Semester 1, 2008
Solutions – Final Examination
AFF3111 Personal Financial Planning
A FSG discloses the services of the adviser to the client. It must provide sufficient
information about the business, principal(s), remuneration, internal and external
dispute resolution systems, etc, to enable the client to evaluate whether or not to use
the services of the adviser.
A PS sets out the manner in which the firm offering FP will collect, use, keep
secure, and disclose the necessary personal and sensitive information provided by
clients in the course of their interaction with advisers, according to the National
Privacy Principles emanating from the
Privacy Act 1988
General advice is given when the adviser does not consider any of the
objectives, financial situation or needs of the person, and a reasonable person would
not expect the adviser to have considered such matters. When general advice is given,
it should be accompanied by a warning that this was the case, and that further
information should be obtained prior to making any decisions.
Personal advice is given when reasonable inquiries have been made about the
client’s relevant personal circumstances, such information is taken into consideration
in determining any advice, and that the advice given to the client is appropriate for
which is designed to pool an investor’s (unit
holder’s) money with other investors, in which a fund manager undertake investments
in various securities, and makes periodic distributions on behalf of unit holders. Unit
trusts are run according to rules established in a trust deed.
There are a number of different types of trustee (MIS, superannuation,
discretionary trust, etc.), but in general their role is in prudential supervision as a
protection to investors. Trustees are in control of the fund, and are required to act
honestly with due care, acting in the best interests of members of the fund, as well as
providing access to reasonable amounts of information concerning fund activities.
(6 x 3 = 18 marks)
- expansion period - unemployment decreasing, interest rate declining,
economic growth, upward movement.
- peak period - low unemployment, low interest rates, high economic growth,
normally buoyant property market.
- downswing - unemployment rates begin to increase, interest rates rise.
- trough or depression - high unemployment, high interest rates, negative
economic growth for more than two successive periods.
Depending on where in the cycle we are will affect the types of investments to be
recommended. Additionally, the adviser needs to be aware of the effect of the