FPC002B - Case Study: PlanForIt Financial Services

Independent research

For some or all questions in this assignment, you will be required to complete independent research beyond the provided materials. You will also be expected to analyse this research and use it to support your own reasoned conclusions.

This includes:

• considering multiple sources beyond topic notes or other provided resources
• ensuring sources are academically sound and credible
• analysing and understanding the argument or information the source presents
• using the material appropriately to directly support your

Where significant independent research is required for a given question, it will be clearly indicated in the question and the Criteria-Based Marking Guide.

Assignment referencing and presentation (5 marks)

Your assignment should be presented in a clear and appropriate format, with all sources correctly referenced and cited.

You are required to:

• structure a clear response to each question, using headings if required
• number questions (including sub-questions) and pages
• use correct font style and size
• ensure tables or graphs are clearly labelled and readable
• clearly set out calculations or workings, where they are required
• adhere to the assignment word limit
• follow the Harvard referencing style as recommended in Kaplan Australia: Harvard Referencing Guide (available from the ‘Build Your Skills’ hub in KapLearn) to cite sources throughout your assignment, and provide a reference list at the end.

There are three (3) questions in this assignment worth a total of 95 marks. Answer all questions. All three (3) questions are based on the following practice case study:

Get Your Customize Task on any subject starting 10$/Page

Order Now Whatsapp Now

Case study: PlanForIt Financial Services

James Watkins (age 44) established PlanForIt Financial Services 15 years ago. Five years ago he brought Alison Redbank (age 49) into the partnership. They are both owners and principals and hold their own Australian financial services (AFS) licence. You are a senior financial adviser employed for the past three years by PlanForIt, with an offer for equity in the business within the next few years. With the

business having experienced exceptional growth over the past 12 months, PlanForIt has decided they need an additional adviser. Rather than hire outside the firm, they have opted to transition their young support staff member, Monique, into an adviser role.

James’s clients are predominantly self-funded retirees, with a small number who require specialised aged care financial advice. His clients have accumulated their wealth through successful small businesses. James prefers to look after his existing clients, with any new clients referred to yourself or Alison.

Alison’s clients (age 35 to 55) are successful wealthy professionals from a mix of professional backgrounds. Given their wealth, Alison has recommended self-managed superannuation funds to a number of these clients.

Monique has worked in the practice in a number of support roles over the last four years while she was completing her university degree. Monique graduated 12 months ago with an approved Bachelor of Commerce (Financial Planning) degree. As part of her career planning, you have agreed to supervise Monique through her professional year, and she is currently in the third quarter of her professional year.

You have 10 years experience as a financial adviser and are fully qualified to provide advice on a wide range of strategies and products. Half of your clients followed you to PlanForIt, from your previous financial adviser role. When James or Alison is on leave, you also help out by providing advice to their clients.

Scenario 1 — PlanForIt clients: Les and Marg Linehan

Les and Marg Linehan are both in the late 60s and have been clients of the practice for many years,

mainly dealing with James. They have one child, a son Robert, with whom they have a strained relationship, and they are not on speaking terms. They do however see their only grandchild, Jennifer (age 22), who is Robert’s daughter, on a regular basis. As Jennifer is just about to complete her university degree, Les and Marg think it would be a good time to give Jennifer $200,000, as they have significant wealth accumulated and would prefer to see Jennifer benefit from the funds while they are alive.

Les and Marg have already spoken to James about how they believe the money should be managed and invested. Before telling Jennifer about the gift, Les and Marg asked her what her financial goals are.

Jennifer said she wasn’t sure but would like to travel overseas or save towards a deposit for her own home. Les and Marg insist that Jennifer receives financial advice before they gift her the money, to ensure she has an effective financial plan in place. They think it would be better for Jennifer to deal with an adviser closer to her own age and suggest that Monique would be suitable. Les and Marg have always found Monique to be friendly over the years and are comfortable that you and James will be mentoring Monique.

This will be Monique’s first meeting (indirectly supervised) as a provisional relevant provider. You ask Monique about her current plan for the interview, and she provides you with the following outline:

Jennifer’s grandparents have already spoken to James about how Jennifer’s gift should be managed and invested. Les and Marg have been James’s clients for a long time and have done well financially, and I’m assuming they know what they are talking about and will be able to provide Jennifer with the right guidance on investments too.

To save a bit of time, I’ve already emailed the FSG to Jennifer and I’ll get her to acknowledge she has received it, when I see her.

The money will be given to Jennifer as cash. Given that Jennifer is in her early 20s, she has a long-term investment horizon, and it sounds like high-growth investments will be an appropriate solution for her. We’ve got some really great model portfolios of direct shares on our approved product list, which are currently generating high returns for other clients,

that I can talk to her about. I am a bit concerned her grandparents may not be happy for her to put all the funds just in shares, so I may need to check with them about that.

This meeting should be straightforward as we will focus just on investing the $200,000 gift and I doubt whether Jennifer will need any insurance, given her young age. She will eventually inherit all of her grandparents’ money anyway, and I’m sure they would look after her if anything was to happen to her in the meantime.

Question 1         (25 marks | Word limit: 1,100 words)

1. Define ‘unconscious bias’ and examine how it may be influencing Monique while she is planning for the meeting with Jennifer. (10 marks)
2. Analyse Monique’s conduct and discuss whether she complies with Standard 1 and Standard 2 of the Financial Planners and Advisers Code of Ethics 2019 in her dealings with (10 marks)
3. Examine and discuss Monique’s compliance with the value of Fairness in the Financial Planners and Advisers Code of Ethics 2019 if she proceeds with the interview as (5 marks)

Support your answers with reference to the case study and scenario facts and research.

Scenario 2 – PlanForIt clients: Rodney and Joan Edwards

One of your longstanding clients, Rodney Edwards, has called to arrange an appointment for you to see his mother Joan (age 78). Rodney’s father passed away a little over six months ago and his estate has now been finalised with all assets transferring into Joan’s name. Rodney’s father John always looked after their own finances and invested primarily through direct shares. Rod has emailed you a portfolio listing all the shareholdings now in Joan’s name as well as details of all the cash holdings. The cash and shares add up to just over $2 million, based on the current share prices.

Rod was going to attend the meeting with his mother but has been caught up at work and is now unable to make it. He calls you and says to meet with his mother anyway, as it is her money, and she is quite capable of making her own decisions.

You commence your meeting with Joan by providing her your FSG and passing on information about your practice and the advice you can give. Joan just nods while you speak, and you ask her if she understands what you have outlined. Joan replies, ‘Some of it – but it doesn’t really matter, as you always look after Rodney, and he says you will look after me’. While you are not entirely convinced that Joan understands everything you have said, you are confident that she has the legal capacity to make her own decisions,

so you decide to continue with your initial meeting.

You begin the fact-finding process and ask Joan a range of questions to understand her current situation, goals and objectives. She says that Rodney should have provided the details of the investments, and aside from that, she just wants ‘things to continue as they were before John passed away’. John always told Joan they had enough money to see them through their life and had things set up to provide a regular amount into the bank account for them to spend, and Joan is happy for this arrangement to continue. She admits that she has never been part of the decision making financially, mainly because she was not interested and just let her husband deal with things. Now she is on her own, she just wants things to continue and says that as long as Rodney agrees with what you recommend, she will be happy with that, and she will sign whatever needs to be signed.

Question 2         (30 marks | Word limit: 1,300 words)

1. Briefly identify and describe a potential ethical issue that may arise from Joan’s apparent minimal knowledge of or experience with investing and overall disinterest in the financial planning process. (10 marks)
2. Identify at least three (3) relevant standards under the Financial Planners and Advisers Code of Ethics 2019 that have arisen for consideration based on the approach or actions that Joan has displayed, and explain your concerns, with reference to the (10 marks)
3. Based on your meeting with Joan, identify and describe two (2) different appropriate ethical frameworks that could be used to deal with this client interaction/situation. (10 marks)

Support your answers with reference to the case study and scenario facts and research.

Scenario 3 – PlanForIt clients: Kevin and Anika Leste

Alison has not been well lately and has just been diagnosed with early-stage breast cancer. Her doctors have recommended she take at least six months off from work to concentrate on her treatment plan, which they are in the process of finalising. As Alison will be away from the office for some time,

she asks you to provide advice for her existing clients.

Your first meeting with Alison’s clients Kevin and Anika Leste. You will be meeting them for the first time and Alison has told you they are important clients because they often recommend family, friends and their own clients (from their business) to the practice.

Kevin and Anika operate a successful bookkeeping business where they manage the accounts for many self-employed clients. There has been a longstanding referral relationship between Alison and the Lestes, which sees them share many clients. There remains frequent cross-referral of clients between Alison and the Lestes; however, this arrangement has been altered due to the introduction of the Financial Planners and Advisers Code of Ethics 2019. Where in the past, Alison simply paid them a referral fee, she now adjusts her advice fees (up or down) to Kevin and Anika, in lieu of referral payments.

You read in the client notes that Alison recommended the Lestes establish an SMSF, and this has now been in place for nearly three years. The file notes state they have rolled over superannuation from their previous superannuation funds with AustralianSuper and Aware Super. Both funds were previously invested in the ‘balanced’ options. As bookkeepers, the Lestes undertake a lot of the SMSF administration work themselves. As you read through their file, it appears they have little knowledge of investing. The only assets currently in the SMSF are a $1.4 million term deposit with the CBA and the SMSF administration account with about $60,000. You review their goals and objectives listed in their file and note that their main goals are to build wealth for their retirement and help their adult children.

After introducing yourself to the Lestes, you explain that as you are not fully aware of their financial situation, and as part of the review process, it would be worthwhile revisiting their current situation, goals and objectives. Part-way through the meeting, Kevin takes a phone call and states he will need to leave immediately to take care of some urgent business, and Anika can update him later on what was discussed. However, as he leaves, he says that he just wants you to invest the money in the way you think is appropriate for them as ‘Alison does this all the time’. He adds, ‘we know how the process works,

so we don’t really need to go through all the paperwork’.

Question 3         (40 marks | Word limit: 1,800 words)

1. Explain how Alison’s conduct would be assessed under the value of Diligence and Standard 5 of the Financial Planners and Advisers Code of Ethics (10 marks)
2. Explain any issues or potential breaches that may arise from Alison’s actions of adjusting advice fees as a result of cross-referrals with Kevin and (15 marks)
3. Discuss whether Alison’s previous advice to Kevin and Anika meets the best interests obligations under Standard 2 of the Financial Planners and Advisers Code of Ethics (5 marks)
4. Outline the obligation Standard 12 of the Financial Planners and Advisers Code of Ethics 2019 places on advisers. Given your experience in dealing with the Lestes, outline three (3) actions you could take to comply with this (10 marks)

Support your answers with reference to the case study and scenario facts and research.