Daniel and Carol Blacksmith have come to see you to help organise their financial affairs. 

Daniel's date of birth is 29/4/1982 (aged 40) and Carol's date of birth is 21/5/1967 (aged 55). 

Daniel is working as a sales consultant for a beverage company earning $145,000 p.a. and Carol is a senior consultant for a food manufacturing company earning $190,000 p.a. In addition, they both receive the standard Employer Superannuation Guarantee. 

They have no dependent children. 

They both have superannuation with the XYZ Superannuation Fund. The platform fee in this fund is 0.3% 

p.a. In addition, there are fund manager fees, which can vary depending on the funds chosen within their superannuation. 

Daniel has $280,000 in his superannuation across the following funds: 

UBS Cash Fund	$40,000
iShares Australian Bond Index Fund	$40,000
Antares Income Fund	$40,000
T.Rowe Dynamic Global Bond Fund	$40,000
Premium Asia Income Fund	$40,000
iShares Australian Equity Index Fund	$20,000
iShares Australian Listed Property Index Fund	$20,000
iShares Hedged International Equity Index Fund	$20,000
AMP Capital Core Infrastructure Fund - Class A	$20,000

Carol has $660,000 in her superannuation, invested as follows: 

La Trobe Aust Credit Fund - 12-month term account	$80,000
Macquarie Australian Fixed Interest Fund	$52,000
K2 Asian Absolute Return Fund	$30,000
APN AREIT Fund	$30,000
APN Asian REIT Fund	$30,000
Perpetual W/S Industrial Share Fund	$100,000
First Sentier Wholesale Geared Share Fund	$100,000
Fidelity Global Equities Fund	$70,000
T. Rowe Price Global Equity Fund	$70,000
Fidelity China Fund	$68,000
Magellan Infrastructure Fund (Unhedged)	$30,000

They have selected their own investments within their superannuation funds and the investments selected were mainly chosen because, at varying stages, friends had recommended the funds. They figured if they were recommended by friends, they would be good funds to hold. 

The mortgage for their home is with the Commonwealth Bank of Australia (CBA) and they have $520,000 outstanding. Interest is currently 4.7% p.a. The repayments are $3,500 per month. 

They also have a joint CBA Complete bank account with a balance of $50,000. In addition, they have a further $100,000 in a CBA mortgage offset account. 

Their other combined living expenses are $120,000 p.a. 

You explained to them risk profiles and asset allocation and in doing a risk profile assessment found that they had distinct different risk profiles. 

Your assessment of Daniel is that of a 'Growth' investor with a recommended asset allocation of: 

Cash	5%
Fixed interest	15%
Australian property	4%
Global property	4%
Australian shares	30%
International shares	30%
Other	12%

Your assessment of Carol is that of a 'Moderate' investor with a recommended asset allocation of: 

Cash	10%
Fixed interest	50%
Australian property	2%
Global property	2%
Australian shares	15%
International shares	15%
Other	6%

They have heard about diversified funds and wonder if they should invest in diversified funds in their super. 

Carol has concern about the environment and wants to know if there are investments that support sustainable companies, both within Australia and globally. She really has not done much research and is seeking your guidance in terms of what is out there. 

She has also noticed some significant falls in her superannuation and is concerned about that. One of Carol's particular concerns is the big fall in the First Sentier Wholesale Geared Share Fund and would like to sell that fund for performing badly. 

Daniel on the other hand has been doing a significant amount of research and is being concerned that the investments in his superannuation may not be the best for him. He has heard about improved investment opportunities in emerging markets and would like exposure to these markets in his superannuation to help maximise his investments returns. 

However, he has been concerned about the performance in the Premium Asia Income Fund and wonders if he should sell out of that investment at the very least. 

He is also thinking about setting up a share portfolio outside of superannuation and would like recommendations on starting an investment portfolio of $20,000. He would like to put some of his surplus savings towards this investment portfolio to increase his exposure to shares. 

They are also wondering if they should be making additional contributions. 

Carol would like to retire once she reaches age 60 and Daniel would like to continue working until he reaches age 70. 

They would like advice on: 

• Reviewing the investments in their superannuation
• Considering the amount of additional superannuation contributions they should make and where the additional contributions should be invested. They understand there are tax benefits for making additional superannuation contributions and they would like to take advantage of these benefits to help build savings for retirement
• Setting up a $20,000 share portfolio for Daniel and which stocks to buy. He would like to have an investment portfolio outside of the superannuation system, which is not subject to preservation rules. However, this investment will be long term and he wants growth investments to help maximise returns

On these investments. They also want you to advise if they should take $20,000 from their Commonwealth Bank Account or mortgage offset account for this initial investment 

• Recommending what regular savings can be made to Daniel's share portfolio and where the additional regular savings are invested. He would like to maximise the growth of his share portfolio and he believes that adding regular investments will help to grow the portfolio. He feels that they should have sufficient cashflow surplus they could save and add to the share portfolio
• Purchasing a new car in five years for $50,000 and how that should be funded and where the funds should be invested prior to the purchase of the car.

 

Question: Generate a Client report

 Requirement of Client report structure and format

1. Executive summary

    This section provides a summary of the client's situation, investment considerations and recommendations provided. 

 2. Introduction

    This section should provide clarity on what the investment strategy paper is about. The introduction should cover: 

• scope and limits of the strategies presented the client's investment objectives, preferences and timelines • commentary on the clients' risk profile and allocations
• investment surplus.

 3. Investment considerations and recommendations

    This section covers product research, product selections and investment strategy recommendations. The discussion should cover product asset allocation, investment styles, fees, performance, volatility, and other relevant information. 

    The discussion should clearly connect and justify the strategies and recommendations provided to the client's situation (e.g. needs, goals, risk profile and timelines).  

 4. Conclusion 

    This section should emphasize the benefits of the recommendations made and how they relate and are relevant to the client's objectives. This section should serve as the closing statements of the arguments presented in the investment considerations and recommendations. 

 References 

Appendices.