DFP- Term 6 - Assessment 1 - FNSFPL502 (3)

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TAFE NSW - Sydney Institute *

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FNSFPL502

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Finance

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Jan 9, 2024

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FNSFPL502 – Conduct financial planning analysis and research ASSESSMENT ACTIVITY 1 FNS50615 Diploma of Financial Planning Z:\++ Course Materials\Diploma of Financial planning\ FNSFPL502 – Conduct financial planning analysis and research \ Assessment\ Assessment 1 - V03102019.docx

ASSESSMENT ACTIVITY 1 - COVER SHEET Please ensure this form is fully completed prior to submitting. This page should be on the front of your assessment and needs to be easily accessible. Student Number: Student Name: Unit Name: FNSFPL502 – Conduct financial planning analysis and research Qualification: FNS50615 Diploma of Financial Planning STUDENT DECLARATION I hereby certify that: 1. This assessment task is my own work based on my personal study/research and not the work of another student and/or source. 2. I have acknowledged all material and sources used to prepare this assessment task. 3. I have not plagiarised or copied any part of this assessment task from the work of any other student or source either. (I know the penalties for plagiarism include $200 re-assessment fee) 4. This assessment task has not previously been submitted. 5. I am aware of the requirements set by my Trainer & Assessor. 6. I have retained a copy of this assessment task for my own records. 7. I have completed all my assessments, tasks & activities (on Moodle®) successfully. Student’s Signature: _______________________________ Date: _________________ Z:\++ Course Materials\Diploma of Financial planning\ FNSFPL502 – Conduct financial planning analysis and research\assessments\ Assessment 1 - V03102019.docx

Student instructions This assessment must be based on where you work (or have worked most recently). This Assessment is designed to test the knowledge that you have acquired throughout the unit. Use the following tips to help you answer the questions: Read each question carefully. Check with your trainer or assessor if you are not sure what the question is asking. HINT: Use these questions as subheadings to create a business style report to answer your assessment Your response to each question should aim to provide enough information to answer the question. In most cases, this can be done with just a few paragraphs. Don’t forget to refer to attachments under the heading (question) applicable, e.g. ‘See attached email’. Important: Your assessment must contain this coversheet and your own coversheet (for your “report”) Your answers & assessment submission must professional in style (Business), content and format. Maximum font size 11 points: Font Arial or Times New Roman; single spacing; clear paragraphs with appropriate punctuation, spellchecking and final submission will need to be proof-read. (i.e. few missing words or typos) In particular: - Use clear, non-discriminatory language - Avoid the use of jargon - Write clearly using plain English - Consider your target audience - Ensure that your responses meet the needs of the target audience (in this case your trainer or assessor). All of your work must be original. Performance Evidence Evidence of the ability to:  conduct financial planning research that demonstrates:  evaluation of client’s current situation and identification of issues  identification of research requirements and parameters  extraction and analysis of information  use of a wide range of available information sources  compliance with relevant legislative and regulatory requirements, relevant industry codes of practice and organisational operating guidelines  accurately summarize research information and test its integrity  prioritize findings, validated against client requirements, and document research for financial plans. Note: If a specific volume or frequency is not stated, then evidence must be provided at least once. Knowledge Evidence  identify and describe a wide range of financial products and services  discuss the risks and implications associated with use of financial products and services  explain financial products and services and the associated benefits from a financial planning perspective  identify financial industry information sources and outline research techniques for accessing this information Z:\++ Course Materials\Diploma of Financial planning\ FNSFPL502 – Conduct financial planning analysis and research\assessments\ Assessment 1 - V03102019.docx

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 compare and contrast financial planning strategies  describe the key features of:  organisational policy and procedures relating to research  relevant legislation and regulations governing trusts and companies  relevant industry code of practice requirements  describe the key features of taxation and social security systems and regulations, and their effect on specified financial products  outline the key aspects of theories of investment, portfolio management and management of investment and risk. Assessment Conditions Assessment must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the financial planning field of work and include access to:  office equipment, technology, software and consumables. Assessors must satisfy NVR/AQTF assessor requirements. Marking and Criteria guide: Assessor and student must read this carefully before assessment. • All parts of the assessment must be completed successfully in accordance with the guidance provided in the Marking guide for the student to achieve competence in this unit. • Students & assessors must note that professionally critical aspects/concepts must be included (e.g. Knowledge of regulatory requirements and outcomes of the Banking Royal Commission 2018-2019). • All parts (criteria) in the marking guide must be completed successfully for the student to achieve competence in this unit. EDUCATOR to complete Z:\++ Course Materials\Diploma of Financial planning\ FNSFPL502 – Conduct financial planning analysis and research\assessments\ Assessment 1 - V03102019.docx

Observation/assessment Satisfactory/not Satisfactory Comments Did the student have provided information at the satisfactory level for all the following tasks: What are three reasons a client might have to modify their goals? Give an example. The fact finder or data-gathering instrument is an essential part of ‘know your client’. Discuss. Discuss the role of body language in the client–adviser relationship. Provide examples of various aspects of body language to demonstrate your point. The data-collection process and the data-collection form are carefully scrutinized by ASIC when it does licensee audits. Why is ASIC so concerned with the data collection process? Why is longevity analysis an important part of financial plan development? Why is it important to use time value of money concepts in setting personal financial goals? Why do assumptions have to be reviewed each year? What are the main internal and external information resources required for financial planning research? Outline research techniques for assessing this information. Discuss the risks and implications associated with the use of financial products and services. Explain financial products and services and the associated benefits from a financial planning perspective. Practical Checklist Assessor to complete: (circle) Did you observe the student? Yes No Further comments required Assessor Comments ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ Z:\++ Course Materials\Diploma of Financial planning\ FNSFPL502 – Conduct financial planning analysis and research\assessments\ Assessment 1 - V03102019.docx

________________________________________________________________ Resubmission required Yes_________ No___________ Date resubmission must be handed in: ________________________ Assessor’s name and signature: _______________________________ Date: _ ________________________ Z:\++ Course Materials\Diploma of Financial planning\ FNSFPL502 – Conduct financial planning analysis and research\assessments\ Assessment 1 - V03102019.docx

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Assessment 1 – Question and Answer 1. What are three reasons a client might have to modify their goals? Give an example. 1.There is not enough time to achieve their goals; for example, clients need $500,000 for their retirement, they only have three more years to retirement and they only have $300,000 saved. 2.Their goals cannot be achieved; for example, the client wants an investment that will pay high returns but wants security of their investment money. 3.Regulatory barriers; for example, clients want to receive the age pension, but fail the assets test as they have three investment properties and other personal investments. 2. The fact finder or data-gathering instrument is an essential part of ‘know your client’. Discuss. Data-gathering instrument include interviews, questionnaires, experiment, observation, sample survey, census, etc. They are important for the part of ‘know your client’: Collecting data allows you to store and analyse important information about your existing and potential customers. Collecting this information can also save your company money by building a database of customers for future marketing and retargeting efforts. You no longer need to cast a “wide net” to reach potential consumers within your target audience. You can focus your marketing efforts and dollars on those with the highest propensity to take action. 1. data provides a deeper understanding of your clients 2. data collection improves your consumer database 3. consumer data improves your marketing strategies 4. it allows for greater personalization 3. Discuss the role of the body language in the client and an adviser’s relationship. Provide examples of various aspects of body language to demonstrate your point. Z:\++ Course Materials\Diploma of Financial planning\ FNSFPL502 – Conduct financial planning analysis and research\assessments\ Assessment 1 - V03102019.docx

According to Mark Bowden, a global authority on nonverbal communication and author of Winning Body Language and the forthcoming Truth and Lies. As a financial advisor, we can use our body language to stand out, win trust, and gain credibility every time we communicate with our clients. Learning body language is an unspoken form of communication. It reveals our true intentions and can either attract new clients or repeal them. They are read subconsciously and are universal in most situations. For example, making a confident first impression is 80% of the reason you close a client. Clients want to see a relaxed confident financial advisor that is genuinely interested in them and clearly wants to help. Working in any customer related field takes interpersonal skills, but in the finical sector, customers need to trust you with their hard-earned money. Often, they are coming to you because they don’t even trust themselves with it. You need to be superman/woman to win a client over as a finical advisor. 4. The data-collection process and the data-collection form are carefully scrutinized by ASIC when it does licensee audits. Why is ASIC so concerned with the data collection process? The ASIC aims to promote fair and efficient financial markets, characterised by integrity and transparency, and to support confident and informed participation by investors and financial consumers. ASIC monitor activity and outcomes by examining data relating to registration and licensing, regulated entity reporting and regulatory activities. They also review relevant data obtained from partner regulators and other third parties. ASIC requires granular financial services data on a recurrent basis to improve its evidence base, to better understand developments in the market’s ASIC regulates, to detect emerging risks, and to drive better consumer outcomes. In order to perform their role, ASIC use data to better understand the regulatory environment, the activity of those we regulate, and the outcomes for consumers and markets. 5. Why is longevity analysis an important part of financial plan development? Creating a financial plan helps you see the big picture and set long and short-term life goals, a crucial step in mapping out your financial future. Determining how long a financial plan has to last is a real challenge for financial planners, due to a number of factors. A well known fact is people are living for longer and according to the ONS, male and female expectancy has increased respectively from 70.8 and 76.8 in 1980 to 79.3 and 82.9 in present day. What’s more, one in five men and one in three women born between 2016 and 2018 are expected to live to 90. Increases in longevity and the decisions associated with longer life means developing a plan that integrates health care, financial management, and personal life goals into a strategy that supports and enhances the later mature years. Therefore, it has a great impact on financial plan’s period and decisions. 6. Why is it important to use time value of money concepts in setting personal financial goals? Z:\++ Course Materials\Diploma of Financial planning\ FNSFPL502 – Conduct financial planning analysis and research\assessments\ Assessment 1 - V03102019.docx

The time value of money (TVM) is an important concept to investors because a dollar on hand today is worth more than a dollar promised in the future. The dollar on hand today can be used to invest and earn interest or capital gains. Accurately accounting for the time value of money allows for the proper comparison of equivalent amounts of money in different time periods, which is extremely useful for financial planning purposes. Because of inflation and rising prices, one would usually prefer to receive an equal amount of money sooner rather than later. The following provides a good example of the time value of money and its importance in financial planning. If you plan to buy a house that is valued at $250,000 today, but will not do so for 10 years, that same house will cost you more money at that time compared to today (granted there is no traumatic recession that hits). When making financial goals and creating a plan, one must take these money differences into account, or things will not work out their way in the future! 7. Why do assumptions have to be reviewed each year? Financial assumptions and projections are critical components of all business plans. They include income and expense assumptions, as well as the inventory and accounts receivable in the balance sheet. Your financial assumptions provide the foundation for projecting all of your financial statements. Your assumption numbers entered into each assumptions worksheet page flow via links and formulas throughout the entire financial model financial statements. The budget, asset, liability and equity are changing on the yearly basis, so does the financial assumption. It should be changed accordingly and do the proper adjustment recurrently. 8. What are the main internal and external information resources required for financial planning research? Outline research techniques for assessing this information. Internal information resources: 1. Business ownership The nature of business ownership has a significant impact on financial objectives. A venture capital investor would have quite a different approach to a long-standing family ownership. 2. Size and status of the business E.g. start-ups and smaller businesses tend to focus on survival, breakeven and cash flow objectives. Quoted multinational businesses are much more focused on growing shareholder value 3. Other functional objectives Almost every other functional objective in a business has a financial dimension – which often brings the finance department into conflict with other functions. External information resources: Z:\++ Course Materials\Diploma of Financial planning\ FNSFPL502 – Conduct financial planning analysis and research\assessments\ Assessment 1 - V03102019.docx

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1. Economic conditions As demonstrated by the Credit Crunch. The economic downturn forced many businesses to reappraise their financial objectives in favour of cost minimisation and maximising cash inflows and balances. Significant changes in interest rates and exchange rates also have the potential to threaten the achievement of financial targets like ROCE. 2. Competitors Competitive environment directly affects the achievability of financial objectives. E.g. cost minimisation may become essential if a competitor is able to grow market share because it is more efficient 3. Social and political change Often an indirect impact. E.g. legislation on environmental emissions or waste disposal may force an business to increase investment in some areas, and cut costs in others There are 2 main methods for assessing this information - Quantitative and qualitative analysis 1. Qualitative Analysis This approach mainly answers questions such as ‘why,’ ‘what’ or ‘how.’ Each of these questions is addressed via quantitative techniques such as questionnaires, attitude scaling, standard outcomes, and more. Such kind of analysis is usually in the form of texts and narratives, which might also include audio and video representations. 2. Quantitative Analysis Generally, this analysis is measured in terms of numbers. The data here present themselves in terms of measurement scales and extend themselves for more statistical manipulation. 9. Discuss the risks and implications associated with the use of financial products and services. Financial products and services risks are the possibility of losing money on an investment or business venture. Some more common and distinct financial risks include credit risk, liquidity risk, and operational risk. Financial risk is a type of danger that can result in the loss of capital to interested parties. Financial risk management is important for the entities to look after these financial products and services, here are some of the most common ways you can properly manage financial risk:  Carry the proper amount of insurance.  Maintain adequate emergency funds.  Diversify your investments.  Have a second source of income.  Have an exit strategy for every investment you make.  Maintain your health.  Always read the fine print. 10. Explain financial products and services and the associated benefits from a financial planning perspective. Z:\++ Course Materials\Diploma of Financial planning\ FNSFPL502 – Conduct financial planning analysis and research\assessments\ Assessment 1 - V03102019.docx

Financial products are investments and securities that are created to provide buyers and sellers with a long term or short-term financial gain. Financial products enable risks to be spread, and liquidity to circulate around an economy. Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual managers and some government-sponsored enterprises. From a financial planning perspective, the financial products and services are important for the company, because it provides:  Vibrant Capital Market.  Expands activities of financial markets.  Benefits of Government.  Economic Development.  Economic Growth.  Ensures Greater Yield.  Maximizes Returns.  Minimizes Risks. Z:\++ Course Materials\Diploma of Financial planning\ FNSFPL502 – Conduct financial planning analysis and research\assessments\ Assessment 1 - V03102019.docx