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I'm stumped!

Discussion in 'Financial Planning Study Group' started by Jen, 15th Jul, 2008.

  1. Jen

    Jen Member

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    I'm studying the Entry Level Competencies through Kaplan and I'm wondering how everyone found the course content. Also, does everyone find the assignment quite breezy?

    From comments on various threads, it comes across as though this course can be easily knocked over in two weeks. I am finding it really tough going and am having trouble deciphering what the heck they are talking about at times (eg module 8 -income streams).

    I have now read all of the content and as far as the assignment goes, I don't really know what they want. For example, in qu.3 - data analysis - they want 500 words max but the question appears to me to be asking a fair bit of detail. I've got twice that amount and if I cut any back, I don't seem to be answering their question. In fact I'm not sure I've answered it anyway! It all seems so vague.

    I am not in the financial industry but have invested in various areas. I have successfullly completed 2 degrees before and have always enjoyed learning. While I don't expect to breeze through it all, I can't see why I am having so much trouble understanding it all. At this stage, I also think their support is dismal.

    As it is an entry level course, I can't imagine that they would expect students to be already working in the industry or have any prior knowledge of the subject content.

    If anyone can enlighten me on this or direct me as to how to tackle the assignment in particular, I'd appreciate it VERY MUCH !!

    Jen
     
  2. Mark Laszczuk

    Mark Laszczuk Well-Known Member

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    Jen,

    Write it like you're writing it for a five year old. Just focus purely on the question at hand, leave as much detail out as possible and she'll be apples! I did my first four units through AIFS (no open book exams, hee) and their assignments were fairly short too. They aren't looking for University level competency, just enough to show you can think at around a Grade 3 level. Which is about 2 grades higher than most people think anyway.

    Mark
     
  3. bowling2020

    bowling2020 Bowling

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    Sydney, NSW
    Hey Jen,

    Wow, I'm so glad I finally found someone in my shoes !!!!
    I've been doing the ELC since July, and boy .. it pisses me off every now and then the materials they provide and the support I get.

    I must admit I expected a lot more from Kaplan in terms of technical support. I think there is only one guy who answers the email for ELC, not to blame him but sometimes I feel like I'm left alone in the cold and dark place.

    And I totally agree with the module 8 ! Oh my god, you know I spent one full week trying to understand what the heck is the income stream all about. I even wrote an email to complain how ridiculous it is to "assume" we (at least me!) all know about Australian income stream system. I was furious.

    Anyways, I've just started the assignment and I gotta tell ya I haven't even got passed the second question. I can't think of any questions to ask the client ! Well, I've been trying to review what I've learnt from the beginning and hopefully I'd come up with one.

    Any suggestions?
     
  4. Young Gun

    Young Gun Guest

    post the questions and I'll see if I can give you a few pointers. I don't mind helping, these assignments are generally quite easy if you do it as a job.
     
  5. bowling2020

    bowling2020 Bowling

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  6. Young Gun

    Young Gun Guest

    you'll need to attach the pds to this topic, cos I don't have a kaplan login to view the assignment. cheers
     
  7. CJ. Wentworth

    CJ. Wentworth Well-Known Member

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    PDF

    The FSG starts on page 8.

    I'm hoping we're allowed to post these here. I'm also on the assignment section of ELC and while I do find it difficult, I also find it linear in structure.

    For example
    Question 1: Relates to early modules
    Question 2 + 3: Relates to mid-modules
    Question 4: Relates to module 4 onwards
    etc.
     

    Attached Files:

  8. Young Gun

    Young Gun Guest

    Okay here goes, I’m not going to do this assignment for you, but I’ll try and give you as many pointers that I can. As I haven’t studied the previous 7 subjects of this course I can only make assumptions as to what they want, so use my tips at your own peril and if you get a bad mark don’t blame me!!!

    a little bit of a disclaimer: I've have just skimmed through most of it, so I may have misinterpreted a question or gone off on the wrong tangent, so if it looks wrong use your own judgement.

    Question 1:

    As I don’t have the sample FSG to compare it with I’ll just take a few stabs in the dark. They are going to be obvious omissions and serious ones at that. This should be the easiest question of the assignment. They could include the following:

    Not adequately disclosing a referral agreement (who it’s with, how much he gets paid) or not adequately disclosing the fees for service.
     
  9. Young Gun

    Young Gun Guest

    Question 2:

    (FYI hardest question in the assignment in my view) What they are after here are “open” questions such as “how do you feel about...”, “what would do in the event of....” and “Why have you....”. they are not after questions that would give short one word answers i.e. yes or no.

    In terms of what questions you should ask...you should look at each section and ask yourself what do I need to know so I can provide quality advice to my clients and what question will extract the most information.

    Section 2: from this section you would be trying to determine their current financial position. This would actually be the hardest question to ask out of the 4 they have given you. As this section would normally be factual type questions (which is why I haven’t given you a sample, couldn’t think of one).

    Section 3: This should be a risk insurance question, you would be trying to determine if the level of cover they have would be enough in the event of death, disablement or illness. As such your question should be posed in such a way that the client can see for themselves, if there is a need that should be filled.

    “In the event of death, disablement or illness, what would be the impact on your current financial needs, goals and objectives? Such as your day to day living expenses, your future retirement, paying off your mortgage and going on that O/S trip”.

    Section 5: From this section you would need to determine how strongly a client feels towards a particular goal, how flexible they are and what are their priorities. A question might be like this:

    “Tell me about your retirement, when would like to retire? What lifestyle you would like to live? What income would you need to support it and how long would like that to last?”

    Section 9: This section doesn’t really tell you how their super is invested or if they are making any contributions to it. Your question might be structured around trying to find this out.
     
  10. Young Gun

    Young Gun Guest

    Question 3:

    So in other words.... are the clients invested inline with their risk profiles and how will their future goals impact upon this.

    you would need to add up all their assets and determine for each client what % is invested in Australian & Int. shares, cash, fixed interest & property and then compare that with each clients recommended asset allocation for a balanced or growth investor. You would then need to determine which asset class is overweight and which is underweight.

    From that you will need to calculate what impact their planned expenditure will have on their asset allocation and how you could prevent it from becoming a problem. So for example instead of spending all their term deposit on a new car, you might suggest they sell some shares to fund this expense, to prevent them becoming overweight to Australian shares.
     
  11. Young Gun

    Young Gun Guest

    Question 4:

    There really aren’t too many financial planning strategies out there so the following should cover most strategies you could use, why and how it will meet thier goals. I’ll leave it up to you to pick which ones and explain whether it is appropriate or not and the risks. One of the risks in selling shares would be CGT ect.

    Expenditure:
    • Sell assets... pretty simple watch out for CGT

    Tax minimisation:
    • Have the lowest MTR client hold most of the assets to minimise tax on income and future capital gains.

    Super:
    • Salary sacrifice to super to increase retirement benefits. (Perhaps have client 1 do the majority of the SS as he is closest to sixty and the tax free benefits). You’ll have to ensure they don’t go over the tax deductible limit for SS contributions.

    Pension:
    • have them start a non-commutable allocated pension (TTR) and commence the income swap strategy (client 2 will have to wait a few weeks till she’s 55 though). Again focus on contributing the most to client 1’s super as he will reach age 60 sooner.
    • Alternatively use the TTR to repay debt sooner (probably best if you do from age 60, client could pay IO on their debt, increase SS and use that to repay debt sooner.

    Debt:
    • Have them clear non-deductible debt first, so credit cards, car loans then mortgage. Then if any surplus above what you need to meet retirement goals, reduce investment debt.
    Investments:
    • Start an investment (managed fund) to meet a future expense and invest excess cash (grandchildren etc). Don’t see the point in this... but I’ve included it none the less.

    Gearing:
    • Even though they are already doing this, borrow to invest to meet goals, (quite risky given the time frame till retirement)

    Insurance:
    • After a needs analysis is complete recommend appropriate levels of death, TPD, Trauma and Income Protection cover. And how it should be structured (inside super or outside, who is the owner etc).

    Social security:
    • When client 1 reaches age 65, switch his super to his wife’s to maximise age pension (until client 2 reaches pension age). Possibly gift assets and/or purchase funeral bonds to increase this further. Have to watch out for contribution limits

    Estate planning:
    • Establish an up to date will, powers of attorney and testamentary trust (that should stop that pesky son in law getting his hands on their cash)
     
  12. Young Gun

    Young Gun Guest

    Question 5:

    This is how I present and implement a plan, it may not match up 100% to what they teach, so check your text books.

    1. Revisit the financial planning process and explain what step they are up to.
    2. Introduce the document and its purpose (legal requirements etc)
    3. Get the client to confirm that the information we have (asset values, income, goals & needs) is correct and that nothing has changed since you last met.
    4. Go over the recommendations and the reasons behind them, getting the clients confirmation on each recommendation (whether they agree and wish to proceed with that recommendation etc).
    5. Go over the fees, costs and risks of the advice.
    6. Give the client the option to “sign up” on the spot or take away our advice have a think about it and get back to you.
    7. Ensure all paperwork is explained, signed and correctly filled in.
    8. Notify the client once all your recommendations have been implemented and tell them when they can expect to have their situation reviewed.
    9. Add them to our review schedule to ensure that they are reviewed on an ongoing basis going forward.
     
  13. Young Gun

    Young Gun Guest

    Question 6

    Three parts:
    Part 1. Determine if he should put that $50,000 into super, off debts, in cash to fund living expenses, into an investment etc. I’ll leave that one up to you.

    Part 2. Review income and expenses ensure that the income they will generate enough to cover their day to day expenses and what you had recommended previously in terms of contributions to super etc etc.

    Part 3. Using part 3 will they fall short of their retirement goals? Which goals might have to go or change. You might have to make a few calculations.
     
  14. CJ. Wentworth

    CJ. Wentworth Well-Known Member

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    Young Gun you are a godsend! I'm glad you didn't do the assignment for us by giving us the answers, as I would like to become competent myself, but it helps so much having someone to offer guidelines and add professional insight.

    Thank you! :)
     
  15. bowling2020

    bowling2020 Bowling

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    Location:
    Sydney, NSW
    Thank you so much, Young Gun ! I totally agree with C.J. and I'm grateful !
    Alright guys, let's knock this out together and move on to the next chapter !
     
  16. Jen

    Jen Member

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    I have only revisited this site tonight and am sorry to have missed all your replies!
    I finally struggled through the assignment and passed, so if anyone is still having trouble, let me know.
    There are a lot of mistakes/ommissions in the information the clients provided.
    Q5 is the easiest as it is set out for you in one of the modules ( can't remember which one)

    Anyway, I will keep watch here to see if anyone is struggling - or you can PM me.

    I am currently trying to swot for the exam now - still don't really get module 8.
    Apparently, this is the hardest subject of the DFP, so that is some good news.

    Cheers,
    Jen
     
  17. micky

    micky New Member

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    Just come accross this forum, and I must say my life has been saved.

    Big thanks to Young Gun.

    I definately feel that the coursework prepares you at one level and the assignment is about 10 times more difficult. I'm not in the industry so maybe thats why. I still have a few questions which it would be great if any of you can answer for me (I'm doing the same ELC assignment).

    With question 3. Ive worked out a pie chart with their current investment asset allocation however I'm unsure if I include the full value of their investment property or the equity (value-loan amount)? Also unsure if I include their super as the allocation of this is unknown? Also unsure if you include personal use assets (such as house, contents, car), I assume you don't though?

    And finally with question 4: They ask for relevant issues, possible strategies and then selecting one strategy saying why this is appropriate. I'm majorly confused by this??? Ive started the estate planning one. So far for relevant issues ive got wills out of date, concerned that daughters partner is a spendthrift, no power of attorney etc. But then what are the possible strategies??? The strategies I see are creating wills, powers of attorney, testamentary trust etc. But then how can you choose one of these stating its relevant, to me there all relevant. I just don't get it.

    Any help greatly appreciated.
     
  18. CJ. Wentworth

    CJ. Wentworth Well-Known Member

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    Kind of touching on Micky's question above. When question 4 asks you for strategies, are you suppose to come up with them with the whole plan in mind, or each one somewhat separate from the rest.

    As an example in the Short Term goals, they want to buy a new car. Am I supposed to just come up with a way for the funds, or am I supposed to figure out whether they need a new car.
     
  19. BankChick

    BankChick New Member

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    Gold Coast Qld
    Hi Jen,
    My names Rachel, I've been studying the DFP1 for a few months now (also working full time) and I'm up to the assignment. p.s thanks Young Guy for all the advice.

    I just have a little question for you if you wouldn't mind...
    In Question 2 the property is joint however in section 3 it states it's in Zelda's name..so i'm just wondering if you split it between both clients whilst doing the risk profiling of just had it in Zelda's name?
    Hope you don't mind answer this one for me.

    Thanks

    Rachel
     
  20. bris2187

    bris2187 New Member

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    Jen,

    i am curently trying to do this assignment and i am have reached Q3 and i am not sure how indepth it needs to be or what exactly they are asking for and as most of the questions after this is a kind of follow on in a way i need help.

    Amy