All advice and recommendations made takes into account your personal and financial situations, needs and objectives and risk profiles. This SO includes the basis on which the advice is made, limitations of our advice and any matters that are not covered within. A disclosure of the fees and commissions payable and the steps for implementation of the financial plan is also enclosed. If this SO recommends any particular financial product to you, we will provide you with a Product Disclosure Statement containing information about the financial product to help you make an informed decision about that reduce.
Table of Contents 1. Executive Summary 4 2. Current Personal and Financial Situation 5 2. 1 Goals and Objectives 5 2. Personal Information 5 2. Financial Information Current income and expense details 6 Current assets and liabilities 6 Current Asset Allocation 6 2. Risk Profile 7 3. Our Advice to You 9 3. 1 Asset Allocation 9 3. Term Deposit 10 3. Share portfolio 11 Australian Shares 11 International Equity 11 3. Gnome Loan 12 Your current home loan 12 Other options available to you 13 3. Insurance 13 Medicare Levy Surcharge and Private Health Insurance 14
Home and Contents Insurance 14 Travel Insurance 15 3. Salary’ Sacrifice 15 3. 7 Self Managed Superannuation Fund 15 3. Estate Planning 16 What is estate planning? 1 6 Will 16 Testamentary trust 1 7 Power of Attorney 18 3. Pension 19 Account-based Pensions Life-time Pensions 3. Adage Pension Eligibility 20 4. Other Matters Required to be Disclosed 23 4. 1 Risks in our advice 23 4. 2 What our advice does not cover? 23 4. 3 Disadvantages of our advice 24 4. 4 Fees and Commission Disclosure 24 Our schedule of fees 24 Other costs to you: 24 4. What’s next? 24 Authority to Proceed 26 5. Appendix 27 1 . Executive Summary Based on your risk profile and your personal and financial information provided, here is a summary of our advice to you. Asset Allocation You should adopt the recommended asset allocation for balanced investors. This will ensure provide you with better diversification in your portfolio to help you manage risks. Term Deposit After your current term deposit expires, you should reinvest the principal and interest received based on the recommended asset allocation.
Share Portfolio You should sell half of your ROI and BOP shares to fund an initial purchase of 25,000 in both TLS and SSL holdings to help diversify the unsystematic risk in your Australian share portfolio. To gain exposure to international equity, you should purchase $40,000 of Shares Global 100 (100) IETF. Horn Loan You should consider restructuring your home loan repayments to help you achieve the goal of paying off your home loan as soon as possible. Insurance It is recommended that you purchase private health insurance for tax and other benefits. The recommended cover is the Australian Unity’s Basic Cover policy.
The home and contents insurance recommended for you is by Budget Direct and costs $1, 142 per year, which is valued at $400,000. We recommend for you to buy travel insurance for your frequent travels and your proposed Europe Trip. Salary Sacrifice To ensure your total confessional contributions are under this maximum amount while also taking full advantage you should contribute a maximum of 10. 75% of your gross salary to superannuation, which is equal to $13,437. 50. In 201 5, Peter is aged 60 and therefore the confessional contributions he can now make are capped at a maximum of $35,000 per year. He should salary sacrifice $4,939. 3 as a result of this higher cap. Self Managed Superannuation Fund You should set up an SMS after Pewter’s retirement. You should not purchase a property through the SMS but can invest through it for tax benefits. Estate Planning You should meet with a solicitor as soon as possible to set up a Will containing a testamentary trust. You should also appoint a Power of Attorney as soon as possible. Pension You should consider an account-based pension. This will provide you with the flexibility to withdraw funds. Age Pension Eligibility You will not be eligible for any age pension and other social security. . Current Personal and Financial Situation The following section contains information gathered from you in regards to your goals and objectives, personal and financial information and your attitudes to risk. The advice prepared is based on these information. Please inform us immediately if any of the information below contains any errors or omissions as these might affect the appropriateness of our advice to you. 2. 1 Goals and Objectives As per our meeting, we understand your main goals and objectives as follows: Peter wishes to retire in 7 years at 65; Georgia wishes to retire in 2 years at 57;
You would like to pay off your home loan as soon as possible; You would like to save and invest; Peter would like to slow down and retire soon to spend more time with the family; You would like to help your son, Lima, get back on his feet again; You want to be able to go on an overseas trip around Europe, replace your old car, renovate the house, and fund your grandchildren education. 2. Personal Information Name Peter Zinc Georgia Zinc Age 58 55 Marital status Married Health status Not specified Smoker Employment status Full-time Coco patio n Chief Financial Officer Marketing Manager
Homeowner Yes (Joint tenancy) Proposed retirement age 65 57 You have two children: Koala (28) and Lima (24). Both of your children are no longer legally dependent. 2. Insurance Your existing insurance is as follows: Current Insurance peter $520,000 in life and TAP cover under your superannuation fund Georgia $350,000 in life and TAP cover under your superannuation fund You have not advised us whether or not your family has private health Insurance. This advice was made on the assumption that you do not have private health insurance. Please advise us if this is incorrect. 2.
Estate planning You have not provided us with any information regarding your estate planning arrangements. You have advised us to consider you estate planning needs. 2. Financial Information Current income and expense details peter ($) Georgia ($) Total (S) Yearly income before tax 300,000 125,000 425,000 Yearly income after tax 186,953 88,928 275,881 Yearly expenses 90,000 Total 185,881 Current assets and liabilities Asset Owner Value (S) Liabilities Amount ($) Bank account Joint 73,000 Home loan 250,000 Term Deposit 163,000 House Home contents 400,000 Us per animation Peter 520,000
Us perpetuation Georgia 350,000 TOTAL ASSETS TOTAL LIABILITIES $250,000 Current Asset Allocation Asset Class Percentage (%) Cash 236,000 54, 13 Bonds N/A Property WA Australian Shares 200,000 45. 87 International Shares $436,000 100 The financial information outlined above is based upon the information you have provided us. If any of the details are inaccurate or incorrect, please inform us as soon as possible. 2. Risk Profile All forms of investment involves a certain level of risk as there are chances author investments’ actual returns and expected returns will differ.
Even Hough most investments have risks, the level of risk will differ between different investments. Generally, investments with a higher expected return will involve more risk whilst more conservative investments bear lower returns. From our discussions, Peter appears to be a more aggressive investor compared to Georgia. This is shown through Pewter’s willingness to take risks to achieve rewards and your preference towards owning shares. On the other hand, Georgia appears to be a more conservative investor, which is shown through her conservative upbringing.
However, since you have both indicated that you would not mind taking some lactated risks to achieve your goals, for the purposes of this advice, your risk profiles will be consolidated to a balanced risk profile. This type Of risk profile lies between a moderately aggressive and a moderately conservative investor, which is appropriate for you. Balanced investors are medium to long term focused who will accept some short to medium term negative returns to achieve investment growth overtime. Under this risk profile, the most appropriate asset mix for you is: 40% in defensive assets; and in growth assets.
The recommended asset allocation for a balanced investor profile is shown as 0 30 property 10 5 Fixed Interest (Bonds) 35 Please note that this risk profile is evaluated based on our meeting. In order to ascertain your risk profiles accurately, a formal risk tolerance test should be completed to ensure the accuracy of this advice. 3. Our Advice to You The following section will provide you with our advice, the basis of our recommendations and any limitations that our advice may have. Please read this section and consider our advice carefully. 3. 1 Asset Allocation Asset allocation is an important part of the financial planning process.