satisfy the financial adviser’s disclosure responsibilities under

the law? Provide reasons in your answer.

Question 6

• With reference to ASIC RG 175.268 and the safe harbour requirements, describe three (3) changes you would make to the SOA that could materially improve the quality of advice given to the clients. (10 marks)
• Would the advice meet the ‘best interests duty’ obligations under the Code of Ethics? Explain your answer, addressing the following standards:
  • Standards 2 and 5 (10 marks)
  • Standard (5 marks)

Provide reasons in your answers.