AFF3111 2006 Sem 1 Solutions

AFF3111 2006 Sem 1 Solutions - Semester 1, 2006 Solutions...

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1 Semester 1, 2006 Solutions – Final Examination AFF3111 Personal Financial Planning Question One (4 + 4 = 8 marks) (a) Some issues which could be mentioned include: ± declining birth rate ± ageing population ± fewer taxpayers to support social security budget ± higher health costs associated with ageing population ± people are living longer (pressure on retirement care) ± constant immigration intake ± government initiatives, such as x introduction of Superannuation Guarantee x attractive concessional rate of tax for both superannuation fund income and individual contributions x increased pensionable age to 65 years x increased age for superannuation contributions to 75 years x family social security allowances to support young families (e.g., Baby Bonus scheme) x Private health care rebate to encourage private health insurance. (b) (i) Administers the Financial Services Reform Act and Corporations Law as it relates to the financial services industry, and releases policy statements to enunciate the law; (ii) Acts as the single licensing regime for the industry; (iii) Acts to protect clients from poor advice. Question Two (5 + 5 =10 marks) (a) A Financial Services Guide (FSG) is a document given to a retail client at an early stage (often at the first meeting) in relation to the provision of financial services. It is required to contain information so that consumers can make an informed decision about whether to acquire financial services. The information should be worded and presented in a clear, concise and effective manner, and should include information such as: ± who will provide the advice ± the kind of financial services offered ± who the advisor is acting for when providing the services ± remuneration of the advisor ± commissions ± any associations or relationships which might be expected to influence an advisor in making a recommendation ± contact details ± complaints and dispute handling information (internal and external)
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2 (b) Wholesale clients are those who work in the financial services industry. They require far less information and consequently less protection than retail clients because they are better informed and are better able to assess the risks involved in financial transaction. The consumer protection emphasis in the new financial services reforms is directed at retail clients who are assumed to need the protection provided under the corporations, financial services and consumer protection laws. Question Three (3 + 4 + 5 = 12 marks) (a) Some features are: ± does not attract fringe benefit tax. ± automatic deduction, can be increased, decreased or stopped at any time. ± avoids payment of the Medicare levy and the Medicare levy surcharge on the sacrificed amount.
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This note was uploaded on 07/19/2011 for the course BUS 3111 at Monash.

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AFF3111 2006 Sem 1 Solutions - Semester 1, 2006 Solutions...

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