DPE Project

Student Question Guide

DPE version 1206.3

Total Possible Marks Part A: 73 Part B: 31 Part C: 80

www.pinnacle.edu.au

DPE Project - Student Question Guide

Published by Pinnacle Financial Services Academy Pty Limited Level 7, 100 William Street Woolloomooloo, NSW 2011 www.pinnacle.edu.au/ Tel: 1300 782 822 Fax:1300 794 820 Email: students@pinnacle.edu.au/ Copyright: Pinnacle Financial Services Academy Pty Limited (ACN 116 541 256) 2012

Version number: DPE Project_STUDENT_QUESTION_Guide_v1206.3

Disclaimer: This project (Material) has been developed as a guide to current students of Pinnacle Financial Services Academy Pty Limited (ACN 116 541 256) (Pinnacle) and is to be used by such students subject to the terms and conditions on which such students are enrolled with Pinnacle. This Material is not intended to be a comprehensive or exhaustive resource relating to financial services education, but a basis on which knowledge and skills can be formed. Pinnacle believes that the Material is up-to-date as at the date identified on the front page of the Material but does not warrant that the Material is up-to-date as at the date on which the student uses the Material. Students undertaking education within the financial services arena should be aware that the law, regulations and policy in relation to the content of the Material are liable to change without notice and students must ensure that they keep themselves informed of any such changes.

DPE Project

Attention: Read these instructions first 1. This project is required into three Parts A, B, C. This Question Guide contains all the questions you must answer for this module. 2. You should answer each question in the separate Student Answer template provided by Pinnacle. In Part B you will also be required to submit some answers in a spreadsheet. 3. You must achieve a pass mark of 80% to be deemed competent 4. On completion, save your Answer Document including your name in the file name and refer to the instructions online on how to submit your answers.

DPE Project v 1206.3 - Student Question Guide

DPE Project Part A Student Question Guide

Part A Student Question Guide

Financial Services Overview and Compliance Total number of questions: 9 Total marks awarded: 73 Required pass mark: 59

Question 1 Marks allocated: 2 marks What is a financial intermediary (1 mark) and what is their chief role in the financial system (1 mark)? Question 2 Marks allocated: 3 marks The financial service industry consists of many interrelated sectors. Describe the following sectors, including their interrelationship to other sectors (1 mark per sector): a) Financial planning sector b) Investor sector c) Credit management sector Question 3 Marks allocated: 13 marks Part A Marks allocated: 9 marks Complete the table below. It lists the three chief regulators of the Australian financial services industry. For each regulator answer the following where indicated in the table: a) What legislation they administer (Legislation) (1/2 mark per regulator) b) Their primary role in the Australian regulatory environment (Role) (1 mark per regulator) c) Regulators website and link to home page (Website) (1/2 mark per regulator)

DPE Project v 1206.3_Part A Student Question Guide

DPE Project Part A - Student Question Guide

d) Provide an example of how the regulator impacts on your job role (Job role) (1 mark per regulator)

Part B Marks allocated: 3 marks List three sources of other experts, either within the business or external to it that you could refer to for advice or guidance on technical or financial planning issues (3 marks)

Part C Marks allocated: 1 mark How can changes in technology be adapted to in a timely manner within the financial services workplace? (1 mark) Question 4 Marks allocated: 4 marks When you provide personal financial advice to retail clients: a) What documentation must be provided to the retail client and, where applicable, in what timeframe? (1 marks) b) Explain the financial (civil) and custodial (criminal) penalties for not providing the required documentation (1 marks). What are the specific penalties for non-provision of a Statement of Advice? (1 mark) Question 5 Marks allocated: 30 marks The compliance officer of your organisation has just phoned, indicating that he will see you at your workplace on Monday. He wants to ascertain how well you are complying with the legislative and regulatory requirements in relation to your provision of financial advice. Your manager has provided you with a comprehensive advice checklist which lists the following: 1. Financial product advice requirements including documentation and organisational procedures. 2. The source of each requirement (i.e. the name of legislation, code of practice, ASIC regulatory guide etc.)
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DPE Project Part A Student Question Guide

The checklist is excellent but there is one problem. It is incomplete. There are 15 items missing from the checklist. The 15 missing items are: - Confirm exemption to provision of FSG doesnt exist - Ensure confidentiality of information acquired using information only for the specific purpose intended - Act within the requirements of the licensee - Information regarding remuneration and benefits that the planner or associates may receive - Explain cost of such review service or basis for calculating the cost of such on- going services - Ensure ethical behaviour is displayed at all times and in compliance with relevant codes of practice - Obtain agreement from client o On each recommendations and strategies noted in the SOA. o On timing and priority of implementation. o On value of recommendations to implement - NOT engage in conduct that is misleading or deceptive in relation to a financial product when dealing in that financial product - Identification of AFSL on all business documents/ communication - Information about the remuneration, fees, commission or other benefits that the financial planner, licensee, or any other related parties may receive that is attributable to the advice provided - All documents formatted according to the style guide/ templates provided by the licensee - Incomplete/ inaccurate information such as o Identification of any information provided by the client to the adviser felt to be inaccurate or incomplete or misleading and not rectified to the adviser's satisfaction o Provide a warning to the client they should consider the appropriateness of the advice having regard to the client's relevant personal and financial circumstances, and they have been notified of this inaccuracy, omission or incompleteness of Information provided. - Retail versus wholesale client test - Have you completed an SoA for all advice on Licensee letterhead? - If required, arrange a meeting with third parties involved with implementation of recommendations, e.g. tax accountant, solicitor You are required to identify the missing items and place them in the correct place in the checklist (1 mark per item) and then list the source (for example, the Corporations Act) for each item (1 mark per item) (total 30 marks)

DPE Project v 1206.3_Part A Student Question Guide

DPE Project Part A - Student Question Guide

Client file checklist

Move the items in the list above to the relevant location on the checklist below and identify the source.

Requirement

Source of requirement (Regulation, legislative, organisational, code of practice)

Making services available to clients Comply with AFS Licensing requirements Become an (authorised) representative of a licensee MISSING ITEM Appropriate advertising/ identification of AFSL Restriction of use of certain words MISSING ITEM Not engage in holding out or giving the impression of a particular association Not engage in hawking activities General conduct requirements Prohibition of referral selling General conduct dealing in financial services should be efficient, honest and fair Avoid false or misleading statements Do not engage in unconscionable conduct Ensure interests of the client and practice are safeguarded and do not conflict with duties and loyalties owed to the general public and the laws Objectivity in recommended solutions given, ensuring they meet the client's situation and needs, identifying and managing real and potential conflicts of interest Professional independence when providing services and avoiding any circumstances or relationships that may compromise the adviser's integrity, objectivity and professionalism MISSING ITEM Highest technical and professional standards, competence with reasonable care and diligence MISSING ITEM Making statements or disseminate information that are false or materially misleading

Corporations Act SOURCE Corporations Act SOURCE Corporations Act Corporations Act ASIC Act ASIC Act Corporations Act ASIC Act ASIC Act

Corporations Act

FPA Code of Professional Conduct

SOURCE Corporations Act, FPA Code of Professional Conduct SOURCE Corporations Act

DPE Project v1206.3_Part A Student Question Guide

DPE Project Part A Student Question Guide

Requirement Source of requirement (Regulation, legislative, organisational, code of practice) Corporations Act

NOT engage in any dishonest conduct in relation to the financial product or services, in the course of providing the financial services MISSING ITEM NOT engage in Insider trading activities Actions at initial interview Ascertain type of client and advice MISSING ITEM Determine if financial product advice is provided Any statement of opinion or recommendation intended to influence or may influence a decision regarding financial products Exemptions from financial product advice (e.g. property advice) Determine classification of advice General Advice - Simple Product Advice with no further analysis needed (consideration to individual client situation) Personal Advice (no consideration/ expectation to individual client situation) Provide client with information about services offered Provision of Financial Services Guide MISSING ITEM Dispute resolution process is separate and clearly explained to clients, including referral to the external dispute resolution service FSG contains the following: Full title Financial Services Guide Date of the FSG Licensees AFSL number Name and contact details of the providing entity - licensee or authorised representative Number which has been allocated by ASIC if the Representative is an Authorised Representative Statement of the purpose of the FSG, and information about other disclosure documents that may be received by the client, (e.g. Statement of Advice (SOA) and Product Disclosure Statement (PDS)) Information relating to the kinds of financial services and products that the licensee and financial planner can provide

SOURCE Corporations Act

SOURCE Corporations Act & RG175

Corporations Act & RG175

Corporations Act & RG175 Corporations Act & RG175

SOURCE Corporations Act & RG175

Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175

Corporations Act & RG175

DPE Project v 1206.3_Part A Student Question Guide

DPE Project Part A - Student Question Guide

Requirement Source of requirement (Regulation, legislative, organisational, code of practice) SOURCE Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175

MISSING ITEM Statement detailing that full disclosure information will be provided within the SOA Any relationships or associations which may be capable of influencing the licensee or the financial planner Details of the dispute resolution procedures the licensee has in place Fact finding process for personal advice Know Your Client - Collect sufficient information to be able to provide appropriate advice to the client Consider complexity and financial literacy issues Explain the Fact Find process(including providing complete and accurate information) and its importance in ensuring Financial Advice given is appropriate to Client's circumstances, needs and objectives Reiterate the Privacy and Confidentiality Policy regarding the handling of and access to information given by the client to the adviser Make reasonable inquiries about the clients circumstances by completing a Fact Finder including the: Client's circumstances and personal data Needs and concerns - prioritise Life goals and objectives short, medium and long term Risk profile Confirm and ensure thorough understanding of client's financial situation, needs, objectives and risk profile: Obtain Client's signature on Fact Find confirming information given is complete and accurate and FSG has been issued and received by the Client Adviser to sign off on the Fact Finder duly completed and date it MISSING ITEM Obtain documentation of current financial situation of the client including Bank statements Superannuation, insurance and investment statements, policy documents and any other relevant information Developing Statement of Advice MISSING ITEM

Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175

Privacy Act 1988

Corporations Act & RG175

Corporations Act & RG175

SOURCE Corporations Act & RG175

SOURCE

DPE Project v1206.3_Part A Student Question Guide

DPE Project Part A Student Question Guide

Have you taken a copy of the SoA on Licensee letterhead including all attachments for the file? Are all products recommended in the SoA featured on the licensees APL. If not, have you obtained and filed written approval for the use of the product. Contents of the SOA Title Statement of Advice Executive summary Table of contents The name and contact details of the authorised representative and licensee The advice and the basis of advice Any warnings in relation to incomplete information provided in the provision of the advice or restrictions on the advice given MISSING ITEM Information on associations that may influence or reasonably be expected to influence the advice. Other SOA requirements All sections of the SOA are complete Recommendations clearly explained All workings and projections are attached as an Appendix Generic educational material is NOT included NO technical or industry jargon Document personalised to the client Information is presented in a clear, concise and effective manner No material included that is misleading or deceptive Present recommendations and strategies in SOA Present strategies and recommendations in clear, succinct manner, using relevant charts/visuals where applicable: Use clear and simple language and ensure all terminologies are explained and avoid using jargon Ensure both benefits, risks and limitations of the recommendations are explained Corporations Act & RG175 Corporations Act & RG175 Licensee requirement

Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 SOURCE Corporations Act & RG175

Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act

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DPE Project Part A - Student Question Guide

Pause at each recommendation and strategy, with openended questions requesting affirmation from the client, e.g.; Does this make sense to you What do you think of this strategy? Which product features do you like and which you dont and why? How the fees and charges of this product compare to others that you may have come across? How do you feel this recommendation would help you achieve your goals? Ensure client thoroughly understands the strategies and recommendations in the statement of advice including the total costs, benefits, risk and limitations involved in the product/service implementations. MISSING ITEM Get the client to fill and sign off on any other documentation needed to implement the recommendations and strategies. Get the client to sign off on the Authority to proceed section of the statement of advice that list all recommendations and strategies for clients approval, with indication on timing of implementation. Product Disclosure Statement (PDS) Provide Product Disclosure Statement (PDS) of all products recommended PDS must present the information in a clear, concise matter and with enough detail about the financial product so the client can make an informed purchasing decision PDS contains the following: Features of the product Fees that apply The benefits and risks of investing Commissions that may affect client returns Information about complaints handling and cooling off rights Other information that is material to the clients decision to invest Co-ordinate implementation of agreed action plan Ensure the client knows the actions that the adviser needs to take, to implement each of the recommendations, by using statements of confirmation such as; I will now prepare the application for for your approval I will now place your funds with The cost of these recommendations are Corporations Act and FPA Code of Professional Conduct

Corporations Act

SOURCE Corporations Act Corporations Act

Corporations Act & RG175 Corporations Act & RG175

Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175 Corporations Act & RG175

Corporations Act

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DPE Project Part A Student Question Guide

Explain clients involvement and role in the implementation of approved recommendations and any follow up actions for the client: Give the client a checklist of tasks to do for the recommendations agreed to be implemented. Obtain confirmation of clients understanding of their role by getting the client to repeat the tasks they are required to do and the time frame for completion Arrange for ongoing review service Stress the importance of on-going review, and agree with the client the level of ongoing service to put in place: Regular annual review Client is advised to contact the adviser upon any change in the clients circumstances, financial situation, needs of objectives. Change in legislation Significant drop in performance or new factors affecting products/services implemented/recommended New products that may be more appropriate Discuss frequently of each of these services or factor/s that would prompt a need for a review service MISSING ITEM Explain to the client, the regular reporting of their implemented plans that they can expect from of how they can access updated information from the website of: Product or service provider AFS licensee The adviser and the practice Complete and maintain necessary documentation Ensure all documentation, PDSs and application forms are complete and duly signed by the client to implement the recommendations Ensure client has sign off on the following documents and a copy retained in the clients file and a copy given to the client Engagement agreement Fact find questionnaire Statement of advice Authority to proceed section in the SOA Submit all application forms and documentation to the product provider MISSING ITEM Corporations Act

Corporations Act Corporations Act

Corporations Act

Corporations Act SOURCE Corporations Act

Corporations Act & RG175

Corporations Act & RG175

Corporations Act & RG175 SOURCE

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DPE Project Part A - Student Question Guide

If the SOA needs to be rectified or adjusted, arrange for the SOA to be rectified by the due date agreed with the client, in time for another meeting for the client to sign the authority to process: and the product implementation documents Update client activities summary to summarise the second interview on: Issues discussed Actions taken and those arranged Follow up on action, if any, by the client and the adviser Record the version number of SOA, product disclosure statements and other documents given to the client Any pertinent details to provide a quick overview of the interview Organisational procedures All documents presented in the specific folder provided by the practice Corporations Act & RG175

Corporations Act & RG175

MISSING ITEM All documents grammatically correct

No spelling mistakes

All documents are saved in a clear and easily found location

SOA dated and printed on file

No regulatory requirement requirements of organisational, industry groups and Codes of Practice SOURCE No regulatory requirement requirements of organisational, industry groups and Codes of Practice No regulatory requirement requirements of organisational, industry groups and Codes of Practice No regulatory requirement requirements of organisational, industry groups and Codes of Practice No regulatory requirement requirements of organisational, industry groups and Codes of Practice

Question 6 Marks allocated: 4 marks Refer to the sample Financial Services Guide (FSG) attached at the end of this document. List four errors or omissions, using the following seven point checklist as a guide. (4 marks) The identity of the licensee and their AFS licensee number

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DPE Project Part A Student Question Guide

Full address and contact details of the licensee and the representative The capacity of the representative (only if it is an authorised representative) The financial services and products the representative is able to provide Fees and other remuneration The rights of the client The complaints resolution process Question 7 Marks allocated: 4 marks Refer to the Statement of Advice (SOA) template provided for Part C of the DPE Project (available online). List four compliance issues /wording errors, using the following four point checklist as a guide. (4 marks) Title Statement of Advice The name and contact details of the authorised representative and licensee Any warnings in relation to incomplete information provided in the provision of the advice or restrictions on the advice given Personalise the document to the client Question 8 Marks allocated: 9 marks Part A Marks allocated: 5 marks Each of the following statements contains at least one compliance error. What is (are) the error(s) in each case? a) Advertisement: Hi, Im Allan Brown. I can arrange some excellent investments for you in managed funds or direct equities. Call me on 1800 ... (1 mark) b) Advertisement: Come to XYZ Financial Planning for superior service. We are independent and offer impartial advice... (1 mark) c) Interview: "Weve run out of FSGs. Ill send one when theyre reprinted". (1 mark) d) Interview: "ABC Imputation Fund is a great investment. Weve run out of Product Disclosure Statements, but I can tell you whats in one of them anyway..." (1 mark)

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DPE Project Part A - Student Question Guide

e) Business card:

Part B Marks allocated: 4 marks Esme Jones is single and retired four years ago at age 63 with superannuation benefits totalling $350,000, all of which was rolled over by her financial planner Allan Turner: $150,000 to a complying pension paying $8,000 per annum $200,000 divided equally among four managed funds, two Australian share funds and two international funds, paying a total of $5,000 per annum in income. Miss Jones also receives age pension payments of $5,500 per annum. The four managed funds have lost 25% in value over the last year or so and Miss Jones has telephoned to complain. Among other things she claims that she had no idea that she could lose so much. a). What action should Allan Turner take in this situation? (1 mark) Miss Jones tells Allan Turner that she is not satisfied with his response. b). What does Allan Turner then do? What happens at this next stage? (1 mark) Miss Jones decides that the response at this next stage is not satisfactory either, and informs Allan of this. c) What action does Allan Turners organisation take then? What happens at this next stage? (1 mark) d) Explain the external dispute resolution process (1 mark)

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DPE Project Part A Student Question Guide

Question 9 Marks allocated: 4 marks Access the FPAs Code of Professional Practice at the FPA website. This code lists the eight professional qualities an adviser must demonstrate when interacting and providing advice to clients. In your own words, define the principles of: fairness (1 mark) diligence (1 mark) For each of these principles identify two ways in which you can ensure yourself, and a financial services practice, and the advice you give clients could comply with the requirements. (2 marks)

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DPE Project Part B - Student Question Guide

DPE Part B Project Question Guide

Part B Student Question Guide

Workplace, Sustainability & Spreadsheets Total number of questions: 8 Total marks awarded: 31

Question 1 Marks allocated: 2 marks List four ways that you can serve as a role model within your work team ( mark per factor)

Question 2 Marks allocated: 4 marks Define sustainability (1 mark) and list three Australian government regulatory responses to the issue of sustainable development (3 marks). Question 3 Marks allocated: 1 mark Summarise the CPD requirements for financial services professionals under Regulatory Guide 146.

Question 4 Marks allocated: 8 marks Part A List four areas of the work environment that can be altered in order to maximise work efficiency. (2 marks)

Part B One of your clients, Ernie, has come to you for advice in a number of areas. One area in which you believe you have the chance to make improvements is Ernies home loan. Ernie currently pays his home loan monthly and you believe you can reduce his total annual payment if his periodic repayments are made fortnightly, in line with his pay cycle.
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DPE Project Part B Student Question Guide

Analyse the task of modelling this concept and detail the steps that need to be undertaken. The headings below can be used as a guide. (6 marks) Step 1 Determine your ultimate goal ( mark) Step 2 List two possible resources required (1 mark) Step 3 Analyse what needs to be done to achieve your goals (1 mark) Step 3a Identify the requirements of the spreadsheet (including inputs, formulae or functions, tools to streamline the sheet, access, storage, outputs and reuse) (3 marks) Step 4 Develop a process of review ( mark)

Question 5 Answer in spreadsheet Marks allocated: 4 marks You wish to test whether your client, Ernie, would save money by making mortgage repayments fortnightly as opposed to monthly. You have determined a spreadsheet is the best tool to analyse this. Create a spreadsheet that will compare the two payment options. Use the following assumptions: Outstanding loan - $500,000 Interest rate 7.5% Term remaining 10 years (120 payments if monthly, 260 if fortnightly) You will be assessed on the following Use an inputs sheet and an outputs sheet in the same workbook Create clearly labelled inputs, such as: Outstanding loan amount Interest rate Term remaining (in years) (1 mark) Create clearly labelled outputs, such as: Monthly repayments Annualised monthly repayments Fortnightly repayments Annualised fortnightly repayments Difference (1 mark) Consider whether you wish to use a formula or function to determine the monthly and fortnightly repayments
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DPE Project Part B - Student Question Guide

The applicable formula is available in the answers to Question 4 For Microsoft Excel, the PMT function is useful. Equivalents may exist in other software programs. Remember: To click on the relevant cells on the inputs sheet to fill in the data inputs for the formula (use the fx button next to the command line) Consider absolutely referencing the input data Divide the interest rate by 12 for monthly repayments and by 26 for fortnightly repayments Multiply the Term remaining input for the Number of Periods field by 12 for monthly repayments and by 26 for fortnightly repayments The future value is 0 The payments are to be made at the end of each period Considering formatting to make the sheet as user friendly as possible (1 mark) Ensure you test the outputs of the spreadsheet using the equation provided in Question 4 or the example shown in the answer to this question (1 mark) This answer to be provided in spreadsheet format. Name these worksheets YOUR NAME Question 5 Inputs and YOUR NAME Question 5 Outputs

Question 6 Answer in spreadsheet Marks allocated: 4 marks A simple macro is to be added to an existing spreadsheet with the purpose to delete the inputs in this spreadsheet. If you have completed Question 5 you should undertake the following exercises in this worksheet. Part A Create a macro that will clear the three input fields on the inputs spreadsheet. (2 marks) Part B Create a button on the input sheet that can be used to execute the macro and assign the macro to that button. (2 marks) If you have NOT undertaken Question 5, create a simple spreadsheet or use an existing spreadsheet. For example create a single sheet with three input fields input 1, input 2 and input 3. Enter a number in each

DPE Project v1206.3_Part B Student Question Guide

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DPE Project Part B Student Question Guide

of the input cells. Create a cell labelled output that adds the three input cells. Tips for creating the Macro (specific references are for Excel 2010) Ensure your spreadsheet software allows the use of macros. Ensure you are on the inputs sheet Select Record Macro from the Macros option (in the View menu) Title the macro clear Assign a shortcut key. Please note that shortcut keys cannot be those that are already assigned (e.g. Ctrl + x is already the shortcut for cut) Once the macro is recording, perform the actions you wish to be repeated (e.g. click on cell C2, hit delete, click on cell C3, hit delete, click on cell C4, hit delete) Stop the macro recording (use the small blue square at the bottom left of the window) Test the macro by re-entering inputs and then using the shortcut key Tips for creating the button (specific references are for Excel 2010) Insert a rectangle (in the Insert menu, click on Shapes then choose a rectangle) Drag the rectangle to the position and size you want on the inputs sheet Enter the text clear inputs (right click on the shape and choose Edit Text) Assign the macro to the shape (right click, choose Assign Macro and assign the correct macro) Test the button by entering inputs then clicking on the button to execute the macro Add the macro to your spreadsheet. Name the worksheet YOUR NAME Question 6 Question 7 Marks allocated: 4 marks

Part B: Answer in spreadsheet

You have created a spreadsheet to determine whether your client, Ernie, would be better off making his mortgage repayments monthly or fortnightly (Question 5). Ernie is a visual person and you want to demonstrate this using a graph or chart. Part A
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DPE Project Part B - Student Question Guide

What sort of graph or chart should you use and why? (1 mark) Part B Using the spreadsheet created in Question 5, or the information provided in this question, create a graph to demonstrate to Ernie the benefit of making his mortgage repayments fortnightly. (3 marks) If you have NOT undertaken Question 5, create a simple spreadsheet or use an existing spreadsheet which shows comparative figures for a given variable. Assessment areas Ensure your data is organised in such a fashion that there are no blank cells between the relevant figures. If need be, replicate the relevant information on the graph sheet Highlight the relevant data and create the graph type required Edit the graph to emphasise the desired point (e.g. truncate an axis, add or remove a legend, change the colour scheme, add a title) Part B create a worksheet called YOUR NAME Question 7 Question 8 Part B: Answer in spreadsheet Marks allocated: 4 marks You now need to present these calculations for the client: In a summary report for the client in the form of a word processing document (e.g. Microsoft Word or Pages) and the relevant information needs to be exported to this document and in hard copy you wish to have a printed copy to present to your client as well as to keep on file as a hard copy For the following questions, please use the spreadsheet created in Question 5 or 6. Alternatively you may use a spreadsheet you have created previously that includes a graph. Part A Add the calculations you to a Summary Report for the client in a word processing document by exporting the relevant data from your spreadsheet. The relevant data should include the inputs, the outputs and the graph. Export the data so that any changes to the spreadsheet will not alter the word processing document. (1 mark) Note: The most common way to export data is to copy and paste. Part B
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DPE Project Part B Student Question Guide

Summarise the relevant information in your workbook as follows: Create a new worksheet to organise the information called Question 8.(1 mark) Organise the information you wish to be in the one page summary (including the data used, the outcomes and the graph) (1 mark) Ensure the layout is appropriate and aesthetically appealing by using the Print Preview functionality. (1 mark for layout) Part B create a worksheet called YOUR NAME Question 8

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DPE Project Part C - Student Question Guide

Part C Student Question Guide

Part C Student Question Guide

Project: Based on the Case Study of Tony and Clare Mancini Total number of questions: 14 Total marks awarded: 80

SOA Question 1 Marks allocated: 5 marks Complete the summary of the financial situation of the Tony and Clare Mancini in the table provided in the SOA (including their net worth).

Question 2 Marks allocated: 4 marks Part A Marks allocated: 2 marks

SOA

Tony and Clare have completed the annual income details in the fact finder. However, they have left the following table blank: Current Estimated Taxation Liability & Net Income. Complete the table below where it is included near the beginning of the SOA and shown in the question guide. Note: You will need to complete all sections of the table to show adequate workings for the marks allocated in the final two rows. Assume no offsets are available. Part B Marks allocated: 2 marks The Mancinis fact finder does not detail the totals of their annual income and expenditure in the Annual Expenses and Cash Flow section. Complete the table below where it is included near the beginning of the SOA.

Question 3 Marks allocated: 3 marks

DPE Project v1206.3_Part C Student Question Guide

SOA

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DPE Project Part C Student Question Guide

Go to the supplied SOA template and complete the section titled What you want to achieve. This section asks you to list the Mancinis objectives. For each goal and objective, identify it (1 mark total), explain it (1 mark total) and give it a timeframe (1 mark total).

Question 4 Marks allocated: 4 marks

SOA

Complete this question in the Additional information to assist your decision making section in the SOA template. Tony and Clare both complete the risk profile questionnaire (RPQ) attached to the fact finder. Tony has come out as an aggressive investor and Clare as a balanced investor. Clare has several questions about risk profiling and the definition of a balanced investor. Clare needs your assistance with: Explaining the standard risk profile of a balanced investor (1 mark) Explaining the concept of risk and return (1 mark) Understanding what her investment risk profile means with regards to aspects such as risk, returns (capital growth and income), timeframe of investments, volatility, hedging inflation and tax effectiveness (2 marks). Question 5 Marks allocated: 16 marks Part A Marks allocated: 14 marks The clients main objective is to build wealth and increase retirement savings. They are unsure whether it would be better to do this through investing in a managed fund or using a superannuation strategy. The Mancinis have $10,000 in a cash account. They would like to retain a $7,000 emergency reserve and have $3,000 available for investment. Construct a strategy in the Recommendations (main) part of the supplied SOA template. Assumptions will include client objectives, access to money, the amount of funds to invest and the surplus cash flow. For the purposes of this case study, assume that these are the only two strategic options the client wishes to consider. Do not recommend an alternative such as repayment of debt.

SOA

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DPE Project Part C - Student Question Guide

Remember to complete all questions in the relevant blank section of the SOA template. Outline the proposed strategy (investing in superannuation or managed funds). You will need to fully explain your recommendation (4 marks), list the assumptions used (1 mark), define a superannuation fund and a managed fund ( mark), along with whose name you recommend the clients invest in ( mark). (6 marks total) Prepare a projection of either the managed fund or superannuation strategy using the modelling tools at the Money Smart website. (2 marks) Go to www.moneysmart.gov.au > Tools and resources > Calculators and tools > Managed Funds OR Superannuation calculator (how fees affect your payout). Note that you cant save the calculator inputs to return at a later time, but can save the output in PDF format. (Do not send the PDF document as your answer) Do not include this modelling in your answer or in the SOA template. Instead, use this modelling to list the following items in the SOA template where indicated: Assumptions used to create projections ( mark) The projections for 10 years for the management investment strategy OR The projections until retirement for the superannuation strategy (1 mark) Figures before and after fees for the management investment strategy OR Figures with and without the extra contribution for the superannuation strategy ( mark) What are the advantages of your proposed strategy? (2 marks) What are the disadvantages and risks of the proposed strategy? (2 marks) Part B Marks allocated: 2 marks Tony and Clare have indicated they didnt feel they needed advice on personal insurance. During the interview however, Tony asks a question about income protection. In a separate recommendations step in the SOA explain the benefits of having income protection (1 mark) and the risks associated of not having it (1 mark)

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DPE Project Part C Student Question Guide

Question 6 SOA Marks allocated: 4 marks Refer to the following section What this advice will cost you and how we are paid and complete the disclosures for the financial advice provided, making sure your disclosures are made in both percentage (%) and dollar ($) terms. You need to complete the following sections which have been left blank in the SOA template: a) The disclosure breakdown table (initial and ongoing disclosure) (2 marks) b) Product annual fees (2 marks) Make the following assumptions: Fee for plan preparation is $700 Fee for implementation is $2,000. There is a 10% penalty on the implementation fee if they decide not to go ahead with the advice The recommended strategy (for the disclosures) is to invest $3000 in a managed fund or superannuation investment with an ongoing commission of 0.80% applied per annum. Note you should assume a total initial investment amount of $3,000 regardless of your recommendations contained within Question 9 of this project. Complete the product annual fees in the table in the SOA using the given 60%/40% split of underlying investment options in the fund. For the purposes of this question you are to assume two underlying funds have been recommended regardless of what you have recommended in Question 9 of this project. You specifically need to complete the columns titled Amount Invested and Cost PA $ Question 7 Marks allocated: 6 marks Reviewing the estate planning and power of attorney (POA) information in the fact finder, construct a recommendation in the supplied SOA template (in the Recommendations section) addressing their Wills and estate planning needs. Specifically, answer the following questions in your recommendation: a) What is the current status of their Wills? What are the risks of not having a valid Will in place? What are the benefits of having a Will? (2 marks)

SOA

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DPE Project Part C - Student Question Guide

b) What would you recommend and why in relation to a power of attorney for Tony and Clare? Ensure you consider all available types of attorneys. (4 marks)

Question 8 SOA Marks allocated: 6 marks Tony and Clare ask you what happens after they receive the SOA and wish to act upon the advice provided. Note: Students should only complete this question in the Action Plan template included in the SOA adding more rows if necessary. Do not include a separate document as Pinnacle cannot accept this for marking. a) In the SOA template, explain what is required for an implementation/action plan (just before the actual implementation plan asked for in section D below). (1 mark) b) In the SOA template, list the broad implementation items required for the implementation of Tony and Clares advice. (1 mark) c) In the SOA template, explain how you would monitor the implementation of the advice to ensure that lodgement dates and plan timings are met (1 mark) d) Complete the implementation plan template for Tony and Clare which is included in the SOA. Remember to include specialist implementation points for each product, specifically superannuation and managed investments. Your completed action plan should list the personnel responsible for implementation of each point, completion date for each point, any authorities/signatories required, transaction items required to implement the recommendations, cheques to be written, third party specialists to be followed up, account/ investments/ insurances to be implemented or closed. (3 marks) Question 9 SOA Marks allocated: 6 marks Tony and Clare enquire about your review service. Write a letter to the clients (which must be written at the end of the SOA template) about your review service so they can determine if it suits their needs. Do not copy word for word for the sample provided in the course; the letter should specifically include items that may be specific to your clients. Note: Students should only write this letter at the end of the SOA template. Do not include a separate document as Pinnacle cannot accept this for marking.
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DPE Project Part C Student Question Guide

The letter should include: a) An outline of the ongoing service being provided, including fees and charges (1 mark) b) An agreement with the clients to undertake an ongoing service ( mark) c) Any referrals to other external or internal professionals ( mark) d) Review of client circumstances ( mark) e) Review of strategies (strategic review) (1 mark) f) Review of products (investment monitoring) (1 mark) g) Regulatory changes and new market opportunities (1 mark) h) Timeframes for implementation of review items ( mark)

Question 10 File note Marks allocated: 2 marks Using the information provided in the Mancini case study describe Tony and Clares typical life stage ( mark). Explain how the standard characteristics of their typical life stage will dictate their financial needs and objectives ( mark) and how they will impact upon your recommendations (1 mark). Ensure your response covers the advice areas applicable to the Mancinis, and is tailored to their specific situation.

Question 11 File note Marks allocated: 10 marks During your fact finding interview and subsequent review of the Mancinis situation you discover you need more information from them. You also think that you will not be able to assist them with specialised advice in all areas. Refer to the case study and answer the following questions: Part A Marks allocated: 6 marks a) What other information do you require from the clients? (List at least four (4) items) (2 marks mark per item) b) What additional questions could you ask the Mancinis to elicit qualitative information from them? (List at least four (4) questions) (2

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DPE Project Part C - Student Question Guide

marks mark per item) (Do not list questions requiring one word answers or yes/no etc.). c) List four (4) further questions for the Mancinis to clarify their stated goals and objectives? (2 marks mark per item) Part B Marks allocated: 4 marks List two (2) areas you will not be providing advice to the Mancinis and explain your reasons (2 marks 1 mark per response) On what occasions should specialist advice be sort? (1 mark) List any other professionals to whom you will be referring the Mancinis for specialist advice. (1 mark) Question 12 Marks allocated: 9 marks Part A Marks allocated: 4 marks (1 mark for each area) You have determined that you need to research some further information in order to examine at the Mancinis retirement aspirations. One key area that you have decided need to be addressed to provide retirement advice is the Mancinis preservation ages. You ask your para-planner to conduct this research and need to prepare a summary to guide them in this area. Identify the following areas and prepare your answer in the able provided below: a) Why the additional information is needed (e.g. legislative, clarification of client specific data) (Purpose) b) Where you will be able to find the information you require (Sources). Sources can include legislation, other specialists, websites and reports from primary and secondary sources. If secondary sources are cited, provide an explanation on how the information they provided was verified. Do not cite the Pinnacle text as a source. c) An approximate plan for how long each research task will take to complete (bearing in mind when the Mancinis will come back to you) (Expected duration) d) Which element of the advice could not be addressed until the research is completed, or when certain information is obtained (Interdependencies). Present your answer in the table format in the Answer Guide.

File note

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DPE Project Part C Student Question Guide

Part B Marks allocated: 5 marks Your paraplanner completes the necessary research and discovers that both Clare and Tony have preservation ages of 60. As such, you create your retirement modelling based on this information. You identify that the major concern with this information is that the legislation may be changed by current or future Governments. Provide an explanation to be included with the modelling explaining this risk. Be sure to include: The specific piece information used (1 mark) How this information was obtained (the research source) (1 mark) What the risk is (1 mark) Why this risk is relevant (consider whether there is a history of similar events) (1 mark) How this risk may be mitigated (consider your review service) (1 mark)

Question 13 File note Marks allocated: 5 marks It is now time for you to present the SOA to the Mancinis. You make an appointment for them to come in so you can present your recommendations in person. To prepare for the presentation you: a) Note down the main headings of the content you will need to cover off in your presentation of the SOA to the Mancinis in the appropriate order (3 marks) b) List two key items of supporting documentation that should be provided to the Mancinis (2 marks)

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