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Financial Planning Fundamentals
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Before you begin
Read everything in this document before you start your assignment for Financial Planning Fundamentals (DFP1v1).
About this document
This document includes the following parts:
• Part 1: Instructions for completing and submitting this assignment
• Part 2: Case study
• Part 3: Assignment questions
How to use the study plan
We recommend that you use the study plan for this subject to help you manage your time to complete the assignment within your enrolment period. Your study plan is in the KapLearn Financial Planning Fundamentals (DFP1v1) subject room.
Part 1: Instructions for completing and submitting this assignment
Word count
The word count shown with each question is indicative only. You will not be penalised for exceeding the suggested word count. Please do not include additional information which is outside the scope of the question.
Additional research
You will be required to complete additional research to answer the assignment questions.
Saving your work
Download this document to your desktop, type your answers in the spaces provided and save your work regularly.
• Use the template provided, as other formats will not be accepted for this assignment.
• Name your file as follows: Studentnumber_SubjectCode_Submissionnumber
(e.g. 12345678_DFP1_Submission1).
• Include your student ID on the first page of the assignment.
Before you submit your work, please do a spell check and proofread your work to ensure that everything is clear and unambiguous.
Submitting the assignment
You must submit your completed assignment in a compatible Microsoft Word document.
You need to save and submit this entire document.
Do not remove any sections of the document.
Do not save your completed assignment as a PDF.
The assignment must be completed before submitting it to Kaplan Professional. Incomplete assignments will be returned to you unmarked.
The maximum file size is 5MB. Once you submit your assignment for marking you will be unable to make any further changes to it.
You are able to submit your assignment earlier than the deadline if you are confident you have completed all parts and have prepared a quality submission.
The assignment marking process
You have 12 weeks from the date of your enrolment in this subject to submit your completed assignment.
Should your assignment be deemed ‘not yet competent’ you will be give an additional four (4) weeks to resubmit your assignment.
Your assessor will mark your assignment and return it to you in the Financial Planning Fundamentals (DFP1v1) subject room in KapLearn under the ‘Assessment’ tab.
Make a reasonable attempt
You must demonstrate that you have made a reasonable attempt to answer all of the questions in your assignment. Failure to do so will mean that your assignment will not be accepted for marking; therefore you will not receive the benefit of feedback on your submission.
If you do not meet these requirements, you will be notified. You will then have until your submission deadline to submit your completed assignment.
How your assignment is graded
Assignment tasks are used to determine your ‘competence’ in demonstrating the required knowledge and/or skills for each subject. As a result, you will be graded as either competent or not yet competent.
Your assessor will follow the below process when marking your assignment:
• Assess your responses to each question, and sub-parts if applicable, and then determine whether you have demonstrated competence in each question.
• Determine if, on a holistic basis, your responses to the questions have demonstrated overall competence.
‘Not yet competent’ and resubmissions
Should sections of your assignment be marked as ‘not yet competent’ you will be given an additional opportunity to amend your responses so that you can demonstrate your competency to the required level.
You must address the assessor’s feedback in your amended responses. You only need amend those sections where the assessor has determined you are ‘not yet competent’.
Make changes to your original submission. Use a different text colour for your resubmission. Your assessor will be in a better position to gauge the quality and nature of your changes. Ensure you leave your first assessor’s comments in your assignment, so your second assessor can see the instructions that were originally provided for you. Do not change any comments made by a Kaplan assessor.
Units of competency
This assignment is your opportunity to demonstrate your competency against these units:
Conduct financial planning analysis and research
Comply with financial planning practice ethical and operational guidelines and regulations
Determine client financial requirements and expectations
Apply principles of professional practice to work in the financial services industry
Develop and use complex spreadsheets
Establish client relationship and analyse needs
Develop, present and negotiate client solutions
FNSIAD301 Provide general advice on financial products and services
We are here to help
If you have any questions about this assignment you can post your query at the ‘Ask your Tutor’ forum in your subject room. You can expect an answer within 24 hours of your posting from one of our technical advisers or student support staff.
Part 2: The case study
Steve and Crystal Riley
You met Steve Riley when he came into your office last week. He had been mowing the grass in the park over the road and saw your business sign and came for a chat to see if you could help him and his wife.
He and Crystal live in a small rural community outside town and have been married for three years. Steve is aged 26 and is a horticulturalist with the local council. Crystal is aged 24 and a librarian however she is not working at present as she looks after their twins. Until the twins arrived their focus had been on working hard and saving for a deposit to buy a house. They rent a nice home on the edge of town and enjoy the scenic views over the hills.
Their landlord has approached them saying she wants to sell the house and will give them first refusal to purchase it. Steve’s parents have offered to help them with a loan.
They want some help in making a decision and understanding how it will all work.
You give Steve your Financial Services Guide (FSG) and a fact find form and you agree to meet next week.
First meeting
After introductions and pleasantries you ask Steve if he has read the FSG and briefly go through the contents for Crystal. They are comfortable to have an initial consultation to see where it takes them.
They have completed the fact find and as you discuss the contents you make additional notes on their file. The fact find looks as follows:
Steve and Crystal Riley Fact Find
Table 1 Personal details
Name Steve Riley Crystal Riley
Salutation Mr Riley Mrs Riley
Age 26 24
Marital status Married Married – we just celebrated our third anniversary
Home address Hillview Cottage Burgenfield
Health Good Good
Smoker No No
Occupation Horticulturalist Librarian
Employer Burgenfield Rural Council Burgenfield Library
Projected retirement age Probably 67 Not thought about it
Dependents/family relationships Name Age/date of birth
Son Bobby 26/6/2015 Both in good health and developing normally
Daughter Celeste 26/6/2015
Table 2 Professional relationships
Solicitor None
Time span of relationship N/A
Quality of relationship
Accountant None
Time span of relationship N/A
Quality of relationship
Table 3 Assets and investments
Assets and investments (personally owned)
Assets Value Ownership status Other information Purchase price
Everyday bank account $500 Joint We try to keep at least this amount in the account. We’d like to have more cash on hand for the unexpected because with the twins something is always happening
Steve’s ute $4000 Steve It’s 12 years old and still running well. It’s a great little workhorse $15,000
Crystal’s sedan $12,000 Crystal It’s only three years old and I love it. The four doors and hatchback make it great to take the kids out and for shopping $18,000
Home contents $7000 Joint Includes gardening equipment that Steve uses for part-time gardening jobs
Bonus saving account $22,500 Joint We were saving quite well and enjoying a carefree lifestyle until the twins came along but for the last year we have often had to resist the temptation to dip into it. We get extra interest if we don’t make withdrawals
Table 4 Liabilities
Debts Value Payment Ownership status Other information Interest rate
Credit card $2500 Minimum Joint We would prefer to pay it off each month but we spent a lot rearranging the house for the twins when they arrived 22.5%
Car loan $5400 $61 pw Crystal There are two years until it’s paid out 13.5%
HECS debt $12,000 None Crystal From Crystal’s librarian course CPI
Table 5 Superannuation
Fund Value Ownership Other information
SunSuper $16,300 Steve From my job with the Council. I’ve been with them since I left school and did my apprenticeship
Council Super $11,800 Crystal From my job in the library since I finished Uni
Table 6 Income p.a.
Income type per annum Steve Crystal Notes
Salary $48,000 Super on top of this. I hope to get the supervisor’s job in a couple of years when the current guy retires
Salary $5000 I was on $47,000 before I took time off to have the kids. I’m not sure how long I’ll be away but I don’t want to lose the opportunity to work locally. This is my town and I love it
I still do some work from home for the library. I hope I’ll earn $5000 a year but we’ll see
Centrelink About $17,500 About $675 a fortnight
Interest $394 $394 From the home deposit saving fund
Total combined gross income $71,288
Table 7 Estimated annual expenditures
Expense per year Joint Notes
Accountant’s fees A friend does our tax online
Charitable donations None
Children's pocket money N/A
Council and water rates Included in rent
Discretionary: restaurants, gifts, holidays, etc. $1000 We used to go out a lot and take short weekend breaks but we are more likely to go for a walk than to the pub nowadays
Debt repayment $3765 Car loan and minimum payment on the credit card
Electricity $1000
Gas $600
Weekly shopping $30,000 What with things for the kids we easily spend $550 week
Health insurance We don’t have any
Holidays We now visit an aunt on the coast if we go anywhere
House insurance Landlord’s responsibility
House maintenance and repairs Landlord’s responsibility
Income protection Never thought of it
Medical bills/prescriptions $1500 We are pretty healthy
Mobile phones and internet $1500
Motor vehicle and fuel $10,000
Mortgage N/A
Pay TV Don’t get time for much TV
Private school fees N/A
Rent $15,600 $300 pw
Total expenses $64,965
Table 8 Investment objectives and attitude to risk
They did not fill out this part of the fact find. They said it did not apply to them or they did not understand the question or possible answers. You did not push the issue as it is obvious that debt management and short-term saving are their priorities.
Determining your investor risk profile Points
This investor risk profile questionnaire has been designed to help you understand the type of investor you are, so that with the help of your adviser, you can choose the investments that best match your financial objectives.
Which of the following best describes your current stage of life?

Single with few financial commitments. You are keen to accumulate wealth for the future. Some funds must be kept available for enjoyment, such as cars, clothes, travel and entertainment.
A couple without children. You may be preparing for the future by establishing and furnishing a home. There are a lot of things you need to buy. You are probably better off financially now than you may be in the future.
Young family. This is the peak home purchasing stage. You have a mortgage and a very small amount of savings. Probably dissatisfied with your financial position and the amount of money saved.
Mature family. You are in your peak earning years and have the mortgage under control. Many partners also work and any children are growing up and have either left home or require less supervision. You are starting to think about retirement, although it may be many years away.
Preparing for retirement. You probably own your own home and have few financial commitments; however, you want to ensure that you can afford a comfortable retirement. Interested in travel, recreation and self education.
Retired. No longer working you must rely on existing funds and investments to maintain your lifestyle. You may be receiving the pension and are keen to enjoy life and maintain your health.
What return do you reasonably expect to achieve from your investments?
A return without losing any capital
3–7% p.a.
8–12% p.a.
13–15% p.a.
Over 15% p.a.
If you did not need your capital for more than ten (10) years, for how long would you be prepared to see your investment performing below your expectations before you cashed it in?
You would cash it in if there were any loss in value.
Less than 1 year.

Up to 3 years.
Up to 5 years.
Up to 7 years.
Up to 10 years.
How familiar are you with investment markets?
Very little understanding or interest.
Not very familiar.
Have had enough experience to understand the importance of diversification.
Understand that markets may fluctuate and that different market sectors offer different income, growth and taxation characteristics.
Experienced with all investment sectors and understand the various factors that may influence performance.
If you can only receive greater tax efficiency from more volatile investments, which balance would you be most comfortable with?
Preferably guaranteed returns, before tax savings.
Stable, reliable returns, minimal tax savings.
Some variability in returns, some tax savings.
Moderate variability in returns, reasonable tax savings.
Unstable, but potentially higher returns, maximising tax savings.
Six months after placing your investment you discover that your portfolio has decreased in value by 20%, what would be your reaction?
Horror. Security of capital is critical and you did not intend to take risks.
You would cut your losses and transfer your money into more secure investment sectors.
You would be concerned, however would wait to see if the investments improve.
This was a calculated risk and you would leave the investments in place, expecting performance to improve.
You would invest more funds to lower your average investment price, expecting future growth.
Which of the following best describes your purpose for investing?
You want to invest for longer than five years, probably to the age of 55–60. You are mainly investing for growth to accumulate long-term wealth.
You are not nearing retirement, have surplus funds to invest and you are aiming to accumulate long-term wealth from a balanced fund.
You have a lump sum (e.g. an inheritance or a lump sum payment from your employer) and you are uncertain about what secure investment alternatives are available.
You are nearing retirement and you are investing to ensure that you have sufficient funds available to enjoy retirement.
You have some specific objectives within the next five years for which you want to save enough money.
You want a regular income and/or totally protect the value of your savings.
Investor profile total points
Investor risk profile summary
70 –140 Conservative
You are a conservative investor. Risk must be very low and you are prepared to accept lower returns to protect capital. The negative effects of tax and inflation will not concern you, provided that your initial investment is protected.
140–210 Moderate
You are a cautious investor seeking better than basic returns, however risk must be low. Typically an older investor seeking to protect the wealth that you have accumulated, you may be prepared to consider less aggressive growth investments.
210–280 Balanced
You are a prudent investor who wants a balanced portfolio to work towards medium- to long-term financial goals. You require an investment strategy that will cope with the effects of tax and inflation. Calculated risks will be acceptable to you to achieve good returns.
280–315 Growth
You are an assertive investor, probably earning sufficient income to invest most funds for capital growth. Prepared to accept higher volatility and moderate risks, your main concern is to accumulate assets over the medium to long term. You require a balanced portfolio, but more aggressive investment strategies may be included.
315–350 High growth
You are an aggressive investor prepared to compromise portfolio balance to pursue potentially greater long-term returns. Your investment choices are diverse, but carry with them a higher level of risk. Security of capital is secondary to the potential for wealth accumulation.
Table 9 Estate planning
They have not bothered about wills because if one of them died everything would go to the other. They haven’t got around to doing anything now they have the kids.
Insurance and risk management
Policy Life insured Owner Cover Premium per annum Notes
Death and TPD Steve SunSuper $125,000 Death
$175,000 TPD $3.92 pw Standard cover
Death and TPD Crystal Council Super $87,000 Death
$2.00 pw TPD cancelled as she is not working
Income protection
Home and contents
Private health insurance
Steve’s ute insurance
Crystal’s sedan insurance Crystal Fully comprehensive $420 pa Premium included in motor vehicle costs
You ask them about the offer from their landlord.
Question Answer
Tell me about this offer from your landlord? We’ve always got on well with her. We pay our rent on time and she always responded promptly if we had any problems. She likes to come and collect the rent if she can so she can see our kids. So we’re friends really.
She says she’s selling up and moving to the coast and can’t manage a rental property from far away. She knows we were saving to buy a house and it would make life easy for her if we bought it and she didn’t have to pay real estate agent fees. Of course it would make life easy for us too as we wouldn’t have to move.
How much is she asking? Well she wants $280,000. Sounds a bargain compared to the prices they pay in the cities nowadays but it’s only a two bedroom weatherboard cottage and it suits us just fine. We looked at the asking prices for other homes in the window of the real estate office and it seemed a fair price.
Have you asked about a mortgage? Yes we spoke to the bank and they told us if we could make a 20% deposit they would fund the rest. So that means we would borrow $224,000 and we need $56,000 deposit — well a bit more than that to cover legal costs.
And you’ve had an offer from Steve’s parents? Yes we told them we have saved $22,500 but they could see we were short about $40,000 and they said they’d lend us the money to help us out. It’s too big an opportunity to pass by.
But it’s a loan not a gift? That’s right. They are in their mid- fifties and plan to retire in 10 years and will want the money back by then. Steve has two brothers and neither of them is married yet so he’s the apple of their eye having presented them with two grandkids at once. They haven’t said anything about paying interest but it’s sort of understood that once we get on top of the mortgage payments and I’m back at work we can pay them back in instalments.
Part 3: Assignment questions
Question 1a
The first four steps of the safe harbour are repeated below. They all form part of this stage in the financial planning process and you need to address all four steps in this first question.
• Step 1: Identify the objectives, financial situation and needs of the client that were made known through the client’s instructions.
• Step 2: Identify the subject of the advice the client is looking for (whether explicitly or implicitly).
• Step 3: Identify the objectives, financial situation and needs of the client that would reasonably be considered relevant to the advice sought on that subject (the client’s relevant circumstances).
• Step 4: If it is reasonably clear that information relating to the client’s circumstances is incomplete or inaccurate, make reasonable enquiries to get complete and accurate information.
Briefly describe the clients’ financial situation, their objectives and needs as initially explained by them?
(100 words)
Answer here
Assessor feedback: Resubmission required?
Question 1b
(i) What is the subject of the advice the clients are seeking? What advice have they asked for?
(ii) What additional advice do you think they need from what you know about their circumstances?
(100 words)
Answer here
Assessor feedback: Resubmission required?
Question 1c
Assume you have asked more questions of the clients and have explained the areas where you think they need advice.
Read the fact find thoroughly and identify all the issues they are concerned about. Identify what you consider would be reasonable objectives for the clients. In your answer describe between six (6) and ten (10) objectives.
(150 words)
Answer here
Assessor feedback: Resubmission required?
Question 1d
List five (5) other clarifying questions you would ask them. This task requires you to identify what gaps there are in your understanding of the client’s situation.
(150 words)
Answer here
Assessor feedback: Resubmission required?
Question 2a
Determine how much Crystal will receive from Centrelink in family benefits, listing in your answer the type of benefit and calculated amount. You will need this information for Question 2b.
Tips: Reread Topic 8 on payments to support families. Refer to the latest Guide to Commonwealth Government Payments booklet available at ? Corporate ? Publications and resources ? ‘A guide to Australian Government payments’.
Alternatively go to the Human Resources website at and click on families. Identify at ‘Payment Finder’ which benefits are available for someone in Crystal’s position and which she is eligible to receive. Use the ‘Calculate’ function to determine how much she will get.
(200 words)
Answer here
Assessor feedback: Resubmission required?
Question 2b
Analyse their current position when they are renting the cottage.
(i) Compile tax and cash flow statements and a statement of net worth.
Note: Please review the Kaplan resource on how to complete cash flow tables.
(ii) Describe the conclusions you have formed on the outcome of this analysis.
(100 words)
Answer here
Assessor feedback: Resubmission required?
Question 2c
Calculate the costs of a 25 year mortgage if they borrow $224,000. You should determine an illustrative interest rate from searching amongst mortgage providers. Whilst a honeymoon interest rate may give short-term benefits you should also illustrate repayments if rates were higher than today. Use an online mortgage calculator or develop your own using Excel. Set out your assumptions and workings.
(150 words)
Answer here
Assessor feedback: Resubmission required?
Question 2d
(i) Compile a cash flow statement if they go ahead and buy the house. Consider every item in the statement. How will their income change? Some costs in their budget (like rent) will not apply and be replaced by mortgage repayments. Some cost items are likely to increase and some may decrease. Some new cost items will apply. In answering this question use your judgement to create a cash flow statement that you can show to Steve and Crystal to illustrate the possible outcome if they buy the house.
Note: You may search for average council rates to use them in your answer. Only a reasonable assumption is required for this question, students are not assessed on their ability to assume a correct figure for council rates.
(ii) Write some notes explaining the differences you have identified such as changes in Centrelink benefits.
(100 words)
Answer here
Assessor feedback: Resubmission required?
Question 3a
(i) Consider their debt management position. If they had the capacity, in what sequence should they pay off the debts? Explain your reasoning.
(ii) What strategies could they adopt to reduce their current debts?
(200 words)
Answer here
Assessor feedback: Resubmission required?
Question 4a
Describe what risks there are to the client’s financial position.
Reread the fact find and think about what risks they face. You should consider all the risks to their lifestyle not just the traditional ones that can be insured.
(200 words)
Answer here
Assessor feedback: Resubmission required?
Question 4b
Although you do not need to provide specific, tailored risk management and estate planning advice, you can identify issues for the clients to consider and provide strategic advice that will assist them.
Briefly describe what risks Steve, Crystal and their family face if either or both of them die and what general recommendations do you believe they should consider to mitigate these risks.
(200 words)
Answer here
Assessor feedback: Resubmission required?
Question 5
In Question 1c you identified between six (6) and ten (10) objectives for Steve and Crystal.
For each objective, set out your recommendations to assist Steve and Crystal achieve that objective. Refer to ‘Step 3 Development of recommendations’ in Topic 10 for one way to present your answer. You can provide your recommendations as dot points.
(500 words)
Answer here
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Question 6
Identify two issues that Steve and Crystal may wish to change in your recommendations. Refer to the negotiations that occurred in the advice process in Topic 10. Explain how you would deal with their objections/concerns and how you would incorporate them into your recommendations.
(200 words)
Answer here
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Question 7
Steve and Crystal agree to join your ongoing service plan. Identify four specific issues related to their financial circumstances that you will raise with them at a review meeting in 12 months.
(200 words)
Answer here
Assessor feedback: Resubmission required?