1. finance
2. personal finance
3. insurance

Financial Plan
Craig Mattern
7 April, 2011
Statement of Advice
Prepared by: Jenny Norman, Authorised Representative of AXA Financial Planning
7 April, 2011
Craig Mattern
Unit 1, 10 Donal Place
Bentleigh VIC 3204
Dear Craig
It was a pleasure to meet with you on 24/03/2011 to explore ways that I can assist you in planning your
financial affairs.
Please find enclosed the Financial Plan we have prepared for you, setting out my recommendations to
help you achieve your financial goals. Brochures for each recommended product are also attached.
The Financial Plan is split into two parts, and must be read as a whole document:
•
Our advice: Summarises your current situation, your goals, how we recommend you meet your
goals, the benefits of our initial and ongoing advice and a summary of costs.
•
Detailed section: Includes all the information you need to gain a thorough understanding of our
advice. This section includes detailed investment and insurance recommendations, supporting
calculations, fact sheets, implementation steps and forms, and advice agreements.
I will contact you in the coming week to discuss the financial plan with you and answer any questions you
may have.
I look forward to working closely with you in the coming years.
Yours sincerely
Jenny Norman CFP Dip FP
Authorised Representative of AXA Financial Planning
Statement of Advice / Page 2
About you
Page 4
Our advice
Page 6
Your goals
Will you meet these goals
Our advice
Keeping you on track
What does this advice cost?
Other things to consider
What happens next?
Page 6
Page 6
Page 7
Page 10
Page 11
Page 11
Page 12
Investment recommendations
Page 14
Insurance recommendations
Page 19
Supporting calculations
Page 23
Key contacts
Page 27
Ongoing service provided
Page 28
Advice Fees
Page 31
What else you need to know
Page 33
Fact sheets
Borrowing to invest
Selecting your investments
Page 34
Page 43
Implementation schedule
Page 50
Agreement to implement initial advice
Page 51
Ongoing advice agreement
Page 53
Statement of Advice / Page 3
The information you have provided us forms the basis of our advice. It is important that you let us know
as soon as possible if our records are incorrect.
Personal details
Personal details
Full name
Craig Mattern
Date of birth
24/02/1963
Age last birthday
48 years
Marital status
Divorced
Health
Good
Smoker
No
Unit 1, 10 Donal Place
Bentleigh VIC 3204
Principal place of residence
Home owner
No
Dependents
Children
DOB
Age
Support until age
Travis
13/08/1994
15
18
David
13/12/2000
9
18
Employment details
Employment details
Occupation
Employer name
Operations manager
Basketball VIC
Employment status
Full time
Income
$65,000
Expected retirement age
65
Current net worth
Lifestyle assets
Market value
Home contents
$30,000
Car – Camry
$12,000
Total
$42,000
Statement of Advice / Page 4
Ongoing
investment
Financial assets
Reinvest
income
NAB Cash account
Generations Investment Portfolio - Growth
$200 per month
Generations Personal Super Plan - High Growth
Estimated value
Yes
$5,000
No
$19,700
No
$21,548
Total
$46,248
Net worth (includes lifestyle assets)
$88,248
Personal risk insurance
Insurance type
Owner
Insured
Provider/ Insurer
Sum insured
Annual premium
Death
Generations
Craig
AXA
$733,690
$1,049.00
TPD
Generations
Craig
AXA
$733,690
Bundled with Death
Trauma
Craig
Craig
Zurich
$150,000
$92.00
IP
Craig
Craig
Zurich
$3,750
$1,769.00
You have also advised us that:
•
You have advised us that you have no exclusions or loadings for your insurance cover.
•
You didn’t want to disclose details of your general insurance cover.
•
You do not have any health insurance.
Statement of Advice / Page 5
One of the most important steps of the financial planning process is mapping out a long term strategy that
will help you achieve your goals. We are therefore pleased to present our advice below, which
summarises your situation and details the recommended strategy we believe will be most suitable for you.
Your goals
During our meeting we undertook a fact-finding process to help define
your goals and objectives.
Scope of advice
Our advice will focus on solutions that address the goals and issues that
are important to you.
Goals to be addressed
Areas not addressed
•
Building wealth over the long term. You are prepared to borrow
money to boost your investing potential. You would like us to
determine if this strategy is appropriate for you and recommend
some investment options.
•
Making sure you have enough personal insurance to cover your
income needs.
•
Set aside $5,000 in a bank account so you can access it quickly in
case of emergency.
•
$30,000 each year to meet your current living expenses.
We have agreed to not address the following areas:
•
How to fund your income needs in retirement.
Will you meet these goals?
Assuming that you continue as you are, we have determined that you will
meet only some of your goals.
You will meet your
income needs
•
You will continue to meet your income needs but you will not be
maximising your investments which means you will have limited
savings available for retirement.
You need to review
your insurance cover
•
You don’t have enough income protection cover. This means that if
you have an accident or become seriously ill and can’t work, you
won’t have enough income to meet your everyday expenses and
your other goals will be put at risk.
Statement of Advice / Page 6
Our advice
Outlined below is our recommended strategy and why it is suitable
for you.
We considered alternative strategies and products when we prepared our
recommendations. If you wish to receive a copy of these alternatives,
please contact us.
Keep $5,000 in cash
•
Keep $5,000 in your NAB savings account to act as a cash buffer. A
cash buffer will give you peace of mind that you have money to draw
on if an emergency or extraordinary bill arises.
Keep your
Generations
Investment portfolio
•
Keep your Generations investment portfolio managed fund to
continue to build wealth outside of super. Whilst you don’t anticipate
that you will need this money, you are comfortable knowing that you
will have access to it.
Borrow $20,000 from
Colonial First Choice
to invest
•
Borrow $20,000 to invest using your Generations Investment
Portfolio as security for the loan. This is known as margin lending.
•
We recommend you use Colonial First Choice Margin Lending. This
is a simple and cost effective loan.
•
By using borrowed funds to invest, you have a better opportunity to
increase your non superannuation savings as you will have money
invested.
•
The recommended loan is an interest only loan, therefore based on
an interest rate of 9.49% p.a. the repayments will be $1,898 a year.
You will be able to claim your total interest costs as a tax deduction
in your tax return.
•
Please note that the interest rate is variable, so your repayments
may increase or decrease throughout the year. Our calculations
suggest you will be able to afford an increase of at least 2.0% p.a. on
top of the current interest rate.
•
A margin call occurs when your portfolio drops below the level of
security required to fund the loan. Based on your initial investment of
$59,700, your portfolio will need to fall below $20,000 for you to
receive a margin call. As part of our ongoing service, we will manage
any risks of a margin call. Please refer to the ‘Borrowing to Invest’
fact sheet for information on margin calls.
•
We anticipate your investment loan will be repaid in at retirement. At
this time, we will look at ways to repay your loan and consider ways
to reduce any capital gains tax that you may incur.
•
We strongly recommend that you seek advice from your accountant
before implementing a gearing strategy.
Statement of Advice / Page 7
•
Borrowing to invest can accelerate your investment returns. It also
works in the opposite way by magnifying any losses.
•
Regardless of how your investment performs, you will always need to
meet the interest costs, and ultimately repay the loan.
•
When borrowing to invest, you need to make more money from the
investments than you pay in borrowing costs.
•
We have calculated that over the long term, as your investments
grow, the returns will outweigh the costs. Please refer to the
supporting calculations section for our detailed analysis.
Important information
about withdrawals
from your portfolio
•
When and if you need to withdraw money from your investment, any
investment gains (on this amount) will be taxed (capital gains tax).
We will manage the tax consequences at this time.
Invest $20,000 into
Generations managed
fund
•
Use the $20,000 from the margin loan to invest in your existing
Generations managed fund
•
Continue to invest the $200 per month for the foreseeable future.
•
This is an easy and disciplined way to save as the money comes
automatically out of your bank account. The aim of investing over a
period of time, rather than in one lump sum, is to smooth out some of
the effects of short-term volatility by buying investments at various
prices.
•
Your investments will be managed by investment professionals with
proven experience. A managed fund allows you to invest in a range
of investments assets, such as Australian and international property
as well as shares, fixed interest and cash. This allows you to spread
your savings over a number of different asset classes.
•
Your savings will increase by $2,400 each year, totalling
approximately $68,800 in 5 years (or $48,800 if we deduct the
outstanding loan).
•
The income from the managed fund will be reinvested on your behalf,
adding more to your savings. It will still be included in your tax.
Important information
about borrowing to
invest
Important information
about selling your
investment
When you need to withdraw money from your investment, any investment
gains will be taxed (capital gains tax). We will manage the tax
consequences at that time.
Your investment
strategy
You have financial goals you wish to achieve over the short and long
term. We have developed investment strategies designed to match
these timeframes, which are listed below.
For more detail, refer to the ‘Investment’ section of this financial plan.
Statement of Advice / Page 8
Short term for cash
reserve
Cash only allocation
Your short term investments will be invested entirely in cash investments.
This means you will have access to this money immediately if or when
you need it.
Long term for wealth
creation
85% Growth allocation
Long term for super
savings
99% Growth allocation
Apply for income
protection via super
•
Your long term investments will be spread across shares, property, fixed
interest and cash. The asset allocation will focus on growth investments,
with 85% of your money allocated to shares and property. We expect
your portfolio to move in value both up and down over the short term, in
order to achieve stronger returns over the medium to long term.
Your long term investments focus entirely on growth style investments,
with a 99% of your money allocated to Australian shares and
international shares. This portfolio aims to achieve strong long term
capital growth. We expect your portfolio to move in value both up and
downwards in the short term, in order to achieve stronger returns over
the long term.
We recommend that you apply for $4,430 per month of salary
continuance insurance through your Generations super fund.
Cancel your Income
protection cover with
Zurich
•
Keep your Life, TPD
and Trauma cover
We recommend that you keep your existing life, TPD and trauma cover
as you are comfortable that they provide you with sufficient cover.
•
The benefits of the
recommended
insurance strategy
Detailed insurance
calculations & product
You no longer need this insurance because it will be replaced with
insurance held via your superannuation account.
We have found this product still suits your situation and offers
competitive premiums.
•
The insurance cover will allow you to continue to receive an income
of $53,160 until age 65 if something happens to you.
•
The recommended insurance will allow you to cover the cost of your
loan, and provide for your children so you don’t have to sell your
geared investments to meet expenses, should something happen to
you
•
The insurance held in super will not impact your cash flow.
•
You can view the calculations and details of the recommended
Statement of Advice / Page 9
recommendations
insurance products in the ‘Insurance’ section of this financial plan.
Keeping you on track
It takes more than a financial plan and a single meeting to meet your
goals.
Your current situation, goals and strategy need to be reviewed regularly
to keep you on track, because it’s difficult to predict if and when things
may change.
It is equally as hard to predict the effect these changes will have on your
goals and our advice.
Apart from unexpected changes, there are particular areas of our advice
that will need to be continually maintained.
Monitoring your
margin loan portfolio
Interest rates and your
repayments
Your investments
•
If the value of your investments drop below $20,000, Colonial
FirstChoice will need you to invest more money or pay back part of
the loan. This is called a margin call.
•
Should this happen, and you can’t meet the margin call, the lender
could sell your investments, at their discretion, to pay back the loan.
This is why it’s important to monitor your margin lending portfolio on
a regular basis.
•
Interest rate increases will change your repayments, increasing your
everyday expenses.
•
We have calculated that if interest rates increase by 2 per cent you
will still have a cash surplus of $600 a year, but this will need to be
reviewed regularly as your expenses and income change.
•
When investing there is a chance that the returns won’t meet your
needs or that your savings reduce in value just when you plan to
withdraw them.
•
How much your savings go up and down over the short to medium
term depends on which asset class (such as shares, property, fixed
interest) your savings are invested in. Different asset classes
perform well at different times. To make sure that your investments
are still suitable, you will need to review your portfolio on a regular
basis.
•
We invest your money in assets that match the timeframe of when
you need the money. The reference section of this plan explains
how we recommend you invest your money.
Statement of Advice / Page 10
•
Over time as your net wealth increases we can investigate
opportunities to decrease your insurance cover and reduce your
premium costs.
•
Alternatively, changes to your income, your expenses, your spousal
relationships, number of dependants or increased borrowings, may
require you to increase your insurance cover.
Ongoing service
•
Please refer to ‘Ongoing Services Provided’ in the detailed section to
see what ongoing services we will provide as part of our agreement.
Keep in touch
•
Don’t feel like you need to wait for a specific review to contact us.
•
You should contact our office if there is anything that you think may
impact your financial plan.
Appropriate insurance
and sum insured
Other things to consider
In addition to our advice above, there are other areas that may need
your attention.
Confirm your tax
position
Meet with a solicitor to
review your Wills and
other estate planning
matters
•
We strongly recommend you speak to your accountant to confirm the
impact our advice will have on your tax position.
•
You will need to consult your accountant before implementing our
recommendations.
•
We recommend you meet with a solicitor to discuss your estate
planning needs, in particular:
•
•
Your Wills
•
Establishing an Enduring Power of Attorney
A solicitor can make sure that your wishes can be carried out if you
are unable to look after your own affairs or die.
What does this advice cost?
Financial planning costs can be separated into advice fees and
product costs.
•
The advice fees are payable by you to research, prepare, implement
and maintain this financial plan.
•
You pay product costs from your investment balance and insurance
premiums to the provider to manage and administer your
investments and insurance.
Statement of Advice / Page 11
Advice fees
This section summarises the advice fees you pay to us.
More information about the advice fees and commission we receive is
located in “Advice Fees”.
Initial advice fees
•
There are no initial advice fees to research, prepare or implement our
advice.
Ongoing advice fees
Your product costs
•
Our ongoing advice will cost $2,500 p.a.
•
You have requested this amount be deducted in monthly instalments
from your investment.
Each product we have recommended charges you a fee or a
premium to professionally manage your investment.
These products form an important part of your financial plan – they make
sure that the strategy we have recommended can be implemented.
Craig
•
NAB savings account costs $0 each year, and is based on 0.00% of
the investment balance.
•
Generations Investment Portfolio costs $560 each year, and is based
on 1.41% of the investment balance.
•
Generations Personal Super costs $325 each year, and is based on
1.51% of the investment balance.
The fees above will be deducted from your investment in monthly
instalments and will vary according to the investment balance.
Your insurance
premiums
•
Craig, your annual insurance premiums are:
•
$92.00 for your Trauma insurance through Zurich Wealth
Protection Plus - Basic Trauma.
•
$1,584.96 for your Salary Continuance insurance through
Generations Personal Super Plan
•
$1,049.00 for your Death & TPD insurance through AXA
Generations Death Cover.
What happens next?
We recommend you take this Financial Plan with you today and read it in
full to make sure you fully understand our advice.
We will contact you in a week to see if you have any questions, and to
arrange another appointment.
The Implementation Schedule on page 50 explains the steps we need to
take to implement your Financial Plan.
Statement of Advice / Page 12
Before you agree to implement your Financial Plan or agree to receive
any of our Ongoing Advice Services, you should make sure that you
have:
•
Read and understood both parts of your Financial Plan: ‘Our Advice’
and the detailed sections.
•
Understood the risks associated with the strategies and investments
we have recommended.
•
Asked us any questions you have about your Financial Plan and our
advice.
•
Read and understood the Product Disclosure Statements (PDSs)
about each of the financial products we have recommended.
•
Read and understood the Agreement to Implement Advice.
•
Read and understood the Ongoing Advice Agreement.
•
Completed and signed any forms and agreements.
Statement of Advice / Page 13
Which investments are best for me?
Matching your
investments to your
needs
Timeframes
During our meeting we discussed investments and explained how we
select investments that are
•
appropriate to your goals,
•
investment timeframe,
•
attitude to investment risk, and
•
the strategies we recommend.
We have designed investment strategies to match the timeframes of the
goals you want to achieve.
Matching investment strategies to each of your goals ensures your
overall blend of assets is appropriate.
Short term investment strategy
We have based your short term investment strategy on your desire to have some cash available as a
cash reserve.
Recommended investment strategy
Cash
Your short term investments will be invested entirely in cash
investments. This means you will have access to this money
immediately if or when you need it.
Recommended short term investments
Investment
NAB savings account
Total
Owner
Craig
Final balance
Regular
Investments /
withdrawals ($) pa
Reinvest
income
$5,000
Nil
Yes
$5,000
Statement of Advice / Page 14
Long-term investment strategy
We have based your long term investment strategy on your goal to build funds for retirement.
Recommended investment strategy
Gearing portfolio 85% Growth
Your long term investments will be spread across shares, property, fixed
interest and cash. The asset allocation will focus on growth investments,
with 85% of your money allocated shares and property. Your portfolio is
likely to move in value both up and down over the short term, however
we expect it to achieve stronger returns over the medium to long term.
You do not know how long you will hold this investment for or if you may
need to draw on it in the future. You are not prepared to take on quite as
much investment risk as you are with your retirement savings.
Retirement savings 99% Growth
Your long term investments focus entirely on growth style investments,
with 99% of your money allocated to Australian shares and international
shares. This portfolio aims to achieve strong long term capital growth.
Your portfolio is likely to move in value both up and downwards in the
short term, however we expect it to achieve stronger returns over the
long term.
As you are 17 years from retirement, this will give your superannuation
plenty of time to ride out any negative returns that this type of allocation
may experience.
Recommended investments
Generations
We recommend you use Generations, as it is a cost effective investment
option that allows you to invest in a broad range of underlying
investments.
Generations is managed by AXA Australia. AXA Australia is a member
of the Global AXA Group, one of the largest financial services groups in
the world. The world wide group has 65 million superannuation,
investment and insurance customers. They invest A$1.6 trillion dollars
on behalf these clients.
Generations will send you regular reports on your investments as well as
giving you 24-hour/7 days-per-week access to your account information
via the internet.
Additionally, you already have an investment account established with
Generations.
We have provided you with a Generations brochure (Product Disclosure
Statement) that has more information on this investment.
Statement of Advice / Page 15
Underlying investments
Multi manager
diversified fund
As the name suggests, multi manager diversified funds invest across the
range of asset classes drawing on the expertise of specialist investment
managers in each asset class. Extensive research, both locally and
globally, is carried out by ipac.
ipac have been selected for their scale, expertise and experience in
managing diversified multi manager investments.
They will ensure appropriate investment managers are selected for each
of the asset classes. These managers are then blended to construct a
portfolio that is suitable for the investment objectives of the fund.
The various managers are then subject to a rigorous monitoring and
review process to ensure the managers are continuing to work with the
agreed strategy. The managers may be changed or the allocated
amount of the portfolio varied at any time without prior notice.
Recommended long term investments
Investment
Regular
Reinvest
Investments /
income
withdrawals ($) pa
Owner
Final balance
Generations Investment Portfolio – Growth
Craig
$59,700
$2,400
Yes
Generations Personal Super – High Growth
Craig
$21,548
$0
NA
$61,248
$2,400
Total
Your long term asset allocation
Gearing strategy - 85% Growth
Asset class
Target asset allocation (%)
Recommended allocation (%)
Difference
Cash
2.0%
1.0%
-1.0%
Australian Fixed Interest
8.0%
6.0%
-2.0%
Overseas Fixed Interest
5.0%
7.0%
2.0%
Australian Equities
43.0%
38.0%
-5.0%
Overseas Equities
32.0%
36.0%
4.0%
Property
10.0%
7.0%
-3.0%
Other
0.0%
5.0%
5.0%
Total
100.0%
100.0%
0.0%
Statement of Advice / Page 16
Superannuation savings - 99% Growth
Asset class
Target asset allocation (%)
Recommended allocation (%)
Difference
Cash
1.0%
1.0%
0.0%
Australian Fixed Interest
0.0%
0.0%
0.0%
Overseas Fixed Interest
0.0%
0.0%
0.0%
Australian Equities
45.0%
43.0%
-2.0%
Overseas Equities
49.0%
47.0%
-2.0%
Property
5.0%
4.0%
-1.0%
Other
0.0%
5.0%
5.0%
Total
100.0%
100.0%
0.0%
Your long term investment portfolio asset allocation closely reflects your target asset allocation.
Statement of Advice / Page 17
Important information
about growth assets
We have allocated a portion of your money to shares and property which
are growth assets.
By allocating money to growth assets, you take on more investment risk
than if you were to invest into cash or fixed interest investments. This
increases the chance that your money will earn more over the long term,
but it also means that there is a greater chance your investment could go
down in value.
If you need to withdraw money from your investments in a year when your
investments have gone down in value, it could significantly impact your
goals.
Summary of our investment recommendations
Investment
Owner
Start balance
Change (+/-)
Final balance
NAB savings account
Craig
$5,000
$0
$5,000
Generations Investment Portfolio – Growth
Craig
$19,700
$20,000
$39,700
Generations Personal Super – High growth
Craig
$21,548
$0
$21,548
$46,248
$20,000
$66,248
Total
The change of ($20,000) in the above table represents the amount borrowed from Colonial First Choice.
Statement of Advice / Page 18
During our meetings we discussed the importance of securing your future. To achieve this you need to
be able to meet your financial commitments both now and in the future.
The most important asset you have to help you achieve this security is your ability to earn money. If you
were unable to work and generate income, not only would your financial goals be unachievable, your
ability to meet everyday costs could be in jeopardy.
The best way to ensure you can be financially secure if something happens is with insurance.
The cover you need
To work out the insurance cover you need we examined your current and
future financial commitments and the amount of money you would need to
fund them. We also discussed the priority you place on insuring your
future. Our insurance recommendations have been based on these
discussions.
Income protection
insurance
In case you can’t work
How much cover you
need
Your waiting period
Your benefit period
Income protection insurance protects you financially if you are unable to
work due to illness or injury. It provides regular payments to help you
meet your normal living expenses.
•
We recommend you insure 75% of your gross income. This is the
maximum level of cover you are allowed by most insurers.
•
This level of cover will allow you to meet your regular living costs in the
event of a claim.
•
We recommend you also add ‘super contributions protection’ to your
cover. This means you will receive a further 9% of your salary, paid to
your super fund, in the event of a claim.
•
The ‘waiting period’ is the amount of time you have to wait, after you
are unable to work, until you can lodge a claim to receive income
payments.
•
We recommend that you select a waiting period of 30 days.
•
This is the shortest waiting period available, and will ensure you will
receive a regular income in the event of a claim, as soon as possible.
•
The amount of time you receive income protection payments for is
called the ‘benefit period.
•
Craig, we recommend you select a benefit period to age 65.
•
This is the maximum benefit period available, and will provide
protection until your expected retirement age.
Statement of Advice / Page 19
The structure of your
income protection
cover
Tax implications of
your income
protection insurance
Indemnity policy
Important information
about income
protection insurance
•
We recommend that you apply for $4,430 per month of cover inside of
super with a 30 day wait and a 2 year benefit period.
•
The insurance we have recommended through your superannuation
fund is a low cost policy. This is because the premiums are offered at
wholesale rates.
•
You should be aware that this insurance is not as comprehensive as
income protection policies offered outside of super.
•
This policy meets your needs because it will provide you with a higher
level of cover without impacting on your cash flow.
•
Any benefits paid will be taxed at your marginal tax rate, even if you
are aged over 60 at the time of receipt.
•
Income protection premiums are tax deductible to you personally, or to
your superannuation fund, depending on where the cover is held.
•
You have advised that you are in stable employment and your income
is secure and constant. You have also advised that you would like to
minimise the cost of your insurance protection insurance. As a result,
we recommend you apply for an indemnity policy.
•
An indemnity policy means, when you make a claim, you will need to
provide evidence of your income over the 24 months immediately
preceding your claim.
•
If your income at claim time is less than when you applied for the
policy, you can only claim on the lower amount.
•
Income protection insurance provides cover if you are unable to work
due to illness or injury. It does not provide a payment if you are made
redundant or lose your job.
Recommended products
The core benefits of insurance policies are similar (e.g. life insurance
providing a payment upon death). But the secondary benefits, which can
provide extra protection and comfort, can be complex and vary greatly.
We have reviewed policies from a range of market leading insurance
providers, and selected insurance products based on your individual
needs and personal situation. Our recommendations are summarised in
the following pages.
Please be aware that the premiums quoted below are subject to
underwriting and may change.
Statement of Advice / Page 20
Craig Mattern
Death
TPD
Trauma
IP
Policy Owner
Generations
Generations
Craig Mattern
Generations
$733,690
$733,690
$150,000
$4,430
AXA
AXA
Zurich
AXA
Amount of cover
Insurer
Waiting period
30 days
Benefit period
To age 65
Premium each year
Stepped
$1,049
$92
$1,584
Stepped
Stepped
Stepped
•
We recommend you replace your existing insurance with the
recommended policy because:
•
The new insurance will cost you less and provide you with more cover.
•
A comparison of the costs of your existing insurance and our
recommendation is provided below.
Don’t cancel your
existing cover until
your new cover is
accepted
•
We will make sure the new insurance is in place before we cancel your
existing cover.
•
If the insurance company does not accept your application (for
reasons we can not foresee), this will ensure you are not left without
cover.
Benefits of the
recommended policy
•
The products we recommend have been selected to meet your
insurance needs in the following manner:
Replace your
existing insurance
We have recommended AXA Generations for your income protection
insurance because it allows you to return to work for up to 5 days
during the waiting period, without affecting the timing of your claim.
Stepped (increasing)
premiums
Super ownership
•
We recommend you apply for stepped premiums.
•
This type of premium provides initial cost savings, when compared to a
level premium, but the cost of your insurance will increase each year
with your age.
•
The premiums will be cheaper for you now, which allows you to use
your surplus cash flow to build up your non super investments.
•
We recommend your salary continuance insurance be owned by the
trustee of your Generations super fund.
•
As your insurance benefits will be owned by your super fund you will
need to meet a ‘condition of release’, such as permanent ill health, to
have your insurance benefits paid to you.
•
Please refer to the section above, ‘The cover you need’, for other
benefits and implications of having your insurance owned by your
Statement of Advice / Page 21
super fund.
Taxation
implications
•
Capital gains tax may apply if ownership is transferred.
Please seek
professional tax and
legal advice
•
We strongly recommend you discuss this with your tax adviser and
legal representative before proceeding with the advice.
•
It is important that you seek legal advice from a specialist legal firm to
establish an appropriate buy / sell agreement.
•
We are happy to refer you to an appropriate professional in this area if
needed.
Replacing your insurance: Product comparison
The table below compares your existing insurance against the insurance we have recommended.
Income protection
Existing Insurance
Recommended Insurance
Insurer
Zurich
AXA Generations
Level of cover
$3,750
$4,430
Waiting period
30 days
30 days
Benefit period
To age 65
To age 65
$1,769
$1,383
Annualised premium
Policy fee
$57
Stamp duty
$144
Total annual cost
$1,769
$1,584
Statement of Advice / Page 22
Our assumptions
The following tables show your current tax and cashflow position. The projections were prepared using
the following assumptions.
General assumptions:
st
Start date for projections:
1 July 2011
Inflation rate (per annum):
2.5%
Centrelink payments (indexation)
2.5%
Investment
Amount
Income (%)
Growth (%)
Reinvest
income
(Y/N)
Franking
(%)
Superannuation
$21,548
-
6.8%
-
-
Bank account
$5,000
0.0%
0%
Yes
-
Managed fund
$39,700
2.8%
3.8%
Yes
80%
Loans
Amount
Interest
rate
Tax
deductible
Monthly
repayment
Margin loan
$20,000
Owner
Craig
9.49%
100%
$158
Please be aware that:
•
Income and growth rates used are considered reasonable, but are only estimates and can’t be
guaranteed. They are provided as a guide only.
•
We have used the information you provided us for our projections, which is detailed in the ‘About You’
section. Please check the information is correct and let us know if there are any errors or missing
information.
•
While we have carefully considered the tax consequences of our recommendations, we ask that you
confirm your exact annual tax liability with your accountant.
•
As your circumstances and the legislation surrounding superannuation, taxation, and Centrelink is
constantly changing, it is important to regularly review your financial plan to make sure the
recommended strategy continues to be suitable.
•
We have assumed you will receive employer super guarantee contributions of 9 per cent of your
salary while you are employed.
Statement of Advice / Page 23
Income & tax position
The table below shows your likely income and tax over the next five years.
Projection year
Year 1
Year 2
Year 3
Year 4
Year 5
Income received
$65,000
$66,625
$68,291
$69,998
$71,748
Salary
$65,000
$66,625
$68,291
$69,998
$71,748
Income reinvested
$1,145
$1,317
$1,497
$1,685
$1,883
Regular savings plan
$1,145
$1,317
$1,497
$1,685
$1,883
Total gross income
$66,145
$67,942
$69,787
$71,682
$73,631
$265
$305
$346
$390
$436
$1,898
$1,898
$1,898
$1,898
$1,898
Taxable income
$64,512
$66,349
$68,236
$70,174
$72,168
Tax payable before rebates and
credits
$12,904
$13,455
$14,021
$14,602
$15,201
Less Tax offsets and credits
00
00
00
00
00
Franking credits
Deductible interest
Imputation credits
$265
$305
$346
$390
$436
Tax offset - Low income
$120
$46
$0
$0
$0
Total tax offsets and credits
$385
$351
$346
$390
$436
$12,519
$13,104
$13,674
$14,212
$14,765
$968
$995
$1,024
$1,053
$1,083
Net tax / (refund due)
$13,487
$14,099
$14,698
$15,265
$15,847
Tax attributable to income
$13,487
$14,099
$14,698
$15,265
$15,847
Tax payable after tax offsets and
credits
Add Medicare levy
Please be aware:
•
The tax calculations in year one do not take into account any salary paid up to leaving employment /
employer termination payments expected to be received upon retirement / the withdrawal from
superannuation / the withdrawal and re-contribution from your superannuation / nor the tax
consequences of these payments. This may result in some income tax being payable on your
account based pension income in your first year of retirement.
•
Tax offsets can only be used to reduce your income tax liability to zero. You cannot receive a refund
for unused tax offsets. Tax offsets (except Pensioner and Low income aged persons tax offsets) are
not transferable between partners.
Statement of Advice / Page 24
Disposable income
The table below shows how much disposable income we estimate you will have over the next five years.
Income position
Year 1
Year 2
Year 3
Year 4
Year 5
Income received
$65,000
$66,625
$68,291
$69,998
$71,748
Total income
$65,000
$66,625
$68,291
$69,998
$71,748
Less income tax
$13,487
$14,099
$14,698
$15,265
$15,847
Less regular loan repayments
$1,898
$1,898
$1,898
$1,898
$1,898
Less planned additions to
investments
$2,400
$2,400
$2,400
$2,400
$2,400
Less surplus assumed to be
allocated to investments *
$1,043
$3,302
$3,185
$3,113
$3,037
Net income
$46,172
$47,326
$48,509
$49,722
$50,965
Less budgeted expenditure
$46,172
$47,326
$48,509
$49,722
$50,965
$0
$0
$0
$0
$0
Surplus income
* We have assumed that you will direct all of your suruplus income to your Generations investment. We have estimated that you will
have a surplus ranging from $1,000 to $3,300.
Statement of Advice / Page 25
Can you afford an interest rate rise of 2% in a year?
The table below shows how much disposable income we estimate you will have, if interest rates were to
increase by 2% per annum.
Our calculations below demonstrate that you will be able to afford this increase.
Recommended
($)
If interest rates rise by
2%
($)
Gross salary
$65,000
$65,000
Total income
$65,000
$65,000
Income before tax
$65,000
$65,000
Net tax/(refund due)
$13,487
$13,345
After tax income
$51,513
$51,655
Amount remaining
$51,513
$51,655
Less cost of living
$46,172
$46,172
Disposable income surplus/(deficit)
$5,341
$5,483
Less regular loan repayments
$1,898
$2,298
Additions to regular savings plan
$2,400
$2,400
Surplus/(deficit)
$1,043
$785
$991
$0
$52
$785
Sources of income and expenses
Additions to Generations Investment portfolio
Net cash surplus/(deficit)
Total assets
The following table aims to show the estimated value of your investments over the next five years.
All investments
Investments
Bank account
Year 1
00
Year 2
00
Year 3
00
Year 4
00
Year 5
00
$5,000
$5,000
$5,000
$5,000
$5,000
Regular savings plan
$45,843
$52,249
$58,962
$66,045
$73,521
Rollover fund
$26,404
$31,714
$37,513
$43,837
$50,725
Less liabilities
00
00
00
00
00
Less investment loans
$20,000
$20,000
$20,000
$20,000
$20,000
Total investments
$57,247
$68,963
$81,475
$94,883
$109,246
Present day value of total
investments
$55,850
$65,640
$75,658
$85,959
$96,557
Statement of Advice / Page 26
Your adviser
Jenny Norman
Authorised representative (No:123 456) of AXA Financial Planning
10 Smith Street
Leongatha VIC 3953
Phone: 03 5322 2222
Fax: 03 5333 1111
Email: jenny.norman@sfp.com.au
Web: www.stablefp.com.au
Who your adviser is
licensed through
AXA Financial Planning Limited
ABN 21 005 799 977
Australian Financial Services Licensee, License No: 234663
Andrew Mayne
Paraplanner
For questions about your statement
of advice when I am out of the office
andrew@fo.com.au
Claudia Frank
Administrator
claudia@fo.com.au
To assist you with questions about
paperwork, statements and any
other general queries.
Statement of Advice / Page 27
We provide a range of ongoing advice services because you need more than a single financial plan to
ensure you keep on track to meet your goals. Our service offer ensures your financial plan keeps up to
date with your changing needs.
Information and communication
We will contact you each year to reassess your personal and financial situation. This includes:
•
re-establishing your goals and confirming your income, expenses, assets and liabilities, and
•
considering changes in legislation and assessing whether new products on the market can better suit
your needs.
Financial Planning legislation is regularly reviewed and updated by government. These changes can
create opportunities to help you to reach your personal and financial objectives. We ensure you take
advantage of available strategies maximising your potential to meet your goals.
When you should
contact us
You don’t need to wait for us to contact you if you have ongoing questions
about your financial plan. You should also contact our team immediately if
you experience changes to any of the following:
•
Your goals and objectives
•
The timeframe to achieve your goals
•
Dependant family members
•
Your family home
•
Income and expenses
•
Assets and liabilities
•
Savings and emergency funding
Strategy Management
Throughout the year and during our regular meetings, your financial plan will be monitored in line with the
recommended strategy management services. Some areas of our advice need to be continually
monitored to ensure you progress towards your goals.
From time to time it will be necessary to alter your financial plan based on changes in your circumstances
and legislation.
Borrowing to invest
Borrowing money to invest increases the risks associated with investing. We continually monitor this
strategy to minimise your risk, and ensure you are on track to achieve the goals you set out with.
Statement of Advice / Page 28
Ensuring the strategy
remains appropriate
Margin calls
We continue to assess:
•
your level of debt,
•
your repayments,
•
your affordability if interest rates rise,
•
tax deductibility of ongoing costs, and
•
when and how the strategy will be finalised.
If notice of a margin call is announced, we will take all reasonable steps to
contact you immediately. The margin call must be satisfied quickly and we
will discuss your options and recommend a suitable solution to meet the
lender’s requirements.
Insurance
Your need for insurance changes as you move through different stages of your life. The amount and
types of insurance you require will be influenced by changes to your personal and financial situation.
•
Over time as your net wealth increases we can investigate
opportunities to decrease your insurance cover and provide you with
cost savings.
•
Alternatively, changes to your income, the change in cost of living, your
spousal relationships, number of dependants or increased borrowings,
may require you to increase your insurance cover.
•
We investigate opportunities with your insurance provider to have any
premium loadings or policy exclusions reassessed by taking into
account decisions you have made to improve your health or change
your employment conditions or occupation.
•
This can result in substantial premium savings or more comprehensive
insurance cover.
Premiums
•
We analyse research provided by to ensure your insurance policy
continues to represent value for money. Insurance providers regularly
change their offer creating opportunities to save money on your
premium or access more comprehensive cover.
Structure
•
Changes to your situation can create opportunities for you to structure
your insurance so that premiums are more cost effective, or more tax
effective when proceeds are paid to you or your beneficiaries.
Appropriate types and
sum insured
Re-assess loadings
and exclusions
Investment Review
Over time, market fluctuations, contributions and withdrawals from your investment cause the asset
allocation of your fund to change. The asset allocation plays a key role in determining the return
achieved by your investment and is critical to minimising investment risk in your portfolio.
Statement of Advice / Page 29
•
We re-align your investments with the recommended investment
strategy for your short and long term goals.
•
Over time, we may recommend you change investment strategies to
suit your goals and timeframes.
Fund managers
•
We analyse research provided by to ensure the fund managers we
have recommended remain appropriate.
Minimise costs
•
Wherever possible, costs associated with making changes to your
investment will be minimised. In particular, we seek to offset capital
gains so that you are not paying more tax than is necessary.
Asset allocation
Statement of Advice / Page 30
-
As discussed in our Financial Services Guide, we receive initial and ongoing fees for our advice.
Initial advice
There is no fee for the initial advice we are providing you.
Ongoing advice
The strategy outlined in this plan should be reviewed on a regular basis so that it continues to meet your
needs.
Our service offer is outlined in the previous section and will make sure the advice we provide remains
appropriate for you in the future.
Ongoing Advice Provided
Fee Based on
Payment method
Advice fee
Outlined in ongoing advice
agreement
Ongoing advice
agreement
Investment deduction
$2,500p.a.
Ongoing advice fee payable by you (each year)
$2,500 p.a.
Insurance commission
If your application for insurance is accepted by the insurance company, we will receive upfront and
ongoing payments known as commission. This is only payable once your policy is completed.
We choose to be remunerated by way of a commission because it is a more cost effective way for you to
pay for our insurance advice. We do not rebate insurance commission because the savings the insurer
would pass on to you, in the form of a premium reduction would be lower than the commission rebated.
The amount we receive as commission will vary according to your annual premiums and is payable for
the life of the policy or until you cancel your insurance.
Based upon the insurance we have recommended for you, we will receive the following commissions:
Insurance Product
AXA Generations Death Cover
Zurich Wealth Protection Plus - Basic Trauma
Premium
($ pa)
Upfront
(once-off)
Ongoing
(each year)
$
%
$
%
$1,049
$0
$0
$209
20.00%
$92
$0
$0
$10
11.55%
$1,960 123.75%
$183
11.55%
AXA Generations – Salary continuance
$1,584
Total
$2,725
$1,960
$402
Please note: The above premium amounts include stamp duty and policy fees which are not usually included when calculating initial
or ongoing commissions.
Premium increases on indexed sums insured will be subject to the upfront commissions as noted above.
Margin loan commission
•
We will receive an ongoing commission on your margin loan balance of 0.06%. This is factored into
the interest rate.
Statement of Advice / Page 31
How our advice fees are collected and distributed
AXA Financial Planning collects our fees (inc. GST) and retains 3% to support our business. This
includes investment and strategy research, continuing education, compliance consulting and business
coaching, allowing us provide you with the highest quality service and advice. The remaining 97% of our
fees are distributed in accordance with our Financial Services Guide.
Other benefits we may receive
We may be offered or receive the following non-commission benefits at no extra cost to you.
•
Value Participation Scheme: AXA pays us up to 0.25% of total funds under management in AXA
wealth management products and up to 3% of total premiums on some AXA insurance products. For
example:
If our clients have invested $11million of funds into Summit we will receive $500.
If our clients pay a combined annual premium of $150,000 for insurance with AXA, we may receive
$350.
•
Technology and Education: provides us with ‘points’ when our business revenue exceeds $50,000.
One point is received per $1.25 (incl GST) over $50,000. Points are only redeemed for office
equipment and staff training to ensure you receive up to date information and advice.
For example, if our business receives net earnings of $100,000, we will receive 40,000 points
($50,000 qualifying earnings divided by $1.25). The points are multiplied by 0.008 cents to produce a
benefit worth $325.
•
Top 25 business award: For operating a top 25 business, based on revenue and the retention of the
Certified Quality Advice Practice’ status, AXA Financial Planning covers our cost of attending the
national conference and financial planning software (total value of approximately $15,000).
Statement of Advice / Page 32
In this plan, we have included specific information to help you understand our recommendations and how
you will benefit from them. This page provides important information about things that you should know.
Can I change my mind?
Yes. If you are not happy with our advice, you do not have to accept the recommendations.
If you proceed with our advice and change your mind about a product we have selected, you may be able
to get your money back. Insurance products and managed funds generally have a 14 day cooling off
period. You should refer to the product disclosure statement for further details.
What happens if the information I provided wasn’t accurate?
If the information you gave us was incomplete or inaccurate, the advice may not be appropriate for you.
Please let us know if any of the information does not reflect your current situation.
Do I need to contact a registered tax agent or Centrelink?
Yes. Any tax and Centrelink references in this plan are estimates only. You should obtain advice from a
registered tax agent or accountant regarding the taxation implications and confirm the estimates of your
entitlements with Centrelink directly.
How does my adviser select the recommended products?
AXA Financial Planning maintain an approved product list developed using research from external
research houses. From this list we select products to suit your situation. The approved product list is
continually reviewed and can be supplied to you on request.
We can provide advice on products from a wide range of financial product providers, some of which are
part of the global AXA group and are affiliated with AXA Financial Planning. A full list of our relationships
and associations are detailed in our FSG.
Are my investment returns guaranteed?
No. We have chosen strategies and products to suit your goals, but we cannot guarantee that the
products will perform in a particular way. Unfavourable market conditions can reduce the value of your
investments and the investment returns generated.
Does my advice have a time limit?
Yes. Our advice is current for 30 days from the date of this plan. After that time you should not act on any
of the recommendations without contacting us.
Will my personal information be provided to anyone else?
We will not provide information about you to anyone else without your written permission, unless the law
says that we must.
We may appoint another adviser to manage your affairs. Of course, we will notify you when this happens.
Your new adviser would have access to your personal information unless you instruct us otherwise.
Is my adviser responsible for advice provided by referrals?
No. Where we provide a referral, we do not endorse, recommend, nor are we responsible, for the
products or services that you purchase from them.
Statement of Advice / Page 33
We are often told that debt is bad, so most of us try to clear it as quickly as we can. We are also told to
avoid taking on new debt where possible. While this is certainly true in some cases, debt can also be a
powerful tool for creating wealth. When done sensibly, there are many times where borrowing may be
appropriate, including purchasing a house and borrowing for investment.
Borrowing to fund your investments is called ‘gearing’. Traditionally, gearing has been more commonly
associated with property investment, however over the years gearing to invest in shares has become
more widespread. Many people now use gearing as part of their overall investment strategy to help build
their wealth.
Why should I gear?
Depending on your circumstances, gearing can provide a number of benefits.
The benefits of gearing
•
Borrowing allows you to invest more money than using only your
own funds. It gives you greater potential to build your wealth
because you have more money in the investment market.
Keep all of the profits
•
After you cover the borrowing costs and tax, 100 per cent of the
growth and the income you earn on the invested money are
yours to keep.
Tax advantages
•
When you borrow to invest in income-producing investments,
the interest on your loan is treated as an expense for tax
purposes. This means that you can claim the interest as a tax
deduction.
•
The higher your marginal tax rate, the greater the benefits of any
tax deductions you receive.
Accelerate your investment
returns
Who should gear?
Borrowing to invest is not a suitable strategy for everyone. It is best suited to people who are comfortable
taking extra risk with their investments and those who can cope with potentially large fluctuations, both up
and down, in the value of their investments.
Gearing is best suited to people who:
•
Have a high level of comfort when it comes to investing.
•
Have high disposable income.
•
Are prepared to hold their investments for at least seven to nine years.
•
Can afford the interest repayments without relying on the investment.
•
Have funds, other than the borrowed money, that can be accessed at short notice should the need
arise.
What effect do investment returns have on a gearing strategy?
Borrowing to invest can accelerate your investment returns. It also works in the opposite way by
magnifying any losses. The following examples show you how gearing works:
Statement of Advice / Page 34
Investor 1
Investor 2
Investor 3
$100,000
$50,000
$10,000
$0
$50,000
$90,000
$100,000
$100,000
$100,000
Value of portfolio
$110,000
$110,000
$110,000
Loan outstanding
$0
$50,000
$90,000
$110,000
$60,000
$20,000
10%
20%
100%
Value of portfolio
$90,000
$90,000
$90,000
Loan outstanding
$0
$50,000
$90,000
$90,000
$40,000
$0
-10%
-20%
-100%
Value of portfolio
$80,000
$80,000
$80,000
Loan outstanding
$0
$50,000
$90,000
$80,000
$30,000
-$10,000
-20%
-40%
-200%
Own funds
Amount borrowed
Total investment
Market rises 10%
Investor’s equity
Gain in investor’s equity
Market falls 10%
Investor’s equity
Loss in investor’s equity
Market falls 20%
Investor’s equity
Loss in investor’s equity
Here, gearing has given Investor 3 a significantly greater return than that earned by Investor 1. This
sounds great, but as you can see when the markets fall, gearing has multiplied the losses experienced by
Investor 3. Worse still, if the investment falls by $20,000 or 20%, they lose not only their original $10,000
but a further $10,000. The extra $20,000 is money they owe and still have to repay.
This example highlights that while sensible borrowing can be an effective wealth creation strategy,
gearing can derail your investment plans when the levels of borrowing are high and markets drop.
Remember, regardless of what the market does and how your investment performs, you always have to
pay the interest!
How do I gear?
There are broadly three different ways you can borrow to invest:
•
Using your home as collateral to borrow money, known as ‘home equity’ lending;
•
Contributing a portion of your own money, with the amount being matched by a lender, allowing you
to invest a greater invested sum, known as ‘margin lending’; and
•
Investing money with a Fund Manager that uses your money (and its other assets) to borrow. These
funds are known as ‘geared share funds’.
Each of these methods will be discussed in detail.
Statement of Advice / Page 35
Home equity lending
What is a home equity loan?
•
It involves borrowing against the equity in property you already
own (e.g. your home) using current mortgage rates.
How much can I borrow?
•
The amount you can borrow is limited by:
•
The value of your property, and
•
The amount of any existing loans you have against your home.
•
The equity you have in your property is calculated by subtracting
the debt from the value of the home.
•
Typically, a bank will allow you to borrow, in total, up to 90% of
the value of your property.
•
The simplest and perhaps the most cost effective way to gear.
•
Home loans commonly attract the lowest rates of interest.
•
The only costs are the ongoing interest and any initial fees to set
up the loan.
•
Very little restriction on what you can invest in.
•
No requirement to contribute other funds to the investment.
•
The lending institution will generally only require the regular
payment of interest to fulfil your obligations.
•
If the investments fall in value, your home could be at risk if you
cannot otherwise repay the loan.
•
Paperwork (and some Government and legal costs) may apply
to the loan.
•
The interest and any costs associated with the loan are tax
deductible where the funds are borrowed to purchase incomeproducing investments.
•
In order to claim a tax deduction for the interest payments, your
loan statements must be able to distinguish between existing
money you owe on your home and the money you borrow to
invest.
Benefits of home equity
Disadvantages
Tax benefits and implications
Statement of Advice / Page 36
Margin lending
What is margin lending?
How much can I borrow?
•
It involves contributing your own equity (usually cash, shares or
managed funds), and borrowing additional money from a lender
so that you can invest a greater amount.
•
The loan is secured against the equity you have contributed, as
well as the investment into which the borrowed money is placed.
•
The interest charged on margin loans tends to be at variable
rates.
•
This depends on the value of the assets that you are
contributing and where you invest the borrowed funds.
The lending institution will lend up to a specific level depending on
the asset the loan is secured against. This level is called the
loan to valuation ratio (LVR). If you contribute $50, and you
borrow $50, your LVR is 50% ($50 loan ÷ $100 total value).
Benefits of margin lending
Disadvantages
Instalment gearing
•
The maximum LVR permitted is usually between 66% and 75%.
•
There is generally no fixed term. Margin loans can often be
terminated on seven days’ notice.
•
You can borrow relatively small amounts. Borrowing minimums
start at around $1,000.
•
Relatively broad range of investment choice.
•
Simple paperwork - generally no need to complete borrowing
applications.
•
The lender does not require you to provide them with detailed
information about your financial position prior to the
commencement of the loan.
•
You can borrow either a lump sum or regular ongoing amounts
over a period of time. Borrowing ongoing amounts is called
‘instalment gearing’.
•
You must have your own equity to contribute – cash, shares or
managed investments.
•
There are some restrictions on what you can invest into. The
margin lender will determine the boundaries for your investment.
•
The lender usually charges an ongoing fee, in addition to the
interest rate, for keeping the loan.
•
If the value of the investment falls, you may be asked to invest
more money. This is called a ‘margin call’.
•
People new to the concept of gearing can take a more
conservative approach by using margin lending to borrow small
ongoing amounts. This is called instalment gearing.
•
Rather than contributing and borrowing a lump sum, you can
Statement of Advice / Page 37
slowly build up both your investment and the level of debt by
making regular smaller investments.
Margin calls
Tax benefits and implications
•
An example of an instalment gearing plan is contributing $200
cash and borrowing $200, to invest a total of $400 each month.
•
It has the potential to reduce the risks associated with trying to
‘time the markets’ because you are not investing all of your
money at a single point in time.
•
A margin call is where the lender asks you to contribute more
money to the investment.
•
Margin calls occur when the overall value of your investment
falls and the borrowed amount represents a greater proportion of
the overall value.
•
The lender asks you to contribute additional equity (i.e. shares,
managed funds) or cash to repay a part of the loan. The
purpose is to reduce the proportion of borrowed funds to a level
that the lender is comfortable with.
•
If you are unable to meet a margin call, the lender is empowered
to sell some or all of the investments, pay out the loan, and seek
payment from you for the difference between the proceeds of
sale and the loan.
•
We have provided more information on margin calls later in the
fact sheet.
•
The interest costs associated with the loan are tax deductible.
Statement of Advice / Page 38
Geared share funds
What is a geared share fund?
•
Geared share funds are similar to ordinary managed funds, but
they are 'internally' geared. Basically, the fund manager uses
the assets it already owns as security for borrowing.
Benefits of geared share funds
•
You do not have to borrow directly.
•
Your liability is limited to the amount you invest, so there are no
margin calls or requirements to contribute additional money.
•
There are no interest costs.
•
The funds are usually actively managed, which means the fund
manager regularly reviews where the money is invested to take
advantage of opportunities it identifies.
•
Simple paperwork – there is no need to complete borrowing
applications.
•
Greater volatility (relative to regular non-geared equity funds)
due to the gearing within the fund
•
No obvious visible tax deduction, although the gearing benefit is
received by you.
•
You do not receive any tax deductions directly. All of the tax
savings are received by the fund, and reflected in the
performance of the investment. You receive the benefits
through the value of your investment.
Disadvantages
Tax benefits and implications
What does gearing cost?
The cost of your gearing strategy depends on the method you use to borrow. Generally your costs may
include:
•
Interest costs
•
Loan set-up costs
•
Ongoing loan management costs
•
Insurance costs
Remember, there will also be costs associated with the investment into which you place the borrowed
money. It is important to understand all of the costs before you consider a gearing strategy.
What are the repayment options?
Depending on your gearing strategy, there may be a number of options available to you to pay your
interest expense. Each option has its own benefits and should be considered in light of your own
circumstances. Your financial adviser can help to determine the best repayment option for you.
•
Interest-only payments. This allows you to maximise the tax deductions and minimise the impact
on your cashflow.
•
Principal and interest repayments. As you are paying off the loan, your interest repayments will
reduce, and so will the available tax deduction. As the debt is repaid, your overall wealth increases.
Statement of Advice / Page 39
•
Prepaying the interest in advance. This allows you to claim a tax deduction on the interest
expenses earlier. This can be appropriate if you have surplus income available at the end of the
financial year.
What effect do interest rates have on a gearing strategy?
The success of a gearing strategy depends on interest rates. If interest rates rise during the period in
which you hold the loan, your cost of borrowing increases. This requires additional cashflow from you,
but it also means you require a greater return on your investment to cover the costs. If interest rates rise
dramatically and you are unable to afford the payments, you may be forced to sell your investment at an
inappropriate time, such as when it is valued at less than the amount outstanding on your loan.
If interest rates fall during the period in which you hold the loan, your cost of borrowing decreases. This
reduces the impact on your cashflow and can help to increase the net return of your gearing strategy.
The implications of an increase in interest rates on a gearing strategy cannot be ignored. As such, we will
only recommend gearing if you have the ability to withstand an interest rate rise of at least two per cent. It
is therefore extremely important that your annual expenses and cashflow are calculated correctly. We
can help you with this process.
Why is insurance a vital part of any gearing strategy?
Adequate life and income protection insurance are necessary parts of any gearing strategy. This will
ensure your family is protected from financial strain at a time of high stress and emotion.
Life insurance can be used to repay your debt, if you pass away. This can help your family avoid a
situation where they are forced into selling your investments to eliminate the debt. This is especially
useful in times of poor market performance when selling the investments would result in a loss and
eliminate the future potential benefit of the strategy for your family.
Income protection insurance will ensure you have an income should you be unable to work for an
extended period of time. Income protection insurance will help you service your loan commitments and
hopefully avoid having to sell some or all of your investments to honour the loan.
The cost of income protection insurance is tax deductible, however the maximum cover available is
generally 75 per cent of your salary. Benefits payable from income protection will be taxed at your
marginal tax rate.
What are the tax consequences of a gearing strategy?
In previous sections of this fact sheet we outlined some of the tax benefits associated with a gearing
strategy, such as receiving a tax deduction for interest costs. However, you should never make a
decision to gear for the tax deductions alone. Given the risks that you need to take when gearing, you
should view the tax benefits you receive along the way as a bonus. There are also other tax
consequences that you should be aware of.
The income generated by your investment will be subject to income tax regardless of whether the income
is paid to you or reinvested.
As an investor you always hope to sell your investment for more than it was originally purchased. If this
happens you will be liable for capital gains tax (CGT) the amount of tax payable will depend on the
amount of the gain and your income at the time of the sale. At this time, we will assist you with strategies
to minimise the impact on CGT on your portfolio.
Statement of Advice / Page 40
Because of the tax consequences we encourage you to have your accountant review your gearing
strategy to ensure it is appropriate for your personal situation. We also suggest you ask your solicitor to
check the legal aspects of your loan agreements.
Further information about margin calls
If you choose a gearing strategy using a margin loan, you must be aware of the potential for margin calls.
A margin call is a requirement by the lender for you to provide additional funds to re-establish the original
loan to valuation ratio (LVR). You are allowed a limited fall in the value of your portfolio before a margin
call is made.
Your exposure to margin calls will depend on the amount of money you borrow compared to the amount
of money you contribute. The greater the proportion of your money, the less likely you are to receive a
margin call. Your portfolio can fall by a greater amount before the lender requires you to contribute
additional capital (margin call) or reduce the loan amount.
The following example illustrates the effects of margin calls on a portfolio of $100,000 with borrowings of
$60,000. This represents a loan to valuation ratio (LVR) of 60 per cent ($60,000 loan ÷ $100,000 total
value).
If there is a 20 per cent fall in the value of the portfolio to $80,000, the LVR would reduce to 75 per cent
and a margin call would be required to restore the LVR to 60 per cent. This could be achieved by either:
(1) Lodging additional capital. That is, contributing an additional $20,000.
(2) Reduce the loan amount by $12,000 to $48,000 (by selling down assets). This would bring the LVR to
60 per cent. This option crystallises some of the losses on your portfolio.
Is gearing for me?
If you are considering a gearing strategy, it is important to have other money available to cover the cost of
borrowing rather than relying solely on investment income to meet the interest costs of your loan.
Investment income may be irregular and your interest payment may be due before the income is
received.
‘Negative gearing’ is the term used to describe a situation where your borrowing costs, i.e. interest and
any other loan costs, are greater than the income you receive from the investment. Negative gearing
reduces your cashflow in the short term; however, the intended purpose of the strategy is that over the
longer term, the growth of your investment will outweigh the negative effect on your cashflow
Negative gearing highlights a need for you to have surplus cashflow before considering a gearing
strategy. Unless you are investing the borrowed money in an investment with a guaranteed return, the
amount of income you receive from your investment can fluctuate and at times may not meet your loan
costs. Similarly, if the income from your investment does not change, but the interest rate on the
borrowed funds increases, your borrowing costs will increase. It is therefore extremely important to have
money available from other sources to help in these situations.
Other types of gearing
There are also other, more complex and less common, methods of gearing. These include:
•
Instalment warrants - often used in self managed super funds; and
•
Structured products.
The following table illustrates the features of these less common types of facilities.
Statement of Advice / Page 41
Lending facility
Benefits
Disadvantages
Instalment warrants
•
•
May be suitable for self
managed super funds
Leveraged exposure to
individual or basket of
underlying securities.
Generally higher interest and
borrowing fees relative to other
options.
•
Boosted yields via higher
levels of dividend and
franking credits.
•
Must retain the instalment
warrant until the end of the term
to be able to own the shares
outright.
•
It takes time to administer and
manage these products.
•
The interest rate is substantially
higher to pay for the guarantee
•
Only a portion of the interest
expenses may be deductible
due to the capital nature of the
protection
•
Strict restrictions on investment
options and rules governing the
extent of the protection
•
Very high break even point to
cover high finance costs, usually
in the vicinity of five per cent per
annum after-tax capital growth
•
Some funds may move your
money into cash when the
markets are experiencing
periods of negative returns.
This can limit future growth of
your investment.
Structured products /
Protected equity loan
These comments are
general in nature as
product features vary
significantly.
•
Guaranteed not to lose
money if the investment falls
in value and it is held until
maturity
•
No margin calls
•
Able to borrow up to 100% of
the money being invested
Statement of Advice / Page 42
Whether you are putting aside $2,000 to use in 3 months or saving for your retirement, the things you
need to consider before investing are the same. These are outlined over the following pages.
Investing increases the value of your money to help achieve your goals and objectives.
Meeting your objectives
Reasons for investing will vary from one person to another.
Common objectives include saving for a house, managing cash flow, paying for children’s education,
creating wealth, saving for retirement or managing retirement income.
Different investments
There are five different asset classes you can invest in: cash, fixed interest, property, Australian shares
and international shares. Each has its own level of risk as well as a potential return.
Types of investments
Cash
Fixed interest
•
Cash is the most secure investment. The return you receive will
depend on interest rates at the time.
•
While cash is very low risk, the increasing cost of living (known
as inflation) can decrease the buying value of your money. Tax
on the returns should also be considered when working out the
real, after tax, return of a cash investment.
•
Cash investment can usually be accessed immediately (“at
call”). However, if invested in superannuation and pension
accounts, legislative restrictions must also be considered. Cash
investment offers no growth.
•
Fixed interest investments arise from loans. An investor lends
money to a borrower who must then repay the loan as well as
interest.
•
Fixed interest investments differ due to:
•
The type of loan issuer,
•
The security/asset that backs the debt,
•
The loan timeframe, and
•
The interest rate.
•
Generally, the longer the loan timeframe and the less secure the
lender, the higher the interest rate.
•
Typical fixed interest investments include:
•
Term deposits that provide a regular income at a fixed rate
for a set timeframe.
•
Mortgage trusts provide regular interest income at variable
Statement of Advice / Page 43
rates and a high level of capital security. Investors’ funds
are pooled and invested mainly in registered first mortgages
secured against a spread of freehold property. Usually only
66% to 75% of the properties value is lent.
•
Australian shares
International shares
Bond trusts provide regular interest income through pooled
investment in Government and corporate bonds. These
funds offer high long-term capital security and the potential
for some capital growth in addition to interest income.
•
Generally you can only access money from fixed interest
investment at maturity. Again, when investing in superannuation
and pension accounts, legislative restrictions must be
considered.
•
Australian shares are investments in companies listed on the
Australian Stock Exchange.
•
As a shareholder you become a partial owner of the company
and therefore benefit from the profit and capital growth the
company achieves.
•
Investment returns are paid in the form of dividends (a
distribution of the companies’ profit) and capital growth
(reflecting the increased value of the company over time).
•
The upside of growth and profits comes with the risks associated
with owning any business, cost increases, regulation changes
and increases in competitor presence.
•
International shares allow you to become a partial owner of an
international company, the same as you would in an Australian
company.
•
This can offer opportunities that are not available within the
Australian share market and provide further diversification to
your portfolio as different countries' economies grow at different
rates.
•
The Australian share market only represents about 1% to 2% of
the world share markets.
•
Returns on international shares are affected by changes in
currency exchange rates.
•
While the purchase and sale of Australian shares is relatively
easy and the cost to buy Australian shares is relatively low,
investing directly into International shares is difficult for the
general investor. Most investors have exposure to international
shares through pooled investment structures, such as super and
managed funds.
Statement of Advice / Page 44
Property
Residential
•
For many Australians, property is their first and most significant
investment. Generally property is purchased to meet housing
needs, not as an investment to make a profit.
•
Some people may also buy a rental investment property. The
risks of direct property include interest rate changes, tenant
vacancy and property damage.
•
Property is an all or nothing investment – you can not sell a
room if you need some cash, you have to sell the whole asset.
Commercial
•
Commercial and industrial properties generally generate higher
rental incomes, however, most people cannot afford to invest
directly i.e. buy a whole office building.
•
An easy way for Australians to invest in commercial property is
through pooled investments such as a managed fund or listed
property trusts.
•
Property is a valuable inclusion in most people investment
portfolios because property values tend to move independently
of share prices. Including property in your portfolio can smooth
out the overall return on your investments.
Selecting your investments
Only take as much risk as you need to
Investment risk is crucial to achieving higher investment returns over the long term. It is also important to
remember that you should only take as much risk as you need to achieve your goals.
If you can achieve your goals by taking on a low level of risk, then why risk your money and your goal by
taking on a higher level of risk?
Statement of Advice / Page 45
Don’t put all your eggs in the one basket
Spreading your money between different asset classes is crucial to reducing investment risk and
protecting your capital against strong market movements. Each asset class performs differently from time
to time. Including a range of investments and asset classes will help you achieve a more consistent
overall investment return.
Investment returns
Returns from the overall market, rather than the actual investment, will determine the majority of the
returns within an investment portfolio.
This is known as the market return.
Additional returns come from the ability of the manager to add value relative to the market return. They
must do this so the investor is compensated for any extra risk the manager takes in the portfolio on an
after fees basis.
Putting returns into perspective
Let’s assume you need to receive an average a return of 5% per year over five years to meet your goals.
It is important that you understand the difference between an ‘average’ return after five years, and
actually receiving a 5 per cent return every year.
It is very unlikely that you will receive a return of 5% every year. Some years it will be higher and some
years lower, but when averaged over a minimum of five years, this return is possible.
Choosing your investment strategy
Choosing your investment strategy is the most important investment decision.
We use portfolio theory in the development of our investment strategies and construction of the
investment portfolios. They take into account:
•
The expected return of the individual asset classes.
•
Diversification benefits of each asset class.
•
Business risk (what are competitors doing?).
•
Implementation costs. Can it be put together so that costs do not outweigh benefits?
Each investment strategy has a specific investment objective which it is expected to meet with a
reasonable degree of certainty and a minimum time frame that you should hold them for.
The investment strategies we typically select from are detailed below.
Australian
shares
International
shares
Property
Fixed interest
Cash
Cash
-
-
-
-
100%
Fixed interest
-
-
-
100%
-
30% Growth
14%
8%
8%
50%
20%
50% Growth
22%
18%
10%
40%
10%
70% Growth
34%
26%
10%
26%
4%
85% Growth
43%
32%
10%
13%
2%
99% Growth
45%
49%
5%
0%
1%
Strategy
Statement of Advice / Page 46
Return assumptions
The returns you can expect from the investment strategies your assets will be invested in are summarised
below:
Cash strategy
Expected return per annum
Volatility
Market rate
85% Growth portfolio – returns assumptions
Volatility
1
Projected return per annum
2
Extreme return range
-20% to 37%
3
Normal return range
-1% to 18%
8.5%
Probability of a positive return (over 1 year)
81%
Minimum suggested investment timeframe
5 years
Investment objective over investment
timeframe
Probability of meeting investment objective
CPI + 4%
61%
1
Based on after wholesale fees returns and 1% active outperformance in equities and before tax and administration costs.
Calculations based on historical returns.
2
99% of results are expected to fall in this range. 32/3 of annual results are expected to fall in this range.
Last updated: July 2010
Fund manager selection process
When selecting fund managers we aim to determine the combination of managers that will provide the
best outcome with a high degree of certainty.
It is sometimes appropriate to choose a number of fund managers to manage a single asset class within
your portfolio. As a group, they will increase the likelihood of you achieving reliable strong returns.
Below we have included a description of the types of managers considered in the investment process.
Index manager
Aims to deliver returns that are consistently in line with index returns, with a low risk of under performing
the index.
Enhanced index manager
Aims to deliver returns that are consistently above index by a margin of at least the fund managers’ fees,
with a low risk of underperforming the index.
Core active manager
Statement of Advice / Page 47
These managers do not have any material or systematic portfolio biases, and are likely to generate very
consistent (albeit modest) out-performance in most market conditions. These managers have strong risk
management disciplines, including processes for identifying and managing ‘unintended’ risks.
Specialised active manager
An active manager with specific ‘style’ characteristics is likely to have a higher risk of underperforming the
index and to generate less consistent returns over time. However, investors should be compensated with
higher long-term returns.
This type of manager needs to have strong risk management disciplines and avoid the extremes often
associated with individual ‘styles’.
Managing and reviewing your portfolio
Just as important as knowing what managers to put in your portfolio, is to know when their time is up. So
how does a manager get sacked?
•
Short-term performance is inconsistent with the manager’s stated investment objectives.
•
Longer-term performance is inconsistent with the manager’s performance objectives (usually
expressed on a rolling 3 year basis).
•
Concern about the implementation of a manager’s investment process.
•
The emergence of another factor (e.g. staff change) erodes the manager’s competitive edge.
•
Identification of a compelling alternative.
Our research shows that timing in and out of markets is not a reliable source of added value over time.
Investment portfolio benefits are derived from:
•
Diversification across sectors, managers, and individual securities.
•
Disciplined re-balancing to ensure strategic asset allocations and manager allocations are enduring
throughout market movements.
•
Active funds management.
What are other the risks of investing?
Investing in growth assets
Assets such as shares and property are classified as ‘growth assets’. By allocating money to growth
assets, you take on more investment risk than if you were to invest into cash or fixed interest investments.
This increases the chance that your money will earn more over the long term, but it also means that there
is a greater chance your investment could go down in value.
If you need to withdraw money from your investments in a year when your investments have gone down
in value, it could significantly impact your goals.
Risks of delay
Delays in purchasing and selling investments can happen if a transaction request is not filled in properly
(eg. missing signatures) and the investment provider can’t act on the request. Delays may also occur
where the market becomes illiquid. For example, if the ASX suspends trading in a particular share, you
may not be able to buy or sell that share until the suspension is lifted.
Liquidity risk
Statement of Advice / Page 48
Sometimes, an investment may become illiquid. This means that withdrawals will not be allowed unless
the responsible entity of the investment makes a withdrawal offer. The responsible entity is not obliged to
make this offer. Where withdrawal requests exceed the amount available for release from the fund, the
amount released will usually be distributed proportionally to those who have made requests. For more
information you should read the PDS of your chosen investment.
If you want to understand more about the risks of investing please read “Investing Between The Flags – A
Practical Guide To Investing” created by ASIC before you proceed with our advice. It is available from
http://www.fido.asic.gov.au or we can provide a copy on request.
Statement of Advice / Page 49
The list below outlines the steps needed to implement our advice:
Item
Description
Action
1
Authority to Implement
Advice agreement
Read and sign the agreement to accept our
advice
Who
Done
Craig
Craig
Craig
Craig
Read the following product brochures to
make sure you understand the product we
have recommended:
2
3 x Product Disclosure
Statements
- Generations Investment Portfolio
Investment (IDPS) Guide
- Generations Personal Super and personal
pension PDS
- Colonial FirstChoice Margin Lending PDS
3
Client Agreement Ongoing Service
Read and sign the agreement to receive our
ongoing service package.
Complete and sign the following application
forms:
4
Application forms
- Generations Insurance application and
Personal Statement
- Colonial FirstChoice Margin lending
application
- Generations Investment Portfolio –
application form
5
Lodge applications
Forward applications to relevant companies
and confirm they get processed accurately
Andrew
6
Summary
Call to confirm that everything is
implemented.
Jenny
Links to product disclosure statements
Generations Personal Super & Pension
http://www.axa.com.au/axa/services.nsf/AttachmentsByTitle/8979+Generations+PSPP+PDS+Final.pdf/$FILE/8979+
Generations+PSPP+PDS+Final.pdf
Generations Investment Portfolio (Issue 6)
http://www.axa.com.au/axa/services.nsf/AttachmentsByTitle/5764+Generations+IDPS+Final.pdf/$FILE/5764+Genera
tions+IDPS+Final.pdf
Statement of Advice / Page 50
To implement my advice, please sign and return this agreement. If you have any questions about our
advice or your Financial Plan, please ask us before you sign.
This Agreement to Implement Advice (“Agreement”) outlines the understanding between Jenny Norman
(“Jenny Norman”) and you (“Mr Craig Mattern” )
Client acknowledgement
I/We agree:
•
I/We have received and read a copy of the Financial Services Guide (FSG).
•
I/We have received and read a copy of the Financial Plan dated 7 April, 2011 and agree to keep a
copy for my personal records.
•
My/Our personal information, from which the advice is based, is accurate.
•
I understand that all investments have inherent risks, including that negative returns may impact my
ability to meet my goals.
•
I/We will pay all initial advice fees in the manner and methods described in the “Advice Fees” section
of the Financial Plan. If any payment of the initial advice fee is returned or dishonoured, I/We
understand that an invoice will be provided to me/us requesting immediate payment of the full
outstanding liability.
•
Jenny Norman may help me/us to complete necessary paperwork to open accounts or buy and sell
investments and draft letters of instruction for my signature. I/We will check that my/our personal
information or instructions has been documented correctly before signing.
•
If you cancel the recommended insurance policy/s within 12 months of implementation, or our
application is unsuccessful, I/we will be provided with an invoice requesting payment of a fee equal to
the initial commission for each policy cancelled.
•
I have received or accessed and read a copy of the Product Disclosure Statement for each product
recommended.
We would like to proceed with:
All recommendations
Proceed with all of the recommendations made in this Financial Plan.
Some variations
Proceed with the recommendations made in this Financial Plan and
incorporate the following variations:
I/We have been provided with the opportunity to read all of the documents noted above. I would like to
waive this opportunity and have expressly authorised Jenny Norman to implement the recommendations
contained within this Statement of Advice immediately.
Statement of Advice / Page 51
/
/
Craig Mattern
Jenny Norman acknowledgement:
I/We agree:
•
Our Statement of Advice, as documented to you in this Financial Plan, has been prepared in good
faith and in accordance with the scope of advice as outlined in “Our Advice”.
•
We will not implement any recommendations contained within this Financial Plan without your
authority to do so. We will submit any request(s) to the relevant product provider within three
business days of it being received at our office. The subsequent processing of the request will be
completed within the timeframes and service standards prescribed by the relevant product provider.
/
/
Jenny Norman
Statement of Advice / Page 52
Please sign and return this agreement. If you have any questions about our ongoing advice and service,
please ask us before you sign.
Please review this Client Agreement: Ongoing Services (“Agreement”) carefully as it outlines the
understanding between Jenny Norman (“Jenny Norman”) and you (“Mr Craig Mattern” )
Ongoing advice services
Summary of the selected ongoing advice services
Frequency
Cost per year
Regular contact
$0
Ongoing advice meeting offer
Annually
Newsletter
Quarterly
Strategy Management
$2,500
Borrowing to invest
Annually
Insurance
Annually
$403 *
Annually
$0
Investment Review
Fund manager review
Annually
Total ongoing advice fee payable by you (each year)
$2,500
Total commission received from Colonial Margin Leading
$12
Total insurance commission we receive (each year)
$403
Total ongoing advice fee received (each year)
$2,915
Please refer to the ‘Ongoing Service Provided’ section for a detailed explanation of the ongoing advice
services we will provide. If you require additional advice that is not covered by the advice services
packages listed above, you may incur additional charges. In such instances, we will provide you with a
quote before you receive any advice.
Payment Method
Advice fees must be paid in advance using Bpay, cheque, or debited directly from your bank account,
credit card or investment balance in annual or regular instalments. Please note that ongoing advice fees
paid from your investment balance will continue until you elect to stop them or the investment is ceased.
Please indicate your preferred payment method and frequency below:
Ongoing Advice Fee (each year)
Payment Method
Deduction Frequency
$2,500 p.a
Investment deduction
Monthly
$403
This is based on a percentage of
your annual premium as disclosed
in your SoA.
Ongoing insurance commission
Monthly
Client acknowledgment
I/We agree:
•
We have been provided with a copy of this Ongoing Advice Agreement.
Statement of Advice / Page 53
•
Jenny Norman will provide me/us with the selected ongoing advice services set out in the table
above.
•
Jenny Norman may help me to complete necessary paperwork to open accounts or buy and sell
investments and draft letters of instruction for my signature.
•
I am not under any obligation to follow, either wholly or in part, any recommendation or suggestion
provided by Jenny Norman , but if I do not proceed with the recommended advice, Jenny Norman is
not responsible for any financial decisions I make.
•
The cost of the review service, including the payment method and frequency, has been fully disclosed
to me within my Financial Plan and this Agreement. If the ongoing advice fee is deducted in
instalments from my investment balance, and the investment is ceased, I will be provided with an
invoice for all outstanding fees payable immediately.
•
Either party may terminate this Agreement at any time by giving 30 days written notice to the other
party. If the Agreement is terminated, all advice fees due at the time of termination will be due and
payable by me immediately. Jenny Norman will refund any unearned, prepaid advice fees to me,
within 30 days of receiving a written request to terminate the Agreement.
•
Commission is payable to AXA Financial Planning for the life of my insurance policy or until I appoint
or transfer my policy to another financial adviser.
•
Jenny Norman is authorised to accept a written instruction from any party listed on this Agreement
and the instruction will be binding on all parties unless otherwise stated.
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Mr Craig Mattern .
Adviser acknowledgement
We agree:
•
We will contact you to discuss the results of our review and any new recommendations required.
•
If you accept our invitation for a review, our ongoing advice and recommendations will be provided to
you in writing.
•
We will not implement any recommendations without your authority to do so.
•
We will submit any request(s) to the relevant product providers within three business days of it being
received at our office. The subsequent processing of the request will be completed within the
timeframes and service standards prescribed by the relevant product provider.
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Jenny Norman
Statement of Advice / Page 54