FPSCh19 - 2010 Reed International Books Australia Pty...

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© 2011 LexisNexis Australia 1 Financial Planning in Australia 4ed – by Taylor, Juchau, Houterman Solutions by Beverly Houterman Chapter 19 STATEMENT OF ADVICE CONSTRUCTION Solutions to Questions Question 1: If you were a financial adviser and decided to specialise in investment advice, what are 10 key questions you would need to ask your clients in your data collection process? Students should consider how they can limit the amount of data collection and still have a basis for advice. The main concern would be to protect the long-term integrity of the investment portfolio by ensuring that the client does not need to sell off parts or their entire portfolio to meet emergency financial needs. Some questions might be: level and stability of income — linked to income protection insurance surplus cash flow risk tolerance assessment and experience in investing appropriate ownership (individual, joint, trust, SMSF, etc.) long-term investment horizon and goals related to personal wealth creation sufficient funds to build up a viable, diversified portfolio commitment to work with the financial adviser using borrowed funds? specific areas of interest, i.e. socially responsible investing if partnered, interest of partner in portfolio full contact details Question 2: How would you deal with the investments for a couple where one partner is very conservative and the other is growth orientated? They have paid off their mortgage and have $4000 a month to invest. The first thing an adviser might do is test the conservative nature of the partner — for example, ask them if they had sufficient insurance cover and cash emergency funds, would they be willing to accept a bit more risk in their investments. Determine how concerned they would be if their partner was investing at a higher risk level. Make sure that their personal super is invested in an option they are comfortable with. Use their experience with super as an education tool to perhaps get informed consent to move the risk tolerance a bit higher. © 2011 Reed International Books Australia Pty Limited trading as LexisNexis. Permission to download and make copies for classroom use is granted. Reproducing or distributing any material from this website for any other purpose requires written permission from the Publisher. © 2010 Reed International Books Australia Pty Limited trading as LexisNexis. Ancillary for Financial Planning in Sustralia 4ed - Taylor, Juchau, Houterman
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© 2011 LexisNexis Australia 2 The options are: Invest all at the conservative level, which means over the longer term, expected lower levels of return and perhaps frustration on the higher risk tolerance partner. Invest all at the higher growth level which may mean higher than
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FPSCh19 - 2010 Reed International Books Australia Pty...

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