Assessment – 1
Q1) Dominic and Mary, both 61, are approaching retirement age and are concerned about their financial security over the next 20 years. They have heard that investing in growth shares is likely to be the solution to their concerns.
Required: Discuss with Dominic and Mary how factors in the economic environment affects hare performance and the possible impact on their retirement plans.
Q2) Andrew, from Exercise 3, is getting tired of managing his shares and wishes to know whether he should sell them at the end of the financial year and invest the cash into a high-interest savings bank account yielding 3.8%. Assume his pension would remain unchanged. Note that he acquired his shares 10 years ago, for $62,500, and would save $120 on the website membership fees. Assume Andrew deposits all the $175,000 received from the sale into his bank account, and that he receives the same dividend yield as Exercise 3.
Required: Calculate for Andrew his revised tax payable. Include all Medicare levies and offsets in your answer. Then, recommend a course of action for Andrew.
Net capital gain (175-62.5)
50% CG discount
Less Franking Credit
Net Tax payable
Q-3) Amy and Chris, who are both aged 62, have owned a cleaning business for the last 15 years. All their children are grown up and self-sufficient and now the couple think this is a good time for them to make some plans for their retirement, which they hope to be at around age 65. Neither Amy nor Chris have any specific knowledge as to what a financial adviser does, nor do they really understand what is involved in the financial planning process. Amy is particularly concerned about privacy issues and is reluctant to answer any specific questions. Discuss with Amy and Chris what services you offer and explain to them the financial planning process. Additionally, discuss with them what information they will need to supply and how this information will be used. `
(Explain the role of the financial planning adviser and financial planning practice, including compliance requirements and the disclosure of capacity).
Q-4) Australia’s financial services sector continues to suffer from bad news stories relating to the provision of financial advice. Discuss whether it is possible to legislate for good financial advice behavior.
(Describe the key features of legislation and regulations affecting the financial services industry)
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