1202AFE Lecture Notes - Lecture 12: Tax Avoidance, Cash Flow, Estate Planning
30 May 2018
School
Department
Course
Professor
Week 12 Financial Planning 1 Lecture Notes
Topic 11: Development of a Statement of Advice and Course Conclusion
A Finanial Planner’s Legal Oligations
Disclosure documents required
Corporations act 2001 requirements
• At i the liets best interests
o e.g. obtaining complete & accurate information from clients
▪ Need to ko our liet
▪ Warn your client if advice is based on incomplete information
o Prioritise liets iterests i the eet of a oflit
• Provide appropriate ot perfet advice
o Does your advice leave the client in a better position?
Statement of advice (SOA) requirements
• Purpose = communicate advice / recommendations re financial affairs
o must be provided if giving advice (limited exceptions)
o same time / soon as practicable after the advice is provided
• Must contain sufficient information to enable clients to make an informed decision
o i.e. whether the advice is appropriate / they should act on it
• Written in plain English / easily understandable
An SOA is not required if:
• Client is not a retail client
• Providing further advice to a client
o Provided personal circumstances have not changed significantly
• Adie doest iole the purhase of a fiaial produt & the perso proidig
the advice does not receive any remuneration
o e.g. should I set up a self-managed super fund (SMSF)? salary sacrifice?
• Personal advice provided to clients with a small amount of funds to invest
o < $15,000
• Ma use a record of advice ‘OA istead
find more resources at oneclass.com
find more resources at oneclass.com
Types of SOAs
The Six Step process of financial advice
Steps 1 and 2: Initial Client meeting(s)
• Gather client information & establish financial goals & objectives
o Build relationship with client
o Provide Financial Services Guide (FSG)
o Complete fact find
▪ Establish liets needs / objectives
o Assess the liets risk profile
▪ Itegral part of the ko our liet proess
o Also eed to e ale to erif liets idetit
▪ Anti-money Laundering and Counter-Terrorism Financing Act 2006
1.Gather
information
2.Establish
goals&
objectives
3.Analysedata
&identify
financialissues
4.Prepare,
develop&
presentSOA
5.Implement
agreedupon
recommend-
ations
6.Review&
reviseSOA
Thefinancial
planning
process
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Topic 11: development of a statement of advice and course conclusion. &(cid:9)identify(cid:9) financial(cid:9)issues: gather client information & establish financial goals & objectives, build relationship with client, provide financial services guide (fsg, complete fact find, establish (cid:272)lie(cid:374)ts(cid:859) needs / objectives, assess the (cid:272)lie(cid:374)t(cid:859)s risk profile. I(cid:374)tegral part of the (cid:858)k(cid:374)o(cid:449) (cid:455)our (cid:272)lie(cid:374)t(cid:859) pro(cid:272)ess: also (cid:374)eed to (cid:271)e a(cid:271)le to (cid:448)erif(cid:455) (cid:272)lie(cid:374)t(cid:859)s ide(cid:374)tit(cid:455, anti-money laundering and counter-terrorism financing act 2006. Step 4: prepare and develop the soa: developed appropriate recommendations & strategies, communicated effectively so client can make an informed decision, well-structured, clear & concise, documented assumptions e. g. inflation, tax rates, life expectancy. Fee disclosure: full, transparent and frank disclosure of all remuneration within the soa, may be based on commissions, fee-for-service, or an hourly rate, commissions for insurance related products only! Income tax planning: risk management and insurance, social security matters. Investment planning: superannuation & retirement planning, estate planning, specific disclaimers, how to proceed.
