FPC003 - Case Study A: Tom Blake Assignment

Assignment Task

Learning outcomes (LO) mapping

LO1 Analyse key elements of superannuation including the contribution, accumulation and payment of benefits.

LO2 Identify retirement planning strategies and formulate solutions for client situations.

Case study A: Tom Blake

You have just had a meeting with a new client, Tom Blake, aged 47. Tom has recently divorced, and has one child, Will, aged 7. He is determined to stay single and wants to plan for his future and eventual retirement. He has come to see you because he recently read that his super fund, AMG MySuper, was in the news because it had failed some test twice and was now closed to new members. He joined the fund about four years ago when he started his current job, because a friend recommended it. He has a second super fund that he has not contributed to in a few years which he kept because he had insurance cover through the fund and he couldn’t be bothered changing it at the time. Now he wants to know what fund would actually suit him best. On further discussion with him about his goals, he nominated 60 as his preferred retirement age and $65,000 as an income he thought should be enough to provide him with a decent lifestyle with some travel.

He has just had a pay increase and felt that he should look more closely at what he is doing with the extra money. You have discussed his financial goals with him and have agreed that his objectives at the moment are to:

• choose the best superannuation fund for the long term to maximise growth
• find a fund that offers decent returns for reasonable fees
• get financially back on track after the divorce
• reduce tax and increase long-term savings
• make his financial arrangements less complex
• clear his home loan before he turns 60 when he hopes to retire or reduce his work hours
• financially protect himself and his son Will in the event that he passes away prematurely or suffers a serious illness or accident
• retire at age 60 with $65,000 in after-tax income that lasts for life.

Assets, liabilities and cash flow

This section sets out Tom’s relevant assets and liabilities, as well as his current cash flow. Table 1 below shows his assets and liabilities of relevance and Table 2 below details his current superannuation.

Question 1 Prepare a strategy paper for the clients

Case Study A: Tom Blake and prepare a strategy paper for the client regarding his superannuation and retirement only. A strategy paper is used to set out and explain the options available for a client and the best option(s) for them based on their needs, wants, goals, constraints and limitations.

Your strategy paper must address the following:

(a) Summarise the client’s current position:

• key goals and objectives
• current financial situation and outcomes based on Tom’s current situation
• constraints and limitations in being able to meet goals.

(b) Identify and consider two (2) different accumulation strategies, showing how they meet the client’s goals, with supporting calculations/data where relevant. 

(c) Given the two (2) different strategies you have outlined in part (b) above, provide a statement outlining which strategy you would recommend that meet Tom’s needs and objectives. You should explain why you prefer one strategy over the other.

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