Recommendations For Investment Strategies To Meet Objectives

Investment Strategies for Guaranteed Returns

Provide a list of your recommendations for strategies to meet the clients’ objectives and to address any concerns. 

I have the following recommendation for Sarah and Peter to consider. Under this category, in which they can have investments in stocks and bonds and the incomes from the following heads 

• Dividend Income
• Interest Income
• High Yield Investments 

This section should outline what the actual strategy being recommended is, with a brief outline of that strategy to assist the clients in understanding how it works. 

For the first time investors like Sarah and Peter, this is the safest way for planning for their secured retired life. As is evident from the name, investments under this category are found to be guaranteed. This proves to be satisfactory for first time investors as such guarantees always come with a backing of the government. Hence, first time investors making investments in government bonds, securities or in insurance companies stand the chance of a secured and guaranteed returns. Other guaranteed and equally secure investments are Annuity Plans, Certificates of Deposit and Treasury Securities. During my long experience I have also found the following to be effective – Super Funds and Social Security Schemes, provided the investor is availing them from a young age and is consistently contributing to them all through the working life, so that their full benefits can be reaped by them after their retirement. 

More detail relating to advantages and risks are to be completed in the following sections.

With the changing times and the fast paced changes which are happening in the lifestyle of investors, combined with their tendency of opting for retirement at the traditional age of 60 years, the criteria for allocation of investment structure has also undergone a substantial change. As I have discussed in the strategy explained above, investors such as Sarah and Peter, are becoming interested in the fluctuating mode available in investments, as this offers a quick and accessible method for withdrawal of funds and also offers the investors with options of making changes in their income inputs so that it suits their demands. 

Why is my advice appropriate for you? 

The reasons for recommending the strategies above are: 

Each of the strategies listed above should be noted in the left hand column.  The right hand column should contain the explanation.

Add additional rows as required to ensure all strategies are covered.

Strategy	Why this is appropriate
Strategy 1	Although safe, it is not as productive as Strategy-2.
Strategy 2	This strategy is more productive and flexible.

Does my advice have any risks or disadvantages? 

Unfortunately taking on any new strategy involves some level of risk.  To take on these recommendations, the following risks have been considered: 

Each of the strategies listed above should be noted in the left hand column.  The right hand column should contain the explanation.

Add additional rows as required to ensure all strategies are covered.

Strategy	Risks/Disadvantages
Strategy 1	The couple get income from the interest and dividend given by the offering company. In case of an economic downturn, this income can be reduced and under severe circumstances, can even be totally lost.
Strategy 2	These investments are backed by the governments and even in case of an economic downturn, there are no chances of any loss of income or complete loss of investments.

What alternative strategies were considered? 

In deciding upon making the above recommendations, the following alternative strategies were considered, but dismissed: 

Alternative Strategy	Reason for dismissal
Strategy 1	This strategy could be dismissed by the couple because of their demand of wanting a stable and regular income.
Strategy 2	There is no reason to dismiss or ignore this strategy as it fully meets the desired results of the couple and also offers their next generation the security of investments as well as a steady and regular source of income.

Consequences of replacing one financial product with another 

These recommendations include the transfer of existing benefits.  A consequence of this will be that fees and charges can occur. 

Investment Strategies for Fluctuating Modes

To ensure these are full taken into account, please consider the comparison provided below: 

Include a table that gives a comparison of any products that you have recommended be transferred or replaced as a part of your recommendations.  This should provide detail of any:

• Exit or transfer fees;
• Entry fees;
• Current vs. proposed ongoing administration fees and other costs;
• The loss of any benefit that currently is in place
• Any other significant consequences (CGT, insurance loadings, etc.)

This comparison should conclude with a statement outlining why your recommendations are superior to the clients’ current arrangements and how they are in the clients’ best interest.

There are no suggestions to be made to Sarah and Peter for replacements or transfers for products as they are first time investors and have never made investments in the market led investment portfolios. Moreover, the couple has been, so far, only making contributions to super funds and in this direction I would definitely recommend to them to consider the option of starting their own SELF-MANAGED SUPERANNUATION FUND (SMSF), which they can jointly float as trustees and make their daughter Christine and their grand-daughter Beth as the beneficiaries. The biggest apprehension shown by both Sarah and Peter is about their gambling-addicted son-in-law, with whom their grand-daughter is very mush attached. The couple fear that their son-in-law can take advantage of this weakness and may try to extract money from Christine after he finds that she has access to the large legacy left by Sarah and Peter. But in case the couple starts the SMSF, and makes Christine and Beth as the beneficiaries of the income from SMSF, then the son-in-law cannot have access to the funds because even Christine will not have access to the funds of the SMSF as per the rules governing the SMSF’s are laid out. 

Outcomes and other information 

In this section outline the outcomes from your recommendations – whether you project the clients’ goals to be achieved, how you have addressed the issues you identified, etc. 

This section should also be used to provide detail in relation to information that was requested, or to elaborate on why certain strategies they may have raised were not used (e.g. legislative restrictions, lack of funding, etc.) 

Ongoing review service 

Outline here the ongoing service you wish to offer to the clients to review the plan that you have put into place.  This should include: 

• The need for the service
• Features of what your service provides
• How often reviews will take place
• The cost of this service and how payable 

This section: 

• Tells you about any fees that I will receive;
• Explains what product fees you will pay; and
• Answers other questions you might have about my advice. 

Please also make sure you have read the Financial Services Guide (FSG) I have provided, and be sure to ask me any questions you might have in relation to any of this. 

What are my fees? 

My fee for the preparation of this advice is $3,000 (including GST). 

Where you have recommended any investments and charged a portion of the lump sum as part of your initial or ongoing remuneration please include the following table:

Investment	Initial/Upfront remuneration	Ongoing remuneration
$	%	$	%	$
Total		$		$

Include the following table if you are receiving commissions from life insurance policy recommendations as part of your remuneration 

Insurance Policy	Annual Premium	Initial Commission	Ongoing Commission
%	$	%	$
Total			$		$

Conflict of interest 

Please note that the following payments will be made and are directly related to having provided you with this advice: 

Provide detail of payments received from any source, as well as any payments you will make to other parties.

Risks and Advantages of Each Strategy

Remember that a payment to an associated company must be disclosed as a conflict, even where the planning business does not directly receive the benefit (e.g. payment to the accountancy practice under which the planning business operates). 

What product fees will I pay? 

Provide details of the costs within any of the products that are recommended.  These can include: 

• Set-up costs (trust deed, lodgement fees, etc.)
• Brokerage
• Indirect Cost Ratios (ICRs)/Management Expense Ratios (MERs) 

Where these fees are amounts based on a percentage of any investment, include a table outlining the percentage and dollar amounts based on the current value recommended. 

What steps do I take next? 

Provide a table that outlines each step required to implement your recommendations.  This should detail: 

What each step is;

Who is responsible for each step; and

When each step is to be completed by. 

Other questions you might have 

Am I restricted to an approved product list? 

As an adviser of Pinnacle Financial Services Network I have access to a range of financial products that has been researched by my licensee.  These products have all met rigorous scrutiny from the investment committee after being rated by an un-conflicted research body. 

If there is a specific product you would like a recommendation on please let me know and I will arrange for its review by these sources.  If approved we can then include it as part of the recommendations 

Does my advice have a time limit? 

Yes, my advice should be revisited if it is not implemented within 28 days of the date on the cover of this SOA. 

Is your information protected? 

Yes.  Your information is stored and not given to any party outside Pinnacle Financial Services Network unless the law says that we must. 

Disclaimer

No warranty as to correctness is given and no liability is accepted for any error, or omission, or any loss, which may arise from relying on this data. Every effort has been made to assure the highest reasonable degree of accuracy in your financial plan. However, due to the dynamic nature of our economic and tax environments, no guarantees or assurances can be given regarding the profitability or tax benefits of any investment. 

This plan is only as accurate as the information on which it was based. If the data originally supplied to us is incorrect or incomplete, the plan will reflect these inaccuracies, and these errors will project into the future at a magnified rate. Certain assumptions made by us, or you, may also limit the accuracy of the data.

Where tax benefits are illustrated, they are based on the best information currently available.

Various proposals are made from time to time to change the tax laws, and it seems probable that many of our current tax laws will undergo changes during the years illustrated in this financial plan. Some of these proposals, if enacted, might have a serious adverse effect on tax consequences of some of the investment strategies proposed. On the other hand, some proposals may significantly enhance your position if enacted. 

Authority to Proceed 

We, Sarah Parsons and Peter Parsons, having read the Statement of Advice dated DATE and prepared by ADVISER NAME acknowledge: 

• The information provided in this document is accurate and reflects my/our current circumstances; 

• I/We understand and agree that the risk profile recommended meets our concerns and requirements; 

• That the recommendations given in this Statement of Advice meet our needs and objectives as stated in this document; 

• That the recommendations given are based on legislation current at the time of making these recommendations; 

• That because legislation is subject to change these recommendations should be reviewed if not implemented within 28 days from the date on the cover of this SOA; 

• I/We understand that the recommendations made in this Statement of Advice are for our use only and should not be passed on as recommendations suitable to other parties; 

• That if the recommendations made in this Statement of Advice, unless implemented in full as described may not meet the desired outcomes stated as the goals and objectives described; and 

• That where a referral has been given to another party to seek recommendation for investment and personal insurances, any recommendation made by that party is not the recommendation of ADVISER NAME. 

We agree with the recommendation and give authority to commence establishment. 

We agree with the recommendations in part and will advise you in writing which strategies we wish to have implemented. 

We do not agree with the recommendation and do not wish to proceed with implementation.

Member 1: Sarah Parsons	Date
Member 2: Peter Parsons	Date
Adviser Name	Date