OVERVIEW OF SMSF ADVICE PROCESS Case Study Je Sands, Senir Accuntant frm Sands Accunting Pty Ltd has had an initial discussin with Peter and Rsa Weber ver the phne and will be seeing them in a weeks time t discuss the apprpriateness f setting up an SMSF. Je will be prviding advice via his cmpany Sands Financial Services Pty Ltd under the licence f Unisn Wealth Management. Peter and Rsa Weber are aged 47 and 45. An verview f their current situatin is belw. Assets Liabilities CBA Savings accunt $15,000 (jint) CBA Variable Hme Lan $100,000 (jint) CmmSec prtfli $80,000 (jint) CBA Credit Card $10,000 limit (jint) Hme $1,250,000 (jint) Insurance Hme Cntents - $80,000 (jint) In Super- Death & TPD unsure f amunt BMW (Peter) - $80,000 N Trauma r Incme Prtectin Audi (Rsa) - $60,000 Incme & Emplyment IBM Super $360,000 (Peter) Peter (IT Executive) - $180,000 REST Super $120,000 (Rsa) Rsa (HR Manager) - $120,000 Super Cntributins Histrically Peter & Rsa have maximised CC s and made regular NCC s Dependents 3 kids Mary (age 11), Gerge (age 9) and Kathy (age 7) Wills / Estate Plan N Wills. Nt sure if beneficiaries have been nminated in superannuatin funds Gals and Objectives 1. Cnslidate their super funds and set up an SMSF. Interested in diversifying their investments in shares, managed funds and direct residential prperty 2. Put their mney t better use and build wealth fr retirement (preferred incme in retirement is $70,000 pa). 3. Assess their current insurance plicies t determine if they have adequate cver 4. Set up a secure Estate plan Will, & Death Benefit nminatins in super In preparatin fr the meeting Je sends the clients an email and includes the fllwing: Meeting agenda Financial Services Guide, Adviser Prfile, Risk Prfile and Fact Find with a brief explanatin f the dcuments. Je requests the clients t cmplete the Risk Prfile and Fact Find befre the meeting (as much as they can) as these dcuments will be discussed in the meeting. Je requests the clients bring the latest super and insurance statements they can find, as well as evidence f their incme The email includes a reminder fr the clients that they will be asked t prvide identificatin (i.e. Drivers Licence r Passprt) as Je is legally bliged t verify their identity.
Summary f the Key Dcuments yu are required t supply yur clients Financial Services Guide (FSG) Why d we prvide an FSG t clients? Whenever a financial service is prvided t a client an FSG must be prvided. Je must maintain a recrd f hw he supplied the dcuments t Peter & Rsa (i.e. email), the versin f the dcuments supplied and when they were prvided t the clients. What is the purpse f the FSG? The FSG cnfirms the fllwing: 1. Sands Financial Services Pty Ltd is the Crprate Authrised Representative (CAR) f Unisn Wealth Management. All advice prvided is under the licence f Unisn. 2. Sands Financial Services Pty Ltd can prvide general advice under limited authrity in relatin t establishing an SMSF, cntributins and pensins. 3. It prvides a brief explanatin f the dcuments Je is required t give clients when he prvides advice (SOA r ROA) 4. Explains hw Je and his assciates are paid 5. Prvides details f the dispute reslutin prcedures 6. Explains what infrmatin is kept n file t meet the Privacy Act and satisfy the Anti Mney Laundering and Cunter Terrrism regulatins. Adviser Prfile Why d we prvide the client with an Adviser Prfile? The Adviser Prfile frms the 2 nd part f the FSG. The FSG is nt cmplete withut the Adviser Prfile. Bth the FSG and the Adviser Prfile shuld be prvided at the same time. What is the purpse f the Adviser Prfile? The Adviser Prfile cnfirms the fllwing: 1. Je s Authrised Representative number as well as the Crprate Authrised Representative number fr Sands Financial Services Pty Ltd. 2. Cntact details fr Sands Financial Services Pty Ltd. 3. The level f Je s experience and what areas f advice Je can give. 4. Explains hw Je is remunerated. Risk prfile questinnaire Why d ur clients need t cmplete the Risk Prfile Questinnaire? Risk prfiling is a prcess used by Financial Planners fr finding the ptimal level f investment risk fr their client. There are 3 factrs that are addressed in the questinnaire: 1. Risk Required this is the risk assciated with the return required t achieve the client s gals based n the financial resurces they have available 2. Risk Capacity - is the level f financial risk the client can affrd t take 3. Risk Tlerance is the level f risk the client is cmfrtable with Where a mismatch between risk required, risk capacity and risk tlerance has been fund, Je will need t have a discussin with the clients and guide the client thrugh the trade-ff decisins that are required t reach an ptimal slutin. Wh needs t cmplete the Risk Prfile Questinnaire? Each client will need t cmplete the Risk Prfile Questinnaire, hence bth Peter and Rsa will individually cmplete the dcument
Fact find What infrmatin is requested frm the client in the FACT FIND? 1. Persnal Details Name, DOB, cntact details, dependents 2. Emplyment, Incme and estimate f living expenses 3. Gals and bjectives 4. Superannuatin and insurance details 5. The primary reasn they are seeking advice and what ther areas they wuld like advice n 6. Are they interested in setting up an SMSF r d they already have an SMSF 7. D they have a current Will / Estate Plan in place What PAGES f the Fact Find must the CLIENT SIGN? 1. Page 5 cnfirms the Adviser and the client agree n the clients Risk Prfile (i.e. balanced, grwth etc) 2. Page 6 client acknwledgment that the infrmatin in the Fact Find is true and crrect t the best f their knwledge, the FSG has been supplied t them, and the infrmatin in this dcument will be used t frmulate Je s advice. 3. Page 7 Authrity t request and receive financial infrmatin fr any superannuatin and insurance plicies the clients have. Please ask yur clients t sign multiple cpies f this page if they have several super and insurance plicies. Why must the FACT FIND be cmpleted and signed? 1. It is a recrd that Je has made reasnable enquiries abut the persnal circumstances f Peter & Rsa and has identified their gals and bjectives and has reasnable basis fr the advice he will prvide. 2. It cnfirms that Je understands the client s financial psitin t ensure the advice given will be in the best interest f Peter and Rsa. 3. The Paraplanner will use ALL the infrmatin recrded in this dcument (and any supprting dcumentatin prvided) t cnstruct the SOA. 4. The infrmatin may be used by ther areas f the Unisn netwrk (i.e. finance) t help assess serviceability and funding if the client wishes t prceed with purchasing a prperty. The Client Meeting It is the day f the meeting and the clients have brught alng the fllwing dcuments with them: Risk Prfile (cmpleted) Fact Find (majrity cmpleted) Superannuatin and insurance statements Persnal tax returns During the meeting Je discusses the fllwing with the client (in n specific rder): Risk prfile dcument Peter & Rsa agree with the High Grwth prfile as they have 20+ years t invest and sme experience in investing. Fact Find Je runs thrugh the dcument and btains any missing infrmatin frm the client and makes sure that Peter & Rsa have signed the dcuments n pages 5,6, and 7. Je explains the type f advice he is authrised t give in relatin t superannuatin and prduct class f investments. Cnfirms the type f advice Peter & Rsa are seeking: (a) set up SMSF and cnslidate superannuatin, (b) build wealth fr retirement, (c) prduct class advice, (d) assess current insurance, and (e) establish secure estate plan & binding nminatins in super.
The respnsibilities f setting up and perating an SMSF and the cmpliance requirements Csts assciated t set up SMSF / Bare Trust as well as annual csts (i.e. cmpany fees, tax returns, audits, nging service etc) Explains the cst f btaining his advice and the dcuments they will be prvided shuld they wish t prceed as per current industry regulatins: SOA addressed t Peter & Rsa utlining all recmmendatins SOA addressed t SMSF utlining investment strategy f SMSF Explains that nce the SMSF is set Peter & Rsa shuld seek advice frm a Financial Adviser as well as a Prperty, Finance and Legal specialist as this is utside f his scpe. Je explains that he has a netwrk f specialists that he can refer them t btain advice in relatin t: What accunts t set up fr SMSF (i.e cash accunt with Macquarie) What stcks/managed funds t invest in, as well as what prvider t use Which insurance prvider t use What prperty investment t purchase The amunt f finance required The clients are keen and agree t prceed with setting up an SMSF and wuld like Je t refer them t a Financial Adviser, as well as a Prperty, Finance and Legal specialist. Je rganises t meet the clients in 2 weeks t present the recmmendatins in the SOA Pst meeting Prcedures Ldge the Authrity t Request and Receive Financial Infrmatin t each super and insurance prvider Why des this dcument need t be ldged t each super and insurance prvider and hw is this infrmatin used. The paraplanner needs t btain detailed infrmatin regarding Peter & Rsa s superannuatin plicy and insurance benefits in rder t: 1. Cmpare the client s current super funds (IBM Super and REST Super) t a generic SMSF in terms f fees and csts. This infrmatin must be cntained in the SOA. 2. Obtain the actual levels f insurance the clients have and cmpare it with the levels Je will recmmend. This infrmatin must be cntained in the SOA. Withut the ldgement f this dcument, the paraplanner is unable t make these inquiries. Yu have been prvided with the cntact details f the mst cmmn super and insurance prviders t help yur staff. Please cntact Suzanne Glavas (Operatins Manager) if yu have any questins. Cmplete the Paraplanning Request Frm and email it t the paraplanner with the supprting dcuments What is the purpse f the Paraplanning Request Frm and what infrmatin is required? The paraplanning request frm prvides the paraplanner with the necessary infrmatin in rder t cnstruct the SOA (r ROA) fr Je. This dcument requires Je t stipulate the fllwing: 1. The areas the client wuld life advice n 2. The amunts t be rlled ver frm existing super funds t SMSF 3. The full details f all ther advice (i.e. cntributins, insurance, nminatins etc) 4. The fees the client will be charged fr Je s advice and t set up the necessary structures 5. Prpsed name f SMSF and crprate trustee 6. Details f the investment strategy (% range fr each asset class) 7. Amunt t be invested in investment prtfli
8. Prpsed amunt required t cmplete prperty purchase 9. Prpsed amunt required fr finance applicatin Sme Tips & Tricks when filling in this frm 1. Prvide as much infrmatin as pssible s that it is clear t the paraplanner the basis fr yur recmmendatins 2. Strategy 8 cvers insurance - there are tw ptins available where the paraplanner can calculate the levels required fr yu OR yu can prvide yur wn estimates fr the client s insurance needs. 3. Make sure t prvide all supprting dcumentatin t paraplanner (i.e. statements etc) 4. There is a checklist n the 2 nd last page which asks yu t tick ff that the 3 rd party authrity frms have been ldged Paraplanner cmpletes the SOA and prvides it t Je fr review 1. Accuntant checks the dcument fr accuracy and advises if amendments are required. Once satisfied yu can print and bind the dcument. Yu may prvide a cpy f the dcument t the clients prir t the next meeting. SOA presentatin, Signff & Referrals Je is nw meeting Peter & Rsa t present the SOA which will include the fllwing recmmendatins: Set up f SMSF and Bare Trust Partial rllvers frm IBM Super and REST Super (keep $5,000 in each super fund t retain insurance benefits until new insurance plicies are established) Maximise CC cntributins and where pssible make NCC each year Invest apprximately $280,000 in prduct class f cash, shares, managed funds $200,000 t be retained fr prperty purchase (prperty price t be apprx. $500k) Peter - $1,280,000 f Life / TPD, $200,000 f Trauma, and $11,250 per mnth Incme Prtectin Rsa - $1,350,000 f Life / TPD, $200,000 f Trauma, and $7,500 per mnth Incme Prtectin Binding nminatins fr SMSF and establish Will It is a successful meeting and the clients have agreed t prceed. The Authrity t Prceed is signed Je can nw apply fr the ABN and TFN fr the Super Fund and rder dcs fr SMSF all thrugh the Nw Infinity prtal Je requests the SOA fr the investment strategy frm the paraplanner The clients are called back int the ffice t sign the SMSF dcuments and have the investment strategy presented t them fr sign ff. Je enters a referral n the Unisn Accunting Grup website t rganise fr Peter & Rsa t meet with a Financial Adviser (Centric Wealth) fr specific prduct advice. Je attaches a cpy f the SOA and Fact Find t the referral. In the referral Je als includes details that the client is seeking Finance ($350k) and wuld like t purchase a prperty in SMSF ($500k). The client details are Unisn Finance and the prperty experts.